Running online sweepstakes is a great way to grab attention, but if you don’t follow the laws, you could be in serious trouble. Sweepstakes are governed by state and federal laws and failure to follow them could result in you being sued, having your social media profiles banned, or even being charged with a crime by running an illegal lottery.
But never fear, The Social Media Law Firm is here. As an experienced sweepstakes lawyer who has helped businesses big and small run online giveaways legally, our team has some legal tips to help you get started:
The first thing you need to do is figure out if you’re running a “sweepstakes” or a “contest.” They are both governed by state laws and social media site rules, but the laws and legal requirements a bit different for each.
Sweepstakes are a game of chance where the winners are picked at random, whereas contests are a game of skill where winners are chosen based on pre-determined criteria.
If it’s a game of chance where someone is picked at random to win, your sweepstakes must let people enter for free. Sweepstakes require an alternative method of entry where people can play for free – otherwise, it is considered an illegal lottery which has criminal penalties.
Contests are games of skill. Unlike sweepstakes, the winner cannot be picked at random. Instead, there must be specific criteria in your rules that demonstrates how winners are chosen. With that said, contests can require people to “pay to play” and no “free” entry method is required. A seasoned sweepstakes attorney can help you decide what game you are running and how to make it legal.
The next thing that you need are your “rules” or “terms and conditions” for the giveaway. Every sweepstakes, contests, or giveaway requires legal terms and conditions. These rules are the legal contract between you and people who play your game. It is extremely important that these meet specific legal requirements. Failure to prepare your legal rules will subject you to penalties, fines, or having your account shut down and banned forever. So, it’s critical to get them prepared or reviewed by a sweepstakes law firm.
Finally, you need to post legal disclaimers when you promote your giveaway. In addition to sharing a link to the complete set of rules, your giveaway may need to include legal disclaimers. These may include “no purchase necessary,” “void where prohibited, “open to legal residents of the US 18+.” Other disclaimers that release any social media site you promote the giveaway from liability may be needed. These short-form disclosures are especially critical when you sell products or services or require payment to enter the giveaway (even if there is a free method to enter). Without these disclaimers, your innovative giveaway can turn into a massive legal headache!
Once you’re ready to run an online giveaway, an experienced sweepstakes attorney at The Social Media Law Firm would be happy to help. We can review the structure of your giveaway, write your terms and conditions, and provide you with the necessary disclosures to ensure your sweepstakes complies with the law. We invite you to schedule a complimentary telephone consultation to learn more.
Want more legal tips and helpful information for your startup or small business? Give us a follow on Instagram and check out our YouTube channel.
