SMS Competitions Rules & Guidelines

Competition services must have a specific closing date, except where there are instant prize-winners. An insufficient number of entries, or entries of inadequate quality are not acceptable reasons for changing the closing date of a competition, or for withholding prizes. Once the closing date for a competition is reached, the advertised prizes must be awarded, not withstanding the number of entries.

An insufficient number of entries, or entries of inadequate quality, are not acceptable reasons for changing the closing date of a competition or for withholding prizes. Once the closing date for a competition is reached, the advertised prizes must be awarded, not withstanding the number of entries.

Prizes must be awarded within 28 days of the closing date, unless a longer period is clearly stated in the promotional material.

The general answer is no, but it is best to contact the National Lotteries Board directly, as there have been instances of them giving approval to larger companies who wish to offer a cash prize.

1. Competition services that are aimed at, or could reasonably be expected to be particularly attractive to children, must not offer cash prizes.

2. Competition services that are aimed at, or could reasonably be expected to be particularly attractive to children, must not feature long or complex rules.

Please note that NPO’s may not conduct sms competitions in conjunction with business entities at any point. They are required, by law, to register as societies when planning to conduct any fundraising projects. However, a business entity may offer sponsorship in the form of prizes, but may not derive any feasible benefit from the latent project.

If you wish to request donations from the public, you may do so via sms lines, without the use of a competition & without distributing prizes by lot or chance. However, to avoid any misconceptions, you will be required to clearly state your intentions in the media release, stating that the campaign is solely donation driven.

The National Lotteries Board has been established in terms of the Lotteries Act, No. 57 of 1997 to regulate all lotteries in South Africa. The definition of a lottery in terms of the Act is, “any game, scheme or plan where the prize is distributed by luck or chance”. In other words, if there is a “draw” to determine the winner, it is a lottery.

Only two types of lotteries are legal i.e. the National Lottery “Lotto” and “raffles” conducted by non-profit organisations. All others are therefore illegal.

However, a company or profit making entity, may conduct promotional competitions. A promotional competition is a lottery whereby goods or services of that specific entity are being promoted, for example, Coke or Vodacom. It is of vital importance that the promotional aspect of the competition is being clarified. If for example, a competition is conducted where the public sms's or enters into the competition, without a specific product being promoted i.e. “sms a number and you can win a car”, then that competition is an illegal lottery and not a promotional competition, as nothing is being promoted.

In order to ascertain whether it is a legal, promotional competition, the following information should be submitted by the entity:

(a) which entity is conducting this competition;
(b) which goods or services of that entity are being promoted; and
(c) what the rules of the competition are, the draw date, the entry fee and who may participate etc.

All promotional competitions should be conducted in terms of section 54 of the Lotteries Act, 1997 (Act No. 57 of 1997) as well as the relevant regulations. (Please ensure that you have copies of the Lotteries Act, 1997 (Act No. 57 of 1997) and the Gazettes in which the Amendment Act (No. 24837 dated 2 May 2003) and the Regulations (No. 24874 dated 16 May 2003) were published. (Copies can be obtained at the Government Printer telephone 012 334 4508 or on the Government’s web site at www.gov.za)).

According to the legislation, a promotional competition shall be lawful, inter alia, if the price paid for the goods or services are not increased by the entering of the competition. In other words, a participant may not pay more to enter the promotional competition. Therefore a sms may not cost more than the standard tariff as prescribed by the cell phone companies and Telkom. *

The rules of the promotional competition relating to the manner and date of announcing the winners of the competition must be published in advertising material promoting that competition. The advertising material must be in legible type and alert prospective participants in that competition to the prohibition of certain participants.

Therefore, unless the promotional competitions and lotteries are conducted within the framework of the appropriate legislation and regulations, such lotteries and competitions are unauthorised and therefore unlawful.

Section 57 of the Act prescribes that any person who participates in, conducts, facilitates, promotes or derives any benefit from a lottery, and or a promotional competition (unless such lottery or promotional competition has been authorised by or under this Act or any other law), is guilty of an offence and may if convicted be liable to a fine or to imprisonment or both.

* This item is currently being disputed, the entry price into a competition

Unacceptable SMS Marketing Practices

Introduction

There have been a number of incidents over the past few weeks of SMS marketing that is totally outside the realms of acceptable behaviour in terms of the WASPA Code of Conduct and the WASPA Advertising Rules, and above all, to the major detriment to all industry participants.

The purpose of this advisory is twofold:

• To warn WASPA members who may be unaware of these incidents of their occurrence, so as to try avoid any repetition and further damage to the industry; and
• To avoid any WASPA members against whom a complaint may be brought, from arguing that they were unaware of the practices of their information providers or that these practices are errors or in any way unintentional.

It must be noted that many of the practices are, it seems, perpetrated by Information Providers, rather than WASPA members directly. In addition, many of these Information Providers appear to be based outside South Africa.

You are advised, if applicable, to immediately forward this Advisory to all your Information Providers and also obtain positive indication from them that they have read, understood and will fully abide by the contents of this Advisory.

