How To Run Prize Competitions, Giveaways And Trade Promotions In NZ

Running a giveaway or prize competition can be a great way to build your audience, launch a new product, move stock, or reward loyal customers.

But if you’re a small business owner, it’s easy to accidentally run a promotion that creates confusion, attracts complaints, or even breaches New Zealand law (often without meaning to).

The good news is that most of these risks can be managed upfront by getting your prize competition terms and conditions right, making sure your advertising matches your rules, and thinking through how you’ll collect and use entrants’ personal information.

Below, we’ll break down the key legal considerations for prize competitions, giveaways, and trade promotions in New Zealand, plus what your terms and conditions should cover so you’re protected from day one.

What’s The Difference Between A Giveaway, Prize Competition And Trade Promotion?

People often use these terms interchangeably, but legally and practically they can work a bit differently. Getting clear on what you’re running helps you write the right prize competition terms and conditions and market it properly.

Giveaway (Often “Random Draw”)

A giveaway is usually a promotion where:

• someone enters for free (or by doing something low-barrier like following your page or signing up to a newsletter), and
• the winner is chosen at random (a draw).

From a risk perspective, you still need clear terms about eligibility, how the draw works, and what happens if the prize can’t be delivered.

Prize Competition (Skill-Based)

A prize competition is typically where:

• entrants have to answer a question, submit a photo, write a caption, etc, and
• the winner is chosen based on judging criteria (skill), not chance.

If you’re judging entries, your terms should spell out the criteria (even at a high level), who is judging, and whether the decision is final.

Trade Promotion

A trade promotion is often used to describe promotions run to increase sales or engagement. It might be:

• a purchase-to-enter promotion (eg “spend $50 to go in the draw”),
• a random draw open to the public, or
• a competition tied to a marketing campaign.

Trade promotions can raise extra issues (like proof of purchase, refund requests, and claims about value), so your terms need to match how your promotion is actually run.

Which New Zealand Laws Apply To Prize Competitions?

Even if your promotion feels “just for fun”, it’s still advertising your business. That means several legal rules can apply.

Fair Trading Act 1986 (Misleading Or Deceptive Conduct)

The Fair Trading Act 1986 is one of the big ones. In plain language, it means you can’t mislead people through what you say (or don’t say) about the promotion.

Common risk areas include:

• advertising a prize that isn’t actually available (or has materially different features to what’s promoted),
• making it sound like “everyone wins” when they don’t,
• changing the rules mid-promotion without clearly addressing what happens to existing entries, and
• failing to disclose key conditions (eg that the prize is only redeemable on certain dates, or delivery isn’t included).

A practical rule of thumb: your marketing posts, emails and ads should always match your terms and conditions.

Gambling Act 2003 (Chance-Based Promotions And “Sales Promotions”)

If your promotion involves chance (for example, a random draw), it can also raise issues under the Gambling Act 2003.

In New Zealand, some trade promotions (often called “sales promotions”) can be treated as a form of gambling unless they fit within an exception under the Gambling Act. In practice, this is where the details matter - for example, whether entry is free, whether a purchase is required, and how the draw is run.

Depending on how your promotion is structured, you may need to deal with requirements or approvals administered by the Department of Internal Affairs (DIA), or ensure you fit within an applicable exemption. If you’re unsure whether your promotion is a regulated “sales promotion”, it’s worth getting advice before you launch.

Consumer Guarantees Act 1993 (If The Prize Includes Goods Or Services)

If the prize is goods or services supplied in trade, the Consumer Guarantees Act 1993 may be relevant. For example, if you’re giving away a product bundle, a membership, or a service package, you’ll want to think about what happens if something is faulty or cannot be provided as described.

You can’t always “contract out” of consumer guarantees for consumer winners, so it’s important the prize is accurately described and you have a plan if something goes wrong.

Privacy Act 2020 (Collecting Entrant Information)

Most competitions involve collecting personal information, like names, emails, social handles, addresses, or even photos/videos.

Under the Privacy Act 2020, you generally need to:

• collect only what you actually need,
• tell people what you’re collecting and why,
• store it securely, and
• not use it for unrelated purposes (unless you have a lawful basis and you’ve been transparent about it).

If you’re collecting entries via a landing page or website form, a Privacy Policy is usually a must-have.

Unsolicited Electronic Messages Act 2007 (If You Market To Entrants)

If you plan to email or message entrants for marketing (for example, adding them to a newsletter), you also need to consider the Unsolicited Electronic Messages Act 2007 (New Zealand’s anti-spam law). In general, marketing messages should be sent with appropriate consent, clearly identify the sender, and include a functional unsubscribe option.

