Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
Free-to-enter competitions can be a great way to build your brand, grow your email list, drive foot traffic, and reward loyal customers.
But even when you’re not charging an entry fee, you still need to think about the legal requirements for free-to-enter competitions in New Zealand. If your promo is unclear (or looks misleading), you could end up dealing with customer complaints, platform takedowns, reputational damage, or even regulatory attention.
The good news is that most legal issues with competitions are avoidable if you set things up properly from day one. Below, we’ll walk through the key rules and practical best practices for running a free competition in NZ, especially for small businesses.
What Counts As A “Free-to-Enter Competition” (And Why The Legal Category Matters)
Not all promos are treated the same, and the legal obligations can change depending on what you’re actually running.
Common Types Of Promotions
- Prize draw: winners are chosen randomly (e.g. “we’ll draw 1 winner on Friday”).
- Game of skill: winners are chosen based on judging criteria (e.g. best photo, best slogan, best recipe).
- Instant win: participants find out immediately whether they’ve won (often through a code or online mechanic).
- Giveaway: often used as a marketing term, but legally it’s usually still either a prize draw or skill-based competition.
The category matters because chance-based promotions can trigger gambling-related rules in some cases, and any promotion that encourages purchasing can create extra consumer law risk if it’s not clearly optional or if it’s presented in a misleading way.
“Free Entry” Still Needs To Be Genuinely Free
One of the most important requirements is that “free” must be real in practice.
If you say entry is free, but the only realistic way to enter is by buying something, paying for shipping, or subscribing to a paid service, you can quickly get into “misleading conduct” territory. It’s not just about whether money changes hands - it’s whether your marketing gives a false overall impression.
Do I Need A Permit Or Licence To Run A Free Competition In NZ?
This is one of the first questions business owners ask, and for good reason. The answer depends on the structure of your promotion (and sometimes where/how it’s offered).
In New Zealand, promotions that involve chance may fall under the Gambling Act 2003. In particular, if entry is tied to buying goods or services (even if you describe it as a “giveaway”), it may be treated as a sales promotion scheme - which can trigger licence or other compliance requirements depending on the details.
Skill-based competitions are generally lower risk from a “permit” perspective, but the line between “chance” and “skill” - and whether a promotion is truly free to enter - can be surprisingly fact-specific.
Because the consequences of getting this wrong can be significant, it’s worth sanity-checking early. If you’re unsure, start with Competitions Permit guidance and get advice before you launch.
Quick Practical Tips To Stay On The Right Side Of “Permit” Issues
- Be transparent about how winners are selected (random draw vs judged criteria).
- Avoid “pay to play” mechanics if you’re calling it “free entry”.
- Keep the entry method accessible (e.g. free online entry, not only in-store after purchase).
- Don’t accidentally create a raffle-like setup (for example, issuing “tickets” linked to spending can raise red flags).
If your business operates across multiple channels (online, in-store, events), it’s also important your staff and marketing team understand the rules and communicate them consistently.
What Are The Core Free-To-Enter Competitions Legal Requirements Under NZ Consumer Law?
Even if no permit is required, your competition marketing still needs to comply with New Zealand consumer protection laws.
Fair Trading Act 1986: Don’t Mislead People
The Fair Trading Act 1986 is the big one for competitions. In plain terms, it means you must not mislead or deceive people (or be likely to mislead) in how you promote the competition.
Common risk areas include:
- Unclear entry requirements (e.g. “free entry” but the only entry path is through a purchase).
- Changing the rules mid-way (e.g. extending the closing date without reserving the right to do so).
- Overstating the prize (e.g. using images that imply extras not included).
- Hidden costs (e.g. winner must pay shipping, customs, or redemption fees).
- Vague winner selection process (especially for skill-based contests without clear judging criteria).
A good rule of thumb: if a customer would reasonably assume something from your ad, you should either deliver it or clearly explain the limitation upfront.