Nevertheless, the WASPA Code of Conduct makes it clear that WASPA members can be held responsible for the actions of their Information Providers (Clause 3.9) and this has been confirmed in numerous decisions of WASPA Adjudicators.

Formatting of Promotional SMS Messages

• Do not place spaces and/or carriage returns between the body-text and the price indication. The user must not have to scroll down to see pricing. This practise has been declared deceptive and an Information Provider has been suspended for doing so.

Active Number Harvesting

• For example: Do not run competitions or similar to simply harvest numbers for non-competition use. Any messages sent via such harvesting are considered spam by Adjudicators.
• If a competition is held via radio, the announcement must indicate that users will be placed on a distribution list.
• Do not use a pre/post-paid mailbox for unsubscribe requests or any customer care issues. These mailboxes only store 10 messages on average. A live operator must be used.

Use of International Gateways for MTs

• WASPs are allowing their Information Providers to send MTs to subscribers from “cheap” non-South African international gateways. IPs are placing wording in these SMSs that are in conflict with the WASPA Code Of Conduct and various network rules.
  
  WASPs then become liable for any use of a shortcode in an errant SMS.

Long Code Use

• The WASPA Code of Conduct Committee has instructed the WASPA Adjudicators to draw a negative inference regarding commercial SMS messages originating from Premium Rated long codes, if this has the effect or possible effect of exposing consumers to costly mistakes or unintentional spending.
  
  This is a potentially deceptive practice and WASPA members found to be using this practice, or allowing their information providers to do so, will be subject to the institution of complaints.

Formatting of Promotional SMS Messages
A number of promotional SMS messages have been brought to WASPA’s attention, where the price is included in the message, however is placed after several carriage returns.

This has the effect, on the vast majority of mobile phone screens, of making the price invisible without scrolling down several times.

In assessing these SMS messages the following Clauses of the WASPA Code of Conduct were considered:

4.1.1. Members are committed to honest and fair dealings with their customers. In particular, pricing information for services must be clearly and accurately conveyed to customers and potential customers.
4.1.2. Members must not knowingly disseminate information that is false or deceptive, or that is likely to mislead by inaccuracy, ambiguity, exaggeration or omission.
6.2.5. The price for a premium rated service must be easily and clearly visible in all advertisements. The price must appear with all instances of the premium number display.

In addition, the following provisions of the WASPA Advertising Rules were considered:

11.3 TEXT DISPLAY
11.3.1 Display Text with full pricing information must be displayed on the SMS/MMS
11.15 PRICING: Show component, bearer and total cost // Cannot use term Standard Rate when no free/discounted SMS/Minutes cannot be utilised

Overview:
The display text must show the full or potential cost of access for fully obtaining the advertised Content and/or service.

This practice is dishonest and negatively affects the reputation of all WASPs. It is, inter alia, a contravention of Clause 4.1.1 of the WASPA Code of Conduct in that it amounts to a failure to clearly and accurately convey pricing information to customers and potential customers. A contravention of Clause 6.2.5 of the WASPA Code of Conduct is also clear, while a finding of deception in terms of Clause 4.1.2 of the WASPA Code of Conduct has also been made.

While not directly covered in the WASPA Advertising Rules, the requirement for showing or displaying pricing information on the SMS and as part of the display text, makes it clear that hiding the pricing by using superfluous and intentionally inserted carriage returns, is a contravention of the WASPA Advertising Rules.

WASPA members are to be vigilant regarding superfluous carriage returns, as following this advisory, it is unlikely that any Adjudicator will accept a response based on unintentional errors or third party errors.

As indicated above, WASPA Adjudicators have held this to be a deceptive practice and the WASPA Adjudicators have been requested to be particularly strict with to regards this practice and a complaint of this type of behaviour could result in a fine, a suspension of service, or both a fine and suspension, being imposed on a WASPA member.

Active Number Harvesting
There have been incidents of active number harvesting, inter alia with information providers running general competitions to harvest active numbers.

The information provider then uses the harvested numbers to send unsolicited SMS messages (spam for the purposes of the WASPA Code of Conduct) for unrelated services.

In addition, it is made almost impossible for recipients to remove themselves from the distribution lists, in one case due to the fact that a prepaid voice mailbox was provided as the removal mechanism.

As the mailbox only stores a limited number of messages, it is constantly full.

WASPA Adjudicators have found this harvesting and subsequent spamming mechanism to be in contravention of the WASPA Code of Conduct. The lack of a functioning list removal mechanism is possibly another infraction.

Furthermore, Clause 4.1.5 of the WASPA Code of Conduct requires:

4.1.5. Members must have a complaints procedure allowing their customers to lodge complaints regarding the services provided. Members must acknowledge receipt of complaints expeditiously, and must respond to any complaints within a reasonable period of time.

Obviously, a full mailbox will not qualify as a complaints procedure as contemplated in the Code.

Do not use a pre/post-paid mailbox for unsubscribe requests. These only store 10 messages on average.

A live operator must be used.

Use of International Gateways for MTs
Many WASPA member’s are getting into trouble because their information providers are sending MTs through alternative and cheaper non-South African gateways, rather than through the WASPA member, as is required by the networks.

