Risks and side effects of running a sweepstake on Facebook & Co.
Franchise systems often use sweepstakes, contests, coupons, and other promotion activities on internet platforms such as Facebook or Twitter in order to increase customer acquisition and customer loyalty for their brands. For franchisors acting internationally it is therefore essential to be aware of local law pitfalls in connection with terms and conditions applicable to such sweepstakes.
Social networks such as Facebook and Twitter have come up with their own guidelines in regard to the realization of promotion activities. Since 2013, the “Facebook Pages Terms”, for example, state that companies are allowed to provide and administer their sweepstakes directly on their Facebook page. Before 2013, companies were only allowed to administer promotions within apps. The Facebook Pages Terms also provide, amongst other things, that companies acknowledge that Facebook is neither associated with the promotions nor liable for any damages as well as that it is prohibited to use Facebook pages of consumers for commercial purposes.
The specific rules applicable to a sweepstakes are normally provided by the promoting company and they define on which conditions a user may participate – for example by simply commenting on or “liking” a post. The funniest photo, the most imaginative comment or the proposal for a product name with the most “likes” shall win.
Legal regulations that play a role when running a sweepstake, for example in regard to the protection of minors, of consumers, or data privacy, are not explicitly addressed in the Facebook Pages Terms. It is therefore important for international franchisors to know that numerous regulations exist in Germany which are dedicated to warrant a certain level of protection with respect to the aforementioned aspects. Those statutory provisions also apply in the context of sweepstakes on Facebook and other internet platforms. Franchise systems running promotion activities on such internet platforms in Germany are therefore well advised to ensure that their individual promotion activities and terms comply with local law requirements.
Ignoring mandatory regulations regarding the use of standard terms and conditions for example may have the unpleasant “side effect” for a franchisor of being in breach of the German Act Against Unfair Competition which gives competitors the chance to send costly written warning letters and consumers’ associations the possibility to bring an action in court. Using “sample” terms and conditions is no solution because the terms of each individual sweepstakes must be reviewed with respect to its design (competition, contest or price draw), the target group, the type of prizes and other factors which have to be taken into account. In most cases the following aspects need to be considered:
According to section 6 (1) no. 4 of the German Telemedia Act (Telemediengesetz, TMG) sweepstakes or contests with an advertising nature have to be clearly identifiable as such. In addition, the participation conditions have to be easily accessible, clear, and unambiguous. Not only the scope of the sweepstakes needs to be defined in regard to the organizer, the eligibility and time frame, it is also essential to provide precise description of the prize and the rules, according to which the winner will be selected or drawn. Depending on the design of the sweepstakes and the type of the prizes, potential age restrictions apply and have to be dealt with.
Due to the fact that participation conditions are considered as standard terms and conditions pursuant to section 305 (2) German Civil Code (Bürgerliches Gesetzbuch, BGB) certain particularities regarding the protection of consumers apply. A user must be able to take notice of the participation conditions in a reasonable manner. In this context it is crucial to know that participation conditions must be provided in the German language in order to be valid (cf. decision of the Regional Court of Berlin of May 9, 2014 – 15 O 44/13: the instant messaging app for smartphones “WhatsApp” had used English terms and conditions on their German website. The court found that a good knowledge of the English language cannot be expected from a user and that providing the terms in English language only was therefore insufficient). This aspect is not necessarily evident since the English language is quite dominant in social media – also in Germany.
Communicating personal data may be necessary in order for a user to participate in sweepstakes. The organizer is therefore obligated to inform the user of the type, scope and purpose of the gathering and processing of personal data prior to the usage in a “generally understandable way” (section 13 (1) German Telemedia Act [Telemediengesetz, TMG]). According to section 13 (2) TMG, the declaration of consent given by a user with respect to data processing is valid only if certain requirements are met: the user must have declared his consent in a clear manner, the declaration of consent must have been actively provided, the user must be able to access the content of his declaration at all times and the user must be able to revoke his declaration of content with effect for the future at any time.
With respect to the liability of the promoting company (e.g. the franchisor) the Facebook Pages Terms are silent. It is therefore advisable to provide for an exclusion of liability clause in the participation conditions. This clause however, must be drafted in line with the relevant provisions of the German Civil Code related to the use of standard terms in order to be valid. This is the only way to ensure that the promoting company cannot be called for account for statutory violations of participants (e.g. by posts which infringe intellectual property rights or contain insults or false and defamatory statements).
Ensuring compliance with local statutory provisions is essential for running a sweepstake on the internet successfully in Germany. The terms and conditions applicable in the home jurisdiction of the franchisor need to be reviewed if not revised prior to their use in Germany. By this, written warnings from competitors, law suits filed by Consumers’ Associations, and other unpleasant side effects resulting from the (non-intentional) breach of provisions dedicated to protect consumers, minors, or data privacy can easily be avoided.Save as PDF
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