Sweepstakes, Contests & Giveaways – Laws Bloggers & Brands Need to Know

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Giveaway-Laws

More and more I’m seeing giveaways that may not be fully compliant with federal or state laws governing giveaways. Whether online or off, there are a host of laws that every contest holder must follow or risk significant fines or, in some states, criminal prosecution. Giveaway laws in the US cover sweepstakes, contests, and lotteries.

Sweepstakes and contests have been used by marketers for decades to create awareness for their product or service. Bloggers are getting into the promotion business, not only for themselves but also for brands of all sizes. While brands often have legal counsel to advise them on the intricacies of running a contest that complies with all laws, that information is not usually passed down to bloggers. As such, bloggers are left to their own accord. This has resulted in a number of different tactics being used. Unfortunately, many bloggers are not compliant with the various laws exposing them to potential liability.

What are Sweepstakes, Contests and Lotteries?

Sweepstakes are prize giveaways where the winners are chosen by the luck of the draw. Prizes can be almost anything a blogger can think of from handmade cards to an all expenses-paid trip.

Contests choose a winner based on some merit. The winner is chosen based on some criteria such as best photo, funniest parenting tip, etc.

A Lottery is a prize drawing where people must pay money to buy a chance to win. Lotteries are highly regulated and should not be run without consulting with legal counsel.

While many bloggers use the term contest, unless there is some criteria for choosing the winner their giveaway is most likely a sweepstakes. In addition, I’ve seen that most bloggers will use some form of random selection process to choose the winner of their giveaway item, thus making their giveaway a sweepstakes and not, in fact, a contest.

What laws govern?

In the United States, sweepstakes promotions are regulated by numerous federal and state laws as well as overseen by various federal agencies. Federal agencies with jurisdiction to regulate sweepstakes promotions include the Federal Trade Commission (“FTC”), the Federal Communications Commission (“FCC”), the United States Postal Service (“USPS”), and the United States Department of Justice (“DOJ”). Sweepstakes promotions may also be regulated by state laws. And let’s not forget that sweepstakes promotions may be the subject of a private lawsuit brought directly by a consumer with a beef as to how the promotion was handled.

If a sweepstakes promotion allows nationwide participation, the promotion must comply not only with federal regulations, but also the regulations of each state. For example, in California, the Business and Professions Code governs the promotion of the sweepstakes while the Penal Code (criminal law) sets forth the definition of a lottery.  In New York, if the value of the prize offered is more than $5,000.00 the law requires that consumer sweepstakes be registered and bonded 30 days before the commencement of the sweepstakes. The state of Florida also has bonding requirements for sweepstakes.

Could my giveaway be an Illegal Lottery?

A lottery has three things: Prize, Chance and Consideration.

Prize – without a prize your giveaway would be lame and no one would enter it, so there’s always a prize!

Chance – pure luck! You could get around this by having some skill requirement but that is often difficult to manage or greatly limits the number of people who will enter.

Consideration – something of value. Often it’s money, but it doesn’t have to be. Depending on what you require entrants to do, you could be pushing the envelope on this element. Each state may have their own particular definition making it very difficult to manage.

When it comes to bloggers, there are few things more valuable than followers. As such, requiring someone to ‘like’ you or ‘follow you’ could be construed as consideration. Even more important, asking an entrant to go to a third-party site, navigate to find a product or services and then report back to your site is even more likely to be deemed consideration and thus placing your giveaway into the classification of illegal lottery. Time is exceedingly valuable!

While online promotions seem to be everywhere, the laws pertaining to this realm have not been as quick to develop as the internet itself. As such, even by providing an easy and simple means of entering but providing additional entries conditioned upon doing certain things may result in your giveaway not complying with necessary laws.

Who can enter my giveaway?

You will often see that a contest or sweepstakes is only open to those 18 years of age or older. This is because the laws relating to minors adds a layer of complexity that many are not willing to manage.

Because blogs often have readers from all over the world, can you just let anyone enter? The short answer is yes, if you are willing to comply with the laws of every jurisdiction (including those of foreign countries). In Canada, for example, the winner can not be chosen by luck, but rather some element of skill must be involved. And if you do wish to open your giveaway to residents of Canada, you must go one step further and either exclude Quebec or add in the various additional rules that province requires.

While bloggers definitely don’t want to leave their Canadian readers out in the cold, it’s a harsh reality of administering a giveaway through a sweepstakes that residents of Canada must be excluded. It’s the same reason readers under the age of 18 are often excluded. It becomes cumbersome to administer the promotion if more laws must be followed.

Checklist for your giveaway:

If your giveaway winner will be chosen at random you are hosting a sweepstakes and thus you should comply with the laws regarding sweepstakes.

1. Identify the prize – provide as much detail as necessary to both identify it and make it attractive to your readers

2. Who can enter - detail who is allowed to enter, as well as those excluded

3. Duration – clearly set out when the giveaway (sweepstakes) will begin and end, and follow through

4. How to enter – let the reader know what they need to do to enter your sweepstakes, keeping in mind that element of consideration that could vault your sweepstakes into illegal lottery territory. Ultimately, the best bet is to keep entry as simple as possible.

5. How Winner Is Chosen – describe how you will choose your winner, especially since you are likely choosing randomly

6. Technical Issues - since we all know there could be technical problems, let people know how they will be handled. For example, will you delete duplicate entries? If your site goes down, what will you do?

Group of Bloggers Come Together For Giveaways

Recently I’ve noticed that a group of bloggers will get together and offer several prizes. This is a new phenomenon that presents unique concerns. While it is uncharted territory, the legal ramifications can be far-reaching. Consideration needs to be given to the total value of the prizes given away because it could require either filing for and obtaining bonds in states that require them, or declaring their promotion void in those states. Because the giveaway is often billed as a cross-blog promotion and involving many prizes, it would be advisable for the bloggers involved to ensure they are compliant to avoid potential civil and/or criminal violations.

Tax Implications

While this will not apply to all, bloggers need to be aware that any giveaway with a value of $600 or more must be reported to the Internal Revenue Service. Knowing that, the blogger should not only make entrants aware of the value of the prize but also that they will need to complete a prize validation as well as are responsible for any taxes that may result from winning.

Conclusion

In summary, running a legally compliant giveaway involves a lot more than throwing up a post. Bloggers need to adhere to a variety of federal and state laws, as well as ensure compliance with federal agencies if that is the case. And while blogger do not want to exclude any of their readers, sometimes it is necessary. Finally, if your giveaway is over $5,000.00 there will be other state laws and bonding requirements that will need to be met.

Disclosure: While I am a lawyer, I am not offering legal advice. Posts on legal matters are intended to provide legal information and do not create an attorney/client relationship. 

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207 thoughts on “Sweepstakes, Contests & Giveaways – Laws Bloggers & Brands Need to Know

  1. Li

    EXCELLENT POST! I love the blog law series! It’s the only thing I read concerning the law outside of my work. Kudos to you for writing it (for down that road I care-not to wander).

    Superfantastic information chica! I will now prepare to RT it!

    Best,
    Li
    @LaLicenciada
    @HerDeepThoughts

    Reply
    1. Sara

      Thanks, Li! I appreciate your visiting and reading and sharing my blog law posts. It means so much to me that you read it. Because I know after work you don’t want to read legal things.

      I appreciate your support!
      Sara

      Reply
    1. Sara

      Tracy,

      Thank you for visiting! I, too, feel bad that our Canadian friends don’t get to be part of the fun.

      Sara

      Reply
  2. Mara @ Kosher on a Budget

    This whole series has been immensely helpful, Sara! Thank you. This post in particular is very timely for me. I am just talking to a corporate partner about a giveaway and have decided to skip all the possible “considerations” going forward. I’ll be writing up a new giveaway policy and linking up to this helpful post. I’m also sharing it with my corporate partners!

    Reply
    1. Sara

      Mara,

      Thank you for your nice comment. So glad to help and offer up information that will empower you as a blogger.

      Sara

      Reply
  3. Honey

    Excellent post as usual. Thank you for sharing. Now I understand why everyone leaves Canadians out in the cold (maybe the law and high shipping costs? ).

    Blessings
    Honey

    Reply
    1. Sara

      Hello Honey,

      Yes, it’s not personal just likely don’t know exactly how to comply with the law. Although, I’ve seen a number of Canadian bloggers do giveaways that don’t seem to follow the rules set for Canada, so I’m not certain how that all works under Canada law.

      Sara

      Reply
  4. Paula

    Hi, Sara–

    I love this series and am very glad you’re addressing this topic, since I’ve just hosted a few giveaways and had wondered about the ins and outs and how-tos of giveaways.

    I have a couple of questions that I’m hoping you can answer or at least point me in the right direction.

