facebook social mediaFor business operating promotions through social media, there are additional concerns of which an owner should be aware. If your promotion is directed at a national audience, you must be compliant with the laws in each state. If you are unable or unwilling to comply with a particular state’s laws, the promotion rules should specifically restrict eligibility to those individuals not in certain states.

Generally, if the promotions is offered to a member of a state, or that member is able to participate in the sweepstakes or contest, you must comply with that state’s laws and regulations. For example, certain states (including Florida, New York, and Rhode Isl and) require a sponsor to register with proper state authorities all sweepstakes and contests where the aggregate prize value exceeds $5,000. Additionally, some states prohibit purchase requirements altogether (including Colorado, Maryland, Nebraska, North Dakota and Vermont), even if contest winners are determined based on skill or something other than chance.

Having a written, clearly defined set of official rules regulating the promotion is imperative. While not an exhaustive list, to better comply with laws in all states, sweepstakes rules should include, but not limited to, the following:

  1. Clear and conspicuous statements that no purchase is  necessary and that a purchase will not improve the chance of winning;
  2. The method of entry, including a consideration-free method of entry that has an equal chance of winning as the purchased entry, often called free alternate means of entry (“AMOE”);
  3. Precise start and end dates of the promotion;
  4. Eligibility requirements (age, residency, etc.), as well as limits on eligibility;
  5. Sponsor’s complete name and address; and
  6. “Void where prohibited” statement.

Similar to sweepstakes, contests also must comply with laws in each state in which the contest is offered. In addition to many of the requirements for a sweepstakes, rules for a contest should include, but are not limited to:

  1. The number of rounds of the contest, cost to enter each level, and maximum cost for all rounds;
  2. How to participate in subsequent rounds, and whether subsequent rounds will be more difficult to solve or overcome; and
  3. The identity of and description of judges and the method used for determining winners (usually including what objective criteria is to be considered)

It is also important to be aware of and comply with the terms of service and guidelines of the mediums by which you are offering your promotion. For example, Facebook (R) has particular rules against certain conduct regarding sweepstakes, such as prohibiting businesses from holding promotions which require applicants to “Like” a Facebook (R) page to enter the promotion and prohibiting using the “Like” button as a voting mechanism.

There are legal reasons to avoid using the “Like” button, following your company on Twitter (R), joining your group on LinkedIn (R), subscribing to your newsletter or other conduct as a means of entering a sweepstakes in addition to running afoul of a service’s rules. Making these actions a condition of entering a sweepstakes could be deemed to require consideration, thus turning your innocent sweepstakes into an illegal lottery. Additionally, the sponsor would fail to offer an AMOE to individuals who don’t use such services, which may violate many states’ laws.

Be aware this is a brief discussion of just a few laws and provisions that may govern promotions, and prior to running a promotion, you should be sure that the concept complies with all governing rules. If you have questions about promotions run by your business or compliance with other laws governing your company, or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.


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