Want to improve your brand awareness and social media engagement? Have a contest! Not so fast. Like everything else in life, there’s a lot of complicated rules. The fact that there is more than one rule-making body for these kinds of hi-jinx is what makes it so complicated. There is the Federal Trade Commission. There is the Federal Communication Commission. There are also your local government rules. Here are some thoughts to think about before you run off and create a prize that raises your brand awareness–to the authorities.
It’s also a good idea to actually know what kind of promotion you’re running. That’s how you’ll know if your promotion violates or conforms to your local laws. Here’s the down and dirty of promotion mechanics. There’s a prize, chance, and something called “consideration.” Sweepstakes are free to get in and the winner is picked randomly. Contests have winners but winning requires merit or skill (not random). Lotteries have random winners but they charge a fee. See how much you’ve learned already? These are the kind of things you don’t think about normally. But, there they are. This is by no means the end of the list.
For instance, if you’re running a sweepstake, do not charge the entrants. If you’re running a contest make sure chance is not part of it. Oh, and what is “consideration”? It’s the legal term for what someone must do or pay to enter a promotion. Do they have to give personal information? Do they have to buy a ticket? You get the idea.
Don’t hide the promotion rules. You got to have the rules out in front so everyone can see and make sure there’s no cheating or mistakes. You know, you’ve heard it before, “Void, where prohibited, must be 18 or older to enter…”
Don’t mislead. Don’t lie. Lots of lawyers out there rubbing their hands together for a class action, I know, that’s how I started.
Makes sure to get releases and affidavits of eligibility. The release is so you can use their picture and the giant check you gave them in ads. You know, like Publisher’s Clearinghouse. You also need them to take responsibility through an affidavit that they are of the right age. You don’t want to get in trouble and besides, with thousands of entrants, how are you going to verify all of them?
Privacy laws. Privacy laws. Privacy laws. Think about them. Regulators are super focused on data privacy. Make sure to check state, federal, and international law.
The Tax Man. The taxman always gets his due. Prizes are gross income to the winners. Anything over $600 (always check the latest figure) needs to be reported to IRS. Dust off your 1099 and send it in.
Anyways, this lawyer says a business should always consult a lawyer before jumping into throwing a promotion. It’s a little bit upfront and a hassle but will save you heartache in the long run.”
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