    Is there an easy way to find out what various states’ rules are on giveaways? Or what the various states consider lotteries and how to conform to their regulations? How much enforcement is happening on this front and what are the penalties? (I would think they would vary from place to place, but thought I’d ask!)

    Is this a matter of semantics, like on facebook now, bloggers aren’t calling it a “giveaway” they’re calling it “product testing opportunities”–but that to me isn’t morally or ethically right. A rose is a rose is a rose, call it whatever you want. It’s still a rose!

    I definitely want to play by the rules, and truly, giveaways drive a lot of traffic for bloggers. I’d like to be able to host them in an appropriate and lawful way. And not be hindered by semantics that change with the wind.

    Thanks for your help!

    Reply
    1. Sara

      Hello Paula,

      Thank you for visiting and commenting. I’m glad you’re enjoying the series I’m writing.

      I do not have a single source for the state laws for sweepstakes, contests and lotteries. However, keep in mind that lotteries are often considered gambling and thus highly regulated and limited to governmental use. Many states have exceptions for non-profit organizations, but do not permit for-profit businesses to conduct a lottery. If you’re at the point of doing something unique, you should consider seeking legal counsel.

      As for what bloggers want to call what they’re doing a ‘product testing opportunity’ it’s completely irrelevant. The laws for sweepstakes and contests have very clear definitions and if what they’re doing violates those laws, it doesn’t matter what they call it.

      The legal definition say a “sweepstakes” is a game of chance one plays voluntarily and for which one is not required to pay anything to enter in order to win a prize. A blogger can call it whatever they want but if what they are doing is this then it’s a “sweepstakes” and subject to those laws.

      I hate to compare it to this but it demonstrates my point. It doesn’t matter if the parent call it discipline, at some point if it fits the definition of abuse then it is just that regardless of the name they give it.

      As for thinking that they won’t get caught, it’s always a risk. It’s a matter of if you’re willing to take it.

      My pleasure to help,
      Sara

      Reply
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  6. rachel

    oh my. I really need to re-read this again the next time I do a giveaway! thanks for writing! (and enjoyed hearing you speak at BBCSEA!)

    Reply
  7. Nicole Rivera

    Thank you so much for such an informative post! I have not yet hosted a giveaway, but I have been thinking of it a bit more lately. I just want to make sure that I have this down correctly, I hope you don’t mind. There are two different ways I was thinking about hosting a giveaway, but now I think one is a giveaway – here’s what I’m thinking:

    1. EXAMPLE: I’m giving away X on June 10th at 6pm if you want to enter, please leave a comment on this post if you are interested and I will RANDOMLY select one of the comments to receive X. Winners will be announced in June 11th’s post. SWEEPSTAKES, YES?

    2. EXAMPLE: I’m giving away X on June 10th at 6pm. Ways to enter: a. leave a comment below expressing interest, b. “LIKE” our fan page on FB, c. follow us on Twitter – leave a comment for each action you take and I will RANDOMLY select one of the comments to receive X. Winners will be announced in June 11th’s post. IS THIS A LOTTERY? And is it, therefore, illegal?

    I have entered numerous giveaways in this fashion, so I thought they were standard fare, but I would like to go by the book!

    I am sure I will be back to read the rest of this series. This is fabulous. Thanks again!

    Reply
    1. Sara

      Hello Nicole,

      Thank you for visiting and your comment that I’m sure many are asking themselves as well.

      Both are sweepstakes. In the second example, if the ‘Like’ and ‘Follow’ are optional entries it would not be the ‘consideration’ that is contemplated in the definition of lottery. If they are mandatory, there could be potential legal issues.

      In addition, with the second example the promotion would need to comply with the Facebook promotion guidelines as well.

      Hope this helps,
      Sara

      Reply
      1. Nicole Rivera

        Thanks so much! (Sorry it has taken me so long to reply.) I was thinking of the “likes” and “follows” as optional entries, so that is good to know. I will have to look closely at the FB guidelines before I proceed, but you helped me a great deal her! Thank you so much!

        Reply
  8. Bennett

    Hello Sara

    What and excellent article. I am drafting a ‘Give-Away/Contest’ until I read this, now I changed it to a ‘Sweepstake’ thanks to you.

    Where can I get more legal information about for holding an online Sweepstake, and who has to approve Sweepstakes? Also, do Sweepstakes have to be reported to the IRS, where can I get more information?

    Thanks,
    Bennett

    Reply
    1. Sara

      Hello Jenae,

      Thank you for visiting. Your question is a very good one. You can have additional entries that require the entrant to do something that benefits you or a 3rd party so long as there is a way to enter that does not require purchase or some type of consideration to the sweepstakes sponsor.

      Hope this helps,
      Sara

      Reply
  9. Freebies

    So- I have noticed many blogs (big names included) are doing cash giveaways to those who are subscribed to their email newsletters. I have not seen any alternate ways of entering so it looks like these are not legal.

    If you need an example please feel free to email me, I just did not want to put the names here.

    jenetta

    Reply
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  11. Cheryl

    Thanks for the great information!

    What about a blog that lists out sweepstakes that are already listed publically? I am in the process of beginning my blog, but want to abide by all the rules. Also, if this ok to do, do you know of any programs to help with this type of site?

    Thanks!
    Cheryl

    Reply
  12. Shawna Elkins

    I have a question for you Sara. There has been a lot of debate on this. Can you have an entrant “Make A Purchase” as an entry into a giveaway? Whether it’s mandatory or not? I am pretty sure you can’t do it as mandatory and always thought you couldn’t do it even if it’s not mandatory. I would LOVE to know the RIGHT ANSWER to this question. I for one don’t do it period, but I have seen a lot who do and was just wondering if it’s legal or not. They would be making a purchase from the sponsor of the giveaway!
    Thanks! :) Loved your Blog Law Series!

    Reply
    1. Sara

      Shawna,

      If a purchase is required for an entry (whether mandatory entry or optional) in a promotion then one of the other 2 elements (prize and chance) need to be missing or the promotion will be considered a lottery. Lotteries are governed by very specific laws and must be approved and authorized by the state. So, w/o a prize it’s not really a good promotion. That leaves the element of chance which would need to be removed. Not knowing exactly how the winner would be chosen, it’s possible that the element of chance is removed.

      Regardless of where the purchase needs to be made, it could be consideration for either the administrator (b/c it gives them goodwill with the 3rd party) or the sponsor (whether purchase is made from them or via a 3rd party).

      So, it depends on how the rest of the promotion would be structured to determine if the promotion is a sweepstakes or possibly a lottery which would be governed by additional laws.

      ~ Sara

      Reply
  13. nelda

    I really enjoyed your well-written summary of this important issue and I have referred several bloggers to it. I do have one question for you about the optional enteries that many bloggers include in their “giveaways”. Some of these optional/additional ways of entering the contest are only available to contestants who have access to a particular resource such as facebook or twitter. Therefore some contestants are allowed to have multiple enteries while others (without access to these reasouces) are not and get only one entry. Is it legal to allow some contestants to enter a contest more than once and others not?

    Reply
  14. Molly Jo

    Thank you so much for this information! I’ve been scouring the web to find if it’s legal to offer a $5 giftcard through my blog. From what I’m reading here, I have nothing to worry about. Thanks so much for the clear and detailed information.

    Reply
    1. Molly Jo

      To be quite honest, I read it again, and I’m a bit confused. Could you pretty please take a look at my link and let me know if it’s okay, or if I need to change anything? I’d so appreciate the help! Thank you so much!

      Reply
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    1. Sara

      Roland,

      If your giveaway is a sweepstakes (which most are) then requiring a “like” or a “follow” could be deemed consideration thus making the giveaway a lottery which would likely be illegal. There is no precedent (either in case law or administrative law) on this currently, as this is truly unchartered territory.

      Do people do it? Sure. But the potential consequence is significant if you become the test-case.

      Reply
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  18. James

    Another situation to consider would be they have to get something from your store *including* a FREE product download. In this case, you are actually giving *them* something, but that way the list of entrants comes from a “sales” list. Does this meet the consideration criteria, in your view?

    Reply
    1. Sara

      If you’re requiring an entrant to buy something that would definitely be consideration. There could be an argument that even if it is a ‘Free’ download that there is consideration because ‘# of downloads’ is a valuable indicator of the success of a product. Also, what about those who do, indeed, purchase something? You’d have to have very tight rules that addressed this issue.

      It’s something that has not been tested, but could definitely be argued either way. Programs such as the publisher’s clearing house have gotten in trouble for how entry was handled due to purchase, and it’s been a very expensive defense for them.

      Reply
  19. Sherisa

    Hi Sara,

    Two questions for your consideration:

    1. If the contest is actually a “contest” and there is some criteria attached to the winning is there still a requirement for a US contest offering a prize valued at more than $5,000 registered and bonded? For example a scholarship contest that selects a winner based upon an entry.

