Tuesday, July 19, 2011

Do businesses, bloggers, individuals need a DTI permit to run an online contest even if there is no purchase required?

There has always been an assumption that if you run a contest or promotion, online or offline, getting a Department of Trade and Industry Sales Promotion Permit (DTI Permit) is not necessary if purchase of a product or service is not required.

However, Internet and Mobile Marketing Association of the Philippines (IMMAP) board member Michael Palacios recently had a meeting with the DTI (that got additional thoughts from IMMAP members) that implies such as necessary. The organization is currently reviewing the policy to arrive at a position or conclusion to further discuss the matter.

DTI DAO 10-02 series of 2010: Addenda to DAO 2 series of 1993 or the Rules and Regulations Implementing Rep...

Minutes of IMMAP's First Consultative Meeting with the DTI:
"1) Policy is not done with DTI; they implement the Consumer Act of the Philippines
2) The Consumer Act of the Philippines was last updated in 1992.
3) Cong Luis Villafuerte is currently redrafting the Consumer Act.
4) IMMAP offers to disseminate and communicate to our member companies.
5) DTI having difficulty implementing Consumer Act of the Philippines, with respect to group buying sites.
6) DTI cited dynamic pricing (like those of budget airlines) as problematic. Speed in general was a problem.
7) Facebook is a concern. There are problems using Facebook as promo platform.
8) The Consumer Act of the Philippines covers any raffling or contest activity, whether or not there is a sales requirement component.
9) Problem of creating multiple accounts for promos. No one should be able to influence the results of a promo, said DTI.
10) DTI does not allow "likes" as a determinant of a winner, because it can be influenced by artificial likes.
11) Hypothetical Example: A Brand does a "Tell Us Your Amazing Story Using Our Brand" testimonial campaign. Each testimonial is a raffle entry for an iPhone. At no point does it say "Buy Our Brand". DTI recommendation is to get covered by a DTI Permit.
12) DTI covers any raffling activity in the Philippines, including regional activities which happen to cover the Philippines. As long as someone in the Philippines is eligible, it would need a DTI Permit.
13) Back to Facebook, IMMAP asks: is DTI enforcing Facebook guidelines? DTI Response: we require accountability for a promo. Our job is to make sure that a consumer's rights are protected. 
14) DTI: show to us that the consumer is protected. "Show to us in layman's terms and convince that everything is protected. The database, the administrator, your provisions for data protection. Don't tell us that it's Facebook."
15) IMMAP was invited to form a working group with the DTI for training and consultation.
16) IMMAP will sponsor DTI personnel, into its Certified Digital Marketer Program.
17) Online coverage is understood to be a nationwide promo.
18) DTI only has 4 people looking at online promotions.
19) Only 5 group buying/daily deals websites currently secure DTI permits.
20) DTI needs to be sure that the promo operator owns the data.
21) DTI Violations: escalating penalties to client."
This is what Michael Palacios has posted in the IMMAP Group to summarize his observation:
Hi everyone, I know that everyone has questions about whether or not we should get a DTI Permit for our online promos. Well, IMMAP sat down with the DTI and the answer IMHO is pretty much "yes". Here's why: 
The DTI is an enforcement office, and it enforces the Consumer Act of the Philippines, last updated in 1992. I am reposting below the most salient points of this Act:
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"Sales Promotion" means techniques intended for broad consumer participation which contain promises of gain such as prizes, in cash or in kind, as reward for the purchase of a product, security, service or winning in contest, game, tournament and other similar competitions which involve determination of winner/s and which utilize mass media or other widespread media of information. It also means techniques purely intended to increase the sales, patronage and/or goodwill of a product.

Art. 116. Permit to Conduct Promotion. - No person shall conduct any sales campaigns, including beauty contest, national in character, sponsored and promoted by manufacturing enterprises without first securing a permit from the concerned department at least thirty (30) calendar days prior to the commencement thereof. Unless an objection or denial is received within fifteen (15) days from filing of the application, the same shall be deemed approved and the promotion campaign or activity may be conducted: Provided, That any sales promotion campaign using medical prescriptions or any part thereof or attachment thereto for raffles or a promise of reward shall not be allowed, nor a permit be issued thereof.

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I'm no lawyer, but it seems like the definition of Sales Promotion is pretty encompassing, including techniques that promote patronage or goodwill (branding activities).
Of course, we should get a lawyer to make a definitive conclusion, but this is something we can all show our clients.
The DTI has released several guidelines to further clarify the implementation of the Consumer Act of the Philippines. They also released one covering online transactions.
How about bloggers?
My concern though is when bloggers start organizing contest and promotions of their own that intends to promote goodwill (brand building) for their blogs. Do we need to get a DTI Permit too?

One idea suggested by a fellow blogger is for an association to cover us and negotiate with the government to carry out its own permit system. My only challenge with this idea is that it can be questioned if the association or group is new.

Although, I think the easiest way to go about this is for a minimum standard has to be set, for online contest organized by individuals, that would necessitate a DTI permit.

(Update: 7/26/ 2011 Another factor that has to be looked upon is do we get included in an registry of online contest managers or organizers that can also track performance and any complaints received. This includes how personal data of those who join individual-organized contest is handled and not abused.)

Update:
1. RJ David of Sulit.com.ph gave interesting inputs on this topic and he said.
"We run numerous contests in Sulit.com.ph and as of now we use the following questions to guide us if we need a DTI permit or not:
1.) Do participants need to pay something to join? If yes, a DTI permit is required.
2.) Do we need to advertise through TV, print, radio and other forms of mass media outside our current online properties? If yes, a DTI permit is required."
Group buying sites

RJ David also asked the DTI about Group Buying Sites as they are also sales promotions in nature.

DTI Dialogue

If there is anything sure at the moment, the DTI has no clear guidelines on this. But to protect the consumer, especially when you get to read complaints and horror stories, perhaps it is time.

Currently coordinating with DTI on this to seek further clarification.

DTI References:


Industry Guidelines:




9 comments:

  1. If it's the brand asking bloggers to hold the contest, they should be the ones to apply for DTI permit. If it's the blogger himself, then he's the one who needs to apply, which i think is a hassle.

    Di ba DTI requires a fee for contest permits? if I remember correctly, the permit fee depends on the value of the prizes. If a blogger is holding a contest without sponsorship from brands, kawawa lang because he needs to shell out money for that. Abonado pa. Not to mention the hassle of applying.

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  2. Well we can't say that kawawa yung blogger. Kasi when they hold contest, they get something in return and that is goodwill to begin with and whatever they require the participants to do which are all meant to benefit the site.

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  3. If they require the blogger to get permit, then they will also require for other documents such as business permit, mayor's permit, bir registration, etc... don't you think so?

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  4. They need to regulate simple process for the sponsorship.

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  5. At this point, it is ambiguous. I believe this is one of the biggest loophole in this topic because DTI considers all online promotions as sales promotions. Anyone can bend the truth if there is no explicit guidelines governing these terms.

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  6. I'm shocked with this news. I'm also a blogger. Does this mean I have to get a permit to raffle off unwanted goodies - extra pens perhaps? That seems to be a hassle for me.

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  7. At this point, it is ambiguous. I believe this is one of the biggest loophole in this topic because DTI considers all online promotions as sales promotions. Anyone can bend the truth if there are no explicit guidelines governing these terms.

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  8. I don't think a DTI permit should be required. I don't see any issues regarding them, but if the government requires it, then we should just have to get one.

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