What Are the Laws Around Free Product Giveaway Competitions?
Having a giveaway is a great way to promote your business. However, it's important to understand the laws around promotional giveaways. Read more to learn about giveaway laws in Australia.
A good way to promote your business is to host a giveaway! Everyone likes free things, and giving away free products is sure to increase traffic. Having a giveaway lets you to spread out your business name on social media and attract new customers. However, hosting a giveaway competition comes with legal responsibilities many businesses may be unaware of.
Types of Giveaways
In Australia, there are two sorts of promotional competitions:
1. Game of Skill
In this competition, participants must put forward an entry, or show ‘their skill’. An example you may have already seen on social media is ‘write in 50 words or less why you deserve to win the prize’. Other examples include ‘upload a photo/video with the competition hashtag’ or ‘tag two friends in this post’.
2. Game of Chance
This is a competition where winners are picked at random. The participant does not need to show any skill, and all entries are equal. An example of a game of chance is a lottery.
Giveaway Laws in Australia
Each state and territory has their own laws regarding games of skill and chance. It’s important to acknowledge the rules of your own state, and make sure they apply to your giveaway. Additionally, your business must already have an ABN to apply for this permit.
New South Wales
In New South Wales, you do not need a permit to run a game of skill. However, a government permit is needed to host a game of chance. There are requirements for this game of chance, in that it must be:
- Free to enter the competition
- Start and finish on the date of the giveaway put forward on the business
Australian Capital Territory
Your business will not need a permit for a game of skill or chance if the prize value does not exceed $3000. This application fee starts at $216, and increases as the prize value gets higher.
Similarly, no permit is needed in the Northern Territory if the prize value is under $5000. If the total prize value is above $5000, your business will need to apply for a major trade lottery permit.
Free product giveaway competitions are classified as Category 4 promotional games by the Queensland government. Any person can host a giveaway competition, and it does not require a licence. Furthermore, there cannot be an entry fee. Also, the prize must be delivered within a month of the winner being declared.
You will not need to apply for a permit for giveaway competitions in Victoria. However, there are laws that you will need to follow.
- There is to be no entry fee
- The business at the centre of the giveaway needs to provide written consent to their promotion
- Participants need to be aware of the opening and closing dates
- If the prize value is over $1000, the names of the winner(s) must be published. This can either be in a Victorian newspaper or on the internet
- The winner receives the prize 28 days after announcement date.
- If the specific prize cannot be given, a substitute can be given if it is of equal or higher value
Last but not least, Western Australia requires your business to apply for a permit if it doesn’t comply with the state rules applying to giveaway competitions. If it complies, you do not have to apply.
- There is to be no entry fee
- If the competition requires phoning in, the cost of doing so can’t exceed 55 cents
- The giveaway prize can’t be medical or cosmetic procedures e.g. plastic surgery
- The competition needs to start and finish within 12 months.
- The winner receives the prize within one month of the competition ending
- Online advertising of the competition needs to have links to terms and conditions
- You can only cancel a competition if you have the approval of the Gaming and Wagering Commission
- Records of the giveaway needs to be kept for 12 months after the competition ends
It is important that you understand your state or territory’s laws on free product giveaway competitions. A good start is to make sure that your competition’s terms and conditions comply with the legal requirements. If you have any further questions, you can contact a business lawyer.
Natalie Ho is a legal tech intern at Lawpath, working as part of the Content Team. She is in her 2nd year at Macquarie University studying a double degree of Science and Law and is highly passionate about the accessibility of law.