    2. I like your point that brands should take responsibility for providing bloggers with guidelines. Aside from a link to your blog post :-) What do you think would be the most critical information to provide to a blogger who is conducting a contest/giveaway on behalf of a brand?

    Reply
    1. Sara

      Sherisa,

      Thanks for stopping by and leaving a comment.

      1. Bonding in NY and FL are required for games of chance, which will include a contest. You can read the NY information here – http://www.dos.ny.gov/forms/corporations/0255-a.pdf and the FL information here – and keep in mind that California has special disclosure regulations with regard to contests.

      2. I believe that brands/agencies working on behalf of a brand should provide bloggers all the legal parts, as well as compliance with included social media platforms, of the giveaway to ensure they’re doing their part to keep on top of the laws, this would include all the Official Rule language and explaining what can and can not be used as entries on different social media platforms.

      Hope this helps!

      Reply
          1. SarahJ

            This doesn’t answer the question. The question is, what are the legal requirements for contests with prizes under $5K? Anything goes? No legal scrutiny whatsoever? Anyone can read the statute.

          2. Sara

            SarahJ, the legal requirements for contests are slightly different than those for sweepstakes. For those contests and sweepstakes where the prize is over $5K there are additional requirements. When the prize is valued less than $5K, the contest/sweepstakes must still comply with all state and Federal laws. It’s not an “anything goes” proposition just because the prize value is under $5K. There are still laws that apply regardless of the value of the prize.

  20. Sue

    I’ve been researching all of the legalities of giveaways recently and this post confirms EVERYTHING I’ve discovered so far. Thank you soooooooo much for this great article! :)

    Reply
  21. julia

    How about if you did a “I’m thinking of a number.. ” so that would add a bit of skill so a contest could be opened up to Canadians?

    Reply
    1. Sara

      Julia,

      For Canada, it has to be a skill test and asking someone to guess what you’re thinking is not a skill test. Nearly all Canadian sweepstakes utilize a math question.

      Reply
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  23. Valerie @ Momma in Progress

    Hi, Sara. I just found your site via Blogging With Amy. I’ve been skimming the blog law archives, particularly the info on contests/sweepstakes/lotteries and Facebook guidelines. I *think* what I am planning to do is a sweepstakes. If I write something on my blog like “if you would like a free book/baby sling/stuffed dinosaur/pet rock leave a comment here and I’ll have my cat choose a winner at random.” Is that a legit “sweepstakes”? Is it best to leave FB out of it? Their “guidelines” seem pretty nitpicky. (So, even though most of my readers are “followers” on FB, rather than saying “leave a comment on my wall” specifically say “go to the blog itself and comment there”?) Ah! It is naive to think that my blog is too small and obscure to worry about this legal stuff? I have maybe a couple hundred page views a week, and less than 150 “followers” (FB fans plus Google reader/connect, etc.). Thanks in advance. Looking forward to checking out more of the site.

    Reply
    1. Sara

      Valerie,

      I think you’ve got a good understanding of my post. Keep focused and you’ll be glad you took this road to being a professional blogger.

      Reply
  24. cp

    So I just had a company say that the mandatory entry for the giveaway is to visit their site then leave a comment. So this sounds like consideration? So is it ok if it is not mandatory? I typically do not make anything mandatory…but what is your opinion on this. thanks!

    Reply
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  28. Tania

    I knew about some of the legal concerns re: sweepstakes and contests from my days of participating in fundraising events for NFP’s. So I was surprised when I entered the blogging world to see how many giveaways were happening without the rules specifically laid out (not to mention the whole paid/sponsored post ethical concerns).

    It is news to me that likes and follows could be considered consideration! Thank you for that.

    I have actually chosen not to do giveaways just cause it isn’t worth the hassle. And for me personally, my favorite blogs aren’t the ones doing giveaways. I don’t want to offend anyone but it is my experience that the blogs I’ve visited that are pushing the giveaways are often trying very hard to monetize (sponsor me posts…receiving free goods…sponsored posts). I don’t think anything is wrong with monetizing (I’m a huge fan of big mag like blogs where the bloggers are living their dreams) but the smaller blogs who are fishing for money with ok content are a turnoff for me. I don’t mind sponsors on your side bar but I don’t like when the seeking money becomes part of your content section.

    Sorry…kind of off tangent but for a good reason :-) I love your site, I’ll be baaaaccck.

    Reply
    1. Sara

      Hi Tania,

      Thank you for stopping by and leaving a comment. Monetization is a challenge that many struggle with. Giveaways are often used as part of a monetization strategy, but in my opinion shouldn’t be. It’s a way for people to amass emails so they can then spam them with junk.

      As you’ve mentioned, giveaways are a lot of work. Many don’t want to do the work to do it right. I see it as an issue that is brewing under the surface that will soon begin to have a bigger impact on the blogging community. Too many people doing it wrong and many unhappy participants make it ripe for intervention.

      In the end, though, good content will always bring people back.

      Reply
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  31. susan

    This is so helpful, Sara. Recently a cooking catalog reached out to me and asked if I would like to do a giveaway for two of their products. After going back and forth several times, I agreed. I was asked to use specific links and link back to the product that I was promoting. After the post was up, the rep emailed me and asked me to use two more links that were mentioned in the original email. She did not say specifically where she wanted the links, yet with that said, I did include the links.
    When the giveaway was over and I had randomly picked a winner, I emailed her and let her know that I had had a winner. I never heard from her. I have emailed her 5 times and still no word and no product.

    I am embarrassed. I had 146 comment and promoted the product on good faith. I am still hoping for a positive outcome, but part of me has given up. Is there anything that I could do to assist them in honoring their committment?

    Thanks for your time!

    Reply
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  33. Ilze

    Wow ! What a great post. I did not even think about ANY of these issues before…. I have a small blog and hosted a tiny giveaway or two, but this gives me a whole new take on it !!! Will definitely refer back to your blog and browse around for more wisdom ! Thanks a lot.

    Reply
  34. Lost_Arkitekt

    Sara,

    This article is very interesting. Although not necessarily in your blog category, my business partner and I are trying to design a sofa prototype. We were thinking of using group funding (a la Kickstarter), but we didn’t want to keep the sofa. Our thoughts would be to give the sofa away at random to someone that helped fund the project. However, from what I’ve read, this is a raffle and illegal.

    Someone suggested that we sell other items in the different contribution levels, and with that purchase the person is entered into a giveaway for the sofa. For instance, if a person buys a logo postcard for $10, we will enter them in the giveaway. If they buy a t-shirt at $50, we will enter their name 5 times in the giveaway. Purchases have to be made by such and such a date.

    Is this type of scenario legal?

    Thanks so much for your help.

    Reply
    1. Sara

      Lost Arkitekt,

      Unless you have a ‘no purchase necessary ‘ (read free/no consideration to you) entry option what you describe is not a sweepstakes and is more along the lines of a lottery/raffle, both of which are regulated by state laws.

      If you want to require a purchase to enter, you should consult with an attorney.

      Reply
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  37. Lucille Brown

    Hi,

    Thanks for taking the time to put this together. I work for a non-profit and have spoken extensively with paypal regarding the give-aways and fundraisers that our families do. There are exceptions to what you’ve listed. Our families and advocates use our non-profit’s paypal address for tax deductible donations to their give-aways. Those who use their own personal accounts via chip-in, as long as their fundraiser is still linked to their family being on our website (in other words, an advocate can NOT do this but a family, who’s profile is listed on our website CAN) and the money raised is going toward their adoption costs, even those are protected by the laws and exceptions for non-profits. We have the information from paypal on our family sponsorship program blog and the actual verbage came directly from paypal so those aren’t my words, they are paypal’s. I am mentioning this because some uneducated persons have quoted your blog post in comments to our families and advocates to harass and intimidate them.

    Reply
    1. Sara

      Lucille,

      Thank you for your comment. What paypal chooses to do/allow does not make something legal. Paypal is NOT the government, despite what many might think.

      Just because paypal permits your families to put a donation button on their website does not mean the family can legally run a ‘giveaway’ which requires making a donation to your organization. It’s one thing for YOUR organization to do such a promotion (which would be called a raffle and would still require registration in the states in which it is run), and something totally different for a private individual to run a promotion in which they themselves give something away but require a donation be made to receive an entry.

      If one of the families that your organization is supporting wants to host a sweepstakes to raise money for their own private needs then they need to comply with all state and federal laws regarding such a promotion. If, however, YOUR organization wants to have a promotion by which funds are raised and earmarked for certain families that’s something completely different and should still comply with all state and federal laws regarding fundraising by designated charitable organization.

      Please DO NOT confuse your organization’s fundraising with private individuals hosting a promotion that requires monetary consideration be provided as the only means of entry.

      Finally, referring to people as ‘uneducated’ because they have quoted my post is misguided and judgmental. Because they disagree with how families working with your organization are raising funds does not make them uneducated.

      I would suggest your organization speak with a lawyer rather than rely on what Paypal says. Paypal DOES NOT represent your interests and can not give you legal advice.

      Reply
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  39. Lucille Brown

    Actually, we have spoken both to our lawyers and paypal’s. We have no reason to worry at all. The guidelines for giveaways we give our families are absolutely 100% legally sound. They don’t have raffles or sweepstakes, btw. But paypal does have a LOT of laws they have to follow. There is too high of a potential for fraud using paypal and they are highly scrutinised. Our government here in the UK do not even allow some of the same things paypal US is allowed. So, no, they aren’t just flying by the seat of their trousers. Also, the term uneducated was in reference to the laws regarding non profits and giveaways, not a general statement about them. But no we don’t expect paypal to represent our interests. However, in the EU, if they weren’t following strict legal guidelines, they would be shut down. I do appreciate your concern for our organisation and if I hadn’t fully explored this both two years ago and again this year with our attorney and paypal, your post would definitely have motivated me to do such.

    Reply
    1. Sara

      Lucille,

      I am not here to provide you or your families legal advice, but rather to present factual legal information about running/sponsoring sweepstakes/contests/lotteries in the US. Regardless of where one physically is located, running/sponsoring a sweepstakes/contest/lottery aimed at US residents must comply with US laws.

      You reference you’re in the UK, however, your organization is listed as a 501(c)(3) entity, incorporated in the state of Georgia, with a US-based address. As such, you are well-aware that your organization is subject to all US laws.

      Plain and simple, a private US Citizen (whether an individual or legal corporate entity) asking people to give money as the means of entering a promotion to win a prize drawn at random must comply with US laws regarding sweepstakes.

      Sweepstakes are not charitable fundraisers and should not be treated as such.

      As for Paypal following a host of laws, that is true. However, Paypal is not a law firm and is not likely giving legal advice to anyone regarding anything. At best, in the US, Paypal is ensuring it is in compliance with laws relating to banking/secure transactions and other financial-services laws. Complying with laws to limit fraud in the transfer of funds is not the same as complying with laws related to games of chance.

      Don’t get me wrong, I think supporting families wishing to adopt children (especially children with known special needs) is wonderful. I’m sure many agree. I get that your families are not lawyers and not likely in a position to spend money on a lawyer to advise them on legal matters relating to fundraising/giveaways when they’re trying to gather funds to adopt a child. That, however, does not exempt them from being legally compliant if they choose to put up a website and ask people to donate to their cause as the sole means of entering to win a randomly drawn prize.

      What many may be taking exception to is being forced to donate money to an organization as the sole means of entering what legally appears to be a sweepstakes run in the US.

      Reply
  40. Lucille Brown

    We are legally compliant. I wasn’t stating the organisation I work for is UK based, just citing an example regarding Paypal. And no, paypal is not who we go to for legal advice regarding our giveaways. They are not sweepstakes and our guidelines we give our families do NOT say that the sole way to enter is by a donation. They have non-monetary ways to enter. As well, our organisation provides grants to the families who are part of our family sponsorship program so the laws are not exclusive to 501(c)3 but also laws pertaining to grants. I appreciate that you understand most of the laws pertaining to raffles etc. We are 100% compliant and the state we are registered in has checked us as well as our attorney. Again, I appreciate your concern, but we are 100% compliant in this.

    Reply
    1. Sara

      You can advise your supporters and families however you wish. I am not your lawyer, am not providing you or your organization with legal advice and have no relationship with you or your organization.

      I have provided information in my post based on existing federal and state laws and I stand by what I have written. You can disagree with what I’ve written, but that doesn’t make me wrong.

      Reply
  41. Adam

    I occasionally do giveaways, but I always say I will choose winners “at whim” and clarify there is nothing random at all about it. In fact, the last one I did I made people write short emails about how much they would like to score the book I was giving away. I didn’t collect the addresses or do anything with them. I just read the emails, chose the one I found the most amusing and then contacted the winner on the cutoff date I’d announced.

    Any thoughts on the legality of that? I always do it that way to sidestep any possible legal issues. I assume you can’t be held accountable for a non-random giveaway when you explicitly say you’re arbitrarily choosing who scores what you’re giving away.

    Reply
    1. Sara

      Adam, what you’re describing sounds more like a contest rather than a sweepstakes. While you indicate you’re selecting ‘at whim’, the criteria seems more like you’re selecting based on what most entertains you. There are separate rules that pertain to contests since there is some judging criteria rather than, like a sweepstakes, random selection.

      You can be liable for violating laws relating to contests, especially if you indicate the winner is chosen arbitrarily but in fact there is some basis to selection. You may want to seek legal advice on the way you’re running your giveaways now to ensure you’re complying with contest laws.

      Reply
  42. Anne

    Hello Sara,

    This is a well-researched and extremely valuable post for bloggers and businesses who regularly promote their brand. As you said, no one wants to become a test case! My only question is, what sources or links can you provide for the laws that govern US sweepstakes? I’m often asked by fellow bloggers why we can’t do this or that when running giveaways, and I point them to your post, but then they want links, documents, etc. that actually cite some of the key laws.

    Thanks!

    Reply
    1. Sara

      Anne, many of the definitions used for sweepstakes and contests are taken from the Deceptive Mail Prevention and Enforcement Act of 1999 which can be found at Title 39 of the US Code. In addition, the FTC is charged with policing deceptive trade practices and that includes sweepstakes and contests.

      In addition, nearly every state has laws that both define the various types of prize promotions and may have further regulations that restrict certain types of practices or contain requirements for bonding or registration.

      You would need to go to each state’s statutes to find their laws.

      General definitional information regarding what a sweepstakes/contest/lottery is has been set forth in both case law as well as through various federal laws. There is no written set of law which specifically address sweepstakes/contests with regard to the internet. The FTC has taken up most of the enforcement and has used the Deceptive Mail Prevention and Enforcement Act as a guideline. A good reference is the section about Contests and Sweepstakes in the FTC Small Business Guide – http://business.ftc.gov/documents/bus35-advertising-faqs-guide-small-business

      Definitional information for sweepstakes and contests can be found at 39 USC 3001(k). While this applies to the US Mails, it is generally used as the base of federal laws defining these two types of prize promotions.

      Like many laws relating to marketing practices, how they are translated to the internet has not been further codified. Instead, we rely on best practices as well as laws regarding other forms of marketing to interpret how to best translate those same marketing practices to the internet.

      Since the barrier to entry for starting a website and hosting a prize promotion is very low, many people undertake it without much regard to the laws that regulate such practices in the off-line world. Unfortunately, the laws relating to such practices in the off-line world are then applied to the online usage and may catch the website owner by surprise.

      Reply
  43. Julie M.

    Here is my question…when running a sweepstakes for a non-profit organization, is it legal to have one of the methods of entry be donating money to the charity? For example if you donate any sum of money to this specific charity you will get 25 extra entries? I am just wondering a good way to get people more entries if they donate any sum of money to the non-profit! It gives more motivation. But at the same time, I want to make sure it is legal! Any ideas on how to raise money through a sweepstakes that makes it more appealing to donate money?

    Thanks for the great article!!

    Reply
    1. Sara

      Hello Julie, excellent question. I think others might have the same concern.

      Not for profit organizations still must comply with all the regular sweepstakes and contest laws. However, certain not for profit organizations receive payment/donations in exchange for entries into a giveaway. While this would normally be considered a lottery, each state has special laws to allow for non profits to do this. It is not for every non profit and must be authorized by the state agency tasked with managing these types of promotions. Regardless of whether the non profit would be authorized to accept money in exchange for an entry, it can not, however, give more entries to someone who gives money than to those who do not if you want to have an option to donate or not donate.

      If the not for profit is ineligible under state law to conduct a “legal lottery” then the organization has to follow the standard rules for sweepstakes. In that case, the organization can provide entry into the sweepstakes to those who donate. The organization MUST provide a means to enter that does not require purchase/compensation. But if they also want to give an entry to donors then the rules must be such that donors do not get an unequally beneficial number of entries as compared to those who do not make a purchase/donate.

      Reply
  44. Kelsie Harris

    Thank you for the helpful information. I try to stay informed on the topic so I’m not breaking any laws without realizing it. It’s a lot to learn about since laws vary state to state country to country and it’s hard to know starting out how to run a sweepstakes without breaking any laws since a lot of bloggers are running contests and sweepstakes illegally, probably without knowing what the laws are.

    Reply
    1. Sara

      Kelsie, thank you for visiting and for your comment. I wanted to share the information to help bloggers. I know it is a lot of information, but I hope it gives you the confidence to make changes that will protect you and your blog.

      Reply
  45. Stella

    Where do you find a complaint form? I have been to the FCC and FTC website and I don’t know what form to use. I would like to complain about a website that is requiring a person to purchase at least 10$ to be in the random give-a-way drawing. If you purchase 50$ you get 5 chances in the prizes that are to be given away. I have emailed the owner, but they will not email me back.

    Reply
    1. Sara

      Stella, the FTC website that discussed consumer complaints can be found at: https://www.ftccomplaintassistant.gov/

      The FTC Bureau of Consumer Protection would be the section to address your complaint.

      You may also wish to contact the Attorney General in your state as well as in the state where the promotion is being conducted (if you know it).

      The FCC complaint form is: http://esupport.fcc.gov/complaints.htm
      The FCC does not usually handle complaints regarding online promotional activities.

      Reply
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    1. Sara

      Valerie,

      There have been no updates as of today (5/16/2012) to the laws that govern sweepstakes. There have been bills proposed regarding internet gaming, but those go beyond sweepstakes and contests. If there are new laws or changes I will post them, as I think this is a very important topic.

      Thank you,
      Sara

      Reply
  47. Jordyn

    Hi Sara,

    Thanks for the article. I recently won a $250 gift card from a blog giveaway. They listed my name on the blog as a winner and emailed me to tell me that I won. I responded with my address, and they said they would send me the prize. Unfortunately, the prize never came, and all of my efforts to contact the organization have gone ignored. Can you tell me what my rights are in this case. Is there an agency I could notify? The blogger lives in Utah and I live in Texas.

    Thanks!

    Reply
  48. Renee

    This question is a bit different in that I am the contestant. A company posted a contest on their FB wall announcing a $50 prize to their Top Fan for the month. I have “worked” for 3-1/2 wks promoting their site, posting to their wall, “liking,” and “sharing.” Now they have announced 1 person out of their top 10 fans will be chosen for the $50 prize, not their Top Fan. This is the last week of the contest, too. I have about twice as many points as the 2nd place person, so I was certain expecting to win. When I messaged them, they said it had been an error…an error that they are now trying to correct when the month is almost over??? It looks like they also removed their May 1st post announcing the contest, but I stayed one step ahead & took a photo of it as well as copied & pasted it into a Word document. Let me add that there are no official rules anywhere. They have also tried saying that one could only win one prize every 90 days for either of their 2 companies. I won a $25 prize from their other company in April, same kind of Top Fan promo. This rule is not stated anywhere on the 2 Facebook pages or the 2 company websites. Whom should I contact if they do not award me the prize on May 31st?

    Reply
  49. Joel

    One further question:

    Many giveaways now use PunchTab, which is just a way for people to sign up for the giveaway. So that initial entry is open to anyone and is free. Then, within PunchTab, you can like a Facebook page, follow a twitter account, share it on your FB wall, etc., all for additional entries. This is an app on Facebook, so I believe it follows their guidelines. Is it legal? The initial entry is without consideration, but more can be had with consideration. I’m still unclear on that.

    Following up on that, if someone were to do all of the above, and then offer additional entries for buying a product, is that still legal? I.e., no purchase is necessary to get in the contest, but you can increase chances with purchasing something (or other considerations, like liking a page, etc). Is this legal? I read through all of the above, but I’m still not clear. And we’re talking about a giveaway under $200, so the other constraints don’t apply.

    Thanks!

    Reply
    1. Sara

      I have not checked out PunchTab personally so I can’t speak to exactly what they do. I have used other apps/widgets that interface with social media and social network platforms for the purpose of giveaways/promotions (sweepstakes/contests). To say they’re legal would be beyond my ability here within this blog. While an initial entry without consideration is good, there is much more to what can trip up a sponsors/promoter of a sweepstakes/contest when it comes to legalities. One of the biggest issues I continue to see is a lack of Official Rules. Furthermore, there is often no limitation on entries for those under 18, non-US residents or residents of jurisdictions where the sweepstakes/contest may be prohibited.

      The method of entry is but one criteria in evaluating whether a sweepstakes is complying with all laws and regulations.

      As for having an option where an entry is given if there were a purchase/donation, that is not prohibited so long as (1) there is a “free” method of entry and (2) an entry where consideration is provided does not yield an disproportionate amount of entries. This is where I see many fall short. Both the purchase/compensated and non-purchase/free method of entry must provide the exact same chances of winning.

      Sweepstakes/Contest rules & laws apply regardless of the value of the prize.

      Reply
      1. Rena (An Ordinary Housewife)

        Hi Sara. Thanks for your helpful info. Do all entry options have to have the same value? For example, if I had one mandatory option worth 4 points that only required clicking “enter”, then an optional entry to comment also worth 4 points and facebook, twitter follows, etc as optional entries for 1 point each, would this be acceptable, since no entry method would be worth more than the mandatory method?
        Also, it would be great if you made another post (or updated this one) to discuss some of the things addressed in the comments. I sometimes have offers to run giveaways from companies that want to violate certain rules (like mandatory comments or likes) so I would love to have a link to direct them to so they know there is a real reason for not doing things this way.

        Reply
  50. Annette G.

    Oh my! I am very worried as I have many questions about this issue and want to make sure I follow both federal and state laws. Please help clarify if what I have done is a lottery, sweepstakes, or giveaway. If possible, advise on what to do to make it legal if it is not. I am in the process of turning my son’s website into a non profit and I make donations often to my son’s charity. A charity in which I liaison for is also a non profit that I umbrella and fund raise. Here is my Facebook post to make it easier for you to understand my situation:

    Just to be CLEAR: This is NOT a sweepstakes, NOT a lottery, NOT a contest, NOR is it a giveaway!
    RULES:
    MUST be 18 or older and live and operate your CHD org in the United States
    No Purchase Necessary,
    Start date Sept. 11th
    End date once all calendars are gone.
    The $100 donation was already going to go to Alex’s Heart Fund at CSMC along with a portion of the proceeds from the CHD Awareness Calendar. I am simply taking that $100 from Alex’s donation and donating it to a CHD org OR CHD family in desperate financial need. How am I choosing the CHD org OR CHD Family in desperate financial need? By your comments of your choice for your CHD org OR CHD family in desperate financial need. The one commented the most will be the one receiving the donation.

    Here is my original post:
    From every CHD Awareness Calendar 2013 SOLD (I will DONATE .25 cents a total of $50.00) if all 200 calendars sell to the the winner of the most needed CHD org or CHD Family commented below. This is In HONOR of ALL our ANGELS and CHD SURVIVORS: I ask this of you: Comment below the name on your favorite CHD organization or a known CHD Family in desperate financial need. This means that not only will proceeds from the calendar go to Alex’s Heart Fund at CSMC but all to a needed CHD org or CHD Family.

    Right after I received a .25 cent match per calendar sold by an individual wanting to help and making the total donation $100.

    Thanks!

    Reply
    1. Sara

      First, let me state that all individuals and entities must comply with state and federal laws pertaining to sweepstakes, contests and lotteries. Non-profit organization do have some special exemptions, so check with your state if you are a licensed non-profit.

      Selling at item and taking a portion of the proceeds is not a game of chance or skill and therefore is not a sweepstakes or contest. A sweepstakes has two of the following – a prize, chance or consideration. In buying something that is clearly consideration, so to be a sweepstakes it could have a prize w/o a random chance or a winner can be chosen by chance and given nothing. In your situation, what does the winner get? Is there even a “winner”?

      To be a contest the selection criteria has to be based on some merit. If the selection process of the winner is either random (sweepstakes/lottery) or merit based (contest), you’d have to examine the other parts of the promotion (prize and consideration) to determine what type of promotion you’re running, if you are even running a promotion.

      The rules regarding tax deductibility of donation is a separate topic, beyond the scope of this article.

      Reply
  51. Brittany aka Pretty Handy Girl

    Sara, first I want to say thank you for this post. I attended your talk at Blissdom and took notes, but this really helped me understand the legal ramifications of running a sweepstake as a blogger.

    One question I had was if you have several different prizes (i.e. Grand, 1st, 2nd and 3rd winners) can they each be less than $5,000 and not have to be filed with NY & FL. After reading this article with Florida’s top sweepstakes regulator, she says that even if you had a monthly winner, each winning $1,000, that the total prizes for that one contest has to total less than $5,000 in order to avoid filing with FL and posting bond.

    Here is the article: http://www.thompsoncoburn.com/news-and-information/sweepstakes-law-blog/blog/12-06-26/an-exclusive-interview-with-florida-s-top-sweepstakes-regulator-%E2%80%93-part-two.aspx

    Reply
    1. Sara

      Brittany,

      Thanks for the link to the article, I have read it and while I find it clear I realize not everyone is a lawyer and it can be confusing.

      If one sweepstakes has prizes that in the aggregate total $5,000 or more, the appropriate filing and bonding will need to be done in FL & NY or those states must be excluded.

      Think of it this way, if you were to write official rules would all the prizes included in those rules total $5,000 or more. If a sweepstakes ends and all the prizes distributed have a value less than $5,000 no filing or bonding would be required. However, if there are interim prizes given out before the final ending date and the distribution of some type of final or grand prize, the value of all those prizes need to be added up and counted toward the $5,000 threshhold.

      Hope this helps. If you have other questions, let me know. I’m sure this information will be helpful to others as well.

      Reply
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  53. Donna

    Sara,

    Thank you for this post, I’ve been thinking about doing a giveaway (sweepstakes) and came across your site. It was very helpful and well outlined!

    Thank you again,
    Donna

    Reply
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  56. jamie

    I have a cousin that has a nice property in Belize Central America and want to see if it is possible to do a drawing here in US for $ a chance to win title to it?
    I have a lot of questions, maybe you have another solution?

    Reply
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  58. Cheryl

    Thanks again for this post Sara, I refer to it all the time, and thanks for adding the part about the “group” giveaways many bloggers are doing. (for the record, I don’t care for those – many of them require you like all of the bloggers FB pages and your “entry” is saying Yes I like all of the pages – so they feel that is a free entry)

    I have a question – are you aware of anyone getting into any trouble for running illegal blog giveaways? the reaction I get from most people is “I’m doing what everyone else is doing and no one gets in trouble”

    I’m also I’m still struggling with the “free entry” is simply leaving a blog comment ok for a free entry if you don’t have to register to leave a comment. if not, I’m not sure how a blogger can have a “free entry”. So I’m hoping a blog comment is ok.

    Reply
    1. Sara

      Hi Cheryl,

      I can’t tell you how many times I hear “But, so-and-so doesn’t do it like this.”, as if that’s a reason not to follow the law. I do know that bloggers have been reported to search engines and hosting companies for not complying with legal terms for sweepstakes and contests or hosting illegal lotteries b/c they don’t know what the law is. I also know that Facebook has disabled pages because of complaints.

      Each state has its own laws regarding sweepstakes/contests/lotteries which makes it very difficult to police all of these promotions. The state Attorney General, like the FTC, doesn’t have enough headcount to scour the internet looking for violators. Often, their focus in on the big players and those organizations/people/companies that are receiving multiple complaints.

      Big companies are fully compliant because it’s potentially a huge liability if they’re found to conduct a sweepstakes or contest without legal compliance. Small companies often don’t even know these type of laws actually do exist and don’t take the time to find out.

      When it comes to bloggers/social media professional/website owners many don’t take the time to find out if there are laws they need to comply with. Many of them don’t even read the TOS for the social media platforms they use and so they violate those TOS. If they’re not even going to read what’s in front of them that they specifically click “Agree” to it’s no wonder they conduct promotions that aren’t compliant. Even worse is that when it’s brought to their attention that there are legal requirements, many of these online content providers thumb their nose at the notion they have to follow these laws.

      I don’t personally know of any bloggers who have been held liable for violating state sweepstakes/contest/lottery laws. States do investigate complaints, but with limited resources they’re likely looking for bigger issues (money laundering/drugs). I do know that several bloggers are being investigated for collecting “donation” for a chance to win iPads. However, that operation scammed tens of thousands of dollars from thousands of people. It shows that it’s really a scope issue.

      However, as the sweepstakes culture takes off (I notice TLC did a pilot for something like Extreme Sweepers or something along that line) and professional sweepstakes entrants hit more and more blogs they’ll be looking for the legal compliance or they’ll be complaining.

      Regarding the question about the “free entry”, that’s becoming more and more challenging to define. Historically, the requirement was that no purchase was necessary. This was to ensure there was no “compensation” element. Unfortunately, for bloggers and brands we don’t know what a court would use as “compensation”. Clearly, “likes” and “followers” and “subscribers” are valuable. The other criteria is that the method of entry for a sweepstakes doesn’t require an entrant to do a lot of work. That too is something we don’t know. More and more there are online widgets that make it easy to “like” “follow” “pin” or stumble or tumble or what have you. At some point it becomes splitting hairs to justify that one type of entry is or is not too hard. The fact remains that there should be a single method of entry that is as simple as possible. That “free entry” you mention should be (1) the easiest possible AND (2) not provide “compensation” to the sponsor.

      Finally, if alternative methods of entry want to be provided those methods CAN NOT give a greater likelihood of winning. I see that all the time that you get multiple entries if you pin or blog or buy. It’s the multiple violations and the continuous disregard of the law that’s going to get someone in trouble.

      A blog comment is often the easiest AND does not individually confer “compensation”. And I’m not talking about comments that require going to a 3rd party site and finding a product or service then going back to the original blog. That’s clearly conferring “compensation” (traffic) to the sponsor or administrator. And, you’re right, it’s best not to require registration of any type. Collecting the most basic of information so you can contact the winner should be all that is necessary.

      Thank you, again, Cheryl for commenting. I hope I have clarified your questions. ~ Sara

      Reply
        1. Gale

          “Finally, if alternative methods of entry want to be provided those methods CAN NOT give a greater likelihood of winning. I see that all the time that you get multiple entries if you pin or blog or buy. It’s the multiple violations and the continuous disregard of the law that’s going to get someone in trouble.”

          But there are TONS of corporate sweepstakes where you have a “free” entry method (sending in a post card and such) but get a better chance of winning by buying more products where “the winning entry” may be found under the lid and such. These have been going on for years–and if they were illegal I’m sure would not continue (those companies can afford lawyers to make sure they’re legal). How can those be legal, and “extra” entries which don’t require you to buy anything be illegal?

          And if offering more extra entries for some things, or offering extra entries AT ALL were illegal, than I would assume Rafflecopter would have gotten in trouble now for facilitating illegal activity for thousands of blogs over the past few years. I mean, maybe it’s naive to assume they have lawyers that look over their stuff, and that since they have features that CAN ONLY BE USED to give people extra entries for entering giveaways, that they would have checked to see if this is legal. I’m not saying that nothing that you could do on Rafflecopter could possibly be illegal, but since “extra entries” our built in, you would think if it were illegal they would have gotten in trouble it by now and taken that ability out of their system.

          Reply
          1. Gale

            Sara, I just wanted to follow up with an apology since I can’t go back and delete or change my answer. First, I wanted to say I really appreciate you taking the time to share your expertise. I didn’t realize at first that I was replying to the same person who authored the article, and would have said that first. I read over what I wrote and it sounds terribly antagonistic and I didn’t mean it that way. I just don’t understand how “extra entries” could be illegal in one case and not in another.

          2. Sara

            Gale, thank you for your comment. I will attempt to address your concerns individually.

            1. If a corporation runs a sweepstakes where there is not an equal chance of winning regardless of the method of entry, they are violating the law. Where there are “game pieces” and “instant win” type prizes on products that are purchased, the “free entry” may require sending a SASE to obtain a game piece and the odds of winning from that game piece will provide an equal likelihood of winning prizes. The “free entry” does not require purchase (compensation) and, if audited, must offer the same odds of winning as if a piece is obtained through purchase.

            2. It is NOT legal to have a sweepstakes where any method of entry provides a greater (or less) chance of winning. It may be assumed that a company would safe keep certain pieces, but if that were to be true the legal consequences would be quite severe.

            3. Rafflecopter is one tool for running a sweepstakes. Your statement that “Rafflecopter would have gotten in trouble” assumes that Rafflecopter is the sponsor of the sweepstakes. In fact, that is one of the biggest problems with using a 3rd party platform and not understanding its limitations. Rafflecopter (and others like it) is a facilitator. The fact a 3rd party app/widget has functionality that would create an illegal sweepstakes should be very disconcerting for those who use it. Yes, Rafflecopter (and others like it) could be used as an online platform for running a sweepstakes that violates the law. It is not, however, the platform’s responsibility to ensure users are legally compliant. I believe, these platforms specifically state it is the users responsibility to comply with all legalities. Unfortunately, it does appear many believe these apps/widgets are what is needed to make their sweepstakes or contest legally compliant.

    1. Sara

      Hi Sara, I’m not sure what facts you’re specifically talking about but with regard to the state and federal laws that govern sweepstakes. contests and lotteries I have done research over the years of all state laws that speak to conducting these types of promotions as well as the FTC Rules and Guidelines that govern direct to consumer promotions, which includes both sweepstakes and contests. The US Gov’t does not regulate lotteries since we have no national lottery and those are done at the state level.

      In addition, there has been clarification over the years from courts as to what exactly is meant by “compensation” and “skill test”.

      There are no courts, state legislatures, or FTC rulings that have specifically updated the laws or definitions with respect to advances in technology. With regard to technology that has created entry-method changes that were not contemplated by the laws/guidelines I use my knowledge of the laws and court opinions to provide what I think would maintain the spirit of those laws and guidelines.

      Hope this helps.