Copyright And Content Use (Photos, Captions And User-Generated Content)

If your competition involves entrants submitting photos, videos, artwork, or written content, you should think about IP and usage rights.

You don’t automatically own what people submit. Your terms should cover:

• whether you can repost entries (and where),
• whether you can use entries in ads after the competition ends, and
• what permissions you need from entrants (and, where relevant, from people shown in the content).

This is a common “it seemed obvious” area where small businesses get caught out, so it’s worth addressing clearly in your prize competition terms and conditions.

Do I Need A Permit Or Licence To Run A Prize Competition In NZ?

This is one of the first questions business owners ask, and for good reason.

In New Zealand, whether you need a permit, licence, or other approval often depends on whether your promotion is caught by the Gambling Act 2003 (for example, a chance-based “sales promotion”), and whether it fits within an applicable exemption or needs to be run in a particular way.

Because the line can be fine (and the consequences of getting it wrong can be serious), it’s smart to get legal advice early if you’re planning any of the following:

• charging an entry fee,
• requiring a purchase as the only way to enter,
• running a large-scale national campaign,
• partnering with influencers or third parties where responsibilities are split, or
• running frequent promotions as an ongoing part of your marketing.

Even where no permit or licence is required, you still need clear terms, accurate advertising, and a privacy-compliant entry process.

What Should Prize Competition Terms And Conditions Include?

Your prize competition terms and conditions are essentially the rules of the promotion. They help participants understand what they’re agreeing to, and they help protect your business if there’s a dispute.

As a small business, you want terms that are clear enough to be understood quickly, but detailed enough to cover the “what if” scenarios.

1. Promoter Details

State who is running the promotion (your legal business name and, ideally, your NZBN or registered address).

This matters because it clarifies who is responsible for delivering the prize and handling complaints.

2. Entry Period (Start And End Dates)

Include:

• when entries open (date and time, and the relevant time zone), and
• when entries close.

If you’re using social media, also be clear about what counts as a valid entry before the closing time (eg “must be received by 11:59pm NZT”).

3. Eligibility Criteria

Set out who can enter, including:

• age restrictions (eg 18+ if appropriate),
• residency restrictions (eg “open to NZ residents only”),
• employee/contractor exclusions (eg your staff and their immediate family), and
• any location-based limitations (eg if the prize can only be redeemed in Auckland).

This is also where you can address whether multiple entries are allowed per person and how you’ll treat duplicate entries.

4. How To Enter

Spell out the exact steps. For example:

• “Follow our page, like the post, and comment…”
• “Complete the form on our website…”
• “Purchase any product from X range and keep your receipt…”

If there’s a purchase element, your terms should explain the proof required and how entries are validated.

5. Prize Details (And Any Limits)

Describe the prize accurately, including:

• what it is (and what it isn’t),
• quantity and value (if you state a value, make sure it’s supportable),
• any expiry dates or blackout periods,
• whether it’s transferable, exchangeable, or redeemable for cash, and
• who pays for shipping, travel, or other extra costs.

This is one of the biggest sources of misunderstandings. If there are conditions, make them obvious.

6. Winner Selection Method

Your terms should match the type of promotion:

• Random draw: explain how and when the draw will occur (and whether an independent person is involved).
• Judged competition: describe the judging process and the key criteria (even if it’s broad), plus whether the judges’ decision is final.

If you’re doing a judged competition, it’s also worth stating that entries must be original and must not infringe anyone else’s rights.

7. Winner Notification And Claiming The Prize

Include:

• how winners will be contacted (email, phone, DM),
• how long they have to respond, and
• what happens if they don’t respond (eg redraw).

Be careful with social media: impersonation scams happen. Your process should be clear and consistent so entrants can verify it’s really you.

8. Privacy And Marketing Consent

Don’t assume “entry = consent to marketing” unless you’ve handled it properly.

A safer approach is usually to:

• explain what personal information you collect and why,
• link to your Privacy Policy, and
• if you want to add entrants to a mailing list, use a clear opt-in tick box.

If you’re building an email list, also remember that marketing messages have their own compliance expectations (including anti-spam compliance, clear unsubscribe options, and not being misleading).