This has resulted in WASPA members not seeing the MTs until there is a complaint. Nevertheless the WASPA members have been held liable for the actions of their information providers and have been sanctioned, in some cases very severely with suspensions and fines amounting to tens and even hundreds of thousands of Rand.

WASPA members need to enforce their own internal business rules, as well as network rules, that any MTs using a particular WASPA member’s short code can only be sent through that WASPA member’s gateway.

Failure to do so is likely to result in liability for MTs sent by information providers, even though not sent through the WASPA member’s gateway!

Long Code Use
The WASPA Code of Conduct Committee, by way of this Advisory, instructs the WASPA
Adjudicators to draw a negative inference regarding commercial SMS messages originating from Premium Rated long codes, if this has the effect or possible effect of exposing consumers to costly mistakes or unintentional spending.

This is a potentially deceptive practice and WASPA members found to be using this practice, or allowing their information providers to do so, will be subject to the institution of complaints.

1. Any promotional material for a competition service must clearly display the full cost to enter the competition and any cost to the user to obtain the prize.

2. Any promotional material for a competition service must include details of how the competition operates.

3. Interactive competition services with an ongoing incremental cost, must, at reasonable intervals, inform the customer of any additional costs, and must require the customer to actively confirm their continued participation.

4. Promotional material must clearly state any information which is likely to affect a decision to participate, including:

• the closing date;
• any significant terms and conditions, including any restriction on the number of entries or prizes which may be won;
• an adequate description of prizes, and other items offered to all or a substantial majority of participants, including the number of major prizes;
• any significant age, geographic or other eligibility restrictions;
• any significant costs which a reasonable consumer might not expect to pay in connection with collection, delivery or use of the prize or item.

5. The following additional information must also be made readily available on request, if not contained in the original promotional material:

• how and when prize-winners will be informed;
  the manner in which the prizes will be awarded;
  when the prizes will be awarded;
• how prize-winner information may be obtained;
  any criteria for judging entries;
• any alternative prize that is available;
• the details of any intended post-event publicity;
• any supplementary rules which may apply;
• the identity of the party running the competition and responsible for the prizes.

6. Competition services and promotional material must not:

• use words such as ‘win’ or ‘prize’ to describe items intended to be offered to all or a substantial majority of the participants;
• exaggerate the chance of winning a prize;
• suggest that winning a prize is a certainty;
• suggest that the party has already won a prize and that by contacting the promoter of the competition, that the entrant will have definitely secured that prize.

The Supreme Court of Appeals this week ruled in favour of the National Lotteries Board in its case against the "Winikhaya" competition. Winikhaya primarily uses premium rated SMSs as the entry mechanism for the
competition.

While we are in discussions with some of the role players in respect of the short & long-term implications of the judgment, WASPA in the interim wishes to advise its members to immediately exercise caution in respect of both
current and planned future competitions that may be affected by this judgement.

As there are many permutations of competitions, WASPA cannot at this stage give specific advice as to the current legality of specific competitions. WASPA does however note the finding by the Supreme Court of Appeal that the "Winikhaya" competition is NOT a promotional competition, which may be an issue of significance for WASPA members.

All members who are engaged in competitions are thus strongly urged to immediately consult their legal advisors to determine the legality of competitions they run or facilitate. Please also consult the Lotteries Act as amended and associated regulations (attached).

Further, if you are aggregating on behalf of others, you are strongly advised to immediately send a copy of the judgement to them and to also advise them to immediately consult their legal advisors.

WASPA notes the stated intention of the beneficiaries of the "Winikhaya" competition to challenge certain issues regarding this judgement with the Constitutional Court. We will update you as the events unfold.

Warm Regards, & Seasons Greetings
The WASPA Mancom

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Update: 16 Jan 2009

Winikhaya case: Supreme Court of Appeal handed down judgement on 1 December 2008:

1. NLB's appeal was upheld,
2. Winikhaya competition is not a promotional competition for purposes of the National Lotteries Act ie. it didn't promote the sale or use of goods/services,
3. Winikhaya competition deemed to be an unlawful lottery ito the Act.

Extra info....
The Consumer Protection Bill 2008:

When this Act eventuallly comes into force it will...

1. Amend S(1) of the Lotteries Act by replacing the meaning of "promotional competition" with a similar, but more comprehensive meaning.
   
   Therefore, a "promotional competition" will be:
   - any game, competition, scheme etc, for the distribution of prizes by lot or chance, in the ordinary course of business for the purposes promoting a producer, distributor, supplier etc or the sale of goods and services........etc etc
   
2. Repeal/delete S(54) of the Lotteries Act which deals with promotional competitions.

Effectively, once the Consumer Protection Bill comes into force, it will be the authority on promotional competitions, however, until then the Lotteries Act is applicable.

Regulations Regarding Promotional Competitions 2003 in terms_of the LOTTERIES ACT 57 OF 1997:
Click to Download (88kb)

Original Act:
LOTTERIES ACT 57 OF 1997:
Click to Download (232kb)