Social Media Promotions and the Law: What You Need to Know

social media viewpointsAre you thinking of using social media contests?

Do you understand how the law could impact your activities?

Keep reading to learn more…

Why Legalities?

One of the best ways to grow your business is to give stuff away.

Whether your business is a small enterprise, a website or blog, or a large multinational company, hosting giveaways is sure to increase traffic, awareness and potential new readers or customers.

Sponsoring or hosting a giveaway comes with rules and regulations that many don’t know or understand.

Really, what could be so hard about telling people you’ll give away something if they sign up for your newsletter or leave a comment or like your page or follow you on social media?

Remember the days when you had to buy things to enter a giveaway—and the stuff never arrived, or if it did, it wasn’t worth a fraction of what you paid?

Research shows that more than half of all adults in the U.S. enter at least one sweepstakes every year. That’s a lot of things being given away! Used correctly, giveaways can increase quality of interaction and greatly increase your readership.

What are the three types of giveaways or promotions?

There are three types of promotions used to give things away: sweepstakes, contests and lotteries.

While they often go by many different names (giveaway, raffle, drawing), legally all promotions fit into one of these three categories.

  • Sweepstakes are prize giveaways where the winners are chosen by the luck of the draw. Prizes can be almost anything you can think of, from handmade cards to an all-expense–paid trip.
  • Contests choose a winner based on some merit. The winner is chosen based on some criteria such as best photo, most votes on a video, best recipe, etc.
  • lottery is a prize drawing where people must pay money to buy a chance to win. Lotteries are highly regulated and should not be run without consulting legal counsel.

Most promotions we encounter in the U.S. are sweepstakes. Periodically, we’ll find a lottery. Usually lotteries are limited to the states because they are heavily regulated and monitored and the costs associated with running a lottery are often prohibitive for most small- and medium-sized businesses.

In Canada and many European countries, however, most giveaways and promotions would be labeled as contests under U.S. law because they require a skills competition (usually a math question) to be valid. Does that always happen? No, but the laws require it.

dice

And the winner is… (Image source: iStockPhoto)

How do I know which type of giveaway I’m doing?

There are three things the law looks at to determine if your promotion may be an illegal lottery.

Prize—who wants to enter a giveaway without a prize?

Chance—pure luck! You could get around this by having some skill or voting requirement but that is often difficult to manage or greatly limits the number of people who will enter. If you want to run a contest, you must omit this aspect.

Consideration—something of value given by entrants to the giveaway sponsor. Often it’s money, but it doesn’t have to be. Depending on what you require entrants to do, you could be pushing the envelope on this element. Each state may have its own particular definition, making it very difficult to manage.

When it comes to the online space, there are few things more valuable than followers/likers/friends (or whatever they’re called at the moment).

As such, requiring someone to “like” you or “follow” you could be construed as consideration. Even more important, asking an entrant to go to a third-party site, navigate to find a product or service and then report back to your site is even more likely to be deemed consideration, and thus places your giveaway into the classification of illegal lottery. Time is exceedingly valuable!

giveaway

Don't make it all about you.

In the above giveaway, the blogger is all about “me, me, me” and there’s no way to enter without giving something of value to the blogger. While this may not get the attention of authorities, clearly there is no “free” way to enter.

Because technology is moving much faster than the laws that govern, we’re in uncharted territory with the definition of consideration.

Keep that in mind when figuring out what you’ll have people do for entry. Your best bet is to always have a means of “free” entry and then consider “optional entries.

What laws apply to giveaways and promotions in the U.S.?

In the U.S., federal laws governing marketing promotions have been in place for decades.

Sweepstakes are the most common type of promotion and have primarily been conducted through the mail, which is where many of the laws originate (Chapter 30 of Title 39 of the U.S. Code).

This has given the Federal Trade Commission (FTC) some jurisdiction over monitoring sweepstakes promotions. However, under federal law, the U.S. Department of Justice would have ultimate authority regarding enforcement even if the FTC was not involved.

Many states also regulate sweepstakes, especially when they involve alcohol, guns or tobacco. For example, Massachusetts, Michigan and Virginia prohibit tobacco-related promotions while California, Tennessee and Utah highly regulate those involving alcohol.

In many sweepstakes or contests, you’ll likely see states excluded.

It may be due to prohibitions on items given away or the state requires posting of a bond and the sponsor does not want to pay or go through that process. Florida and New York both require a bond to be posted if the total value of all prizes given away exceeds $5,000. Rhode Island has separate rules if retail outlets are involved.

Why official rules are so important.

Every sweepstakes, contest or lottery must have “official rules” and they should be easy to find.

There are guidelines on what must be included in the official rules to avoid question should there be a challenge if an entrant doesn’t win.

While the majority of people will never read the official rules, without them the sponsor highly increases the risk of liability.

rules

Place a link to the rules where it's easy to find.

Having a link to the rules in an easy to find and conspicuous place not only helps people find them, it also encourages people to read them.

Official rules must always include:

  • “No purchase necessary.”
  • The alternative method of free participation.
  • Geographic area of the sweepstakes and/or who is eligible to participate in the sweepstakes.
  • Opening date and scheduled termination date of the sweepstakes.
  • Complete name and address of the sponsor and promoter of the contest.
  • Number of prizes, the accurate description of each prize, the retail value of each prize and the odds of winning each type of prize.
  • Whether all prizes offered will be awarded and how the prizes will be awarded.
  • Manner of selection of winners and when a determination of winners will be made.
  • Where and when a list of winners can be obtained.

Of course there are other disclosures that should be made such as signing of releases, restrictions and misdirected entries. But if you hit the minimum, there is some compliance and protection.

One other aspect of the official rules is that once they are posted and published, they must be followed exactly.

They cannot be changed except under unusual and extreme circumstances. For example, if you were giving away a trip to Japan in the weeks after the earthquake, you could have changed the prize to another destination. But, as you see, we’re talking very unique circumstances.

Giving Away Expensive Things

Most giveaways have pretty minimal value—an eBook, $25 for an online store, a free product. But if the value of your prize is $600 or more, keep in mind that you will need to take an extra step (possibly several!). You didn’t think the IRS would just let you do your own thing, did you?

If the prize winner is subject to U.S. taxes, a Form 1099 will be required in January of the following year.

This means you will need to collect not only the name and address of the winner but also his/her social security number. Even more reason to maintain a high level of professionalism because asking people for this type of information carries with it great responsibility.

Hosting giveaways can help grow your business or your blog. If you thought this article was helpful, please share it.

What are your thoughts? Have you done giveaways in the past? How will this information help you? Please share your comments in the box below.

Disclosure: While Sara Hawkins is an attorney, this article is for informational purposes only and is not to be considered legal advice.

All photos from iStockPhoto.

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About the Author, Sara Hawkins

Sara Hawkins is a lawyer, blogger and doer. No longer happy waiting for someday to find her, she's finding ways to make her somedays happen. Other posts by »




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  • RB

    Our company has done a couple contests on Facebook and we followed the set rules to make sure there were no issues. I have seen many companies not follow the rules so I do not know how much FB actually regulates. We are not taking any chances though. Our contests have been quite successful to gain fans to our FB page. People love free stuff!

  • http://cindyking.biz/ Cindy King

    Thank you for sharing your legal expertise here Sara!

  • http://about.me/bpicks Ben Pickering

    Sara, thanks for sharing the sound advice. As a platform for social media contests, at Strutta we receive a lot of questions on this topic. Obviously this is a complex one to address in a single blog post but you’ve done a great job of sharing some key considerations. I would just add that the focus above is on sweepstakes, which as you said are quite common. But for contests where winners are not chosen at random (ie, a photo/video competition with merit-based criteria), some of the above requirements, for example bonding of prizes over $5,000 and requirements for alternative means of entry, may not apply. It’s important to be aware of and understand the law but with the right partner(s) it should not be a deterrent to running contests.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    RB, that’s one of the challenges with Facebook. You never know when they’re going to regulate you. In some ways it’s like some of the gov’t agencies. They can’t police everyone so they focus on the most egregious offenders and then every once in awhile spin the wheel and see where it lands (not actually, but you get the idea). If you just do it right every time you won’t have to worry if they draw your name. Kind of like IRS audits – if you make an honest mistake you fix it and move on. Otherwise, it become a very expensive gamble.

    But remember, just because it’s OK with Facebook doesn’t mean that it’s OK with all the federal and state laws that also govern giveaways.

    – Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    RB, that’s one of the challenges with Facebook. You never know when they’re going to regulate you. In some ways it’s like some of the gov’t agencies. They can’t police everyone so they focus on the most egregious offenders and then every once in awhile spin the wheel and see where it lands (not actually, but you get the idea). If you just do it right every time you won’t have to worry if they draw your name. Kind of like IRS audits – if you make an honest mistake you fix it and move on. Otherwise, it become a very expensive gamble.

    But remember, just because it’s OK with Facebook doesn’t mean that it’s OK with all the federal and state laws that also govern giveaways.

    – Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Cindy, you’re welcome. Happy to share information that will help continue to raise the bar on how social media is used.
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Cindy, you’re welcome. Happy to share information that will help continue to raise the bar on how social media is used.
    Sara

  • Xpertadvice4u

    Yes, more info about Contests, and how to keep them from being a from of Gambling, would be appreciated.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Ben, thank you for stopping by and sharing your insight. Yes, the post is mainly about giveaways as they are the most widely used (and my post would have been too long for anyone to read if I had all the contest info in it). Although, for the reasons you mention contests are becoming more popular. And, as you know from being in Canada, sweepstakes can not include Canadian citizens due to the giveaway laws of Canada. And to grow a business it’s best to be as inclusive as necessary. 

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Ben, thank you for stopping by and sharing your insight. Yes, the post is mainly about giveaways as they are the most widely used (and my post would have been too long for anyone to read if I had all the contest info in it). Although, for the reasons you mention contests are becoming more popular. And, as you know from being in Canada, sweepstakes can not include Canadian citizens due to the giveaway laws of Canada. And to grow a business it’s best to be as inclusive as necessary. 

    Sara

  • Elizabeth Moe

    Very informative.  Thank you for sharing.

  • Elizabeth Moe

    Very informative.  Thank you for sharing.

  • http://www.crackerjackmarketing.com/ Stephanie Schwab

    Sara, thank goodness you wrote this post, it’s so necessary as so many bloggers AND brands are doing this wrong, wrong, wrong – and not just on Facebook.  As you and I have discussed, I think this issue is ripe for FTC or DOJ scrutiny, not unlike how they came down on blogger disclosure practices last year. Although I’d love to see more bloggers learn this stuff, it’s actually incumbent on the brands to be sure that the bloggers they work with on giveaways know the rules and are including important things like alternate means of entry, terms & conditions, and tax considerations in their giveaway process. This post is going in my arsenal for training both clients and bloggers.

  • http://www.crackerjackmarketing.com/ Stephanie Schwab

    Sara, thank goodness you wrote this post, it’s so necessary as so many bloggers AND brands are doing this wrong, wrong, wrong – and not just on Facebook.  As you and I have discussed, I think this issue is ripe for FTC or DOJ scrutiny, not unlike how they came down on blogger disclosure practices last year. Although I’d love to see more bloggers learn this stuff, it’s actually incumbent on the brands to be sure that the bloggers they work with on giveaways know the rules and are including important things like alternate means of entry, terms & conditions, and tax considerations in their giveaway process. This post is going in my arsenal for training both clients and bloggers.

  • kaljh

    Every time I read an article about contests, I get even more confused. My company had some logo tshirts made, and would like to give them away thru various ways. One idea was to ask a question, and the first five people to answer correctly would be given a shirt. Or another idea was to post a QR code on facebook which opens up a notice saying that the first five people to email our marketing department would get a shirt. Another idea was to give a shirt away to whoever answered our consumer poll, or whoever our 200th person to befriend us on our facebook page, or whoever posts a photo to our wall. Basically, we’re thinking of not having any one specific ‘contest’, but various fun ways to give away our shirts. Now, I don’t know if any of these ideas are illegal. All this info makes us want to shy away from giving anything away!

  • kaljh

    Every time I read an article about contests, I get even more confused. My company had some logo tshirts made, and would like to give them away thru various ways. One idea was to ask a question, and the first five people to answer correctly would be given a shirt. Or another idea was to post a QR code on facebook which opens up a notice saying that the first five people to email our marketing department would get a shirt. Another idea was to give a shirt away to whoever answered our consumer poll, or whoever our 200th person to befriend us on our facebook page, or whoever posts a photo to our wall. Basically, we’re thinking of not having any one specific ‘contest’, but various fun ways to give away our shirts. Now, I don’t know if any of these ideas are illegal. All this info makes us want to shy away from giving anything away!

  • Debbie B

    As for all the photo contests I see on Facebook, it’s clear that few have ever read the Promotions Policy posted in the Help section. http://www.facebook.com/promotions_guidelines.php .One rule states that all contests must be run through the use of a Facebook app. If you’ve never checked the apps available to you on Facebook you may not realize there are MANY, and some are specifically created for running contests. To check them out, go to your wall and click on “Edit Info” under your business name. On the next page, go to the list on the left and select Apps. There is a lot there so allow yourself some time to read through them. At BizBuzz Marketing Partners we know how important it to to be aware of the legalities. 

  • Debbie B

    As for all the photo contests I see on Facebook, it’s clear that few have ever read the Promotions Policy posted in the Help section. http://www.facebook.com/promotions_guidelines.php .One rule states that all contests must be run through the use of a Facebook app. If you’ve never checked the apps available to you on Facebook you may not realize there are MANY, and some are specifically created for running contests. To check them out, go to your wall and click on “Edit Info” under your business name. On the next page, go to the list on the left and select Apps. There is a lot there so allow yourself some time to read through them. At BizBuzz Marketing Partners we know how important it to to be aware of the legalities. 

  • http://www.facebook.com/profile.php?id=100000176256681 Rodney Asano III

    Is “Fan of the Week” considered a contest if the fan’s
    photo is only posted on our page and doesn’t receive a reward? They
    would be randomly chosen but they are not entitled to “win” anything
    other than bragging rights.

  • http://www.facebook.com/profile.php?id=100000176256681 Rodney Asano III

    Is “Fan of the Week” considered a contest if the fan’s
    photo is only posted on our page and doesn’t receive a reward? They
    would be randomly chosen but they are not entitled to “win” anything
    other than bragging rights.

  • kaljh

    I opened my apps page and see a listing of 10 items, none of which are contest oriented. Am I missing something?

  • kaljh

    I opened my apps page and see a listing of 10 items, none of which are contest oriented. Am I missing something?

  • http://www.webmarcom.net/ Jody Raines

    Thanks for sharing these considerations for contests.  Especially with Facebook, it’s important to understand the terms of service and define the promotion or contest before launching it.  Great info!

  • http://www.webmarcom.net/ Jody Raines

    Thanks for sharing these considerations for contests.  Especially with Facebook, it’s important to understand the terms of service and define the promotion or contest before launching it.  Great info!

  • Pingback: Promotions, Guidelines, Giveaways….Oh My……()

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Xpertadvice4u, Contests are a bit different and can get mixed up with being a lottery if not done right. Contests should not ever have a problem being form of gambling unless multiple bet-type entries are required. I’d have to examine a proposed scenario closer to better understand how the two would overlap.

    Thank you for visiting and commenting,
     Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Xpertadvice4u, Contests are a bit different and can get mixed up with being a lottery if not done right. Contests should not ever have a problem being form of gambling unless multiple bet-type entries are required. I’d have to examine a proposed scenario closer to better understand how the two would overlap.

    Thank you for visiting and commenting,
     Sara

  • Krazy_Kris

    Verrrrrrrry interesting – thank you!

  • Krazy_Kris

    Verrrrrrrry interesting – thank you!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Kaljh,

    Thanks for sharing your concern. First, giving things away on Facebook requires following their promotion guidelines in addition to federal and stat laws. I wrote a post about the Facebook promotion guidelines to try and clarify – http://www.savingforsomeday.com/blog-law-facebook-promotion-guidelines-updated/ – so maybe that will help.

    Putting anything on your wall as a giveaway can get you into hot water with FB. It’s not a guarantee, but probably don’t want to risk having your page taken down.

    You do need to use a 3rd party app or something that runs in an iFrame hosted off of FB (and include all the disclosures, disclaimers and legal guidelines). There are a few that are geared toward small businesses too. Not everyone can afford a few hundred dollars to give away a couple of shirts.

    Facebook is just a twist in how giveaways are managed and administered. I’m sure you’ll find the right app, whether you search the internet or have someone create something for you.

    Best of luck,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Kaljh,

    Thanks for sharing your concern. First, giving things away on Facebook requires following their promotion guidelines in addition to federal and stat laws. I wrote a post about the Facebook promotion guidelines to try and clarify – http://www.savingforsomeday.com/blog-law-facebook-promotion-guidelines-updated/ – so maybe that will help.

    Putting anything on your wall as a giveaway can get you into hot water with FB. It’s not a guarantee, but probably don’t want to risk having your page taken down.

    You do need to use a 3rd party app or something that runs in an iFrame hosted off of FB (and include all the disclosures, disclaimers and legal guidelines). There are a few that are geared toward small businesses too. Not everyone can afford a few hundred dollars to give away a couple of shirts.

    Facebook is just a twist in how giveaways are managed and administered. I’m sure you’ll find the right app, whether you search the internet or have someone create something for you.

    Best of luck,
    Sara

  • Rochelle Friedman Walk

    Sara, as an old lawyer who has reviewed these for Fortune 500’s in the past —- Kudos to you for writing the article and providing the information. Well done! I am just getting into the world of social media now that I am out on my own after a 25 year career as the GC to a couple of public companies and it had not occurred to me that this was happening on FB at the rate I have now observed. Rochelle Friedman Walk

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Debbie,

    I can’t tell you how many pages I could take down in a day due to non-compliance with Facebook Promotions. That’s not even including those that do comply with them but don’t comply with the laws regarding giveaways. It could be my next full time job! ;-)

    Many people think that using an app is the same as following the law. That’s not always true, some are definitely better than others in that area.

    Thank you for sharing,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Debbie,

    I can’t tell you how many pages I could take down in a day due to non-compliance with Facebook Promotions. That’s not even including those that do comply with them but don’t comply with the laws regarding giveaways. It could be my next full time job! ;-)

    Many people think that using an app is the same as following the law. That’s not always true, some are definitely better than others in that area.

    Thank you for sharing,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Rodney, it’s hard to say that giving a shout out to one ‘Liker’ falls under the laws of a giveaway since they don’t enter and there is no prize. But I can’t speak to it exactly (note, this is not legal advice!). However, using Facebook to do this does mean you need to comply with all their TOS, including their promotion guidelines. I’ve tried to break them down into English here – http://www.savingforsomeday.com/blog-law-facebook-promotion-guidelines-updated/

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Rodney, it’s hard to say that giving a shout out to one ‘Liker’ falls under the laws of a giveaway since they don’t enter and there is no prize. But I can’t speak to it exactly (note, this is not legal advice!). However, using Facebook to do this does mean you need to comply with all their TOS, including their promotion guidelines. I’ve tried to break them down into English here – http://www.savingforsomeday.com/blog-law-facebook-promotion-guidelines-updated/

    Sara

  • http://www.goodtobeyou.com Lee Romano Sequeira

    Hi Sara,

    I agree with all of the comments so far — THANK YOU for this post.
    It is pretty confusing to me (as a small business and owner of 2 websites/fan pages).

     Can you please shed any light on the “DOS” for a small biz to promote on FB? We do already take advantage of Facebook ads, but love the contest angle for our “LIKES” (fans).  The last thing we want us to have our Facebook fan pages shut down, and as many folks know it can be overwhelming tying to run businesses, manage all the social media while keeping up with the changes — all this can make an entrepreneurs head spin! :)

    THANKS!

  • http://www.goodtobeyou.com Lee Romano Sequeira

    Hi Sara,

    I agree with all of the comments so far — THANK YOU for this post.
    It is pretty confusing to me (as a small business and owner of 2 websites/fan pages).

     Can you please shed any light on the “DOS” for a small biz to promote on FB? We do already take advantage of Facebook ads, but love the contest angle for our “LIKES” (fans).  The last thing we want us to have our Facebook fan pages shut down, and as many folks know it can be overwhelming tying to run businesses, manage all the social media while keeping up with the changes — all this can make an entrepreneurs head spin! :)

    THANKS!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Jody, Facebook’s promotional guidelines are in addition to federal and state laws governing sweepstakes, contests and lotteries and shouldn’t be used as the sole determination as to if there is compliance. I think that’s what makes this area even more challenging, having to manage both the governing laws as well as the TOS for different platforms.

    Thank you for visiting and commenting, I know it’s an area that isn’t very clear and I think businesses want to know how to do it right.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thanks for visiting and commenting, Elizabeth!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thanks for visiting and commenting, Elizabeth!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Stephanie, thanks for your position that it’s not just one party that needs to be aware of these rules. While it is incumbent on the brands (and their hired agencies) to be sure that promotions are handled properly, if bloggers were aware of what they’d need to do it would help. I think that bloggers don’t want to be told about all the ins & outs of hosting a proper giveaway because ‘so and so doesn’t do that’ or ‘then I won’t get more likes or followers’. And at the same time, bloggers who are in the know are asking for greater compensation because it does take more time to meet all the compliance issues, yet brands are so used to “the old way”. There is a lot of educating that needs to be done and I’m glad to know that agency professionals, such as yourself, are giving brands the real information they need. Because, yes, it ultimately can do the brand extensive harm both financially and reputationally.

    Thank you for visiting and sharing your insight,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Stephanie, thanks for your position that it’s not just one party that needs to be aware of these rules. While it is incumbent on the brands (and their hired agencies) to be sure that promotions are handled properly, if bloggers were aware of what they’d need to do it would help. I think that bloggers don’t want to be told about all the ins & outs of hosting a proper giveaway because ‘so and so doesn’t do that’ or ‘then I won’t get more likes or followers’. And at the same time, bloggers who are in the know are asking for greater compensation because it does take more time to meet all the compliance issues, yet brands are so used to “the old way”. There is a lot of educating that needs to be done and I’m glad to know that agency professionals, such as yourself, are giving brands the real information they need. Because, yes, it ultimately can do the brand extensive harm both financially and reputationally.

    Thank you for visiting and sharing your insight,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Kris, thanks for visiting and commenting. 

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Kris, thanks for visiting and commenting. 

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Rochelle! There are no old lawyers, just those who don’t have to pay bar dues any more. ;-)

    Thank you for your kind words and sharing your observation. Social media has added a new layer of complexity to laws that, when written, did not contemplate such a thing. Now we’re trying to put square pegs into pentagonal holes and it’s a challenge. Add to that a whole host of people who now need to be educated about the laws because the barrier to entry is getting lower, but the consequences to mis-delivery very high. 

    The other difficulty is that we’ve conditioned people that accepting TOS (usually without reading them) is sufficient for most any type of interaction. Now that these platforms are being used in new ways, again ways the law never contemplated, it’s a learning curve. And the law isn’t always kind to learning curves since there isn’t always much gray.

    It’s so nice to meet you, I’d love to talk to you more about your experience. I’ve been lawyering for about 13 years so I’m still a pup compared to your years of experience.

    Thanks again for visiting and sharing your observations.

    Sara

  • http://www.casmccullough.com/ Cas McCullough

    Thanks for posting the section about official rules. As our business runs a lot of contests and sweepstakes, these are really helpful. It would be really great to have an article on running charity auctions on Facebook. There has been a lot of confusion and angst about breaking Facebook rules of late given the crackdown on posting on others’ pages. Small businesses would like to be assured their generosity won’t see them suspended on Facebook. Any chance you could write something about this?

  • http://www.casmccullough.com/ Cas McCullough

    Thanks for posting the section about official rules. As our business runs a lot of contests and sweepstakes, these are really helpful. It would be really great to have an article on running charity auctions on Facebook. There has been a lot of confusion and angst about breaking Facebook rules of late given the crackdown on posting on others’ pages. Small businesses would like to be assured their generosity won’t see them suspended on Facebook. Any chance you could write something about this?

