New Regulations for Contests and Sweepstakes

Section 10 of Fair Trade Law No. 22.802 (the “Law”) prohibits the promotion or organization of contests, draws and sweepstakes (the “Contests”) where participation is subject in whole or in part to the acquisition of a product or the hiring of a service.

In 1997, Decree No. 1153/97 regulated the previously mentioned legal prohibition by defining its scope. The purpose of this regulation was to prevent the offering of conditions of free participation in Contests that elude, through minimal modifications, full compliance with the Law.

Section 1 of Decree 1153/97 established the conditions and obligations that must be followed by those who organize or promote Contests. At the same time, Section 2 ruled the information that had to be disclosed in both the point of sale and on the advertisement of those Contests that were aimed at promoting products and/or services.

Decree No. 961/2017 abrogated previous Decree No. 1153/2017 to simplify unnecessary proceedings and reduce the amount of information about the Contests to be disclosed in each advertisement. The new regulation intends to establish a system that both ensures consumers access to complete and clear information about the Contest, while preventing excessive and unjustified expenses from being borne by advertisers.

Even though Decree No. 961/2017 follows the spirit and guidelines of the former legal framework, the obligation to include the phrase “Consult terms and conditions in the store” in any advertisement was removed. At the same time, the duty to disclose information regarding prizes, territorial scope and participation requirements in the advertisement was also eliminated, even though Section 3 provides that every ad must state where that information is available. That kind of information must also be displayed at the point of sale or store where the goods or services are commercialized.

Moreover, Decree No. 961/2017 appointed the Secretariat of Commerce of the Ministry of Production as the new controlling authority.    

The new Decree was published in the Official Gazette on November 27, 2017, and came into force the following day.

Additionally, on December 4, 2017, Resolution 915-E/2017 of the Secretariat of Commerce of the Ministry of Production (the “Resolution”) was published in the Official Gazette. This Resolution complements several aspects of Decree No. 961/2017.

In particular, it was ruled that the information about the conditions, prizes and territorial scope of the Contest must be published in the website and/or a toll-free hotline indicated in the corresponding advertisement. Moreover, section 4 of the Resolution provides that any advertisement of goods and/or services allowed under Section 10 of the Law must not give rise to misunderstandings or lead to confusion among consumers. It also defines the conditions in which such reference must be displayed depending on the means of communication used to promote the Contest (TV, radio, Internet, etc.).

The Resolution will come in to force 30 days after its publication in the Official Gazette. Please find more information regarding Resolution 915-E/2017 in this month’s article: "Advertising of Products and Services: Unification of Regulations".