The publication of the final Regulations under the Consumer Protection Act, 2008 (CPA) on 1 April 2011, saw a change in stance by the Minister for Trade and Industry on the contentious issue of whether or not it is permissible for promoters, of promotional competitions, to charge any fee to the consumer for conveying an entry into a promotional competition via SMS (or other electronic means). Nick Altini explains.
Under the draft Regulations published in late 2010, it was made clear that the consumer should not be required to pay more for conveying an entry via SMS than the charge that would normally be applied to that consumer by his/her cell phone network operator.
This was taken by some to mean that if a consumer ordinarily does not pay for a SMS at all because she has a free bundle of SMS’s in her contract, then she should be able to enter a competition for free via SMS. Similarly, if another consumer ordinarily paid R1.00 for a SMS, then that should be the cost of conveying a SMS entry into a promotional competition.
The intention of this was that promoters in promotional competitions should not earn any revenue from the conveyance of SMS entries into promotional competitions as this would render the competition an illegal lottery.
No doubt, faced with a host of objections to the draft Regulations, the Minister of Trade and Industry revised the Ministry’s position on the issue allowing for a nominal charge to be applied to SMS entries, with that charge being capped at R1.50 for any competition.
There is no express prerequisite that the promoter should be able to justify charging the R1.50 per SMS entry, but it is suggested that the wording of the Act may enjoin promoters to be able to tie to cost of an SMS entry to a cost actually incurred by the promoter (for example where promoters sometimes incur costs in having to employ third party telecommunication service providers to collate SMS entries)”.
The CPA is noteworthy in that it yields very few, if any, rights for suppliers under the CPA with all of the rights flowing from the legislation lying in the corner of the consumer, but in this instance at least, a position of legal certainty has been created and a measure of relief has been given to promoters in what should be seen as a forward thinking and progressive move.
Overly strict and restrictive Regulation of consumer based activities like promotional competitions would ultimately have had the chilling effect of lessening the number of such competitions conducted. Many promoters can feel relieved that they will be able to recover a measure of costs incurred in organising and running a promotional competition through the relaxation of the Regulation.
Nick Altini is director and head of the competition practice at Cliffe Dekker Hofmeyr.