A family contacted the Advertising Standards Authority (ASA) about the promotion, which offered the chance to win £500 every hour by submitting a barcode online or via text.
In its response, PepsiCo said that one entrant and his family had entered the competition over 11,000 times over the first six weeks of the promotional period using slightly varying email addresses from the same IP address.
This equated to over 35 entries per draw and some draws had more than 500 entries within the hour. PepsiCo did not know how such a volume of entries was submitted by a single family, but assumed a "robot" had been used.
Pepsi said that members of the family were selected as the winner on "multiple occasions", but Pepsi then informed them that bulk or automated entries would not be accepted as this was in violation of the terms and conditions.
The ASA accepted that generating multiple e-mail addresses to make a large number of entries "was not within the spirit of the promotion and could unfairly disadvantage other participants who entered using only existing e-mail addresses".
However, the regulator said that the terms and conditions for the promotion were "ambiguous", as they did not specify the exact restrictions for "bulk" and "automated" entries.
It said that PepsiCo was unable to prove that the family who had entered 11,000 times used an automated system, rather than just manually creating different email addresses, and therefore it was unfair to withdraw their prizes.
"We therefore considered that to withdraw the prizes subsequently, and in some cases over a month after those entrants had been notified of the wins, caused unnecessary disappointment given that, we understood, they had used a different e-mail address for each entry, as per the requirements of the terms and conditions," the ASA said.
"We considered significant conditions of the promotion were not made sufficiently clear and that, because unnecessary disappointment had been caused, the promotion had not been administered fairly."
PepsiCo was warned to ensure promotions were "administered fairly and that significant conditions of promotions were made clear in future".