Consumer Guarantees Act 1993: If You’re Supplying Goods/Services, Guarantees May Apply
If the prize is a product your business supplies in the normal course (or a service you deliver), the Consumer Guarantees Act 1993 may still matter in the background. While prizes aren’t always treated exactly the same as paid purchases, complaints often arise when prizes are faulty, not as described, or cannot be redeemed as promised.
From a practical standpoint, it’s safest to assume you should:
- deliver the prize as advertised (or better),
- have a reasonable redemption process, and
- fix issues quickly if something goes wrong.
Unfair Practices And Reputation Risk
Even when you think you’re “technically compliant”, promotions that feel unfair can still trigger complaints and negative reviews. A competition that looks like it was designed to “trap” people into marketing lists, upsells, or hidden conditions can quickly backfire.
As you build your campaign, it helps to pressure-test: “If I entered this as a customer, would I feel tricked?” If the answer is even “maybe”, it’s time to simplify.
What Should My Competition Terms And Conditions Include?
If you only do one legal thing before launch, make it this: write clear rules and stick to them.
Your rules are what protect you when someone disputes the outcome, claims the prize is different to what was advertised, or complains about eligibility.
For many businesses, having tailored Competition Terms & Conditions is the difference between a smooth campaign and a stressful one.
Key Clauses To Include (In Plain English)
- Promoter details: who is running the competition (your legal business name and NZBN/company number if relevant).
- Eligibility: age limits, NZ-resident requirement, employee exclusions, one entry per person, etc.
- How to enter: the exact steps, including any free entry pathway.
- Opening and closing dates/times: include time zone (NZT/NZDT) and what happens if there’s a technical issue.
- Prize details: what the prize is, how many, and any important inclusions/exclusions.
- Winner selection: random draw details (date, method) or judging criteria for skill-based entries.
- Notification: how winners are contacted and the timeframe to respond.
- Redraw policy: what happens if the winner can’t be contacted or is ineligible.
- Delivery/collection: shipping costs, location pickup, and timing.
- Publicity: whether you can publish winner names/photos (and how you’ll obtain consent).
- Liability limits: reasonable wording to manage risk (without trying to exclude non-excludable consumer rights).
- Fraud and disqualification: how you’ll handle fake accounts, bots, or entry manipulation.
Be Careful With “We Can Change Anything” Clauses
Some businesses try to protect themselves by adding a broad clause like “we can change the competition at any time.” In practice, this can create consumer trust issues, and it may not help you if changes are unfair or misleading.
A better approach is to reserve specific rights (for example, to cancel due to unforeseen circumstances or technical failures) and to explain what you’ll do if that happens (e.g. redraw, reschedule, or offer an equivalent prize).
What Privacy, Marketing, And Platform Rules Apply To Running A Competition?
Competitions are often run to collect leads - which means you’re likely collecting personal information (names, emails, phone numbers, addresses, photos, or social media handles).
That brings privacy and marketing compliance into the picture, even for “simple” giveaways.
Privacy Act 2020: Only Collect What You Need And Handle It Properly
Under the Privacy Act 2020, you should only collect personal information you genuinely need for the competition, and you should be clear about what you’ll do with it.
For most businesses, that means having a fit-for-purpose Privacy Policy and making sure your entry form (or landing page) aligns with it.
Practical privacy considerations include:
- Collection notice: tell entrants what you’re collecting and why (e.g. to administer the competition and contact winners).
- Marketing consent: don’t bundle “entry” with “marketing opt-in” unless it’s clearly optional and properly disclosed.
- Storage and access: keep the entries secure and limit access internally.
- Third-party tools: if you use email platforms, form tools, or social platforms, be mindful that data may be stored offshore.
Email And SMS Promotions: Consent Still Matters
If your competition is designed to grow your list, you’ll likely follow up via email (or SMS). Make sure your marketing flow is compliant and not overly aggressive.