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Lee,

    This post addresses the general overarching federal and state laws about giveaways and promotions, in a general sense. (disclosure: not legal advice, just legal information). In addition to those laws for any sweepstakes, contest or lottery, if you’re running a promotion on Facebook you have to comply additionally to FB Promotion Guidelines. I wrote a post about that  when the guidelines were updated a few months ago – 
    http://www.savingforsomeday.com/blog-law-facebook-promotion-guidelines-updated/

    While you still need to comply with both federal and state laws, many of the 3rd party apps are incorporating some of the requirements such as having Official Rules and for sweepstakes having the least intrusive means of entry. Unfortunately, it doesn’t cover everything and small businesses are often misled into thinking it does.

    I’ve advised small businesses on promotion laws, but no all have a legal budget for them. Which is why I have tried to create some general informational posts to help get them up the ramp so they could then ask the right questions to a lawyer and have a focused conversation that might be more budget friendly.

    Thank you, again, for reading and commenting. If you have general questions, let me know b/c likely others do too and it will help Social Media Examiner know the kinds of topics readers are looking for.

    Kindly,
    Sara

  • http://www.negociosenfb.com Juan Manuel

    Hi Sara!

    Do you know about International Policies? We are located in Mexico.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Cas, I’ve done some work with Facebook Causes and it’s actually very easy to use. It’s the intersection of Federal and State law with those requirements of Facebook that causes the lines to blur. I’ll look at it a bit more and note it as a requested topic. I’m sure Social Media Examiner is following along and noting interests as well.

    I do sit on the board of a 501(c)(3) non profit so I am aware of issues relating to both tax exempt and not tax exempt non profits. And that difference just adds to the challenges of managing charitable giving programs.

    Thank you for visiting, reading and sharing.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Cas, I’ve done some work with Facebook Causes and it’s actually very easy to use. It’s the intersection of Federal and State law with those requirements of Facebook that causes the lines to blur. I’ll look at it a bit more and note it as a requested topic. I’m sure Social Media Examiner is following along and noting interests as well.

    I do sit on the board of a 501(c)(3) non profit so I am aware of issues relating to both tax exempt and not tax exempt non profits. And that difference just adds to the challenges of managing charitable giving programs.

    Thank you for visiting, reading and sharing.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Juan, I am not familiar with the laws of Mexico as they relate to sweepstakes, contests and lotteries. I’m certain there are attorneys in Mexico who practice in the area of promotion and marketing law that could assist. Wish I could offer more insight, but that is clearly beyond my knowledge.

    Sara

  • http://www.facebook.com/jamesdunn James Dunn

    I work with a local radio station on a part time basis as the field engineer.  We’ve been informed that the “consideration” part includes the “expense” of the trip to pick up the prize.  So if someone drives across town to pick up the prize, the prize must be valued at more than the “cost” of getting the prize or we can be fined for running an illegal lottery. 

    I’m not sure if that’s an FCC rule, State of Georgia rule, or some other rule making authority’s rule.  Regardless, the companies that want to give any types of prizes for giveaways have to make them substantial enough so we don’t wade into those muddy waters.  Consequently, most of our prizes are valued at $25 or more and some are even more than $50.

  • http://www.facebook.com/jamesdunn James Dunn

    I work with a local radio station on a part time basis as the field engineer.  We’ve been informed that the “consideration” part includes the “expense” of the trip to pick up the prize.  So if someone drives across town to pick up the prize, the prize must be valued at more than the “cost” of getting the prize or we can be fined for running an illegal lottery. 

    I’m not sure if that’s an FCC rule, State of Georgia rule, or some other rule making authority’s rule.  Regardless, the companies that want to give any types of prizes for giveaways have to make them substantial enough so we don’t wade into those muddy waters.  Consequently, most of our prizes are valued at $25 or more and some are even more than $50.

  • http://www.facebook.com/profile.php?id=100000176256681 Rodney Asano III

    Thank you for your feedback, Sara.

  • http://www.facebook.com/profile.php?id=100000176256681 Rodney Asano III

    Thank you for your feedback, Sara.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    James, Thanks for reading and commenting. I think that’s someone’s interpretation of ‘consideration’ but it makes sense (especially as gas prices have gone up). Consideration can be so many things, it’s interesting that travel time/cost is included.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    James, Thanks for reading and commenting. I think that’s someone’s interpretation of ‘consideration’ but it makes sense (especially as gas prices have gone up). Consideration can be so many things, it’s interesting that travel time/cost is included.

    Sara

  • Ron

    These are things that will help if you put them in your rules “Void Where Prohibited” this will cover you when laws change from state to state. 

    If you are asking for some consideration also add “No Purchase is Necessary you may also enter by mailing a post card with name and address to” (whatever address you want it sent to)

    Also remember that absolutely no one can enter or win a contest that is under the age of 13 years old in the United States.

  • Ron

    These are things that will help if you put them in your rules “Void Where Prohibited” this will cover you when laws change from state to state. 

    If you are asking for some consideration also add “No Purchase is Necessary you may also enter by mailing a post card with name and address to” (whatever address you want it sent to)

    Also remember that absolutely no one can enter or win a contest that is under the age of 13 years old in the United States.

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Ron, thank you for visiting and sharing. It should only be indicated “No Purchase Necessary” if that is true. Many people will dump any and all language into their rules even if they aren’t applicable, negating their showing of due diligence and often exposing themselves to greater risk and/or liability.
    Regarding entry by those under 18 there are special laws. Maine, for example, prohibits anyone under 18 from entering sweepstakes due to laws prohibiting predatory marketing to minors. Which is why promotions open to entrants under 18 will exclude Maine.

    As for promotions geared toward those 13 and under, they must comply with COPPA if conducted online. Those promotions offline must comply with state laws about marketing to minors (see Maine above). In fact, there are promotions aimed at entrants 13 and under. Currently I know of ones by Nick.com, K’nex and Lunchables just to name a few.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Ron, thank you for visiting and sharing. It should only be indicated “No Purchase Necessary” if that is true. Many people will dump any and all language into their rules even if they aren’t applicable, negating their showing of due diligence and often exposing themselves to greater risk and/or liability.
    Regarding entry by those under 18 there are special laws. Maine, for example, prohibits anyone under 18 from entering sweepstakes due to laws prohibiting predatory marketing to minors. Which is why promotions open to entrants under 18 will exclude Maine.

    As for promotions geared toward those 13 and under, they must comply with COPPA if conducted online. Those promotions offline must comply with state laws about marketing to minors (see Maine above). In fact, there are promotions aimed at entrants 13 and under. Currently I know of ones by Nick.com, K’nex and Lunchables just to name a few.

    Sara

  • Blogger

    Hi Sara.  Thank you so much for sharing.  This changes the entire blogging world for giveaways.  This needs to be wider publicized.  I will definitely be changing the mandatory entry for my blog (which is usually going to the sponsor’s website and choosing a product they like and commenting back on my blog).  As these are usually the requirements from the sponsors themselves, I will be writing them emails, including your article on the subject.  I also had a few more questions for you…

    1. As far as Canadian giveaways go… Does this mean that my US blog cannot have Canadians enter and/or win my sweepstakes?  A few of my giveaways include US and Canada and even fewer worldwide.  What about Canadian bloggers – can US entrants win their sweepstakes legally or is it illegal for them to host one in the first place?  Can Canadian citizens win sweepstakes on Canadian blogs?  Just curious.
    2. What about a prize package that is worth over $600 in prizes that are all under $600 in value, meaning the sum of all the gifts to be won total over $600?  Do we still need to do a 1099 for these winners?  What if one prize is worth over $600 – will the sponsor donating and sending the prize be responsible for the 1099 or will the blog hosting it? And what about sponsors giving product to the blogs for review that are over $600 in value – are they required to give the blog a 1099?  What happens if they don’t?
    3. What about sponsors that require the entrants to donate money to a charity (much like a silent auction) in order to enter? Is it still considered a form of lottery if the money goes directly to a third party charity?  Would the blog and the sponsor be at fault for illegal lottery, or just the sponsor requiring the entry, or just the blog hosting the prize?
    4. Where can I find information on specific state’s laws on sweepstakes?

    Thanks so much!

  • Longvaonline

    Thanks for the heads up Sara, I am just starting out and any advice is like gold at the mo.
    Cheers Paul

  • Longvaonline

    Thanks for the heads up Sara, I am just starting out and any advice is like gold at the mo.
    Cheers Paul

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Paul, glad to be of help!  ~ Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Paul, glad to be of help!  ~ Sara

  • http://www.gplusgoodies.com GPlus Goodies

    Hi Sara, wow, I learned quite a bit from this article. To be honest, whenever my company runs a contest we typically don’t think much of it, let me rephrase that, we decide what we’re going to give away, then have some sort of contest that involves a random winner (from a draw) who can enter by following us (Twitter, Facebook, etc…), or perhaps join our forum or whatever then we run with it. My point is, I never realized there were so many legalities involved until now.

  • http://www.gplusgoodies.com GPlus Goodies

    Hi Sara, wow, I learned quite a bit from this article. To be honest, whenever my company runs a contest we typically don’t think much of it, let me rephrase that, we decide what we’re going to give away, then have some sort of contest that involves a random winner (from a draw) who can enter by following us (Twitter, Facebook, etc…), or perhaps join our forum or whatever then we run with it. My point is, I never realized there were so many legalities involved until now.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello GPlus! Many people don’t realize there are a number of legalities. And for the most part most promotions fly under the radar (over worked gov’t investigators). However, as they are becoming more prolific and the scammers are coming out in force it’s lifting the veil. In addition, all it takes are a few complaints and you’ve got the attention of state or federal regulators and what was just a way to get a few more likes or followers turns into a legal mess. And for small businesses it could bankrupt them.

    Glad to be able to offer helpful information. Thanks for visiting and commenting!

    Sara

  • Tony Bogar

    This both heartens and frightens me, but we will forge ahead. Has anybody here done any sweepstakes or contests on Facebook in Australia?

  • Tony Bogar

    This both heartens and frightens me, but we will forge ahead. Has anybody here done any sweepstakes or contests on Facebook in Australia?

  • http://threesides.com.au Todd Wright

    Thanks for the article.  Interesting read on a few more of the issues around the legal implications of ‘free stuff’.  We always get issues of clients wanting to give away ‘a case of wine’ or ‘case of beer’ (might be an Australian thing!) and we invariably end up suggesting what about an amazon voucher or cd voucher etc – much less headaches. 

    @Tony Bogar – we have been involved with a few promos on Facebook in Australia – the same facebook international guidelines still apply but you need to connider Australian trade promotion law.  The most important things to remember is that:

    1. the law (or lotteries act) in Australia is a state law and not a national law so you need to ensure that you are applying the relevant state laws to your promotions
    2.  The laws need to be met and you need to obtain permits in the states that you are promoting your competition not just the state that it originates in (eg.)  If you run and promote a competition in NSW you need a NSW permit – but facebook is global  – do I need a worldwide permit?  The advice we have been given is that you should get permits for the states that you are actively targeting and promoting to.  So if you are backing your promo up with facebook ads geo targted to Queensland – you should really get a permit here to be in the safe side
    3.  Permits are normally required at the $1000 above mark in most states (but check yours first) and steer clear of alcohol as prozes – you’ll encounter a whole other world of froms and permits!!!

    Cheers,
    Todd – Threesides 

  • Tony Bogar

    Wine. Beer. Definitely an Aussie thing! Alas, wine will be the prize so it looks as though we need to do our homework. Thanks for the heads up; your comment was most useful.

  • http://justindupre.com/ Justin Dupre

    Great post! Thanks for sharing this.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Blogger,

    Sorry for the delay, I missed seeing your reply here. I’ll try to explain each of these.

    1. Canadians can enter promotions conducted by US businesses but the US business must then comply with all Canadian laws regarding such promotions. This specifically means that the promotion goes from being a sweepstakes to being a contest (in the US) because Canada’s laws says that winners can not be chosen by luck. As such each entrant must solve a skill testing question. 

    As for Americans winning sweepstakes in Canada, I am not fully versed on all the nuances of Canadian law but it is my understanding that entry by American is not prohibited solely due to nationality. And as long as a Canadian blog adheres to the laws of Canada for their sweepstakes, Canadian citizens may enter and win.

