Are you planning to run an LMCT type giveaway to promote your business? This type of trade promotion can be a great marketing tool, but it’s important to understand the legal considerations involved. In this article, we provide a comprehensive guide to the legal aspects of LMCT giveaways. We’ll touch on permit requirements, terms and conditions, privacy policies, and regulations against misleading and deceptive conduct.
What is a LMCT Plus Trade Promotion?
LMCT Plus is a popular membership-based trade promotion.* People purchase a membership which gives them automatic entry into competitions to win prizes and other benefits, like cars or discounts on retail goods.
A trade promotion is the legal term for a competition or giveaway that promotes the goods or services of a business. LMCT type competitions are just one type of trade promotion structure. Some other popular trade promotions include Macca’s Monopoly or Instagram giveaways. If you are unsure about which trade promotion structure is right for you, it may be helpful to contact a legal professional.
*Gladwin Legal has no association or affiliation with LMCT Plus
What permits do I need for an LMCT Giveaway?
Whether you need a permit or authority for your LMCT competition depends on whether your giveaway the prize value and location of your competition:
- New South Wales: An authority is necessary if your prize value is $10,000 or over.
- Australian Capital Territory: A permit is necessary if your prize value is $3,000 or over.
- South Australia: A permit is necessary if your prize value is $5,000 or over.
- Northern Territory: A permit is necessary if your prize value is $5,000 or over and you do not already have a permit in another state or territory.
Permits are not required where your trade promotion is conducted in Tasmania, Victoria, Queensland or Western Australia. However, you will still need to comply with the requirements of the relevant Regulators, such as specific lodgement rules or provisions in your Competition Terms and Conditions.
What legal documents do I need to run my LMCT Giveaway?
Apart from needing permits, it is important that you have all the legal documents necessary to run your LMCT competition. While it can be exciting setting up your giveaway, having adequate legal protection helps to avoid legal disputes and penalties later on.
The main legal documents you will need for your LMCT giveaway are Membership Terms and Competition Terms. Membership Terms govern the relationship between your business and its members and helps to limit your liability. Competition Terms set out all the terms and conditions of your competition, including rights of entrants, competition rules, and winner entitlements
What else do I need to run a trade promotion?
You may also need:
- Proper corporate establishment, including filing required forms with ASIC, and obtaining director identification numbers and a corporate register;
- Trade mark registration to protect your brand from competitors and copycats;
- Website Terms and Conditions for your app or online site; and
- Tailored agreements with prize and discount suppliers to protect your business in these commercial arrangements.
What is misleading and deceptive conduct?
The Australian Consumer Law (ACL) prohibits misleading and deceptive conduct. This means that you must not engage in any conduct which is likely to mislead or deceive when running your LMCT giveaway, such as in advertisements, actions, or imagery. You can help avoid penalties under the ACL or enforcement action by the ACCC by accurately representing your giveaway and prizes.
- LMCT Plus is a popular membership-based trade promotion. Members are automatically entered into competitions to win prizes and other benefits.
- You might need a permit or authority depending on the prize value and location of the competition.
- The main legal documents needed for an LMCT giveaway are Membership Terms and Competition Terms.
- The ACL prohibits misleading and deceptive conduct. You must avoid this in advertisements, actions, and imagery of your giveaway.
This article was written by Ruth Ong.