Legal Rules For Sales Promotions, Discounts, Competitions And Giveaways In NZ

Running a sales promotion can be one of the fastest ways to get attention on your products, clear slow-moving stock, build an email list, or simply get more people through the door.

But promotions are also one of the easiest places for small businesses to accidentally cross a legal line - especially when you’re moving quickly and posting “FLASH SALE” or “WIN A PRIZE” content across your website and social channels.

The good news is that most promotion issues are avoidable if you plan your offer properly, use clear terms, and make sure what you’re advertising is accurate.

Below, we break down the key legal rules in New Zealand for discounts, competitions, giveaways and other common sales promotion tactics - in plain English, with practical examples you can actually use.

What Is A Sales Promotion (And Why The Legal Bits Matter)?

A sales promotion is any short-term incentive designed to encourage customers to buy, engage, or take a specific action.

For small businesses, common sales promotions include:

• Discounts (e.g. “20% off this weekend” or “$50 off orders over $250”)
• Bundle deals (e.g. “Buy 2 get 1 free”)
• Free gifts with purchase (e.g. “Free tote bag with every order”)
• Referral promotions (e.g. “Refer a friend and both get $10 off”)
• Competitions and prize draws (e.g. “Spend $30 to go in the draw to win”)
• Giveaways (e.g. “Like and comment to win”)

From a legal perspective, promotions matter because:

• Customers rely on what you advertise (and you can get in trouble if it’s misleading).
• Prizes and entry mechanics can fall under New Zealand’s gambling rules.
• You’ll often collect personal information (emails, addresses, social handles) and need to handle it properly.
• Promotions can easily cause disputes if your rules are unclear (especially about eligibility, timing, and prize delivery).

Think of it this way: your promotion is a promise to the public. You want to be confident you can deliver that promise - and that you’ve set the rules so you’re protected if someone complains.

Which Laws Apply To Sales Promotions In NZ?

There isn’t one single “sales promotion law” in New Zealand. Instead, promotions are regulated through a few key legal areas that often overlap.

Fair Trading Act 1986 (Truth In Advertising)

The Fair Trading Act 1986 is usually the biggest one for promotions. In simple terms, it requires your advertising and marketing to be accurate and not misleading.

This can apply to:

• Discount claims (“was/now” pricing, percentage savings, “lowest price” claims)
• Availability statements (“ends tonight”, “limited stock”, “first 50 customers”)
• Prize claims (“guaranteed winner”, “everyone gets a prize”)
• Conditions you didn’t clearly disclose (minimum spend, exclusions, shipping limits, eligibility limits)

If your promotion creates a false impression - even if it wasn’t intentional - it can still be a problem.

Consumer Guarantees Act 1993 (You Still Owe Customer Guarantees)

Discounted products aren’t automatically “no refunds” products. Under the Consumer Guarantees Act 1993, consumers still have rights if goods are faulty or not as described.

You can run a sale, but you should be careful about:

• Using “no refunds” signage (often risky and sometimes unlawful depending on the context)
• Trying to exclude guarantees on normal consumer goods
• Not being clear if a product is discounted due to a known defect (if it is, you need to disclose that)

Gambling Act 2003 (For Prize Draws And Chance-Based Promotions)

If your promotion involves a prize and a winner is decided by chance (rather than skill), you may be dealing with the Gambling Act 2003.

The important point is that many business giveaways and purchase-to-enter draws are often run as a “sales promotion scheme” under the Gambling Act, and those schemes are commonly permitted without a licence as long as they meet the Act’s requirements (for example, entries are genuinely tied to buying your goods or services and customers aren’t paying an extra amount just to enter).

Where businesses get into trouble is when the mechanics start looking like gambling - such as charging separately for entry, inflating prices to cover entry, or running the promotion in a way that doesn’t fit the sales promotion scheme conditions. If you’re unsure whether what you’re planning qualifies as a compliant sales promotion scheme (or if another approval is needed), it’s smart to check before you launch and start taking entries.

Privacy Act 2020 (Customer Data And Marketing Lists)

Many sales promotions involve collecting personal information, such as names, emails, phone numbers, addresses, or social media handles. The Privacy Act 2020 requires you to collect, use, store, and share personal information responsibly.

