Trade Promotions in Australia

If you are a budding entrepreneur or a savvy customer always on the lookout for great deals, you have likely encountered a trade promotion.

Even if you are unfamiliar with the term, you have probably experienced it. If you have ever been enticed by a business offering instant entries to a giveaway just for signing up as a member, then you have experienced one.

LMCT+ stands out as a prime example of a business who profited from a successful trade promotion. The business stumbled across instant wealth in a remarkably short period of time. Its popularity surged when it partnered with different brands and offered high-value raffles. Due to its success, it sparked inspiration for other businesses, each hoping to replicate its luck with trade promotions.

What Are Trade Promotions?

Trade promotions are modelled under a free-lottery system, used by businesses to promote their goods or services. This is currently used by several business owners ranging from sports management firms, real estate agencies, recruitment agencies to online retail shops.

To make this concept more concrete, here’s an example:

Adidazzle is a store offering shoes in a retail shopping centre. When a walk-in customer buys a pair of shoes from Adidazzle, they are given the option to participate in a raffle contest, at no additional cost, to win a limited-edition shoe.

If the customer is enticed to participate, the customer then signs up for the free raffle, which later on expands the company’s customer base.

Adidazzle also offers memberships related to their merchandise. For example, by signing up for a $20 monthly subscription, members receive in-store discounts, exclusive deals, access to VIP events, and accumulating entries to several raffles at a Member’s Draw at no additional cost.

Through this marketing technique, the trade promotion promotes the company’s goods and services, and encourages more customer engagement.

What Do You Need To Know?

Each state and territory in Australia have their own specific legislative framework governing trade promotions. However, the most important rule (which we have said repeatedly) is that an entry fee cannot be charged for a trade promotion lottery. In other words, IT MUST BE FREE.

Other rules to consider are as follows:

• Ancillary costs, if any, should not exceed $1, nor should a winner incur a cost to accept a prize (other than a trivial cost).
• Eligibility requirements should be defined. (Age is something to consider to avoid liability issues with minors.)
• There are prohibited prizes (such as firearms, cosmetic surgery, tobacco, etc).
• Sometimes, an independent scrutineer might be required to be present at the draw.
• Winners should be notified and published, and participant’s records must be kept after a certain number of years.
• A re-draw mechanism should be established in case there is failure on the first draw.
• A robust set of Competition Terms & Conditions, detailing the competition’s entire process, is typically mandatory.
• Permit applications may be required.

When Is A Permit Required?

If your trade promotion would exceed certain Total Prize Value thresholds below, the following jurisdictions may require permits:

How Long is the Application Process?

The application process for the permits may vary per jurisdiction. After submitting compliant Competition Terms and Conditions and paying the official fees, permits may be granted within 2 to 3 weeks, assuming no issues arise. The process may take longer if the regulator would require further information, or if the regulator would require amendments to clarify the Competition Terms and Conditions.

Our Services

We offer assistance in drafting Competition Terms and Conditions and lodging permit applications to ensure your business complies with legislation. Additionally, we provide services for drafting your Website Terms and Conditions and Privacy Policy tailored to complement your trade promotion. For enquiries, please contact us at info@panganlaw.com.

*Disclaimer: The mention of any entities in this article does not imply sponsorship, approval, or endorsement of such.