trade promotion is a free-to-enter competition carried out by a business (with an ABN or ACN) to promote goods and/or services. Running a trade promotion helps engage customers with your brand, goods and/or services. This article will answer the five most frequently asked questions about running a trade promotion in New South Wales (NSW).

1. What is a Trade Promotion?

A trade promotion is a free-entry competition that helps to promote goods or services supplied by a business. 

To qualify as a valid trade promotion, you:

  • cannot sell entry tickets or require entrants to provide anything of ‘intrinsic value’ to enter the promotion, such as reward or loyalty points;
  • must use the promotion to genuinely promote your business’ goods or services; and
  • have a business with an Australian Business Number (ABN) and/or Australian Company Number (ACN).

However, you can require entrants to buy your goods or services at the market rate as a precondition to entry into the promotion. Companies often use trade promotions when launching a new product.

For example, you are a camera company that has just come out with a new DSLR camera. You can increase sales by running a trade promotion that gives customers the chance to win a prize, such as a trip overseas. 

2. Game of Chance or Game of Skill? 

Game of Chance

A game of chance:

  • gives all entrants an equal chance of winning; and
  • does not take into account any skill when determining winners. 

For example, you hold a barrel draw to determine winners for those who enter your trade promotion. 

Game of Skill

A game of skill:

  • allows entrants to perform skill-based activities to enter the trade promotion;
  • does not involve chance; and
  • chooses the winner against set criteria.

For example, entrants must write 300 words about their ideal holiday destination and trip. A judge will determine the winner based on the creativity, skill or originality of response.

3. Do I Need a Permit?

You will need a permit in NSW if you are running a game of chanceYou will not need a permit in NSW if you’re running a game of skill. However, you may need to comply with other laws and regulatory requirements from NSW Fair Trading. If you need a permit you, will need to pay the relevant fee, which will depend on the total prize value of the trade promotion. 

Regardless of whether you are running a game of skill or game of chance, your terms and conditions for the trade promotion should comply with any relevant laws, such as the Australian Consumer Law (ACL)

If you are running a trade promotion in other states and territories besides NSW, you will need to check their respective trade promotion requirements. The rules in NSW may be different to other states or territories. 

4. What Should My Terms and Conditions Cover?

Some of the key points that you should have in your terms and conditions include:

  • the method of entry into the promotion;
  • the relevant draw and re-draw dates for the promotion;
  • when the promotion will run;
  • the prize content and value;
  • how you determine winners; 
  • whether you need scrutineers for the draw;
  • where you will publish the names of winners;
  • how winners can obtain their prize; and
  • the promoter’s name, address and telephone number.

If you run a game of chance you must:

  • conduct the draw within 12 months of the permit being issued;
  • publish the name of winners within 48 hours of the draw. You must make a public statement via print or online if the prize is $500 or more; and
  • ensure the winner claims their prize within three months after the draw date.

If you plan to conduct a trade promotion online using a social media platform (such as Facebook, Twitter or YouTube), you should check each social platform’s promotion guidelines for any additional requirements. 

5. What Are My ACL Obligations?

You will also need to ensure the terms and conditions, as well as how you run the trade promotion, comply with the ACL. The ACL protections do cover people who enter trade promotions. One major protection is that you cannot engage in ‘misleading and deceptive conduct‘, such as falsely misleading your customers about the nature of your trade promotion.   

Therefore, you should be clear and upfront about the terms and conditions of your trade promotion, including the type of prizes you will offer. 

For example, you are offering a trip to Fiji as the major prize in your trade promotion. The trip only includes flights to and from Fiji and no accommodation. Your advertising should avoid misleading entrants into thinking that the prize is an all-inclusive trip. 

If you do mislead entrants, they will be able to sue you under the ACL, with penalties such as financial compensation. Also, your business’ reputation will suffer.  Therefore, it is in your best interests to ensure you are as transparent as possible when advertising trade promotions.

Key Takeaways

Trade promotions can be an effective marketing tool to promote new products your business is selling.  Make sure the terms and conditions for your promotions comply with the law and remember to get a permit if you are running a game of chance in NSW. If you have any questions or need help with your trade promotion, get in touch with LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy