By Jed West
Sweepstakes likely seem pretty straightforward to the player—enter here for a chance to win a prize. But for the agencies behind the scenes life can be complicated. Here are eight big sweepstakes mistakes you really want to avoid.
1. Is It A Sweepstakes Or A Contest Or A Duck?
People use the terms interchangeably, but sweepstakes and contests are different animals and are subject to different sets of regulations, so it pays to know the difference. A sweepstakes is a promotion where winners are chosen by chance. Contests, on the other hand, involve some element of skill (ie. submit a recipe or write an essay).
2. Hey! Let’s Run An Illegal Lottery!
Lotteries are highly regulated (and mostly banned), so it’s important to know what they look like in order to avoid them. An unlawful lottery exists when the following elements are present: 1) a prize, 2) chance, and 3) consideration (a purchase or fee).
3. Forget the Lawyer, The Rules are on the Server … Somewhere
Believe it or not, some companies figure that sweepstakes rules are pretty much boilerplate and “repurpose” old rules to cover a new promotion. Big mistake. The rules are your contract with the consumer and should be carefully drafted for every promotion by experienced legal pros to ensure compliance with the law. Although the majority of people may never read the official rules, you must have solid legal rules that incorporate the latest state and federal regulations. Without them, your risk of liability increases.
4. Hide The Rules
Your rules can only protect you if they are properly disseminated to the public, so don’t hide them! Post them conspicuously wherever participants enter the sweepstakes or contest. We understand that space can be an issue, especially on Twitter and other online platforms. Use shortened links to your website or a third party application to publicize rules, and remember to obtain entrants’ consent to the official rules prior to entry.
5. Forgetting the Small Print
Abbreviated rules and disclaimers should be included in all advertising materials (print, radio, television, web, etc.) to ensure they’re consistent with the promotional offer and with all federal and state regulations. If you see ads or banners or other promotional messaging without the “mice type,” that company is not playing by the rules.
6. Letting the Big Apple Bite You
Certain states require the registration and, in some cases, bonding of promotions. New York, for example, requires that consumer sweepstakes be registered and bonded 30 days before the commencement of the sweepstakes, if the value of the prize offered is more than $5,000.00. Ensure the promotion meets all such requirements or you could face stiff penalties and sanctions.
7. Getting all up in Facebook’s Face
The last thing you want is for your brand or business to be banned from any major social network. Each platform has strict rules and guidelines about running contests and promotions, so before you even think about launching one, you need to know what they are.
8. Dissing Uncle Sam
You are responsible for reporting winnings for winners who receive $600 or more in prizes and will need to prepare and issue the appropriate IRS tax forms to all applicable winners and submit the appropriate winnings and documentation to the IRS. This is important.
Jed West is president of the Haley Miranda Group. He can be reached at [email protected].
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