Contest and promos are a useful way to get more exposure for a product or business. These promos help increase your followers on social media and enhance the quality of interactions that you have with potential customers. However, since they require public participation, promotional giveaways and contests are subject to local and state guidelines.
These rules determine how your contest is going to be done. It is therefore important to refer to official state regulations that cover giveaways and contests to make sure that any promo you run doesn’t violate any laws. This article will show the basic guidelines to keep your social media promos and contest legal.
Types of promotions
The first step is to know what kind of promo you are running. From here you can find out what regulations govern that kind of promo and make sure you stick to these rules. The 3 most common types are:
- contests
- sweepstakes
- giveaways
- lotteries
Contests are promos where winners are chosen based on merit after participating and being judged by a panel or an audience. Sweepstakes are won by random drawing. Giveaways are basically giving stuff away, usually to entrants that meet a particular standard. Lotteries determine winners by random draws. However, they require people to pay money to join, making lotteries subject to heavy regulation. This also means that lotteries are often not a good option for small businesses.
Make sure your promo is legal: basic steps
- Never charge a fee to enter.
- Charging fees to enter the contest or promo makes it a lottery, subjecting you to heavier, more complicated regulations
- Avoid running promos involving alcohol, guns, tobacco, and other heavily-regulated items.
- Most states prohibit tobacco-related promos. Others heavily regulate promos that involve alcohol. While promos involving these items may be legal in other states, regulation and the cost for approval may be more trouble than they are worth.
- Make sure official rules are easy to find and understand.
Have a link to official rules placed prominently on the promo website. The rules must clearly state the following, among others:
- no purchase is needed to enter
- details of alternative methods of free participation
- who can participate
- the geographic area where the promo is valid
- start and end dates of the promo
- complete name, address of the sponsor and promoter
- the type of prize
- the manner of choosing winners
It is important to note that once the official rules have been published, the rules must be followed to the letter. Doing otherwise could open you up to liability.
Consider state limitations
Different states may have specific guidelines for giveaway and contest regulations that are unique to that state. For example, Maryland has strict prohibitions against purchase entries, New York requires bonds for prizes worth more than $5,000, and Virginia considers the requirement of visiting a location a form of consideration that turns into sweepstakes to a lottery. Check your state laws to see if you need to comply with a specific guideline or requirement.
Promotions, contests, and sweepstakes are a fun way to engage your audience and gain more exposure for your product or brand. Ensure that your promos stay within the bounds of the law if you want to benefit from all the advantages that promos can bring to your business.