Practically, that means being clear about:

• what you’re collecting
• why you’re collecting it
• how you’ll use it (including whether you’ll use it for marketing later)
• how long you’ll keep it and who will have access to it

For many businesses, having a clear Privacy Policy is a key part of getting this right.

Spam Rules And Platform Rules (Often Overlooked)

If you’re promoting via email or SMS, you also need to think about spam compliance. In New Zealand, the Unsolicited Electronic Messages Act 2007 generally requires you to have consent (express or inferred), clearly identify the sender, and include a functional unsubscribe option in commercial electronic messages.

This is especially important if your giveaway collects emails and you want to add entrants to your newsletter - you should handle consent carefully and make opting out easy. The rules and best practices are covered in our guide on email marketing laws.

On top of that, social media platforms often have their own promotion requirements (for example, how you can ask people to enter, and restrictions on tagging behaviour). These aren’t “laws”, but breaching them can still get your content removed or your account restricted.

Discounts And Promotional Pricing: How To Advertise It Safely

Discount promotions feel straightforward - until you get into what you’re actually implying when you advertise a saving.

Here are the key legal risk areas to watch.

Be Careful With “Was/Now” Pricing

“Was $199, now $99” is a classic sales promotion format, but it has to be genuine.

As a general rule, you should only advertise a “was” price if:

• it was a real price you previously offered (not a made-up number), and
• it was offered for a reasonable period, and
• customers actually had a genuine opportunity to buy at that price.

If you inflate the “was” price briefly (or never really sell at it) just to create a dramatic discount, that can be misleading under the Fair Trading Act.

Don’t Hide The Catch (Minimum Spend, Exclusions, End Dates)

Most disputes come from unclear conditions. If your discount only applies to certain categories, regions, or time periods, you want to clearly say so.

Common conditions to clearly disclose include:

• minimum spend (e.g. “$20 off orders over $150”)
• excluded products (e.g. “excludes gift cards”)
• shipping limits (e.g. “NZ shipping only” or “rural surcharge applies”)
• time limits (start and end times, including time zone)
• one use per customer (if that’s the intention)

If you run promotions online, it’s worth making sure your website terms are consistent with how you sell and advertise. Many businesses build these rules into their terms and conditions online business set-up, so promo terms don’t contradict your broader customer contract.

Stock Limits And “While Supplies Last”

“While stocks last” can be fine - but don’t use it as a shield if you reasonably should have expected huge demand and didn’t have enough stock, or if you keep advertising the offer after stock has run out.

From a practical risk-management standpoint:

• be honest about how limited the offer is
• update ads quickly if stock runs out
• consider offering a raincheck, backorder, or clear alternative if that’s workable for your business model

Competitions, Prize Draws And Giveaways: Structuring It The Right Way

Competitions and giveaways are powerful because they create urgency and social sharing - but they’re also where legal issues pop up fastest.

The first step is understanding what you’re actually running.

Skill Vs Chance (It Changes The Legal Category)

A common trap is calling something a “competition” when it’s really a prize draw.

• Skill-based competition: winners are determined by skill (e.g. judged best photo, best slogan, best recipe).
• Chance-based promotion: winners are determined by luck (e.g. random draw, spin-the-wheel, “comment to win”).

Chance-based prize draws can fall under gambling rules, depending on how entry works and whether purchase is required. Many business prize draws are structured to fit the Gambling Act’s “sales promotion scheme” category (which is commonly run without a licence if it meets the criteria), but it’s important to get the mechanics right.

If you’re thinking, “Do I need a permit or licence for this?”, you’re asking the right question early. It’s often cheaper and easier to structure it correctly upfront than to fix a non-compliant promotion after launch. This is covered in more detail in Competitions: Do I Need A Permit?

Purchase-To-Enter Promotions (Common In Retail And Ecommerce)

“Spend $50 and go in the draw to win” is a common sales promotion approach.

In New Zealand, purchase-to-enter prize draws may be treated as a “sales promotion scheme” under the Gambling Act if they meet specific criteria (for example, entries are linked to buying goods or services at their usual price, rather than paying extra just to enter).

