Lotteries and contests – non-compliance is not worth it

Sweepstakes and contests are effective marketing tools used by businesses to promote new products, engage customers and increase sales. Promotions of this nature have become increasingly popular due to the rise of social media. Sweepstakes and contests are often easier to implement, less expensive, and more effective in promoting a company’s products than the methods used in the age of social media.

Companies that choose to use a sweepstakes or contest as part of a promotion must ensure that they comply with all applicable laws and guidelines. There are three main areas of concern for business owners: illegal lotteries, disclosure of official rules, and social media requirements.

Lotteries are illegal unless run by the state, and companies that promote illegal lotteries may face civil and/or criminal penalties. A lottery has three elements: a prize is awarded, winners are determined based on chance, and participants must submit consideration (something of value that must be donated to participate), which can be monetary or non-monetary.

To avoid organizing an illegal lottery, it is important to organize That is a draw Where a contest. A raffle is a game of chance, where winners are selected by a random method, like a coin toss. Contests require a free method of entry, such as sending a 3×5 postcard to the company or sending an email. In contrast, a contest is a competition or game of skill that requires participants to put forth a certain level of skill or effort in their entry.

The consideration can be very tricky, as most states consider certain non-monetary requirements to be taken into account. Low-risk entry requirements include short survey questions, downloading an app when the app is free, or requiring a social post or comment on a free platform. Note that it is illegal in Ohio to require a single store visit for the purpose of entering a sweepstakes or contest.

All promotions must have official rules. These rules must be readily available to the public, included in any marketing related to your promotion, and clearly state the following information: eligibility, prize details, method of entry, start and end dates, odds of winning, any relevant deadlines , the name of the sponsor and details of the prizes, including the approximate retail value of the prize. In addition, companies should consider the following special topics when developing their Official Rules: Limitation of Liability for User-Generated Content, Advertising Release/Waiver, Promotions Targeting Children, and Modification or of termination.

It is essential that businesses adhere to the terms and conditions of each social media platform before incorporating its use into their promotion. Typically, platforms require the promotion to abide by its own official rules, all applicable laws, the platform’s rules (such as its terms of service), and include a full disclaimer and acknowledgment that the promotion is not endorsed by the platform. However, all social media platforms have platform-specific requirements. For example, Instagram requires the company to avoid inaccurately tagging content, while Facebook does not allow companies to require friend logins to administer, such as requiring a participant to share a post on their timeline or tag a friend to participate.

Finally, if a business chooses to use influencers in the promotion of its sweepstakes or contest, it must ensure that the influencer adheres to the Federal Trade Commission’s guidelines on influencers, as non-compliance of this obligation may result in additional liability.

Although sweepstakes and contests are nothing new, they are gaining popularity through social media. When implementing these tools in a promotion, businesses should ensure that they take active steps to comply with all applicable laws and guidelines, including the rules and requirements set out on individual social media platforms. . Failure to do so can result in significant penalties – and that’s not something you want to leave to chance!

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