      ~ Sara Hawkins

      Reply
  59. Liz

    Good info, keep up the good work. Trying to do a sweepstakes right now but unsure the best method and don’t want to do it wrong. I see people on facebook all the time violating the rules.

    Reply
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  62. Nikki

    I have been using Rafflecopter for Giveaways. Mine is setup as follows: Write a comment on “your favorite way to use this” or “what your summer vacations plans are” blahblah blah and you are entered to randomly win the prize. I am reading your post over and over again and find it excellent, however, I am still having trouble determining if this is legal? Any information on Rafflecopter?
    Eek! :)
    Thanks in advance.

    Reply
  63. Carl

    Hi Sara,
    Thanks for the great info. I’ll be sure to keep your writings in mind when and if I should decide to add a contest or sweepstakes. Your insight is very valuable and I plan to visit the appropriate GOV. sites to complete my research.

    Reply
  64. Pingback: Busy Being Jennifer | Sh*t You Should Know About Blogging: Giveaways have Rules!

  65. Pingback: TDNCLA: My Jorts “R” Us Facebook Promotion Plan : Life of the Law

  66. Catherine

    Sara,

    This is great information–thank you!

    One question: what if, for example, I was giving identical prizes away to the first 100 respondents? (“while supplies last”) Since this removes the randomness aspect, does this fall under the category of a contest?

    Thank you!

    Reply
    1. Sara

      Catherine, what you’re describing does not neatly fit into either a sweepstakes or contest. However, there are some legal concerns that do need to be addressed with this type of promotion. ~ Sara

      Reply
      1. Ron

        Hi Sara, I know it’s an old topic, could you briefly elaborate on what legal concerns/issues would be at issue in such a promotion where the giveaways are limited to the first X amount of people who respond (or comment on a post, etc.)?

        Reply
  67. Pingback: Planning Sweepstakes - Any Advice?

  68. Submitted

    Well Sara, I sat down this evening to do a quick Google search to track down some good ideas for a twitter contest giveaway. 4 hrs later & after midnight, I have read through your page/comments twice and started cross referencing with other sites…sigh. I must commend you on an excellent post that is very well put together and easy to read for the legal layman (me). I had no idea something like a simple T Shirt giveaway would have so many legal requirements to consider…deeper sigh.

    So, if you would be so kind to indulge my questions, I would greatly appreciate your expert opinion.

    First, I am not a blogger however much of what you said above applies to my situation so I am hoping you can still provide some insight. I would like to run a twitter only contest – no blog and no facebook. This is where I am confused on how to “qualify” contest registrants. I initially wanted to go with followers as a way to register but based on your post that may be too high of a consideration? So here is what I am thinking now.

    Details on the proposed contest:
    • Signed T Shirt giveaway is free of charge
    • No purchase necessary
    • Following me is appreciated & optional
    • US residents only
    • Must be 18 years of age or older
    • Not responsible for technical outages or misuse of product.
    • Winner will have 48 hrs to respond. if they do not they will be removed from the giveaway and another will be randomly selected.

    Contest ideas:
    1. Retweet this tweet and after the time expires we will randomly select a winner from those that retweeted the tweet.
    2. Tweet using the following Hashtag (#ILoveThisContest) and after time expires we will randomly select a winner.
    3. Reply to this tweet and after time expires we will randomly select a winner.

    From what I gather that would make this a Sweepstakes, correct? I “think” what I am asking is, do any of these considerations i.e. retweet or a hashtag or a reply constitute an illegal lottery? Am I missing anything?

    One other question, is it legal for me to use someone else’s terms and conditions as a starting point? An example here: http://spilledmilkshake.com/giveaway-terms-conditions/

    Thank you so much for the public service!!
    Submitted

    Reply
    1. Sara

      Hello Submitted, thank you for visiting my site and reviewing my information about “giveaways”.

      A sweepstakes is a prize given away at random, for which there is no compensation received. Randomly selecting someone who tweets or retweets something to win a prize would likely be a sweepstakes, unless there are other aspects of the promotion. Use of hashtag is often incorporated for tracking purposes and search to ensure everyone who followed the rules is accounted for. Currently, there is no case law as to whether or not a tweet/retweet is consideration under the law, but there would be a very strong argument that it is not and that it is not unduly burdensome on the entrant to give rise to a stronger argument.

      I never advocate using someone else’s terms and conditions. Then again, I am a lawyer and I often deal with the fall-out of situations were a someone used another’s Official Rules (or Terms/Conditions) and something went wrong.

      Sweepstakes laws apply to anyone who is giving something away at random without Consideration (the legal kind). You don’t have to be a blogger.

      There are sweepstakes where a prize is given to a random twitter follower. I have helped companies create these. We always offer a free means of entry so that the entrant doesn’t have to follow on twitter or if they have a protected account and are unable to make it public so the organization can follow back then the person can enter in an alternative manner.

      While I can not offer you legal advice, I hope this information is helpful.

      ~ Sara

      Reply
  69. Pingback: 5 Reasons Not to Ask for Facebook Likes, Comments, and Shares for Your Giveaways - Tips & instructions for beginning and intermediate bloggers.

  70. Carli

    I use Rafflecopter and have different things people can choose from to do. However, I don’t say that a particular choice is the one required. After reading this, not sure if I’m okay or not. I don’t want to fall into the illegal lottery catagory.

    Reply
    1. Sara

      Every sweepstakes should have, as the main form of entry, the ability to enter without conferring compensation to the sponsor. While there may be multiple means of entering, each entrant should be able to enter in a way that is easy and would be not compensate the sponsor. Unfortunately, there is little guidance from the states or courts regarding what compensation means when it comes to online sweepstakes. This is a relatively new (and changing) way to run a sweepstakes so it is unclear if a “Like” or “subscribe” or “pin” is compensation. Since all of those have a value, they could be deemed compensation. However, it’s still a somewhat gray area and should be treated as such.

      Reply
  71. Gale

    I’m really concerned about the “consideration” aspect. I held an event on my blog (one I’d like to repeat) to spread awareness about modern slavery where I asked people to do things like “read any of the listed articles about human trafficking” and comment with something you learned.

    If I didn’t ask them to do anything to prove they had done it…just asked them to “commit to educate themselves” on the topic of modern slavery and provide some links to some places they could learn more…but made it clear that I would not be checking to see that they did, that this was on an honor system, would that be at least more likely to be legal? (Since this sounds like a lot of these things are in somewhat grey area that “could be illegal” but “might not be.”) Thank you so much for any response you’re willing to give–and just like your article I will not take it as “legal advice.”

    Reply
    1. Sara

      Gale, many people as entrants to provide some “proof” that they went to the 3rd party site. However, it’s nearly impossible to verify if they did that. Maybe some people do, but as you state it’s more of an honor system.

      While I completely understand why you’d like readers to take time and read these articles about modern slavery, requiring an entrant to click to a 3rd party site, read an article then come back may be deemed “consideration” because you get value (and possibly create value for this 3rd party site). Courts have not taken up this matter so we are operating in a very gray area. However, like the “no purchase necessary” option for offline sweepstakes a simple comment may be sufficient to avoid the consideration issue. An additional entry (providing the same likelihood of winning as the “free” entry) that provides consideration may be offered only if there is a means of entering that meets the “no consideration” requirement.

      I appreciate that this is not an easy determination, especially since courts have not given guidance and we are still dealing with laws that were created for traditional off-line programs. However, as business professionals, online businesses/bloggers/brands must meet the same legal requirements or risk the consequences for non-compliance.

      Hope that helps.

      ~ Sara

      Reply
        1. Gale

          PS: I was just researching the Canadian “skill test” and, according to this article (http://contests.about.com/od/sweepstakes101/f/caskillquestion.htm) asking them a trivia question about modern slavery that would require research would actually make my giveaway legal there (since trivia questions are one way to pass the “skills test.” Hmm…

          For Americans, since asking for a comment is usually thought to be acceptable, I could simply write about modern slavery in my intro ask them to answer this question:

          “Before today did you know that there are more people in Slavery today than in any other time in history?”

          It would only require a yes or no answer, and wouldn’t require them to do any work other than reading the question, and would still spread awareness, and possibly make them want to read more of the articles I posted…and still be legal.

          I really wanted to keep this international too, because it’s an international problem…but I think I might be able to keep it at least semi-international by seeking out international bloggers willing to host a giveaway and research the laws in their own country.

          Thanks for your help.

          Reply
  72. Kamlesh Kawadkar

    Wow :) Great descriptive post ! i have just started a new blog & i am thinking to give a Book in a contest. Thank you for educating about this thing. I am sharing your article. Thanks.

    Reply
  73. Maurice

    Sara,

    Thanks for the information. However, there is something that you did not talk about. What if someone was to sell a product for say $10, which would include shipping and handling. With every $10 product that is bought, the persons name, and phone number, email address etc. will be placed in a giveaway for an IPAD. Is this legal?

