Giveaway competitions like LMCT Plus * have become a popular way for businesses to increase brand awareness and attract new customers. However, many businesses are unaware that these types of competitions often require permits under the law. This article provides a summary on when you may need a permit to run your giveaway to help inform your business.
*Gladwin Legal has no association or affiliation with LMCT Plus
What is a trade promotion?
A trade promotion is type of competition that is used to promote the goods or services of a registered business. It must be a ‘game of chance’ and free to enter. A game of chance is a trade promotion with a randomly selected winner. This is contrasted with a ‘game of skill’, where the winner is selected by merit.
- Game of chance: winner is selected through a random name generator or by drawing a name from a hat
- Game of skill: winner is selected because they had the most creative answer to a question of what they would do with the prize money
What is LMCT Plus?
LMCT Plus is an organisation which offers promotions to customers who sign up for an ongoing membership. These types of trade promotions have recently become popular amongst businesses. Under an LMCT Plus type of trade promotion structure, members are automatically entered into competitions to win prizes.
Many businesses which begin running LMCT Plus type trade promotions do not realise that they may require a permit or authority to be legally compliant. Failure to set up the business and permits correctly can result in significant penalties for the business.
When do I need a permit?
Each state and territory has different legal framework for trade promotions. Businesses will need a permit or authority to run their trade promotion depending on the location and total prize amount of their competition, as set out below.
- New South Wales: You will need an authority if your prize value is $10,000 or over.
- Australian Capital Territory: You will need a permit if your prize value is $3,000 or over.
- South Australia: You will need a permit if your prize value is $5,000 or over.
- Northern Territory: You will need a permit if your prize value is $5,000 or over and you do not already have a permit in another state or territory.
You do not need a permit where your trade promotion is conducted in Tasmania, Victoria, Queensland or Western Australia.
Do I need anything else?
Importantly, a permit is only one aspect of running a legally compliant trade promotion. Businesses must also ensure they have the correct legal documents in place to protect their business. Among these, it is crucial to have a detailed set of Competition Terms and Conditions. This is a legal document which sets out things like:
- rights and obligations of entrants;
- rules of competition;
- where liability falls if something goes wrong;
- privacy rights and obligations; and
- winner entitlements.
If you are running an LMCT Plus type of trade promotion, you may also need specific Membership or Subscription Terms. You also will need to ensure that the membership offers something to the members other than the entry into the trade promotions.
- A trade promotion is type of competition that is used to promote the goods or services of a registered business, where the winner is selected by chance.
- LMCT Plus type competitions are trade promotions based on memberships.
- Whether you are running a regular or LMCT Plus type trade promotion, you will need to be legally compliant. This means having the correct permits, authorities and legal documents in place.
- Whether you need a permit or authority to run your trade promotion will depend on the location and prize money of your competition.
Gladwin Legal are experts in competitions and trade promotions and have extensive experience in advising businesses. If you require assistance in applying for permits, drafting competition terms and conditions or understanding your legal obligations, please contact us at or 1300 033 934.