Instagram competitions: Influencer giveaways could be against the law
Influencers giving away cash or big prizes in return for an influx of followers on social media could be doing so unlawfully, according to NSW Fair Trading.
Confidential
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In a bid to build Instagram followings, influencers have turned to running cash or prize giveaways in the tens of thousands that, according to NSW Fair Trading, they may not be permitted to do.
For years influencers have teamed up with brands to run giveaways of luxury goods, cash, holidays and everything in between.
Even the biggest Instagram accounts in the world such as Kylie Jenner and Kim Kardashian have promoted giveaways.
However as these giveaways are classed as a lottery with a random winner, the organisers are required to have a license or permit from each separate state for that giveaway to be legally run.
A spokesman for NSW Fair Trading said if the competition is open to NSW residents, a permit is required to ensure fairness and legitimacy.
“If you are running a free entry lottery that promotes your business’s goods or services, and your lottery is open to NSW residents, you will need a trade promotion lottery permit issued by NSW Fair Trading,” they said.
“This is to ensure competitions are kept fair, have rules that apply equitably, and that prizes are transferred appropriately.
“There are conditions that apply to all free entry lotteries, such as how to transfer prize money over $2000, time periods for delivery of prizes, and notifying prize winners.”
There is a public register for NSW that lists all legal lotteries, searchable by business name, ACN or ABN.
However a giveaway that is open nationally would need to check off all requirements and attain separate permits from each individual state and territory.
Additionally, permits are based on who the competition is open to, not where the entity holding the giveaway is based.
Australian expat Harry Jowsey, who rocketed to fame on Netflix dating show Too Hot To Handle and currently has 3.1 million Instagram followers, recently ran a personal cash giveaway of $10,000 to promote his sunglasses brand Kensington Sunglasses and celebrate reaching 1 million followers.
On April 26 he posted the giveaway to his personal page: “1 million follower giveaway. I’m giving away $10,000 cash and 20 pairs of sunglasses.” He then outlined a process of commenting, sharing and following on the platform to be eligible. He said the competition was open worldwide and the winner of the $10,000 would be announced “this time next week”.
Neither Jowsey nor his business were registered through NSW Fair Trading.
Confidential contacted Jowsey’s management multiple times but received no response.
On Monday, Instagram influencer Renee Herbert promoted a cash giveaway of $2,000, $1,000 and $500 to three winners by The Presets Bundle, a company that sells filters for pictures online.
Again, a search for the company on the NSW Fair Trading register returned no results.
NSW Fair Trading said the penalty in NSW for running an unlawful lottery is $5500.
On the other side, Australian company Curated Businesses, which runs and promotes Instagram giveaways as a full time business, operates lawful lotteries.
Founder Schye Fox registered each giveaway with NSW Fair Trading, submitting comprehensive details such as closing date and time for receipt of entries,
place, date and time of the lottery draw, how prizes will be awarded, method for claiming prizes, how prize winners will be notified, how the results of the lottery will be published,
the promoter’s name, address and telephone number and details of the prizes and their value.
Within the past year Curated Businesses has run giveaways with Kylie Jenner, Kris Jenner, Kim Kardashian, Kendall Jenner, Sofia Richie, Emily Skye and Tammy Hembrow.
Originally published as Instagram competitions: Influencer giveaways could be against the law