Sweepstakes and contests are valuable marketing initiatives, but they come with legal complexities. Learn what you need to do, and what terms and conditions must be presented, to launch a contest or sweepstakes.
- [Brad] Hey, I'm Brad Batesole and in this marketing tip I want to talk about launching a legally compliant sweepstakes. Now, contests and sweepstakes are powerful marketing tools, right? People like to win free stuff. But when it comes to giving things away and asking people to enter, you start to cross the line from pure marketing into the legal realm, and this is where problems arise. The way that you message and operate your giveaway must comply with state and federal law and regulations.
And now, while I have spent several years studying law, I'm not actually an attorney, so what I'm sharing with you today is not legal advice. Some of my recommendations may not even be applicable to you, as laws vary between states and countries. Now, for this presentation, we're going to be talking about the rules and regulations in the United States. Now, I know that we like to move fast in marketing and it's very enticing to run a giveaway to attract attention to what we're selling, but I come across illegal contests all the time.
So let's run through the common mistakes that I come across. But remember this disclaimer: please consult with your attorney. I'm here just to show you how easy it is to go down the wrong path when you run a giveaway. So here's the common mistakes that I come across. One, not having any official rules. Two, misunderstanding the difference between a sweepstakes, a contest, and a lottery. Three, ignoring the requirement for no purchase necessary. Four is weighting your entries differently.
And five is not restricting entries at all. So let's talk about number one, no official rules. All sweepstakes and contests must have official rules and your participants need to be able to find them as part of your marketing. So if you're messaging your contest, make sure that there is a link to the official rules. There are plenty of templates that exist online and while you can go download one and edit it, I encourage you to please work with an attorney. Ignoring rules is going to open you up to liability.
Rules are less about things going right and more about protecting you when things go wrong. Next is misunderstanding the terminology. So a sweepstakes is when you're going to have a winner chosen at random. A contest is when the winner is chosen based on skill. And a lottery is really a regulated game of chance, and this is almost always illegal to run. So you want to be sure that you're using the appropriate terms. A lot of times, I will see brands message about the contest they're running, but they're really operating a sweepstakes.
And you want to make sure that you always use the appropriate terminology. Otherwise, you may open yourself up to liability. Next is ignoring the detail of no purchase necessary. So you cannot actually mandate that a consumer trades you money or some sort of consideration for an entry. There must always be a way for a participant to gain access to your giveaway for free. And this is not just money.
This can be anything that can be deemed consideration. So an effort that is more than minimal might be consideration. For example, if you have to fill out a lengthy form or participate in a survey, that can equal consideration. So how do you get around this? Well, you've probably seen this in the fine print of many giveaways, is it will say you can mail a three by five postcard with the following information to this P.O. box. Now, also pay attention, because some states don't allow you to charge for postage, so it can get that complicated.
So please pay attention to those requirements. But if you are not offering a free entry option, then you're likely violating the law. Another common mistake is to weight entries differently. So all of your entry methods must yield the same chance of winning. You can't limit prizes by a specific action, and I've seen a lot of third-party tools that show you, hey, you get three entries for a tweet, you get one entry if you like this post, you get five if you submit a video.
That is actually totally illegal. Now, even though the third-party tool lets you do it, you're the one who's essentially on the hook for the liability, so you want to make sure that each entry method offers the same chance of winning. And then you want to make sure that you can claim those equivalent entry methods without purchase. And then finally, not restricting entries is a problem in of itself. So some U.S. states are going to have restrictions and you may open yourself up to liability if you say everyone in the USA can participate, but Virginia, for example, believes that you're running your contest illegally because you're not following the state law.
And then if you open yourself up to international participants, say Canada, Mexico, and the rest of the globe, you can also open yourself up to complex problems because of additional rules and laws that govern the sweepstakes and the contests in those territories. So be sure that you are restricting your entries to the areas that you know the rules and the laws. Look, contests and sweepstakes are valuable for marketing, but I see how often they're used incorrectly that I really want to encourage you to make sure that you're running yours in a legally compliant manner.
Hey, thanks for checking in. I love hearing from you, so connect with me on LinkedIn or on Twitter via @bradbatesole and let me know what you thought about this tip.
Note: Because this is an ongoing series, viewers will not receive a certificate of completion.