    2. There is differing viewpoints from an accounting standpoint as to how 1099s are issued for promotional prizes. If one single prize has a fair market value (FMV) over $600 a 1099 must be issues, although they are not always. The sponsor of the promotion would be responsible for issuing all such tax documents and securing any necessary releases. As for sponsors proving product for review valued at $600 or more, a 1099 should be issued. I am working on a post specifically on this topic. If a 1099 is not issued, it does not negate the need to report such prize.

    3. Silent auctions for charitable purposes are handled differently because there is no ‘luck’ involved. Item goes to the highest bidder and it is not a promotion but rather a fundraiser and governed by those laws. As for providing a donation, even if to a 3rd party, that is consideration. There is a benefit – albeit not financial – to the sponsor or host thus to avoid being an illegal lottery the element of luck would need  to be removed. Many of these large charitable fundraisers have registered their promotion with the state and follow strict guidelines for lotteries.  Both the sponsor and the host could hold liability, the determination would be very fact specific.

    4. There is no one specific repository for all state specific sweepstakes laws. Most are uniform and follow the general standards. There are certain states where there are bonding requirements, age limitations and/or type of products that can be given away. If you are giving away alcoholic beverages as a prize that is a unique circumstance and state laws should be researched. 

    Hope this helps.
    Sara

    Disclosure: The above is legal information and is not to be construed as legal advice nor does it create an attorney/client relationship.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Todd, thank you for helping out and sharing the particulars of AUS to Tony. This is truly the beauty of social media.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thanks for visiting Justin. Glad you enjoyed it. ~ Sara

  • blogger

    No worries on the delay – it was only yesterday that I asked the questions.  I do have follow-up questions…

    1. If Canadians are allowed to enter a US giveaway, can we have the giveaway be a sweepstakes and if a Canadian wins, have them answer a skill question or trivia and not the whole of the entrants?

    2. What about if a prize package donated by and mailed individually from several different sponsoring brands is worth over the $600?  Not one single item is valued that, but the whole of the package would be. Are 1099s still required?  I would hate to collect a SS# as a blogger and would leave that up to the sponsors, but if their prizes are not individually valued at $600, then they would never file one.  What happens in this case?

    3. What key laws (that we as bloggers need to be aware of) do fundraisers have then?  Specifically in regards to blog giveaways and silent charity auctions?

    4.  We never give away items like alcohol on the blog, so that wouldn’t be an issue.  I would hate, however, to have to check every single state’s laws to figure out if there is something we can’t promote or have a winner enter and/or win in their state.  Could we just have a disclaimer that states “void where prohibited by law” as a blanket statement to cover the hosting blog?

    I’ve been arduously working on my changes for my new promo policies/guidelines and disclaimers and have put up a preliminary one on the blog for now.  I just want to make sure I have everything down to cover us and to comply with all regulations we know of.  The only thing I refuse to adhere to is supplying my address.  There’s got to be a line that is drawn somewhere, right?

    Thanks again!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    1. If Canadians can enter their entry must be accompanied by a skills testing element. It can not be done after they are determined to have won.

    2. It is imcumbent on the sponsor to provide a 1099 to the winner if the prize is valued at $600 or more. If you, as the blogger, are the sponsor then it would be up to you to do that. If you’ve brought together several brands/agencies someone would need to take on the role of sponsor and that should be discussed with them. The Sponsor needs to be disclosed in the ‘Official Rules’.

    3. Charity fundraising is governed by different agencies in different states. Charitable fundraising has to handled in the state where the charity is domiciled. You can find information on which state agency to contact here – http://www.nasconet.org/documents/u-s-charity-offices/

    4. You can have a disclaimer “void where prohibited” but you’d need to know where it would be prohibited. There is no one location with all state laws which govern sweepstakes, contests and lotteries. You can usually find them by searching each state’s gambling or marketing statutes. 

    If you are the sponsor of a sweepstakes or contest you would have to provide your address. If that is the case you should consider getting a business mailing address such as through one of those mail box businesses in the strip malls around town.

    Regards,
    Sara

  • jackreese

    Wow, a post like this is long overdue! Thanks!Although we’ve been working mostly outside of the US, it’s a very good practice to give a 10 minute call to a lawyer before launching your promo. Just to be on the safe side!

    Since we’re on the subject, there’s contest on a Facebook page where you can win a pack of free contests for your Facebook page http://www.facebook.com/indygraphics?v=app_204169126292521
    When you win, please make sure your contest complies with the law! :)

  • http://www.vizionsinmotion.com Shay

    Thanks for a very helpful article.  I did not know there were so many little strings that are attached to running a promotion.  We will definitely do some extra research before even planning a giveaway.

  • Saptrainingsonline

    Thank you for posting a worthable content here….keep going on….

    Roopa
    http://saptrainingsonline.com

  • Brittany Bennett

    Wow – What a great informative article. I am sharing it with my network now. Thank you Sara! 

  • http://www.roverparts.com CK

    Great article, and much needed.  As you mentioned in your comments, the number of Facebook users using promotions that violate Facebook TOS or, federal law, is astounding.  It seems almost impossible to regulate, which is unfortunate.  Now I don’t want to see an honest mistake bankrupt a small business, but without any REAL regulatory presence the ignorance is perpetuated.  
     
    Those of us who are aware of the rules and choose to play accordingly lose a competitive advantage, which is wrong.   

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Shay, thank you for reading and letting me know you found the information helpful. ~ Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Saptrainingonline – thank you for reading the article and sharing a comment of support. ~ Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Brittany,

    Glad you found the article informative and worthwhile to share with your network. That’s a big compliment!

    Thank you,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    CK, it is getting difficult to regulate the various social media platforms. It disturbs me that there are TOS and guidelines that the platforms have in place and clearly ignore. Why have them if they will be selectively applied? And when applied can be catastrophic to a small business because there is little or no customer service or way to get help to fix the problem and learn from the error.

    I hear the argument about losing a competitive advantage, and it’s a very real part of business. There will always be scammers who skirt the law/rules because their ethical code allows them to believe it is acceptable. But at the end of the day, if we feel we’ve done the right thing that’s all we can do. It’s easy to work to the lowest common denominator, but what I strive for (and this site and its readers like you as well) is to raise the bar. There will always be cheaters, and some will never get caught. But when they do, they fall hard and those of us with nothing to worry about just keep going.

    Thanks, CK, for your input. I appreciate you taking time to read as well as share your insight.

    ~ Sara 

  • http://www.facebook.com/people/Igor-Reznitsky/100001152191839 Igor Reznitsky

    Spot on! Recently, I came across a “competition” Facebook page that posts hundreds of links to Facebook page sweeps available in the UK. 99% of them are either “Like this post to win” or “tag yourself to win” or “change your status”, etc. Unbelievable. Only a small portion of them get their tagging/posting suspended by the spam filter, the others just keep going like there’s no tomorrow!

    BTW, always wanted to ask, why in England random drawings (sweepstakes) are called “competitions”?

  • http://www.facebook.com/people/Igor-Reznitsky/100001152191839 Igor Reznitsky

     Dear Sara! Thank you for your time, the post and the answers, I think you must be the most generous lawyer that I’ve ever seen in my life :))
    If you ever need a contest app for your Facebook page, use ours (toptabapp.com), for you it’s free!

  • Penny

    Thanks for this article. I found it while trying to find an answer to this question… Is it legal to charge the winner shipping charges? I’ve seen a lot of Facebook giveaways, in particular, where entering is arguably free, but the rules state that the winner will have to pay $X for shipping.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Igor, thank you for your offer of the toptabapp, I’ll definitely check it out since I’m always asked about FB promotion app options. 

    The UK tends to have it’s only language for certain things (lift, chips, bonnet, boot, biscuit, crisps, etc.) so of course they have a different word for Sweepstakes. However, this is mainly due because what we know as lotteries are called sweepstakes. Talk about confusing!

    UK promotions being posted on US sites do pose significant problems, especially since Facebook has one main URL and the laws pertaining to each individual country where Facebook can be accessed are not woven into each country’s resident’s page. Having such a worldwide platform being so popular in its infancy has created situations like you’ve mentioned. It’s a borderless online world that, unfortunately, must adhere to a vast array of laws (hence the issues relating to China and the internet).

    I would think Facebook could do a better job with programming to help reign in some of this (allegedly) inappropriate or offending content. This is where having vision and foresight comes in and given that Facebook’s trajectory was not envisioned there are so many bumps on the road.

    Cheers my friend,
    Sara

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Penny, thanks for visiting. By law, sponsors of sweepstakes must not require a prize winner to pay any shipping or handing charges to win or receive their prizes. If a promotion requires such and you are the winner I’d advise fighting them and reporting them to the FTC and/or State Attorney General if the prize is worth having, otherwise it might not be worth your time or energy.

    Sara

  • angelaengland

    I know that ShortStack has a giveaway app that will likegate an entry for free or very inexpensive if you’re looking for a reasonably priced option. Definitely go through a 3rd party app because there’s really no reason NOT to!

  • http://www.facebook.com/Kimberly.MyPets Kimberly Morris Gauthier

    I host giveaways monthly and this week, I’m doing 5 in a row.  I get a lot of inexpensive, photography related items to review and I give them away to my followers.  I haven’t eclipsed $50 on any of my prizes, but I have been putting a disclaimer on my contests (and reviews) as well as creating rules.  I don’t want to have to mail something to Ireland from Washington again, so my contests are US Only (unless the prize is an online download) and I participants must be over 18, although I have no way to check this, I like having it in there.
     
    I didn’t think much about this until I attended Bloggy Boot Camp and an attorney shared the “rules” of giveaways.

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  • Brendan

    Thanks for the article Sara. Can you confirm something for me….Can I ask fans to post a video and the video that I determine to be the best will win the prize? Does this follow Facebook’s regulations?

  • Xpertadvice4u

    Well, for example, when Zynga has a Poker Tournament on facebook, why is that NOT gambling?

    There was a Final Four College Hoops contest on Facebook, where people could win prizes for correctly predicting who would be in the Final Four…

    Now, *my* understanding (which is limited by my own ignorance and that of others) is that IF there is no Consideration because it is a Free Contest – and players do not have invest any of their own money in order to play – that it is therefore OK to let them compete and have prizes to the winners.

    So, I could let people play in an online Poker tournament, and as long as they do not have to put up any money to enter, I can give them prizes and it will not be gambling…

    What do you think?  That is the way it was explained by somebody operating a similar site.

  • http://www.your-assistant-lisa.com Lisa

    Thank you for this article.  I have seen some giveaways on blogs that need to consult your article which screams out me, me, me!  I do think giveaways are a great way to draw traffic to your site but if a person is entering into a contest it becomes quite ridiculous all the hoops some sites will make you jump through to win.  Such as Tweet this, like this, go fan this, etc, etc :)  Great read, I shared this with my Facebook page and twitter.  Thanks!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Angela, thanks for visiting and sharing the ShortStack app. I know so many people are always looking for good options, especially small businesses needing budget-friendly options.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Kimberly,

    Thank you for visiting and sharing your experience. As part of the rules you can require that all entrants be over 18 and if you ever wanted to verify that information you would just need the winner to return an affidavit to you as a condition of prize acceptance.

    Your giveaways should likely be limited to US Residents due to the different laws for foreign countries. Ireland (and the UK in general) have very particular rules and it’s not easy to manage all the requirements. Even if it is a download, there is potential liability if you do not adhere to the laws of each jurisdiction.

    Glad you are able to incorporate what you learned at a conference into your blog.

    Sara

    P.S. If it was Seattle BBC, that might have been me.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Brendan, Facebook does permit this type of promotion. It would be considered a contest because you are not basing the prize on luck. You need to use a 3rd party app to host this promotion. Of course you would also need to comply with the other legal requirements for a contest since FB’s promotion guidelines are merely their rules.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Lisa, thank you for visiting and sharing my post with your community.

    Besides not complying with the law it’s just not a best practice to (1) make your promotion a ‘me, me, me’ program or (2) require people to jump through a million and one hoops. Just reading some of the entry requirements makes me tired.

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Zynga is an authorized and vetted app for FB so they have gone through quite a process to be a game on Facebook. And while one of their games is often considered a card gambling game (poker) it is in fact a game whereby credits are purchased. Since it is a virtual game and not a real interactive game the gambling issue doesn’t come up.

    As for the Final Four promotion on Facebook, no money is involved and thus gambling laws don’t apply.