9. Liability, Disclaimers And “Things Outside Your Control”

Your terms should allocate risk in a commercially sensible way, including:

• technical issues (website downtime, platform outages),
• fraudulent entries,
• lost or delayed communications, and
• events that make prize supply impossible (eg supplier failure).

Many businesses use a Disclaimer style clause (tailored to the promotion) to clarify limits, but it needs to be drafted carefully so it’s fair, accurate, and consistent with consumer law.

10. Changes, Cancellation And Redraws

It’s common to include a clause allowing you to vary, suspend or cancel the promotion if something happens outside your reasonable control.

However, you should be careful here. If you reserve a very broad right to change anything at any time, that can create trust issues with customers and may create legal risk if the change is unfair or contradicts what you advertised.

The goal is balanced terms: enough flexibility to manage genuine issues, but still fair and transparent to entrants.

How Do I Run A Competition On Social Media Without Getting Burned?

Social media competitions are popular because they’re quick and low-cost. But they also create extra compliance headaches because entries and communications happen in public.

Here are a few practical steps that help keep things clean and legally defensible.

Make Your Terms Easy To Find

In most cases, you’ll want:

• a short summary in the post (key conditions like eligibility, closing date, and where the full terms are), and
• a link to full prize competition terms and conditions hosted on your website (or a clearly accessible page).

Don’t Overpromise In The Caption

If your post says “Win a year’s supply”, but your terms define it as “12 units”, you’re setting yourself up for complaints.

The simplest approach is to align your marketing wording with the precise prize description in your terms.

Plan For Disputes Before They Happen

Ask yourself:

• What if an entrant claims they entered but you can’t see it?
• What if the winner’s account looks fake?
• What if there’s a tie in a judged competition?
• What if shipping is more expensive than expected?

If your promotion is a core marketing activity (or the prize value is significant), having a lawyer draft the terms properly is usually much cheaper than dealing with a messy dispute later. If you already use business terms on your website, it can also help to align your promotion rules with your broader Business Terms.

What Legal Documents Might I Need (Beyond The Terms And Conditions)?

For a simple giveaway, your prize competition terms and conditions might be the only document you need.

But as your promotions become more valuable, more complex, or involve other partners, you may need extra protection.

Partner Or Influencer Collaboration Terms

If you’re running a joint promotion with another business (or paying someone to promote it), it’s worth having a written agreement covering:

• who is responsible for prize supply and costs,
• who owns the entrant data (and who can use it),
• how the promotion will be marketed (and what claims are off-limits), and
• what happens if the promotion needs to be delayed or cancelled.

Depending on the setup, you might use a tailored Collaboration Agreement.

Website Terms (If Entries Are Collected Online)

If you’re collecting entries through your website, you’ll often need:

• clear rules for use of your site and entry mechanics, and
• privacy information (as above).

For many online businesses, having fit-for-purpose Website Terms and Conditions makes running promotions smoother, because your competition rules can work alongside your general online rules.

Data Handling Documents (If You’re Scaling Or Sharing Data)

If you use third-party platforms to run promotions (email platforms, CRM tools, or external agencies), you should also think about how personal information is handled.

Not every small business needs a complex data suite, but if you’re collecting sensitive information or sharing entrant lists with partners, it’s worth getting advice so you don’t accidentally breach the Privacy Act.

Key Takeaways

• Your prize competition terms and conditions are your first line of protection: they reduce disputes, set expectations, and help ensure your marketing matches the rules.
• In New Zealand, promotions can be impacted by the Fair Trading Act 1986 (misleading advertising), the Gambling Act 2003 (including chance-based “sales promotions”), the Consumer Guarantees Act 1993 (if the prize includes goods/services), the Privacy Act 2020 (if you collect entrant information), and the Unsolicited Electronic Messages Act 2007 (if you market to entrants).
• Your terms should cover the essentials: promoter details, entry period, eligibility, how to enter, prize details, winner selection, notification, privacy, liability, and what happens if things change.
• If you’re running a judged competition, clearly state your judging criteria and decision-making process so entrants understand how the winner is chosen.
• If you collect entries online or through a landing page, it’s important your privacy settings and documents (like a Privacy Policy) are aligned with what you actually do with entrant data.
• If you’re collaborating with another business or influencer, consider documenting responsibilities in writing (for example, a Collaboration Agreement) so you’re not left holding the risk.

This article is general information only and does not constitute legal advice. For advice about your specific circumstances, you should speak to a qualified lawyer.

If you’d like help drafting or reviewing your prize competition terms and conditions (or setting up the right legal documents for a larger trade promotion), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.