Trade promotions are a crucial aspect of marketing and sales strategies for many businesses and can help to build brand awareness and increase sales. However, there are various legal requirements for a business to keep in mind when running a trade promotion. This article provides an overview of what trade promotions are, how they work, and how they are regulated in Australia.

What are Trade Promotions?

Trade promotions are short-term, free-to-enter competitions that aim to incentivize the purchase of a product or service. Trade promotions are divided into two categories:

  • games of chance, in which the winner is drawn at random. For example, scan a QR code to win a prize; and
  • games of skill, in which the winner is decided based on set criteria. For example, the best nature photo will be selected.

The goal of trade promotions is to increase sales of a particular product or service, either by attracting new customers or encouraging existing ones to make additional purchases.

How do Trade Promotions work in Australia?

In Australia, trade promotions are highly regulated.

Concerning specifically game of chance trade promotions, businesses may, at times, need to obtain a permit depending on the value of the total prize pool. This is specifically the case in:

  • The Australian Capital Territory;
  • Northern Territory;
  • New South Wales; and
  • South Australia.

For example, if a business is running a game of chance trade promotion in the Australian Capital Territory and the total prize pool is more than $3,000, then the business will need to apply for a permit in the Australian Capital Territory.

In addition, all trade promotions should comply with the Australian Consumer Law, which for instance, prohibits false or misleading conduct and requires that promotions be run in a fair and honest manner. The terms and conditions of any trade promotion must be well-publicised and clearly outlined. They should include details on how the trade promotion will be conducted, the prizes or incentives offered, and the criteria for eligibility.

Trade promotions can be a useful tool for any business. However, it is crucial to ensure that trade promotions comply with the law and are run in a fair and transparent manner.

How can we help?

If you have any questions regarding trade promotions contact the team at Snedden Hall & Gallop on 02 6285 8000 or by email.