    Gambling laws are both federal and state and if you’d like to know more about them I’d suggest looking at Chuck Humphrey’s page. He’s an attorney and one of the leading experts in gaming laws – http://www.gambling-law-us.com/ – and they are very different than standard giveaways.

    Sara

  • Brendan

    Thanks for your reply Sara. That clears it up for me.

    Brendan

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  • Janet E Johnson

    This article came at such a great time:)  We are creating a contest for our client to give away an ipad 2 and we want to do this right.  Thanks much!

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Janet,

    Happy to be able to offer you practical information to help your client.

    Sara

  • http://twitter.com/CAAdvertising C.A Advert Solutions

    Thank you so much for this post! It’s one of the more complex areas for us social media marketing folks. Since most of my experience is more directly with marketing, it’s awesome to have some guidelines from a pro outlined for me. Well written and informative–Thanks again!

    Lacey
    SMM for C.A. Advertising Solutions

  • http://www.squidoo.com/best-laptop-under-400 Anna W. Mize

    Thanks sara for sharing.now got an idea regarding promotion and give aways online and thier restrictions. i never thought guidelines varies each country. stated very well..

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi C.A. Advert Solutions,

    Thank you for your kind words!

    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Anna,

    Glad I was able to provide you with helpful information.

    Sara

  • http://www.i95dev.com/ecommerce Ecommerce Solutions

    Thank you Sara, for highlighting what needs to be known about Social media promotions.

  • http://www.squidoo.com/best-laptop-for-college-students Irma Glory

    You have such an informative article, I’m glad that there’s law for things like this, but i still doubt that everything is implemented. As we all know, people are really good in looking for loopholes in the laws and system. I’m wondering , how this laws could be polished? I’m also curious if those pop up lotteries, sweepstakes or any game, are under this laws? By the way, the description of lottery and sweepstakes are nearly the same. Is there a particular definition that settles their difference? -thank you

  • http://twitter.com/SaraFHawkins Sara Hawkins

    You’re welcome, Ecommerce Solutions! 

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Irma, first, the difference between a lottery and a sweepstakes is that a lottery has all 3 parts (prize, chance and consideration) whereas a sweepstakes usually only has prize and chance. For a sweepstakes there can only be 2 things, or else once you add the third it becomes a lottery.

    All lotteries, sweepstakes and contests operated in the US must comply with US laws. Of course many of them do not. As for loopholes, I’m sure people look for them. Especially since the word consideration and chance are a bit subjective.

    Depending on who implements the promotion, you will definitely have varying levels of compliance. It’s a risk. Do they get caught? Sometimes. Does it make it right? No.

    So then it becomes an ethical issue – as I mentioned before, do you lower the bar because others are or do you continue to raise it and strive to set you and your organization apart?

    Thank you for visiting and commenting,
    Sara

  • http://www.squidoo.com/best-laptops-under-600 Mandy Bohn

    Thank you so much for this post. As a bloggers and social marketer, it is very helpful to know these laws so that I could checked if I am playing fairly. It will also guide to those consumer that is mostly prone for theses giveaways.Contest happens a lot in social sites especially in Facebook. But, do these laws are properly implemented? 

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Mandy, thank you for visiting and sharing. Appreciate you taking time to comment. ~ Sara

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  • Robert

    Does anyone know the official UK position on all of this?

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    Robert, laws in the UK are quite a bit different. Not only do they call the promotions differently than here in the US there are some peculiarities for each of the countries that mean understanding the general as well as the specific. I hope someone with that information can chime in, but it is beyond my scope.

    ~ Sara

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  • mfb

    Hi Sara,

    thanks for your article.

    I’d like to make sure before I do a contest on my FB page with 6000 fans
    – is writing a post on my wall “hey, email me at [emailadress] and the
    first person to write will win a book” OK with the facebook terms of
    use?

    I don’t choose a person via facebook, but by the messages I get. However it’s not done by using ‘a third-party app’.

    Thanks for your answer.

  • ALC

    I won a blog sweepstakes and the blogger never sent me my prize and ignored my attempts to contact her.  She has now deleted all of my posts on her blog.  What can I do?

  • ALC

    I won a blog sweepstakes and the blogger never sent me my prize and ignored my attempts to contact her.  She has now deleted all of my posts on her blog.  What can I do?

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  • Lee and Ruth Robertson

    Sara,

    We recently opened an optometry office and will be doing a glasses collection to donate to the Lion’s Club right before Christmas.  To entice people to donate we want to hold a drawing for prizes.  Anyone can enter once to win a prize (over the age of 18), but if you bring in a pair of glasses you will get multiple entry forms. We will be asking other businesses in the community to see if they would like to donate any prizes.  From what I understand from your blog this will be considered a sweepstakes, right? 

    Will employees and family members of the employees of those businesses be able to enter the drawing? Or is that up to our discretion?

    Any other red flags you see or want to comment on?  Also reading through the questions, if other small businesses donate a prize, can they donate something as small as a $10 gift certificate?  I didn’t understand the “consideration” comment too well.

    THANK YOU!

    Ruth

  • diane

    Hi Sara

    I  just found the time to read this very informative article and hope you see this comment.  Are we able to just give away something as a result of commenting on our blog and forget facebook all together?  For example, the first ten people to comment receive one of our products….no other requirement necessary i.e. liking us on facebook etc.

    thanks again for sharing your expertise.

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    ALC, that is unfortunate that posts (I’m assuming comments) were deleted. However, winners of sweepstakes can report companies to the FTC and to your state’s Attorney General for failure to deliver a prize. If you know the state she is in you can also report to her state Attorney General.
    Each state handles things differently so there is no guarantee she will ever be contacted. The FTC may or may not follow up either, depending on the value and severity of the infraction.

    If it was a blogger giving away a branded product you may try to find out the PR Company that reps the brand or write/call the brand directly. Most of the time, though, the brand customer service people won’t have any information on bloggers doing giveaways.

    Unfortunately, you may have to just chalk it up as a loss. Depending on the value, your level of involvement to retrieve your prize will vary.

    Sara

    NOTE: This is not to be construed as legal advice. For informational purposes only.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Ruth,

    Giving multiple entries to someone who donates vs. giving one entry to someone who does not may be seen as consideration as the donee would be enticed to donate because they are getting something in return that a non-donee isn’t.

    You decide the rules and if employees and family members can enter the rules should state that. However, be prepared for negative reactions because it may not appear to be truly arms-length in selecting winners.

    Prizes can be whatever you want to give.

    Sara

    NOTE: This is not to be construed as legal advice. For informational purposes only.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Diane,

    You get to decide how the winner is chosen. If the winner is chosen by random it begins to take on the scheme of a sweepstakes. However, if you are using some merit or criteria – such as speed of comment – it is no longer random/luck of the draw and the giveaway would not be a sweepstakes but will begin to look like either a contest or lottery.

    Using Facebook is not a requirement of sweepstakes or Contests.

    Sara

    NOTE: This is not to be construed as legal advice. For informational purposes only.

  • http://www.kroatisches-kuestenpatent.at/ Küstenpatent,

    Michael, Just a short note to say that I think you have the world’s
    premier site in this sort of area. It is a great professional resource,
    and contains actual useful material.

  • Rebecca Miller

    Hi!  Thanks for this post.  I’m still a little confused.  Can you confirm if I am understanding the law correctly?:
    –It’s ok for me to have a contest or promotion in which one enters for free and provides nothing of value to me.
    –It’s ok for me to have a contest or promotion in which I EITHER pick a winner at random OR pick a winner based on the merit of their entry (trivia question, best photo, etc.)…as long as the contest is free and provides nothing of value for me.
    Is that correct?

    Thanks!  So much to learn in this new information age!

  • Sean

    So is it legal for a sports store to have such a contest in which you must make a purchase of $20 or more, and then customer can elect to be entered into a free throw contest?  In which the person who hits the most basketball free throws wins a $100 prize.  Obviously someone will shoot a brick and thus create a winner.  It would appear that the contest is skill based, even though many don’t play basketball. 

    Or for the store to simply say $10 to enter the free throw contest and no store purchase of any product or merchandise.

    Either of those legal?  If not how could they reorganize to make it legal?

  • http://sarafhawkins.com/ Sara F. Hawkins

    Rebecca

    For a Sweepstakes, the promotion must provide a means of entry whereby the entrant does not provide compensation to the host or sponsor and the winner is chosen at random

    For a Contest, the promotion may require the entrant to provide something of value to the host or sponsor (such as a photo, drawing, video) and the winner is selected on some merit basis.

    Most people mix these two up or interchange the names. In the US, a sweepstakes winner is always chosen at random whereas a contest winner is chosen based on merit.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Sean,

    Since the hypothetical you present has the winner being chosen based on merit, the promotion is a contest and the rules are a bit different.

    The presence or absence of consideration paid by a participant for entering the promotion is often the determinate factor of legality of the promotion. In a few US states there are laws which state that requirement of any type of consideration by an entrant that would rise to the level of creating a contractual relationship renders the promotion unlawful.

    This is why it is challenging to put out a blanket statement when it comes to entrants providing consideration.

    For the promotion to be a sweepstakes, the consideration element is removed.

    For contests it’s a bit trickier because of the laws regarding payment to enter promotions often run parallel to laws regulating lotteries.

  • http://www.facebook.com/carla.sgroi Carla Sgroi

    Hi Sara, My Company is preparing for a YouTube Video
    Contest.  We have drafted up Official
    Rules by looking at other companies that have done similar contests and want to
    now have a lawyer look them over.  Is
    this a service you can provide or can you recommend others that can?  Thank you. 
    Carla

  • http://sarafhawkins.com/ Sara F. Hawkins

    Carla, the best way to reach me is via my contact page: http://www.savingforsomeday.com/about-me/contact/

  • http://sarafhawkins.com/ Sara F. Hawkins

    Carla, you can contact me via Twitter. Just ‘at’ me – saving4someday

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  • Melanie

    I am trying to promote my blog and brand myself. I have no tie ups with any companies. Can I still do  a giveaway on my dime? Like my Page on FB, Follow my blog, Tweets, etc etc all making up one entry …
    Is that in the legal ok?

  • Melanie

    Oh – to specify – the giveway would be a product of another company, that I’ve paid money to buy. 

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  • Renee

    This question is a bit different in that I am the contestant.  A company posted a contest on their FB wall announcing a $50 prize to their Top Fan for the month.  I have “worked” for 3-1/2 wks promoting their site, posting to their wall, “liking,” and “sharing.”  Now they have announced 1 person out of their top 10 fans will be chosen for the $50 prize, not their Top Fan.  This is the last week of the contest, too.  I have about twice as many points as the 2nd place person, so I was certain expecting to win.  When I messaged them, they said it had been an error…an error that they are now trying to correct when the month is almost over???  It looks like they also removed their May 1st post announcing the contest, but I stayed one step ahead & took a photo of it as well as copied & pasted it into a Word document.  Let me add that there are no official rules anywhere.  They have also tried saying that one could only win one prize every 90 days for either of their 2 companies.  I won a $25 prize from their other company in April, same kind of Top Fan promo.  This rule is not stated anywhere on the 2 Facebook pages or the 2 company websites.  Whom should I contact if they do not award me the prize on May 31st?

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  • http://sarafhawkins.com/ Sara F. Hawkins

    Melanie, anyone can do a giveaway. It doesn’t matter if you are the sponsor or if a brand is sponsoring. If your giveaway is a sweepstakes or contest (there is a difference between the two legally) then its best to be as compliant as possible. I won’t lie and tell you that every blogger follows sweepstakes/contest legal rules because they don’t. However, there is always a risk and you just have to be willing to take it.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Renee, I think you emailed me with this concern but I’ll reply here too. If you feel a contest or sweepstakes run in the US was not legally compliant with US laws you can make a formal complaint with the Federal Trade Commission and the state attorney general in the state the company is physically located as well as their place of incorporation, if you know that. 

  • Larryrutter

    Sarah,

    What do you think of referral bonuses? We are a yacht brokerage and handle multi-million dollar items on a regular basis. Using the 6 degrees of separation principal (you know someone who knows someone…. that will buy a large yacht) we would like to offer a percentage of our commissions to anyone that refers a yacht buyer to us.  It’s worth every penny to us to locate buyers, but are we doing anything illegal?

