Best Practices for Keeping your Sweepstakes and Contests Legal and Compliant

February 17, 2017
5:48 pm

Posted by DMA Solutions Team

Guest Blog Post by Donna DeClemente, Director of Social & Digital Media, American Sweepstakes & Promotion Company
www.american-sweeps.com

Sweepstakes are a game of chance where the winners are normally randomly chosen. Contests on the other hand are a game of skill and participants usually are invited to submit some content (photo, video, essay, etc.). A panel of judges then chooses the winners based on criteria that are defined in the official rules.

So whether you are planning to run a sweepstakes or a contest, there are rules and regulations that you must follow in order to be compliant. Therefore you need to have a set of Official Rules that outlines the promotion. A promotion that contains all of these three elements: Prize, Chance (random selection) and Consideration (Purchase, Payment or Time) is an “Illegal Lottery”. The Time element is the grayest area. Most social media entry requirements do not usually require consideration. However, writing about a product or a destination or taking a photo or video of the product/destination to enter may be consideration.

For example, if the participant can take a photo of themselves in front of a resort, in a hotel lobby or on the beach, then a purchase would not be required. But, if you’re asking them to take a photo of themselves in a hotel/resort room that would most likely require purchasing a reservation and therefore, consideration. There is a fine line between the two. Another example is asking participants to take a photo while taking a bite of a donut or sipping a drink. They can’t return the donut or the drink then, so wouldn’t that require purchase? You need to ask if the participant can effectively compete without actually making a purchase.

The degree of effort that is being required of participants to enter a sweepstakes is currently very popular on social media. Participants are invited to earn extra entries by performing different tasks and challenges. So how much time is too much and what can you really require? The Supreme Court did rule that watching a 30 minute TV show isn’t too much time, so that’s a guideline to follow. But keep in mind that while awarding bonus entries for sharing/referring may not likely fall under consideration, it may be against Federal CAN/SPAM regulations.

Another thing to keep in mind is the FTC’s Endorsement and Testimonial Guidelines. They recently published a list of Q&A’s that state that when it comes to sweepstakes and contests, any incentive, no matter how minimal, such as an entry into a contest or sweepstakes for making a post on social media sites, may be an endorsement. Thus it requires a disclosure. The use of the promotion title alone is not adequate, and they are encouraging including #Contest or #Sweepstakes or #Entry or a similar designation in a hashtag. Their updated Q&A’s now states that using #sweeps as the hashtag is not enough and instead it should be #sweepstakes.

A rising trend today is running a sweepstakes or contest on social media utilizing only a hashtag with no entry form. Entrants may be invited to post a tweet on Twitter or upload a photo on Twitter or Instagram utilizing your promotional hashtag. Many marketers like these types of promotions since it creates buzz and makes it easy for entrants. However, hashtag entries do not collect data on the entrants since there is no entry form to fill out. Data collection is the number one reason why marketers run sweepstakes and contests. Without collecting data this also can make it more difficult to contact winners.

So it all comes back to what your main objectives are for running a promotion. You need to consider what the risks may be, but also be realistic to run a successful and legally compliant promotion.

By Donna DeClemente, Director of Social & Digital Media, American Sweepstakes & Promotion Company, www.american-sweeps.com

You can read more posts written by Donna on the company’s blog, Promo Talk.