Amelia Conway won the car of her dreams, or so she thought, when she won a modified Nissan Patrol in a raffle by Hello Lifestyle Australia. All was well when she was flown by Hello Lifestyle to Brisbane to collect her prize and drove it home, until she attempted to transfer it into her name. It was then she found out that the Nissan was still under finance and some months later the car was repossessed.
This is just one example of a competition gone wrong. Luckily for Amelia, she was gifted a replacement car from another raffle provider, but good deeds don’t always happen when competitions fail.
This particular competition was advertised and conducted as a trade promotion. However it was by definition, a raffle. Australia has seen a rise in raffles attempting to pass themselves off as trade promotions over the last few years, which raises the question – what is the difference between raffles and trade promotions?
Trade promotion or raffle?
A trade promotion is a promotion that requires free entry, or eligibility for entry can be attached to the purchase of a product so long as the product price is not inflated to cover the cost of entry. Examples include signing up to a company’s marketing list or purchasing a chocolate bar in store to then go online and enter the draw. It could also be a competition where you’re asked to answer a question “in 25 words or less”. Depending on whether your promotion is a game of chance or a game of skill, you may require permits from some state/territory regulators.
On the other hand, a raffle can only be conducted to raise funds for charities or not-for-profit organisation. Businesses can run raffles on behalf of charities or not-for-profit organisations, but there are strict regulations which they must comply with. Similarly to trade promotions, raffles may also require a raffle permit in some States/Territories. However, unlike trade promotions, entry into a raffle is generally not free and consumers usually purchase tickets to win a prize.
Is the competition legitimate? Our tips
As a consumer, there are some signs that the competition you’re entering may not be what it seems. As a business, it’s also important to ensure that you are running your competition under the correct regulations and permits if they are required.
Here are some handy tips:
Tips for consumers:
- The first thing you can do is check to see whether the competition you’re entering has permit numbers. If it is a draw or instant win type of trade promotion or if it is a raffle, it will likely need a permit in some states and territories.
- Don’t hesitate to look into promoters – have they run a promotion before? Is the business registered with ASIC? Is the charity the raffle is benefiting legitimate?
- If you win a prize, make sure that you collect any paperwork that ought to come with the prize. For example, if you win a vehicle, you must make sure it comes with all of the relevant paperwork to transfer it into your name.
- If you win a prize and the promoter is asking you to spend money to claim your prize. For example, a promoter asking you to pay vehicle transfer costs and telling you that you will be reimbursed may be a red flag.
- If you’re concerned by a trade promotion or raffle, consider seeking advice from the State/Territory regulator or the ACCC.
Tips for businesses:
- It is important that you know the difference between a trade promotion and a raffle so that you can obtain the right type of permits for your competition.
- Your competition should always have terms and conditions, which detail everything from competition dates and prize details, to privacy and protections from certain kinds of liability.
- If permits are required for your competition, ensure that you have obtained permits in the appropriate States/Territories.
- Ensure that you are able to provide the prizes you have advertised (without any encumbrances on them).
- If you have a promotion idea and you’re unsure about how to go about it, seek legal advice.
Do you have questions about raffles or trade promotions? Jessica Bell and the KKI Commercial Team can help.