Because the definition and conditions matter, it’s worth getting advice on the specific mechanics you’re using - especially if:

• you’re charging extra for entry
• you’re bundling entry with a price increase
• the promotion is large-scale or high-value
• you’re running it across multiple channels and partners

“Like And Comment To Win” Giveaways

Social media giveaways feel simple, but you still need rules. In particular, you should clearly state:

• who can enter (age, location, any exclusions like employees or family)
• opening and closing dates/times
• how the winner is chosen (random draw vs judged)
• what the prize is (and any limits, like colour/size availability)
• how the winner will be contacted and by when they must respond
• any shipping or collection requirements

It’s also smart to think about what happens if the prize becomes unavailable, a winner can’t be contacted, or entries are spam/fake accounts. Clear rules give you options.

For many businesses, the safest approach is to prepare tailored competition terms and conditions that match the promotion mechanics you’re using (instead of relying on a generic template that doesn’t fit how you actually run the draw).

Be Clear About Prize Value And Delivery

If you advertise “Win a $1,000 prize”, make sure that’s true and supportable.

Also be clear about:

• whether the prize is a product, store credit, a voucher, or a service
• expiry dates or booking limitations (if relevant)
• whether travel, add-ons, or extras are included or excluded
• when you expect to deliver the prize

Unclear prize terms are one of the quickest ways to end up in a messy public dispute - which is the opposite of what you want your sales promotion to achieve.

Marketing And Data: Email, Social Media And Privacy

A strong sales promotion doesn’t just create sales - it often creates leads. That usually means collecting data.

This is where you want to slow down (just a little) and make sure your marketing set-up is compliant.

Only Collect What You Need (And Explain Why)

Ask yourself: what information do you genuinely need to run the promotion?

• If it’s a simple giveaway, you may only need a name and a way to contact the winner.
• If it’s a shipped prize, you’ll need an address - but you can collect that after the winner is drawn.
• If it’s email-only, you don’t need a phone number “just because”.

Under the Privacy Act, you should be upfront about how you’ll use the information. If you plan to add entrants to a marketing list, you should get clear consent for that (and make opting out easy).

Match Your Promo Terms With Your Privacy Settings

When you’re collecting entries via a website form, landing page, or third-party platform, double-check:

• where the data is stored (and who can access it)
• whether it’s sent to overseas providers
• how long you keep entries after the promotion ends
• your process for handling access or correction requests

It can feel like a lot, but once it’s set up properly it becomes a repeatable system you can reuse for future promotions.

Advertising Disclaimers (Use Them, But Don’t Rely On Them)

Disclaimers can be helpful - for example, to clarify limitations, availability, or that a platform isn’t associated with the promotion.

But disclaimers don’t fix misleading advertising. If the headline claim is inaccurate, adding fine print usually won’t save it.

If you use disclaimers in promotional ads, make sure they’re clear, visible, and consistent with the main message. Depending on your business, a tailored Disclaimer strategy can also help you manage expectations across your website and marketing materials.

Key Takeaways

• A sales promotion is a promise to customers - so your first job is making sure your advertising is accurate, clear, and deliverable.
• The Fair Trading Act 1986 is central for promotions: avoid misleading discount claims, unclear conditions, and fake urgency.
• Discounted products can still be covered by the Consumer Guarantees Act 1993, so be careful with “no refunds” messaging and make defect-related discounts clear.
• If your promotion involves prizes and chance, it may fall under the Gambling Act 2003. Many business prize draws can be structured as a “sales promotion scheme” (commonly run without a licence if it meets the Act’s criteria), but the entry mechanics matter.
• Clear rules reduce disputes. For competitions and giveaways, write down eligibility, entry mechanics, draw/judging process, prize details, and how winners are contacted.
• If you collect personal information during a promotion, make sure your privacy practices (including consent for marketing) align with the Privacy Act 2020 and your Privacy Policy.

If you’d like help setting up a legally safe sales promotion - whether that’s promotional pricing terms, a giveaway, or tailored competition terms and conditions - we can help. Reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.