Promotional contests and sweepstakes are a terrific marketing tool for businesses.  Social media has provided companies with a free and effective way to increase the number of consumers participating in their promotional contests and sweepstakes.  This article discusses the importance of understanding the rules governing such contests, with a specific focus on Facebook’s Terms applicable to certain “Promotions.”

Of course, while companies must be knowledgeable of the laws governing “games of chance” throughout the Unites States, if a promotional contest or sweepstakes is offered through social media, the respective forum’s promotional contest policies must also be understood and followed.

Facebook

If you decide to run a promotional contest or sweepstakes on Facebook, please be sure to read the Facebookrules that govern such promotions.  Facebook requires that all promotions featured on its site include a complete release of Facebook by each entrant or participant upon entry and an acknowledgement that the promotion is in no way sponsored, endorsed or administered by, or associated with, Facebook.  Promotions must appear solely on “Pages” (for businesses) and within Facebook apps.  In addition, personal Facebook Timelines may not be used in connection with administering promotions.  Facebook cautions that anyone running a promotion on its site is also responsible for the operation of that promotion in compliance with applicable law.

Sweepstakes Marketing: A Legal Perspective

It is important to remember that the contest rules for a sweepstakes promotion are your contract with the contest entrants.  This means that the rules of the game must be the same for people who enter on day one of the promotion as they are for people who enter near the end of the contest term.  As such, the rules must be set in stone when the sweepstakes contest period commences, and should not be abandoned or changed mid-stream.

It also is important to note that games of chance (which sweepstakes are considered) are deemed illegal lotteries in each state of the Union unless one of the following elements that comprise a lottery is removed: (1) a prize awarded to the winner; (2) chance in determining the winner; and (3) consideration for entry in the game. Consideration, or monetary payment, is the element most frequently removed by providing a free, alternative method of entry into the sweepstakes.

Further, as we have reported, prizes above certain cash (or cash equivalent) thresholds may trigger specific sweepstakes registration and bonding requirements in several states, namely Florida, New York and Rhode Island.

In sum, it is crucial to understand all applicable laws, as well as social media promotional contest guidelines, as appropriate, when preparing to run a sweepstakes.  It is recommended that you retain qualified legal counsel to ensure that you get the rules right in advance, as well as to help you navigate any related issues that may arise during the course of your promotion.