A quick check against Email Marketing Laws is a smart step before you schedule campaigns, especially if you’re running automated follow-ups after entry.
Using Influencers Or Partners? Put It In Writing
If a creator, ambassador, or business partner is promoting the competition for you (or contributing to the prize pool), you should clearly document responsibilities: who is the promoter, who funds the prize, who handles complaints, who owns the content, and what happens if the campaign needs to be changed.
Depending on the arrangement, an Influencer Agreement can help set expectations so you’re not sorting out misunderstandings mid-campaign.
Platform Rules (Social Media, Marketplaces, And Email Providers)
Separate from NZ law, the platform you’re using may have its own rules about competitions (for example, requiring specific disclosures, prohibiting certain mechanics, or restricting how you can ask people to interact).
Platform enforcement is real - even if you’re legally compliant, your post can still be removed if it breaches the platform’s promotion rules. So make sure you review those requirements before launch (and keep screenshots of your original post and rules in case you need to prove what you published).
Best Practices To Run A Competition Smoothly (And Avoid Disputes)
Legal compliance is the baseline, but the best competitions are also operationally clean. This is where many small businesses get caught out - not because they intended to do the wrong thing, but because they didn’t plan for edge cases.
Create A Simple “Competition Pack” Before Launch
We recommend preparing:
- a single source of truth for rules (your terms and conditions),
- a short version of the key terms for your social caption or ad,
- a record of the prize details and value,
- your draw/judging process written out, and
- a short internal script for how staff respond to common questions.
Document The Winner Selection Process
If it’s a random draw, keep a clear record of:
- when the draw occurred,
- how entries were compiled,
- how the random selection was done, and
- the result.
If it’s a skill-based competition, keep:
- the judging criteria,
- who the judges were,
- scoring notes (even brief), and
- why the winning entry was selected.
This isn’t about being overly formal - it’s about protecting your business if someone disputes the result.
Be Clear About Prize Value, Transferability, And Substitutions
For higher-value prizes, entrants sometimes ask about the prize value, whether it’s transferable, or whether a cash alternative exists.
If you are willing to offer substitutions (or if you may need to due to availability), say so clearly in the terms, and define what “equivalent value” means. If you are not offering a cash alternative, state that plainly. (If your competition raises tax questions for your business or entrants, consider getting tax advice specific to your situation.)
Use Disclaimers Carefully (They’re Not A Magic Shield)
Some disclaimers are useful (for example, clarifying that the promotion isn’t sponsored by a platform, or explaining reasonable limitations). But disclaimers won’t fix misleading advertising or allow you to contract out of legal obligations that can’t be excluded.
Having the right Disclaimers in the right places can help reduce misunderstandings, but they should work alongside well-drafted rules - not replace them.
Key Takeaways
- Even when entry is free, you still need to comply with New Zealand’s legal requirements for free-to-enter competitions, especially around clear advertising and fair administration.
- Whether you need a permit can depend on whether the competition is chance-based or skill-based, and whether entry is linked to a purchase (which may trigger Gambling Act considerations), so check early if you’re unsure.
- Your promotion should comply with the Fair Trading Act 1986, meaning your marketing and prize descriptions must not be misleading or deceptive.
- Clear rules matter: strong competition terms and conditions help prevent disputes and give you a clear process for eligibility, winner selection, notification, and redraws.
- If you collect personal information (like names, emails, photos, or addresses), you should align the competition with the Privacy Act 2020 and have an appropriate privacy policy and consent process.
- If you’re using email or SMS follow-ups, make sure your marketing activity is compliant and doesn’t rely on “hidden” or bundled consent.
- Good planning (including documentation of the draw/judging process) reduces risk and makes your competition easier to run smoothly.
If you’d like help setting up a competition properly - including drafting or reviewing your terms, checking privacy and marketing compliance, or sense-checking whether Gambling Act licensing rules may apply - you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