    Appreciate your thoughts.

    Larry Rutter
    Founder
    Rudders & Moorings Yacht Sales

  • http://sarafhawkins.com/ Sara F. Hawkins

    Larry,

    The rules relating to offering compensation or “finder’s fee” are different than those related to sweepstakes, contests and promotional marketing programs. You would likely be better suited than I to know what the laws are related to compensating non-brokers when such compensation is tied to commission. I know that in the Real Estate area there are very strict guidelines about who can and can not receive payment from the commission. I don’t think those same legal compliance mechanisms exist within the auto dealer world though. As a yacht dealer I’m not sure where that industry fits within the various regulatory programs.

    If there are regulatory/legal limits as to who can receive proceeds of commission on a sale those may preclude you from offering a “finder’s fee” based on receipt of commission. 

    If you have other specific questions, please feel free to email me directly at savingforsomeday [at] gmail [dot] com.

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  • katotmottgogo

    Hey Sara!

    First of all, I would like to say that this is really a great article that I happened to have just stumbled across doing some research.

    My question is:  What if the giveaway is something that is given to every single person involved?  For example, if one were to run a Twitter type campaign basically saying that for the next 30 days, they will giveaway a particular music mp3 file of theirs or an ebook pdf file of theirs to everyone who follows them on Twitter?

    What would somethign like this fall under?

  • Leeandruthrobertson

     Thank you Sara for taking the time to answer my question!

  • Leeandruthrobertson

    Sara,

    One more question for you to make sure I understand right.  If the prize is valued under $600 no legal steps need to be taken–aside from contest rules–right?  (Like giving the winner a 1099 form.)   But over $600 requires a form?

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  • Laura

    Wow! I would have never known that. I’ve done several giveaways on my blog, and ‘m glad I never had an issue. I’m glad I now know how to protect myself!

  • Martha Woods

    Wow, there’s so much info here I can barely process it. (head spinning) I’m a blogger looking to start doing giveaways and I had no idea there were so many complex rules when it came to involving social media! Good to know stuff here, thank you for posting!

  • Sara Hawkins

    With the scenario you describe the item is being given to everyone so there is no element of chance or luck so the sweepstakes/contest paradigm doesn’t fit.

  • http://twitter.com/SaraFHawkins Sara Hawkins

     I can’t say that no other legal steps need to be taken because I’m not offering legal advice, nor do I know everything about the scenario. I can say that any time a prize is valued at $600 or more an IRS Form 1099 should be provided to the winner and filed with the IRS per IRS regulations.

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  • http://www.facebook.com/ellikem Eli Kem

    Hello Sara Hawkins, great material u have here. I count myself lucky to have stumbled across it. Can u please help me determine what category my contest falls in and what kind of safeguards i need to take before i land my company into trouble cos from what i read on this page i realize what u don’t know could hurt u big time and ignorance is never an excuse.                                                   
    My Contest/Competition is similar to Miss USA/Miss UNIVERSE. And just like these competitions applicants(prospective contestants) are charged/required to pay application fees and participation fees. It’s my company’s intention to host the application, registration processes and public voting online(specifically Facebook & Youtube). So i want to know if organizing such a thing(contest/competition) this way is legal or illegal. There is a selection of State Winners at the Preliminary Stage and then the 50 State Winners vie for the National Title. I am so confused right now after reading this becos my company was about launching this competition ending of this month. Aside advising me to get an attorney i need some expert advice from you. Thank you and i’ll be looking forward to a reply from u.

  • eli

    Hello Sara Hawkins, great material u have here. I count myself lucky to have stumbled across it. Can u please help me determine what category my contest falls in and what kind of safeguards i need to take before i land my company into trouble cos from what i read on this page i realize what u don’t know could hurt u big time and ignorance is never an excuse.                                                   
    My Contest/Competition is similar to Miss USA/Miss UNIVERSE. And just like these competitions applicants(prospective contestants) are charged/required to pay application fees and participation fees. It’s my company’s intention to host the application, registration processes and public voting online(specifically Facebook & Youtube). So i want to know if organizing such a thing(contest/competition) this way is legal or illegal. There is a selection of State Winners at the Preliminary Stage and then the 50 State Winners vie for the National Title. I am so confused right now after reading this becos my company was about launching this competition ending of this month. Aside advising me to get an attorney i need some expert advice from you. Thank you and i’ll be looking forward to a reply from u.

  • http://www.littlevictorian.com/ Christina

    Hi Sara, thanks so much for the article.  It’s the clearest and most helpful one I have read.  I have a question.  I am hoping to run a contest (they have to work for it) on my blog.  The winner will be voted for by readers.  The first prize will probably be worth about $75.  
    We can give prizes away to people in other countries right?  I have lots of readers that would probably want to participate that are in Europe and Australia.  Are there different rules about that?
    Thanks again!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Eli,

    Many organizations host online contests without problems. The key is to have good rules and to follow them to a tee. Contests can have a consideration component because the winner is not chosen by luck but rather by a set of criteria (which are set out in the official rules).

    I am unable to comment specifically as to whether your proposed promotion is or is not legally compliant. If you are concerned, please seek the advice of competent legal counsel to ensure your promotion is compliant with all state and federal laws, as well as any laws that may apply if the promotion is open to residents outside the US.

    Best of luck!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Christina, I have only addressed US laws. Allowing entrants from other countries mean you will need to determine what the laws are in that country and create your promotion according to the most strict set of rules/laws.

    For example, to be compliant in Canada a contest must have a skills test in addition to a number of other requirements.

    You will find that almost all US-based promotions limit participant to US Residents. This is done so that the promotion administrator does not need to take into consideration the laws and regulations of other countries.

  • http://www.facebook.com/ellikem Eli Kem

    thank u for the insight, i really appreciate ur advice.

  • Nick

    My wife
    and I have a gardening blog. One of the products we offer is an online garden
    design program. The program costs $25 per year however, new customers get a
    “No Obligation” 30 day free trial. They are not forced to pay after
    the 30 days, in fact they have to go back in and buy the one year subscription,
    it doesn’t auto charge them (if that makes sense).

    We would
    like to encourage more people to sign up for the 30 day free trial by giving
    away a free one year subscription to 1 out of every 50 people who sign up. When
    they sign up then enter an e-mail address and that is all we have access to,
    and they don’t have to make it viewable to us. They would though in order to
    qualify for the giveaway as we would need a way to get a hold of them.

    I am
    really trying to wrap my head around the laws here that govern such a
    promotion. Would this be considered a sweepstakes? If so would covering the 9
    points you outlined in the rules be sufficient? What things should we be
    careful of?

  • Nick Brown

    I am
    re-reading your article and it strikes me that requiring someone to sign up for
    the free 30 day trial may be considered consideration? If so, from what I
    described, would this be considered a lottery?  The reason I ask is because then we would have a prize, chance (1 in 50), and consideration.

    The
    person would sign up for a 30 day free trial. After 30 days they have to go
    back in a complete the registration and pay, it doesn’t do it on its own. Once
    the contest is over (less than 30 days from start so winners will have their
    free subscription before the promotion ends and no one feels obligated to pay) we
    will take the number of people who signed up, divide it by 50, and give away
    that many free subscriptions (rounding up of course so the odds are at most
    1:50 assuming we won’t have a total perfectly divisible by 50). It would be
    random and have a definite end date.

    Thanks
    so much.

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  • Jerugold

    Thanks a lot. This was a very helpful :-)

  • http://twitter.com/SaraFHawkins Sara Hawkins

    @facebook-100001387624698:disqus sorry for the delay in replying but I don’t always get pingbacks when new comments are added.

    What you describe could be construed as an illegal lottery. I have seen sites offer free subscriptions as a prize just for leaving their email. Whether or not the person buys a subscription to the site is not taken into consideration when determining the winner.

    Different sites use different methods, but it does’t have to be complex and if the selected winner had obtained a paid subscription during the interim – from entry to award – then the price is refunded.

    There are ways to offer a “free” entry into the sweepstakes. If the promotion is changed to a contest and the winner is chosen by some merit, there are different rules for that.

    It may even be possible to just let all entrants click a box/radial button saying whether they want a 30-day free trial. If they do, great. If not, they’re still entered. But the entry is not conditioned upon obtaining a trial.

    Disclosure: the above is provided for informational purposes only and is not legal advice nor does it create an attorney/client relationship.

    ~ Sara

  • Alvis Jenkins

    Sara, I wonder what you know about Federal law concerning taxes? Most lawyers I write to, have a very small knowledge of Federal tax law. Lets talk about Federal income tax withholding. Can you agree that the word “income” is a legal term for Federal tax purposes? This term is NOT defined in the Internal Revenue Code. But, it has been defined by the US Supreme Court what “income” is. Not knowing whether you know or not, it is a gain or profit from Federal corporate activity. Knowing that, where do you think that the state lotteries have the required authority to withhold Federal income tax on prize winners? They don’t, and the lotteries stand to be prosecuted for withholding the tax without the prize winners consent. All tax forms that contain a written declaration of “under penalties of perjury” are voluntary. You should know that no one can be lawfully compelled to self incrimination. The simple truth is that the IRS is collecting millions and doing nothing to deserve the cash from lottery wins. Title 26, subtitle C, section 3401 defines a employee for collection of income tax at source and section 3402 provides for withholding on a voluntary basis. When volunteered to pay the tax, the Federal employee becomes liable for the tax. Withholding is on employment and the prize winner is not a employee to the lottery as employer. Don’t you plainly see the fraud here? Please do not reply as I’m not asking for legal advice as the law is plain as day and is not void for vagueness.  

  • Alvis Jenkins

    Sara, I wonder what you know about Federal law concerning taxes? Most lawyers I write to, have a very small knowledge of Federal tax law. Lets talk about Federal income tax withholding. Can you agree that the word “income” is a legal term for Federal tax purposes? This term is NOT defined in the Internal Revenue Code. But, it has been defined by the US Supreme Court what “income” is. Not knowing whether you know or not, it is a gain or profit from Federal corporate activity. Knowing that, where do you think that the state lotteries have the required authority to withhold Federal income tax on prize winners? They don’t, and the lotteries stand to be prosecuted for withholding the tax without the prize winners consent. All tax forms that contain a written declaration of “under penalties of perjury” are voluntary. You should know that no one can be lawfully compelled to self incrimination. The simple truth is that the IRS is collecting millions and doing nothing to deserve the cash from lottery wins. Title 26, subtitle C, section 3401 defines a employee for collection of income tax at source and section 3402 provides for withholding on a voluntary basis. When volunteered to pay the tax, the Federal employee becomes liable for the tax. Withholding is on employment and the prize winner is not a employee to the lottery as employer. Don’t you plainly see the fraud here? Please do not reply as I’m not asking for legal advice as the law is plain as day and is not void for vagueness.  

  • Goodsondwayne

    Can you charge for a Essay contest on why you need a new and the new car be the prize for winning essay

  • http://twitter.com/SaraFHawkins Sara Hawkins

    @facebook-1849564061:disqus while I am knowledgeable in US Federal Income Tax law, a discussion on that topic is beyond the scope of this article. I can say that 26 USC 61 is where one would find the definition and discussion of “gross income”. The definition is very broad and inclusive.

    Section 3402(q)(1) of the Internal Revenue Code requires that every person, including the Government of the United States, a State, or
    a political subdivision thereof, or any instrumentalities of the
    foregoing, making any payment of winnings which are subject to
    withholding shall deduct and withhold from such payment a tax as defined within the section. Use of the word “shall” in this provision means it is mandatory and not voluntary as you suggest.

    That the IRS is permitted to collect taxes on winnings has been well settled through numerous legal challenged. State legislatures undertake significant legal consultation when they establish lotteries to ensure that all tax obligations are met.

  • http://aliviaanders.blogspot.com/ Alivia Anders

    Hi there Sara! 

    Call it a bad case of, “I don’t want to get fined or arrested,” but I recently looked into if what I had been previously doing for ‘giveaways’ was legal. Apparently, one of my most recent events was far from it, and I guess you could call it good timing (and a little luck from a friend sharing this to me) that I decided to read up on the do’s and don’ts of events and giveaways and all that like. 

