E-Reputation Law - a case study on e-reputation

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E-Reputation Law

Can my e-communication offer rewards or prizes to web users?

One way to create buzz for a company or product is to organise prize competitions and promotional games or to announce promotional offers.

Exclusives on Facebook or Twitter can encourage more people to join the company’s network while rewarding loyal fans and followers. For some consumers, it is a sign that the company takes an interest in them and is grateful for their loyalty.

In our fictional example, Janssens-Quidam launched a prize draw for cat hat buyers. When buying a cat hat, the buyer received a code (e.g. XE8-J931-9BZ4-XCQ) and was invited to visit the web address www.janssens-quidam.be/concours for a chance to win one of several prizes (a new iPhone 5, another cat hat, dinner for two at a top-rated restaurant, etc.).

One must then pay attention to the rules in this respect.

(a) Is my prize competition a game of chance?

Pursuant to the Act of 7 May 1999 on games of chance, bets, gaming establishments and the protection of players (Gaming Act)  [Note: Consolidated version on JUSTEL: in French, in Dutch.], one is prohibited from operating a game of chance without the prior obtaining of a licence from the Belgian Gaming Commission. For a prize competition to be considered as a game of chance, though, it must involve a stake, i.e. a financial contribution, and must contain an element of chance, even in an ancillary fashion.

It is therefore possible to avoid falling under the scope of the rules on games of chance if no player stake is required (i.e. no participation fee) or if chance does not play a role at any stage of the process  [Note: See V. WELLENS & F. POLET, “Promotionele wedstrijden: is het de gok waard?”, comment under President of the Commercial Court of Brussels, 11 September 2002, Jaarboek Handelspraktijken & Mededinging 2002, pp. 618-624.] (highly unlikely in practice).

On the Internet, it is not unusual to find prize competitions with two questions, first a multiple choice question (e.g. ‘Who was the first man on the moon?’ with the three Apollo 11 crewmembers listed as choices) and second a ‘subsidiary’ question that will decide the winner among those who have answered correctly to the first question (in the present case, the late Neil Armstrong) and whose answer is left to chance (e.g. ‘How many people will have taken part by the end of this contest?’).

If there is no participation fee, the role of chance in the subsidiary question will not transform the prize competition into a game of chance, as there is no ‘stake’ within the meaning of the Gaming Act.

If access to the prize competition is subject to payment, the facts will be of great importance: a financial contribution that is solely linked to the prize competition will be considered as a ‘stake’, while the financial contribution in the form of a normal subscription for access to the entirety of the website, including the prize competition, may in certain circumstances be deemed not to be a ‘stake’  [Note: See V. WELLENS & F. POLET, “Promotionele wedstrijden: is het de gok waard?”, comment under President of the Commercial Court of Brussels, 11 September 2002, Jaarboek Handelspraktijken & Mededinging 2002, pp. 620-623; see also the commented judgment, i.e. President of the Commercial Court of Brussels, 11 September 2002, Jaarboek Handelspraktijken & Mededinging 2002, p. 605.]. In this respect, it is worth noting that, according to the European Court of Justice, a prohibition in principle of prize competitions that are conditional on the purchase of goods is contrary to EU law  [Note: European Court of Justice (ECJ), 14 January 2010, Zentrale zur Bekämpfung unlauteren Wettbewerbs eV v Plus Warenhandelsgesellschaft mbH, case C-304/08, §§47-54 (view online).].

In the case of Janssens-Quidam, where participation is conditional upon the purchase of a cat hat, the aforementioned reasoning provides Janssens-Quidam with arguments to consider that there is no ‘stake’ within the meaning of the Gaming Act, as the possibility of participation has not led to an price increase for the cat hat. However, this is not a risk-free strategy, hence the large number of prize competitions for which no purchase is necessary.

(b) Rules applicable to any prize competition or promotional game

In its Article 13(4), the AISS provides for the obligation of ‘identifiability’ of prize competitions and promotional games. As in the case of online advertising, therefore, prize competitions and promotional must be clearly identifiable as such.

In addition, the AISS requires that the participation terms be ‘easily accessible and be presented clearly and unambiguously’  [Note: English version of Directive 2000/31/EC.
French text: "aisément accessibles et présentées de manière précise et non équivoque."
Dutch text: "gemakkelijk te vervullen en worden duidelijk en ondubbelzinnig aangeduid."]
. In practice, the criterion of accessibility can be met by ‘referring, by way of a hypertext link, to a web page containing this information, the game rules, a participation form, etc.’  [Note: Rough translation, from explanatory memorandum of the Draft AISS, Parliamentary documents, Belgian Chamber of Representatives, ordinary session 2002-2003, 50-2100/001, p. 37 (view online).
French text: "Une telle exigence sera aisément rencontrée par le renvoi, au moyen d’un lien hypertexte, à une page web contenant ces informations, les règles du jeu, un formulaire de participation, etc."
Dutch text: "Aan deze voorwaarde is gemakkelijk te voldoen door de verwijzing, in een hyperlink, naar een webpagina met deze informatie, de spelregels, een deelnemingsformulier, enz…"]

Finally, it bears reminding that the prize competition must comply with the rules of the AMPC.

(c) What about promotional offers?

Announcing promotional offers through social networks is naturally an excellent way to improve one’s e-reputation (examples include Facebook Offers  [Note: Initially free of use, now against payment, this system allows companies with over 400 ‘fans’ on Facebook to send a promotional offer to the latter (see the documentation on Facebook offers).] and Promoted Tweets  [Note: as described previously.]). Such an announcement is not unlawful in and of itself.

As with prize competitions and promotional games, however, a promotional offer must be clearly identifiable as such and the terms to benefit from it must be easily accessible and be presented clearly and unambiguously (pursuant to Article 13(3) of the AISS).

Moreover, the AMPC lists a series of requirements to be met by the promotional offer. As this website does not aim to examine e-commerce rules in detail, we shall restrict ourselves to listing the principles in this respect: