I am not a lawyer. I couldn’t even play one on TV, no one would believe it. However, this is a message that needs a signal boost badly, so I will be writing about it. If you are interested in a more specific analysis of how trivia, raffles or give-aways on social media can affect your standing with state and federal law, please see this Social Media Examiner article that was written by an actual attorney, this Social Media Explorer article that was written by a 20-year online marketing veteran or this Keller and Heckman article that was written by an actual law firm. There is even an entire blog dedicated to Sweepstakes Law.
Please note that other than the blog, those posts were all made in or before 2011, and therefore the specific regulations they refer to may have changed in that time, especially in regard to Facebook, Twitter, YouTube or other private company policies.
If you are giving something away based entirely on chance, you are conducting a sweepstakes. For example, if you are giving anyone who comments on X post or Y video a chance to win a new watch, or ad space on your blog or even an Amazon gift card, that is a sweepstakes.
If winners are chosen on merit, from “most votes” to “best butterfly photo,” you are running a contest. Contests are slightly more of a legal grey area than a sweepstakes, as you are judging content, and as they can actually be considered a sweepstakes if the winner is based on anything more than 40% random chance. Votes/clicks/shares are considered to be random chance in this case. There is also an issue regarding use and protection if you are reviewing original content rather than a trivia contest where the winner is judged on accuracy, rather than skill.
If winners have to pay for entry, you are running a lottery, and you should stop immediately because that is a very fine line that no one should even tip-toe near without competent and specific legal counsel.
Sweepstakes, contests and lotteries are subject to certain laws, mostly governed by the Federal Trade Commission, but also by the Postal Service, your state government and other bodies, depending on the prize.
Any prize over $600 must be reported to the IRS and you will have to provide the prize-winner with a 1099 in January of the following year.
All contests and sweepstakes must have official rules clearly posted, and in fact it is best practice to ensure that the entrant has read and agreed to comply with the official rules by clicking a separate box. Some professionals agree that adding a statement to the rules to the effect that the entrant shows they agree to the rules by entering the contest (i.e. by making the post or comment that would qualify them for entry) is also ok.
Official rules must include, at a minimum, the following points:
- NO PURCHASE NECESSARY
- Eligibility requirements, such as age and residence (marketers may want to limit eligibility to U.S. residents, residents of certain states, and adults only, and should be aware of foreign language requirements that may apply depending on the geographic reach of the promotion)
- Duration and deadlines
- Instructions on playing (if applicable)
- Entry procedures (both online and direct mail procedures, if applicable)
- Prize description(s)
- Odds of winning
- General disclaimers for lost/delayed mail or e-mail, printing or posting typographical errors, technical failures, etc.
- How and when winners are selected
- Right to obtain winners’ names and how to do so
- Right to publicize winners’ names and likenesses
- Method of distributing prizes not claimed
- Liability release
- Sponsor’s name and contact information
- VOID WHERE PROHIBITED BY LAW
If this is a contest and you will be taking entries such as stories, pictures or artwork you will have to outline very clearly how that artwork will be used by you, and what compensation, if any, the artist will get. You will also have to comply with COPPA laws regarding use of minors in content, and you should certainly not allow anyone under the age of 18 to enter your contest or collect a prize. You should also be very clear on what would disqualify a person from participation.
When you advertise this promotion, you will want to state explicitly that there is no purchase necessary, and that it is void where prohibited.
Facebook, Twitter, Youtube and others will have their own rules and regulations regarding the use of their platforms in order to qualify for promotions, as well as to promote these activities. They are subject to change at the discretion of the company, and you should always check with their policies before using their service for promotional purposes.
I encourage you to read as much as you can regarding online promotions when you decide to enter into them, and if at all possible, consult a lawyer. Do not take anything I have written in this article as legal advice, it is merely a signal boost for an important issue that the majority of small online marketers are not aware of.