    So, maybe you can help me out here a little. As a small, self-published and independent author, I know that numbers with my books (sales) can make or break a career, as well as do nifty things like pay the bills. In my last event, I stated that if someone purchased a copy of one of my books and showed proof of purchase, that they would be entered to win a Kindle. I know now that, because I didn’t offer an equally free method of entry, that this was probably illegal, no? 

    But since I’m still trying to sell books, especially when hosting events like release day parties, how can I achieve this without being slapped on the wrists? 

    Here’s a scenario. Let’s say I’m celebrating the release of my newest book, ‘Bacon Bits’ on Facebook. Could I do a giveaway that, if you showed proof of purchase, you’d receive a signed bookmark regardless, but you’re also entered to win the big special basket of goodies at the end of the event? Or is that still not okay? 

    To be honest, the whole ‘consideration’ thing confused the crap out of me. Wouldn’t ‘consideration’ be constituted as the time they spend playing other ‘prize game’ events on my event tab the whole day? 

    Argh. I hate confusion. 

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    @facebook-1849564061:disqus there must be a means of entry that is “free” and all entries must be weighted the same and have the same likelihood of winning. If someone buys a book, makes a donation, washes your car, etc., they can be entered into the sweepstakes, too. But it’s not necessary. Many people are willing to buy something (books, magazines, notecards, etc) to support the person/organization, but the law says that there must be a means of entry that does not confer consideration to the sponsor.

    You’re not alone in the confusion, which is why I gladly write these articles and answer questions to further clarify the information.

    *responses to questions are for informational purposes only and do not constitute legal advice.

  • Aaron Watters

    Thanks for the post, I know I’m a little late to the party, but this article greatly helped me in mapping out a giveaway well over the $600 value you mentioned. I wasn’t even thinking about the IRS until after reading your post (I found you on Google for “giveaway requirements).

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  • Julie

    So for a contest it’s OK to have “consideration” in the form of making them “work to win” in some way. We want to do a quiz – just like you mentioned in the Consideration example – where someone would have to go to our site and find info to answer about 11 questions. If they get them all correct they go into Round 2 which is judged based on the quality of feedback given to 2 new questions. Since this is judged and requires some skill it’s considered a contest and not a lottery, correct? THANKS!!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thanks for coming back and commenting @google-acd39dcaf647248618baa7b197711ce9:disqus. Glad the article was helpful

  • http://twitter.com/SaraFHawkins Sara Hawkins

    @effdc0d8766b446c846c2c472383eaf7:disqus A lottery has: (1) consideration, (2) a prize, AND (3) the winner is chosen randomly. A promotion that is judged and the winner chosen by some judged criteria would not fit the legal definition of a lottery because of how the winner was chosen. Contests, on the other hand, often do select winners based on some judged level of skill. Rules for contests are slightly different than those for sweepstakes, although, just as with sweepstakes a contest should have well defined Official Rules.

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  • Melly

    Hi Sara,

    Thanks for the post. It is informative. I was wondering if you know of any official source for me to reference these information you have posted, as I am researching for my company business and I am afraid I cannot be referencing to a blog.

    I have been searching and finding it a huge challenge to find official publication online on such laws.

    This would help heaps! Thank you!

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  • Linda

    What happens when The company has announced the winner & still has not given the prize you won? Instead you get all kinds of excuses and promises. What do you do about that?

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    The the prize has not be fulfilled as required per the Official Rules (or if there are no official rules and a reasonable amount of time has passed), the winner should contact both the FTC (go to FTC (dot) gov and file a complaint) as well as the state Attorneys General for the winner’s state, the state where the company is physically located, and the state of incorporation, if different than physical location.

    The FTC may not specifically investigate and get you your prize, but they may if there is a history of complaints. Your state Attorney General, or the Attorney General of the company’s location may be able to resolve this issue. Each state Attorney General’s office has a department of consumer affairs that handles matters such as this.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Unfortunately, the laws are not all clear or easy to find in one place. Federal sweepstakes laws are mostly governed under law relating to the US Mail services. State laws vary by state and may or may not be specifically defined under contests/sweepstakes/lotteries.

    The easiest ones to find are NY and FL because of their bond requirements. Other states, you can begin your search with laws related to lotteries which often reference other provisions relating to other types of promotions.

    Each state has a set of statutes and that is where you will find these laws. For federal law you need to look in the Code of Federal Regulation.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Contests may require compensation since its winner is not chosen by random draw but, rather, based on some set of criteria.

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  • Tickedoff

    Sara,
    I have looked at 47 USCA § 509 but can’t tell if this section only applies to radio stations or contests in general. I have a question about contest fixing. I have entered a contest on a site, and have an email from the owner or main contributor to the site that is acknowledging that if they can get people into a close contest they get more users. The email states that the owner/contributor would like people to vote for a specific user b/c they know that the usernmcan get more people to vote. Is this a violation? and if so what is the citation?

  • Bob

    Sara,

    I have an interesting question…could a company’s promotion be deemed a sweepstakes in one jurisdiction, a game of skill in another and a lottery in a third?

    For example, ClubWpt is an online poker site that allows its members to play for cash and prizes. It’s $19.99 a month to be a VIP member with unlimited access. There is an alternate free method of entry as well and they don’t have special rules for Canada.
    I could see this being a contest of skill in States or other Countries that allow or recognize online poker as a game of skill, a sweepstakes in others and prohibited as lotteries in others.
    Your thoughts? Is a free trial membership always looked at as consideration?
    Thanks….
    Bob

  • http://sarafhawkins.com/ Sara F. Hawkins

    The section you reference is for Wire or Radio Communications only. However, the rules for sweepstakes/contests are often mixed within laws related to the mail and radio/wire communications because the laws for sweepstakes/contests have not been updated to take into consideration the internet and mobile platforms.

    Regardless of the platform, the basic rules for fairness will always apply. What you describe may likely be a violation of both federal and state laws.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Paid memberships, and their associated “free trial” memberships are not sweepstakes/contests/lotteries because they are not “games”. The underlying product/service maybe a game (i.e. poker) but the membership itself is a product/service.

    One of the reasons a legal sweepstakes in the US would be limited to US residents/citizens is because in Canada, their definition of sweepstakes is what the US calls a contest thus creating problems in administering the promotion.

    Furthermore, the regulation, in the US, of online gambling is left to the states and most statues are vague in their laws. Only one state, Washington, explicitly makes online poker a crime.

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  • Ronna Reid

    How does this affect “personal/non-business” raffles/drawings for items worth less than $600? We are raising money for our favorite charity, and have our own personal item as the prize. We would like to sell raffle tickets, or drawing chances online, but I want to be sure I do things correctly as well.

  • Ronna Reid

    How does this affect “personal/non-business” raffles/drawings for items worth less than $600? We are raising money for our favorite charity, and have our own personal item as the prize. We would like to sell raffle tickets, or drawing chances online, but I want to be sure I do things correctly as well.

  • armando

    Hi,
    I realize this article was written a long time ago and I might not get a response, but its worth a shot!

    In conjunction with a wine company, a travel company and a retail company, we are giving away a trip, a bracelet and a dinner/wine at a vineyard. We were told that giving wine away is illegal, but also that using the word wine to promote the sweepstakes may not be allowed – is that accurate?

    Thanks

  • http://7and1.net/ Cole

    I’d love to know if there have been any significant changes to this since you wrote this post.

  • Topbulb Guy

    Excellent analysis, thanks for this article. We’ve done some sweepstakes in the past, but are considering a larger one and were debating whether a sweepstakes or contest would be best. We were leaning towards a contest for this one, and that’s probably what we’ll do. But for sweepstakes in the future, this article is invaluable.

  • Tony

    I would like to suggest an economic driver for our downtown business district. This “raffle” would be sponsored by the local business association and for every participating merchant a cash pool will be collected and raffled off to a lucky shopper. The requirement would be a minimum $100 one time purchase to enter. Enter as many times as possible with each individual purchase. Drawing to held at a year end event. The winning pot depends on participation but goal would be $5,000 cash back. Would this be a legitimate program in VA?

  • HAZE

    If I may ask a question….

    I am a film makers and I would like to make a music video for an artist for free (with exceptions and limitations; i.e. not flying them to Cancun to film on the beach and they would have to pay for their own travel expenses).

    That being said, I would like to have an entry fee for several reasons:
    1. Limit the pool of participants to individuals who are serious musicians.
    2. Use the entry fees to pay for film festival entries for the artists complete video (as you know film festivals can cost anywhere from $20 up to $100 a pop).
    3. Use part of the entry fee to pay for overhead costs (i.e. set design materials, props , etc.)

    All that being said can I legally ask for a $20 entry fee? The winner would be selected by two filmmakers who determine the song’s potential and consider their attached essay that would explain why they deserve to be chosen.

    Thanks!

  • Megan W

    Our company is wanting to do a small give away via facebook. Our plan is to giveaway a $50 voucher/coupon for our products. We were going to choose the winner at random from a pool of people who like our facebook page. Because it is under $600 and they don’t have to pay to enter our giveaway, are there any laws that apply?

  • Queenreviews

    Thank you I found this very helpful!

  • Alex

    Hey Sara,

    Awesome article. Very helpful. I have a question – if a company sells a product, but incentivizes customers to buy saying “if you buy you will also be entered to win this bonus product”… does that constitute a lottery? Even though I am receiving an item for my original purchase and the giveaway is just a “bonus?”

  • http://sarafhawkins.com/ Sara F. Hawkins

    There have been no significant changes since this article was written.

  • http://sarafhawkins.com/ Sara F. Hawkins

    You would need to find out what the laws are in your state (VA) regarding raffles. Each state has specific criteria as to who can run a raffle since a raffle is basically a legalized lottery on a smaller scale.

  • http://sarafhawkins.com/ Sara F. Hawkins

    @disqus_D2geyBkglY:disqus the laws relating to sweepstakes (random draw) are different than those for a contest (a game of skill). You should consult with an attorney to determine how best to structure your promotion.

  • http://sarafhawkins.com/ Sara F. Hawkins

    @bell_er:disqus a sweepstakes can not require a purchase nor can it give those who purchase a greater likelihood of winning.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Many sweepstakes are limited to entrants who are members of specific groups and many companies have successfully run promotions that are hosted solely on social platforms allowing such promotions. Sweepstakes laws do not have any specific monetary threshold except in certain states that require a bond or registration.

    You should seek legal counsel to ensure your promotion is legally compliant, as I am unable to offer that type of advice within public comments.

  • Helena Cross

    I know this is super late, but I was hoping you could answer a question for me. I’m running an Instagram contest for my company and noticed in the “Official Rules” of several other Instagram contests that they require the winners complete an “Affidavit of Eligibility and Liability Release” form in order to receive their prize. I was wondering whether it is necessary to have winners sign such a form when the prizes are under $600. Would it be okay to have them simply email us their full name, mailing address, and an original copy of the winning photo? Thanks in advance for your help!

  • lilewis

    I prefer not to share my entry with my FB friends. All contests ask you to share. I don’t know if that’s part of the requirements.
    1. I’m wondering if I don’t share my entry will I be invalidated?
    2. Or if I share only to myself will that counts?

  • booz85

    I’ve been doing a lot of digging about this topic and am hoping to find a quick answer. I work for a car wash business and hope to trying some new things like a sweepstakes on our Facebook page. I have seen other businesses do small giveaways on Facebook without ever stating official rules or guidelines. Basically, what we were hoping to do if to post a question (e.g. What is your favorite car air freshener scent?) and giveaway a free wash to a random fan who answers the question. I just feel that the amount of work involved in drafting official rules or seeking legal counsel who be more than it is worth when it comes to running a small giveaway such as this. Any advice would be much appreciated.

  • http://inspiration-today.jimbo.com Lee

    I’d like to run a promotion on my Bible Verse website giving away free music CDs. Do I need to get permission from the artist or record label first? Thank you!

  • Vickie Verlie

    THank you for all the info above. I was thinking of holding a drawing for anyone who makes a donation. Can I do that? or is it considered a lottery?

