Very few people, with the possible exception of technocrats and lawyers, are fond of rules. As a result, marketers often overlook Online Contest Rules and Regulations. However, to avoid legal issues, make sure you familiarize yourself with applicable state contest laws. Consult an attorney if necessary.
What are Sweepstakes, Contests and Lotteries?
Sweepstakes are prize giveaways where the winners are chosen by the luck of the draw (“chance” or random are often used to explain how winners are chosen). Prizes can be almost anything a blogger can think of from handmade cards to an all expenses-paid trip.
Contests choose a winner based on some merit. The winner is chosen based on some criteria such as best photo, funniest parenting tip, etc.
A 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 with legal counsel.
You get that charging a fee is way off, but then you brainstorm and come up with the idea to make a requirement in commenting on a blog post, or completing a questionnaire, or liking a Facebook page, or tweeting with a hashtag. Bravo! Or not…
From a legal standpoint, paying for a chance to win is not entirely limited to dollars and cents. So, those nice ideas floating in your head are implicating. In fact, as long as your requirement is beyond filling out a simple survey stating where to contact they contract if they win, it might be considered as “pay to play” in some states.
In social media, if it is not an innovative way to make a lottery appear as a legal contest, it probably is the absence of transparency in how the contests and giveaways pan out. Usually, companies do not require entrants to clearly stipulate that they’ve made comments or shared content to be enlisted to win a prize. Thus, a random person could see these posts, comments, like count, and shares as unprejudiced endorsements for the product or service.
“I’m not the only one”
A complex legal system is reason why rules pertaining to giveaways vary between states. Between social networks, site rules may vary as well. Still, that someone else is doing it does not make it legal. It is against the law whether you are the only one, the millionth person or the Nth person.
Should you be concerned? Yes. The law is going to catch up with you. A recognizable pattern with justice is that it is by slow by nature. However, when more people begin to show more complacency towards breaking the law, justice sets foot on the gas and catches up with people when they least expect.
That’s precisely how it hit accessories retailer Cole Haan, when a warning letter was received from the Federal Trade Commission (FTC), after they designed a contest where entrants, before they are qualified to win a prize, were required to create a Pinterest board called “Wandering Sole,” after which they’ll pin 5 photos using the hashtag #wanderingsoles.
What was FTC’s gripe? That Cole Haan did not require people to divulge that their pins, comments and pinboards were requirements for entry to win a $1000 shopping spree. This, according to the FTC, made the hundreds of Pinterest posts hashtagged $wanderingsoles undisclosed endorsements.
Fortunately for Cole Haan, the FTC had never publicly made a stand on social media contests before, and was lenient enough to not fine Cole Haan.
Now that the FTC has clarified their position on social media contests, brands and bloggers stating that they were not aware no longer holds water. The next brand caught in the crosshairs of the agency may not get a slap on the wrist as was received by Cole Haan, it may be a fine and a bonus of bad publicity.
“Everyone else is doing it” does not help your chances if the FTC singles you out.
Excuses are irrelevant
Giving a truckload of excuses is the default plan we fall back to when things go wrong. Check out this scenario: you’re pulled over for speeding and you’re having a conversation with the officer, and then you say, “but everyone’s doing 80.” That’s not smart. You’re actually telling the offer that he is part of a system that’s doing a crass job at enforcing the speed limit. That’s definitely not getting you in his list of offenders he was lenient to.
The large number of illegal giveaways taking place now does give some people a false sense of confidence that they are more likely to see pigs fly than be singled out by the FTC. Maybe so. Hiding in the crowd should work out for some time. Eventually though, someone will make an issue for some reason and may file a complaint with the FTC with a humble request that they investigate you. Now to be clear, the reason may not be a legitimate concern over the legality of your contest(s): Yet, when the alarm is pounded, so to speak, the FTC’s knee-jerk reaction is to hold a “magnifying glass” over your campaigns.
How likely is this to happen? The unfortunate turn of events owing to the intense competition between brands and bloggers, has increased the likelihood of such complaints being laid and followed up.
Our recommendation is, instead of putting your heart over what “everyone else” is doing wrong and getting away with, shift your radar to creatively spice up your promotions in the social media space.
Create fun, engaging and legal contests where participants are evaluated based on merit. This should be on the backdrop of establishing lasting relationships with your audience by inviting them to participate in a significant way—Hangouts are getting popular and play a superseding role in this regard. This is way better than just liking your Facebook page, or following your Twitter handle.
Staying in line
- Choose contests over giveaways. Ensuring that your winner is selected on the basis of impressive talent, humor, creativity or another factor de-lists your promotion from the asterisked “giveaway” list.
- Be Transparent. Phrases like “Void Where Prohibited” and “No Purchase Necessary,” are not sales-y fluff. They could be the thin line between paying a steep fine and a successful hitch-free promotion.
“Void Where Prohibited” implies that people are ineligible to win if they reside at a location where your promotion would be illegal. “No Purchase Necessary” implies that people are allowed to enter your giveaway without having to make a purchase or perform an activity.
To this effect, you’ll often find a fine print in the giveaway terms and conditions instructing participants to mail a 3×5” card with their mailing address to an address, if they are to be eligible to win.
- Encourage full disclosure. In certain terms, make it clear to participants that they are required to mention that the posts, comments made by them as well as content shared are part of a promotion in which they’re participating, and that these actions were performed to stand a chance of winning.
Social Media Platforms and TOS
In addition, if you plan to run your contest on a social network, follow the relevant platform rules. Otherwise, you might jeopardize not only your contest, but also your social media presence.
Here are the rules for, respectively, Facebook, Twitter and YouTube:
There are a couple of reasons why you should stand firm on taking the legal route, even if the game becomes uneven as a result. Among them are that you’ll have a clean sheet when the “gavel” comes down, you’ll have built trust with your audience, as well as an enviable reputation in your industry. Saving on legal fees, and staying immune from the associated bad publicity when you’re scrutinized by the FTC, are also nice perks you’ll not want to pass up.