Many businesses offer gifts or prizes as a way of attracting new customers and rewarding existing customer loyalty. Offers such as competitions and loyalty schemes can be rewarding for both you and your customers. But such promotions must be run fairly.

What organisations govern offers and competitions?

There are laws governing special offers and competitions in NSW. The NSW Office of Liquor, Gaming and Racing is responsible for approving trade lotteries and games of chance. The Office of Fair Trading also looks at competitions or offers where businesses have no intention of offering anything. This is an offence under the Fair Trading Act.

What are my obligations when running offers and competitions?

When making these offers, the trader’s obligations include:

• disclosing special terms and conditions which must be met before the gift or prize is made available to the consumer
• not disguising the cost of the ‘free’ gift or prize by including it in the selling price of the advertised goods
• supplying gifts or prizes the same as those offered.

Where these offers relate to the sale of a motor vehicle, the Motor Traders Association (MTA) Code of Ethics states that an MTA licensed dealer will not offer, in an advertisement, any free gifts or substantially discounted goods (such as television receivers, videos, or other goods or holiday trips or the like not related directly to the supply of motor vehicles) which are intended to or could act as an inducement to a prospective purchaser of motor vehicles from that dealer.

Do I need to apply to run a competition?

To run a trade promotion lottery, that is a competition which promotes the sale of your goods or services and which offers a chance to win a prize, you will need to get a permit from NSW Office of Liquor, Gaming and Racing. Application fees for permits range in cost from $125 to $2,100 depending on the value of the prize or money you will be giving away. However you can save $50 on an application fee by applying online at www.licence.nsw.gov.au In order to obtain a permit you must complete an application and provide certain information. Check with the NSW Office of Liquor, Gaming and Racing for requirements.

Fact sheets and applications for permits are available online from the NSW Office of Liquor, Gaming and Racing. Alternatively, you can contact them on 9995 0300.

Do I need to substantiate claims made in regard to competition?

Under the Fair Trading Act the Commissioner can require a person to provide proof of claims made in relation to products and services.