The “spell and go” promotion invited people to collect and swap letters from codes on crisp packs to spell the names of 26 possible holiday destinations, reports The BBC.
But customers protested that letters C, D or K seemed impossible to get.
Walkers said the contest was fair, but agreed a website where people could swap letters “could have been clearer”.
Destinations on offer included New York, Hong Kong or Sri Lanka. Less than 800 of the 20,000 holidays were won, Walkers confirmed.
Some 112 people complained to the Advertising Standards Authority (ASA) that the competition withheld certain letters needed to spell out the destinations.
The company had advertised the competition, presented by Gary Lineker, on its website, Twitter and Facebook accounts, television and on packaging in May.
Some also reported problems relating to the website accepting the codes.
Defending the promotion, Walkers said all 26 destinations included at least one of the letters C, D or K – “type one” letters – and enough of these letters were in circulation to allow for 20,000 holidays to be won.
As far as it was aware, all consumers who experienced problems with codes being accepted by the website had had the issue resolved, the company said.
After investigating the complaints, the ASA said it was satisfied a small proportion of the letters in circulation were type one letters, and they had not been withheld.
However, it was not satisfied with the “random swap” function – which allowed participants to exchange letters within a “pool” on the competition website – which stated “all letters are treated equally”.
The pool was only made up of “type two” letters, meaning C, D or K could not be won, the ASA said.
The complaints watchdog said it considered the limitation to only “type two” letters was “a significant condition likely to influence a consumers’ decision”.
The omission was “misleading and likely to cause unnecessary disappointment to consumers”, it said.
It told Walkers that future promotions must ensure all conditions were communicated to consumers.
Walkers said it welcomed the ASA’s recognition that the promotion “was fair as everyone who participated had an equal chance of winning”.
It added: “We appreciate that the online letter swapping mechanic could have been clearer and we will ensure all future promotions take this feedback on board.”
The company was “aware some customers are disappointed”, but 796 families had won four-star, seven-night holidays worth more than £1.35m as part of the competition, a spokeswoman said.
“Twenty thousand holidays could have been won if all the promotional packs in the market had been played and we would have honoured all of those should that have been the case,” she added.