What is a Loop Giveaway?
Loop giveaways are a type of trade promotion run through social media platforms, such as Facebook or Instagram where:
- the giveaway prize is made up of a number of prizes contributed to by multiple businesses; and
- promoted by all of the business contributing prizes through their own social media accounts.
Like other social media competitions, entering a loop giveaway often involves some degree of interaction with the social media accounts of each business involved in the Loop Giveaway. For example, an entrant may be asked to follow all the Instagram accounts mentioned in the post announcing the giveaway and share the post to their own stories to enter.
Why do businesses participate in Loop Giveaways?
The goal of the businesses involved in the loop giveaway may be any number of things, such as to increase sales, build brand awareness, increase their social media account followers or grow an email list.
Participating in a loop giveaway can supercharge the results for the businesses involved rather than running a solo giveaway with a smaller prize, as the reach will often be greater due to the number of businesses promoting the giveaway.
Why do social media users enter Loop Giveaways?
Social media users generally enter loop giveaways with the hope to win a significant prize from the businesses involved, particularly where they wish to try to the products involved for the first time or where they are already existing customers of some of the businesses involved. It does however often take more time to enter loop giveaways as they are often required to follow a larger number of accounts to enter. This can deter some people from entering the competition.
Should businesses have contracts for Loop Giveaways?
The nature of a loop giveaway is such that multiple parties are required to do any number of things in order to participate. This might include for example:
- Posting content to their social media account feed and stories on certain dates and at certain times;
- Providing prizes to the winners or to the giveaway organiser;
- Obtaining permits / authorities;
- Creating and agreeing to terms and conditions for the giveaway;
- Sharing the giveaway terms and conditions on their website, or including a link on their social media accounts to the terms and conditions hosted on another website;
- Conducting the draw;
- Notifying the winners;
- Conducting any redraws;
- Complying with the relevant laws in relation to advertising and promotion of the competition; and
- Complying with the social media platform terms and conditions.
As a result, it is prudent for those businesses involved in the loop giveaway to enter into an agreement ahead of announcing the loop giveaway. Failure to do so may result in issues such as:
- an inability to meet specific legal requirements in relation to the conduct of the trade promotion in some States and Territories which may result in penalties such as those set out below;
- Some of the businesses failing to participate in the giveaway as initially intended, such as failing to provide their contribution towards the prize, failing to promote the giveaway, failing to make their followers aware of the full terms and conditions of the giveaway or breaching the terms of service for the social media platform;
- A participant making misleading or deceptive statements about the giveaway, any of the businesses involved in the giveaway, or any of the prizes; and / or
- A lower than expected interest in the giveaway.
What if you fail to comply with your legal requirements in relation to your Loop Giveaway?
The penalties can be significant where an organiser or promoter fails to meet its legal requirements in relation to trade promotion giveaways. Aside from the obvious reputational damage that an organiser or promoter may suffer, they may also face fines and / or imprisonment depending on the relevant State and / or Territory and the requirement with which they have failed to comply. An organiser and / or promoter may also face loss of their social media account where they have failed to comply with the platform terms and conditions of use.
Where to start
Before running a loop giveaway, we recommend obtaining legal advice in relation to your specific giveaway. You can contact us for assistance and advice for drafting your Loop Giveaway Participation Agreement, obtaining permits / authorities, drafting your giveaway terms and conditions, drafting your privacy policy for the giveaway and conducting your competition.
You can view more information in relation to social media competitions generally here.
You can find some further information on trade promotion requirements in each State and Territory of Australia, as well as permit / authority application forms by clicking the following links:
Contact us to discuss your legal requirements for a loop giveaway
Information contained within this blog post is intended to be general information only and is not in any way intended to constitute legal advice. You should not act or rely on any information found in this blog post without obtaining prior advice specific to your circumstances.
