I love a good (legal) giveaway! How ‘bout you? I want to be like Oprah and yell "you get a car", and "you get a car". Or better yet, "you get free college tuition", "you get free college tuition". I'd love to be able to give away full four-year scholarships to deserving teens. #OneDay #DreamBig
Over the past few months, I've noticed many of the entrepreneurs I follow giving away prizes and gifts without following the ahem, rules. I know, I know. It wasn't you. But, I'm hoping this advice will help you or someone in your circle.
There’s nothing like a good giveaway! Who doesn’t like to win a prize from their favorite brand or influencer? I recently won a prize from a leadership consultant that I follow on social media. And guess what? It’s been more than a month, and I’ve yet to receive my $50 Amazon gift card. Now, at this point, I could easily report the contest to the FTC (Federal Trade Commission), the state attorney general, or the Delaware Department of Justice. It’s not that serious for me. However, I’ll probably unfollow her account on social media. I even sent a nice note and still didn’t get my gift card. Did I mention I broke the cardinal rule? I spent the money before it hit my account!
Entrepreneurs are usually busy perfecting their craft and may not spend a ton of time on social media marketing and promotion. That's where these six tips come in handy. They are designed to get you thinking about what you need to know before hosting your next social media or digital promotion.
Failure to follow the rules can have severe repercussions including bad publicity, poor brand reputation, lost sales, monetary fines, and deletion of social media accounts. Oh yeah, I’m not an attorney, so please don’t take this as legal advice. This post is based on my experience as a marketer.
Sweepstakes are regulated at the national and state level by several entities. So, again please consult an attorney or promotions agency for additional assistance.
Federal Trade Commission (FTC)
Federal Communications Commission (FCC)
United States Postal Service (USPS)
United States Department of Justice (DOJ)
There are so many benefits to hosting promotions within your business. Promotions are used to drive traffic to websites, blogs, and social media accounts; grow followers; boost engagement; and increase brand awareness. Promotions can also provide leads and generate sales.
1) What are you running? Is it a contest or sweepstakes?
In simplest terms, a sweepstake is a random drawing. Sweepstakes cannot require someone to pay a fee for entry or else it becomes a lottery. You also have to provide someone an alternate method of entry, such as a mail-in postcard. A contest is a game that has an element of skill to it. For instance, the best travel picture, most endearing essay or guess how many jelly beans are in the jar.
A giveaway or promotion is a blanket term used to describe contests and sweepstakes.
2) Do you need to register for your prize?
If your sweepstakes prize is over $5,000, your contest needs to be registered in Florida and New York if advertising to residents in those states. Rhode Island registration is only required if you are running retail sweepstakes.
If you have a prize valued over $600, you are required to provide the winner with a 1099 tax form.
3) Did you create official rules?
Yes, you’re supposed to have official rules. It should include the name of the contest, how winners will be notified, dates of the contest, and more. They usually appear on your website. And, you are required to link to them in social media posts.
Curious as to what official rules look like?
Here’s a link to some official rules from Eloquii and New York & Co.
Lately, I've seen some brands doing a shortened version of rules on Instagram like these two examples. In the first example, there are several key elements including terms and conditions (T & C), age requirements, Instagram release, dates, and the #sweepstakes hashtag.
Yes, the FTC requires your posts as well as any user-generated content to include #sweepstakes (not #sweeps) or #contest. Cole Hahn received a closing letter (or warning letter) from the FTC in 2014 for it's Wandering Sole contest on Pinterest because the campaign used the hashtag #WanderingSole and it wasn't clear that users received something of value (contest entry) for posting the contest.
In this Instagram example, the official rules are part of the images and not the caption.
4) What if I have a text message give-a-way?
There are special rules for this, quite a few. Here are a few quick nuggets: You must include instructions on how to opt OUT, let consumers know that message and data rates apply, and link to official rules and privacy policy. And, if you collect phone numbers during the contest registration process, please do not add the phone numbers to your text message platform without express permission.
5) Did you include a release of Facebook and IG?
Social media platforms do not want to be on the hook for a poorly administered contest. You have to include a release that says this promotion is not sponsored, endorsed, administered, or associated with Facebook.
And promotions can only be run from pages. Not your personal account. You cannot ask people to share on their timeline to enter or share on their friend’s timeline to enter. However, you may be able to give them an extra entry for sharing on their timeline. See, it gets confusing.
Facebook rules: https://www.facebook.com/policies/pages_groups_events/
6) Make sure you distribute your prizes.
That’s it. Don’t be like the leadership coach I alluded to at the beginning of the story. The FCC recently ruled that a radio station had to pay a fine after failing to deliver the hotel stay they promised a winner. The hotel operator failed to live up to their deal, and the employee at the radio station failed to share this news with management. Eventually, they provided the winner $3,600 which was more than twice the value of the hotel room. Even so, the contest was not administered per the rules, and the FCC is recommending a $5,200 penalty. Read the case summary here.
If you love reading legal summaries, here are seven more cases for you to dive into!
One day soon, several of my friends will have verified social media accounts and seven-figure annual sales. Make sure you’re legitimately running contests, so your account isn’t shut down.
And, many of us work with nonprofits, so these rules apply to them as well. If you’re serving on a board, help them to run legitimate social media promotions. No one is immune from these rules.