  • Jenni Wendlandt

    Can someone point me in the right direction regarding the legality of this situation?:
    My school help a contest, where after a scavender hunt, the picture with the most “likes” on facebook won. It was listed to end Thursday March 20, but didn’t list an end time. I have several screen caps from that day showing I was winning (10am, noon, 5pm, 9pm.) When I looked on Friday morning, someone else had more votes, but I am fairly certain it wasn’t until after midnite (hence Friday). According to a student gov worker, when she checked at midnight (this would then be FRIDAY) the other girl was winning. So they are callin her the winner (But they did not take a screen cap or have PROOF) of the actual time she checked. Lets say that she DID have more votes at 11:59pm, wouldn’t I be the winner, as there is no documented evidence that she had more at any time Thursday? I don’t think one student workers word about when she thinks she checked facebook is enough to determine a winner!
    Thanks in advance.
    -J

  • Janelle Hanaike

    I know this is a very old thread, but I’m running a contest and giving away some tickets to a concert, would you know the legality in that? Or where I would be able to find the rules regarding the prizes?

  • http://sarafhawkins.com/ Sara F. Hawkins

    @helenacross:disqus
    The reason companies obtain an Affidavit of Eligibility and Liability Release is to ensure that the potential winner is qualified to win and to then obtain an affirmative release of liability by obtaining a signature. This is done especially with photo/video contests and sweepstakes where a written copyright assignment or license would be required under the law.

  • http://sarafhawkins.com/ Sara F. Hawkins

    A required FB share may not violate sweepstakes/contest laws but it is a violation of FB Promotion Guidelines.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Both federal and state laws require entrants to be apprised of the rules. Just because companies and individuals choose not to create official rules does not mean they’re not. Lots of people violate the law every day (speeding, copyright, theft, violence). It’s a risk analysis. For some the risk is too high, for others they’re willing to take the risk.

  • http://sarafhawkins.com/ Sara F. Hawkins

    What you’re talking about is covered under the First Sale Doctrine and allows a lawful purchaser to sell/give away the copyrighted work without permission from the copyright holder. To learn more just search the term.

  • http://sarafhawkins.com/ Sara F. Hawkins

    That would likely be considered a lottery. Some states do have exceptions for charitable raffles, but you’ll need to check with your state to determine if your situation is covered by state law.

  • http://sarafhawkins.com/ Sara F. Hawkins

    This is why these promotions should have official rules. Without official rules there are situations like this and if you were to pursue any type of action they would need to defend themselves.

  • http://sarafhawkins.com/ Sara F. Hawkins

    If you want to give away concert tickets as a prize there is no prohibition to that type of prize if you bought the tickets. If they were provided to you gratis, you would need to determine if there was a prohibition on transfer. In addition, with concert tickets, if the ticket must be obtained at “Will Call” there may be requirements to provide identity of the ticket purchaser that could impede your giving them away. These positive identity rules are in place to deter scalping and re-sale and are legal. So, you’d have to consider the entire circumstances.

  • booz85

    Thanks for the response. After some more research and weighing the pros and cons, legal counseling was the route we took. Better to be safe than sorry.

  • Sirendipity

    We keep sending out emails to people who have been chosen to receive sweepstake’s prizes, but no one is responding. Legally, do we have to keep communicating and reaching out to find someone or at some point have our legal obligations been fulfilled? Thanks.

  • sassmastergeneral

    I wanted to submit artwork for Lindsay Adler’s adorama funded light
    editing contest and it was closed LONG before I could submit. Which
    makes me think the contest was fixed. How can you determine a legitimate
    winner when all the participants cant submit?

  • sassmastergeneral

    To clarify the contest closed it’s submission forum four hours earlier than publicly specified.

  • sassmastergeneral

    I would think the implicit contract would allow for cause to elicit the same consideration as promisory estoppel. Being that you are working under the established understanding that the end of the implied contract is at 12pm pacific time not AM.

  • Callmethequeen

    Great article, Sara! For a Twitter promotion, would it be ok to put the disclaimer language (NO PURCH 18+ US) in a graphic that we tweet with a TINYURL to the official rules in the actual tweet?

  • http://sarafhawkins.com/ Sara F. Hawkins

    Sirendipity, this is where having Official Rules is important. If you have Official Rules they should set forth the process that will be followed if the proposed winner does not claim the prize. Without Official Rules, it’s a bit of a Catch-22.

  • http://sarafhawkins.com/ Sara F. Hawkins

    If the promotion has Official Rules, that would be the first place to start in your determination of whether or not the Sponsor and/or Administrator are following their own rules. If there are no Official Rules you may need to look in to other options to get your answers.

  • http://sarafhawkins.com/ Sara F. Hawkins

    If there are Official Rules, check to see if there is a time zone specified as it may have been 4 hours earlier with regard to your time zone but compliant with the one stated in the Official Rules. If there are no Official Rules you may need to pursue other options.

  • http://sarafhawkins.com/ Sara F. Hawkins

    @Callmethequeen:disqus I can’t provide legal advice or provide my opinion as to whether a specific situation is or is not compliant. Unfortunately, there is no law that specifically addresses how promotions should take place on Twitter and what is required due to the space constrain. This is something you’d need to take up with a lawyer if you are seeking legal advice.

  • Edna

    Hi Sarah. Very informative article! Stumbled upon your article while doing research on minimum age requirements for contests in the U.S. and Canada. interested in doing a social media photo contest for the U.S. and Canada, and wanted to know what the legal minimum age is for eligibility in both countries. we are looking at allowing 13 yrs and older to participate. the prize would be two roundtrip air tickets.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Edna, in the US a sweepstakes or contest can be targeted at people of all ages. It’s just a matter of ensuring that the laws regarding sweepstakes for those under 18 are complied with at both the federal and state level.

    I am not versed on the nuances of Canada sweepstakes and contest law relating to those under 18 so I am unable to comment.

  • John

    Hi Sara. Thank you very much for this useful information. A quick question: What do I do if I had already posted a “sweepstakes” that is illegal (for example, it required a purchase of a product to enter)? What are some of the ways I can fix it to make it okay? I am afraid that simply deleting it may be breaching the offer that I made. Any quick advice would be much appreciated!

  • Dollface

    Hi, I was wondering if you could offer me some advise. My mom was notified that she had won a grand price from a company called HelloWorld. The Contest/Sweepstakes itself was sponsored by Twisted Tea. Every since being notified that she was the winner, no one that represents either company has made contact with us. We were notified back June and asked to sign and have some papers notarized in which we did. Since then we have heard nothing. The price itself was a 3 night 4 day all expense paid trip to the Sprint Cup in Dover, DE. It was supposed to take place on 9/26-29. We were all the way into the first week of Sept and hadn’t heard anything form the company. After calling their corporate offices we had someone call us back and told us we could have the cash value of the trip (which is 10k.) Since being told this we haven’t heard anything back and I’m starting to suspect something fishy going on. What do you suggest that I do?

  • Elizabeth

    I enter lots of giveaways on facebook and notice a few pages/companies don’t seem to ever announce winners. It is my understanding that it is unlawful to offer a giveaway and never announce winners. Is that correct?

  • David Kratz

    My apologies for commenting on an older post, but I read your article and was curious. Can a company declare the list of contest winners as essentially private, and state that any one who requested them may not share them?

  • Sherry Cooper

    I won a purse from a reputable designer in June of this year. I quickly chose the purse of my choice as instructed. I never heard back from her so I emailed her. She never answered me so I IM’d her during her next week giveaway. She answered in saying that she had emailed me (which she hadn’t) and said the purse I picked was out of stock, to pick another, so I did and asked her when I could expect to receive again. She again did not get back to me. I was wondering if you could please help me in knowing what to do…:( Susan Nicole Handbags is what I won

  • http://sarafhawkins.com/ Sara F. Hawkins

    @Sherry If you feel you have rightfully won something and did not receive your prize you can contact your state Attorney General consumer protection division, file a claim with the FTC, if they have a brick and mortar store file a complaint with the Better Business Bureau. If it’s a high value item you may want to sue in small claims court. Many small businesses don’t know there are laws pertaining to “giveaways” so often just by educating them and letting them know you will make a formal complaint with a government agency they’ll get it together. Sometimes they job out the promotion and the company executives don’t even know there is a problem.

  • http://sarafhawkins.com/ Sara F. Hawkins

    @David Every state requires a list of contest winners to be made available to the public. While the sponsor/administrator can limit the information provided (don’t want to give out someone’s home address or private email) the winner information is public.

  • http://www.DisneylandDevotional.com/ Randy Crane

    Hi Sara! Thank you for the great information in this post. I am working with a massage therapy business on a sweepstakes/contest idea, and I’d really appreciate your feedback. (We’re in California.)
    Basically, the idea is to get current clients to refer new ones during a certain time period. As the end of that period, if the stated minimum # of new clients (say, 20) have been referred, then 3 prizes would be awarded. The current client who refers the most new ones gets a guaranteed prize. The new clients referred by the winner of that first prize will be entered to win a prize (random drawing among those people). And everyone who referred at least 1 new client will be entered to win a prize (random drawing among all who referred someone).
    I know you can’t give legal advice, but do you see any red flags there? The only thing that I know of is no “free” way to enter for the random drawings. Any suggestions on a free entry option for those that doesn’t defeat the purpose of the contest and/or create a huge flood of entries?
    Thanks!

  • reneesignorelli

    Can a company change the Official Rules during or after the contest if they put in the rules that they have the right to modify the rules at anytime? My
    husband was in 3rd place in a photo contest based on votes, but the
    entrants in 1st and 2nd place did not abide by the Official Rules. The
    rules stated the pictures are to be “selfies” and taken by the entrant.
    The pics are not selfies, one was taken by a 3rd party instead of the
    entrant, and one entrant is not even in a photo. When my husband and I wrote to the sponsor to say some
    pics should be disqualified (apparently none had gone through an
    approval process…instead, all pics were immediately uploaded to the
    contest page), we were told our suggestions will be useful for next
    year’s contest. After the contest, they added to the Official Rules that the sponsor had the sole discretion to approve pictures. There’s also a part in the rules that if they are sued, the plaintiff just gets out of pocket expenses. Can they do this? Thank you.

  • Juliette

    Hi Sara
    We are a non-profit based in Australia and are looking at running an international game of chance competition and actively promoting it via emails and post to a worldwide database. Entry is free and the prize is worth about $20,000. The entry website is based in Australia, and we will obtain all required Australian licences. Do we need permits for every jurisdiction that someone in our database is living? Any help would be appreciated as it seems prohibitive to run this at this stage.
    Thank you!

  • KD

    Hi Sara,

    I plan to start hosting giveaways from my site. Is it legal to specify that the giveaway is only for stay at home moms even though the prize may be something generic like a tablet?

  • Ranee

    I had attended a Halloween event that offered cash prizes for best costumes after sharing pictures on their Instagram and Facebook. There has not been a winner announced after multiple people asking online. I have written them with no response. Is this illegal and if so, is there a way to report them? I had bought tickets to this event specifically for the contest.

  • ST

    This is great! Any info on using photos of products or logos? I would like to purchase gifts to give away monthly on my website but don’t want to infringe on any copyright issues. What’s the best way to do this? I would definitely include rules and that I purchased the product directly and that “X is not a participant in or sponsor of this promotion” but I do want to show what that product is. If could take my own photos of the product but it’s the logos that I couldn’t replicate. Any advise would be great! Thanks!!

  • http://sarafhawkins.com/ Sara F. Hawkins

    Contests do not necessarily require a free entry because the winner is not chosen randomly (by chance), but rather based on some skill or objective criteria.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Under federal and state laws, as well as FTC regulations (and other regulations for which sweepstakes and contests are covered) Official Rules can not be changed after a promotion begins unless there are exigent circumstances. For example, if the rules say the grand prize is $100000 when it should be $1000.00 and the period separating the dollars and cents is missing that can be corrected.

    If the rules are written to limit liability it all depends on if a court will enforce that provision, as Official Rules are deemed to be a contract between the parties.

  • http://sarafhawkins.com/ Sara F. Hawkins

    A promotion must be administered in accordance with the laws of the jurisdiction of the entrant’s residence.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Sweepstakes and Contests can set the rules for entry and qualification. This is why well-drafted, legally enforceable Official Rules are worth having done.

  • http://sarafhawkins.com/ Sara F. Hawkins

    If there are Official Rules the sponsor must abide by those rules. If there are no Official Rules, there is significant liability because rules will be imposed upon them if someone sues.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Logos may be subject to both copyright and trademark. You should consult an attorney to obtain the needed legal advice you are seeking.









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