Running a sweepstakes or contest and what you need to know about promoting it while ensuring it observes all federal and state-level legal restrictions.
Running sweepstakes and contests can boost your sales while also providing the rush of excitement of entering and winning for potential customers. It can be a great way to build your brand and attract more visitors to your website.
However, it’s important that you factor in the importance of compliance, when running such promotional campaigns, or you may find that you’re opening up your business or client to risk of legal action and serious penalties.
The Difference Between Sweepstakes and Contests
Before we dive into what makes a campaign legally sound, let’s explore the difference between a sweepstakes and a contest.
A sweepstakes is all about chance and luck. The customer enters for a chance to win and the company running the giveaway draws a random winner.
A contest is like a competition where each entrant has to demonstrate some sort of talent or skill that was described as a prerequisite for the contest. Then, judges choose a winner based on the rules of the contest.
Which promotional method is right for your contest?
That depends on what your goals are for the campaign. For example, a sweepstakes would make more sense than a contest if reaching the largest number of people with a low barrier to entry is your primary goal.
First of all, there are some things you need to know about sweepstakes promotion to make sure it is legal before you kick things off.
The good news?
We created a checklist for you to make it easier.
Before we dive into the checklist, we will show you some legal issues and questions you’ll want to clarify prior to launching your campaign.
Protecting data is a key component to building trust with your customers and following legal guidelines.
Where will the entrants’ personal information be stored? They will be giving away their name, email address, physical address (in some cases) and potentially a phone number.
Will the data be encrypted? If you are using a third-party software or platform, make sure you fully understand their data protection policy and your completely fine with it. To limit risk, here’s a little tip from us; consider asking your contestants / entrants as little personal information as possible.
The last thing you want is a data breach that reveals personal information on thousands of people.
Having a plan in place for privacy should be one of your top priorities. Once you have all the data that you collected, what are you going to do with it? Are you storing it on a hard drive, or in the cloud? Will you share your list to business partners?
Sweepstakes Legal Compliance
There is a long list of issues you could run into before launching a campaign, depending on the value of what you’re offering/giving away, the target audience, and how strict your criteria for eligibility is.
For example, in some states, registration and bonding are required for high-value prize packages. Some states don’t allow businesses to run specific types of promotions without a written up legal contract in the rules.
In addition, depending on the theme of your promotion, you could run into potential problems if you’re marketing to certain age groups. An example would be running a campaign targeting minors and failing to comply with the Children’s Online Privacy Protection Act (COPPA).
The Questions Blueprint: Checklist for a Successful Sweepstakes
If you aren’t sure about the right answer to these questions, consult with a legal expert that is experienced with sweepstakes or contests.
- Where is it being held? Is it limited to residents of the United States? Furthermore, is it limited regionally, such as one or more states or cities within the U.S.?
- For entrants to be eligible, are the age, residency and other requirements for entrants clearly identified?
- Is the minimum age requirement at least 13 years old to enter?
- Can someone trying to enter (the entrant) mail a postcard with their contact information to the sponsor?
- In the rules for the contest or sweepstakes, are the odds of winning clearly stated and are they equal for everyone who enters, including the mail-in entrants?
- For the prizes, are they described in great detail? Do they include all aspects and the approximate retail value for the total prize?
- In the official rules and on all advertisements that have to do with the contest or sweepstakes, is the sponsors’ name, address, phone number and website URL visibly listed?
- For selecting a winner, is the method and process easily explained? Will everyone know the date and time for when the winner will be selected?
- In the official rules and in all advertisements, is this statement displayed: “No Purchase
- Necessary” and “Void Where Prohibited by Law”?
- Is the prize value less than $5,000?
- Are employees of the sponsor forbidden from entering?
- Is the amount of entries that each person may enter/submit clearly stated?
- In the rules, is there an end date and time listed?
Most people make the mistake thinking sweepstakes or contests are as simple as firing up a landing page and running some ads, whereas in reality compliance is anything but straightforward.
As the information here is in no way exhaustive, speak with a legal professional that specializes in sweepstakes to get the most up-to-date information and details on compliance. Contact us today with information about your sweepstakes and we’ll let you know how we can help.