    Reply
  74. Pingback: Blogging Edumacation: Blog Giveaway Rules Too - Pink Heels Pink Truck

  75. Pingback: How To Promote Your Blog Using Freebies | Web Revenue

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  78. Jay Dorsey

    Great overview and thank you for the information. I wasn’t aware of the clause about the Canadian rules requiring skill.

    One question: It looks like your site descriptions (and possibly some content) is blocked by your robots.txt file. I saw the error message in the search results on google when I searched for “running an international punchtab contest” (without quotes). Your site was in the top 10 but your description was blocked with the message about robots.txt

    Is this on purpose? I just wanted to pass it along in case you weren’t aware.

    Thanks again!

    Reply
    1. Sara

      Jay, thank you for visiting and commenting. My site is still under development right now and will be finished soon which is why it’s not indexing. I was changing too many things and didn’t want to take a hit by the search engines.

      Glad you were able to get helpful information from my article.

      ~ Sara

      Reply
  79. Joseph

    Sara, thanks very much for a very helpful article and posts. I would appreciate any help you could provide on this situation:

    I would like to run a promotional contest (?) in which I require people to post a comment on my website/blog to get access to a webinar, during which I’ll give away gift certificates to the first 7 people who post correct answers to “quiz questions” I’ll be asking about the content, asked during the webinar. What are the legal issues I need to follow to be compliant for this situation?

    a) they must post a comment for access (is this a ‘consideration’? if so what do I need to do)
    b) there will be a limited number of gift certificates (7) given away, one to each of those who correctly answer a question (so it’s not random, there is a skill element). Value of $20 per gift certificate.
    c) it’s for giveaways during a webinar, which has international attendance

    Thanks very much for sharing any insights –

    Joe

    Reply
  80. Pingback: X-ray of a Blog – Blogging Tips Series pt. 3 | Life With Lorelai

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  82. Pam Hoffman

    This is the best article/post about this topic that I have seen on the internet. I recently saw a small company offer a chance at prizes with an online purchase. As a person who enters sweeps a lot, I knew this was not legal. I posted a comment to them that their giveaway was not legal and they promptly removed my post and went on with their plan. These people do not realize that they are opening themselves up to potential legal action and hefty fines if they do not comply with the law. I tweeted your link to them with the hopes that the next giveaway they have, they will open it up to the general public w/out a purchase required. Thanks for your efforts. Pam

    Reply
    1. Sara

      Pam, thank you for your kind comment and for sharing my article with a company that can use some guidance. I do see many small businesses that don’t understand that there are laws that govern their “giveaways”. I hope that by writing about the legal issues it will help them and their customers. ~ Sara

      Reply
  83. Anne Sweden

    HI Sarah. What a well-researched and informative post, especially for bloggers who regularly run promotions! I just have one question: if you are a US blogger and want to open a giveaway to both US and Canada, must you include the skills test on your entry form? I was curious about this because then you would be requiring Americans to submit to Canadian law. Is this skills test then required only when your giveaway is exclusively open to Canada? Thanks! Anne

    Reply
  84. Jim

    Sara,

    Thank you so much for this informative article and all the time you have spent answering questions in the comments. I came here because I have a relatively new website and I was thinking of hosting a promotion on Facebook to increase awareness of my “brand.” I had absolutely no idea there were so many legal ramifications to what I thought was going to be a simple task!

    After reading all of this, I’m not sure how I am going to proceed but I am certain you saved me from running afoul of the law. For that as well, I thank you very much!

    Reply
  85. kate

    Hi Sarah,

    thank you thank you thank you for writing this post. I absolutely want to play by the rules and follow every last regulation.

    I want to host a giveaway to raise money for our adoption. Adoptions are extremely expensive and I knew I might could raise a good bit by doing a blog giveaway. Several other blogs have donated ad space and several Etsy shops have donated items they make. I live in MS so I’m wondering if you know anything about the laws and regulations. I tried researching but honestly I don’t understand anything I’m reading.

    basically I wanted the to donate $5 to have they name put in for the giveaway. I realize that sounds a lot like a lottery though. They would be chosen at random & they would receive a prize…..

    would it be better for me to just make that an option. Like say “any one can enter” then make it an option to get other entries by sharing about the giveaway or donating.

    If i need to I can even say “donations are welcome but not required and will not up your chances, they will simply just help us bring our son home.”

    I’ve contacted our CPA but he’s been out of town.

    any information would be helpful! Thank you so much for writing this post!!

    Reply
    1. kate

      oh and one more thing. We had planned on setting up an account on pure charity.com. people can donate through their site – it’s tax deductible and sends the money straight to our adoption agency. Didn’t know if this would make a difference on anything or something you would need to know. thanks!

      Reply
  86. Pingback: GIVEAWAY: Win a Copy of the Hilarious Book, The Memoirs of a Hamster! 4 Winners! - Harvard Homemaker

  87. Valerie

    Thank you so much for this post! So, so helpful!
    I have a question – are “virtual” sweepstakes (for advertising space), under the same laws? I host regular prize sweepstakes and have them open to US residents only, but if I am offering space in my sidebar to bloggers (not businesses), do you think that even counts since no one is actually receiving anything? I’d like to keep that open worldwide.
    Thanks!

    Reply
  88. Julie

    Great post. I found your site through a link on a post on pinkheelspinktruck.com’s blog. Quick question. Do the same rules apply for a giveaway if I wanted to include Canadian and other International residents when the prize is an e-gift card?

    Reply
    1. Sara

      Canada regulations for sweepstakes are very similar to US rules for contests, so that makes it a bit more challenging. Also, Canada has regulations regarding the need for rules in both English and French due to Quebec’s French-language prominence. Each country has their own requirements so having a truly international promotion can be a challenge, especially if you do not write in that country’s native language.

      It’s not the ease of prize delivery that dictates the rules. And, unfortunately, the rules for online promotions are just the rule for traditional marketing/media and do not take in to account the new and easy means of prize delivery over the internet.

      Reply
  89. Andrew

    Can a company change the end date of a contest after it has started? I have been playing an game in which the makers of the game announced the top 8 players with the highest score in the game at the end of October would win a cash prize. The 1st place prize is $5,000, and they go down from there, the total amount being given away combined between all top 8 is suppose to be $8,000. Just today, a couple days prior to the announced end date, they have since changed the rules and are now saying the contest has been extended to the end of November. Is that legal for them to do? I am currently in top 8 based on their most recent leaderboard update, and I think I have a good shot of maintaining that status through the next few days, but I have some doubt I could hold that position for another month.

    Reply
    1. Sara

      Andrew, the general rule is that a sponsor or administrator of a sweepstakes or contest can not change the start or end date once the promotion has begun. There are exceptions, but there needs to be extenuating circumstances and not just a business or marketing need. This is especially true if the promotion was required to be bonded in Florida and New York (or Rhode Island). If the promotion has prizes in excess of $5,000 and allow entry by NY and FL residents then both states would require a registration filing and bond. Both states require notification of start and end dates, as well as other information.

      There is some argument that if the official rules say they can change the rules then it’s permissible. However, a change in end date of a contest may be too material to merit change based solely on a generic provision in the official rules. If the official rules do not have language permitting changes then they’re likely violating their own contract with entrants.

      And while the sponsor and/or administrator may be in one state, the contest rules would have to comply with the rules for every state where a resident is permitted entry.

      If you feel there may be legal violations you should contact your state Attorney General as well as the Kentucky Attorney General to examine what, if any, consumer protections exist.

      Reply
  90. Pingback: What You Need To Know Using Google Plus For Your Online Giveaway | V3 Kansas City Integrated Marketing and Social Media Agency

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  93. Nadine

    Hi Sara! Thanks for this very informative article! I still have a question though. What about items like World of Warcraft trading card packs, which may or may not contain a “loot card” which is a card that gives a prize? The prize is electronic, meaning that if you receive one of these special cards in a pack of trading cards (the special loot card will replace a card that would normally be in the pack), you need to scratch off the covering on the card to reveal a claim code, then input the code on either a website or in the World of Warcraft game itself to claim your prize. The prize can be a special mount or pet, or different in-game toys that are all electronic, and only usable inside the game world. You have to purchase a pack of cards to have a (small) chance to get a special loot card, so the entry isn’t free, though it is random.

    Are there separate rules that govern this type of giveaway? Is it technically a sweepstakes? I’m assuming it’s not a lottery, or they wouldn’t be doing it!

    Thanks for any insight you can provide!

    Reply
    1. Sara

      What you describe is not a sweepstakes. There is no entry mechanism. Every purchaser is buying a pack of cards. In some packs there is what is like a “mystery” card. What someone is buying is a pack of unknown cards. The manufacturer is providing a card with a code that unlocks some type of bonus or special card.

      The company is not sponsoring a game of chance. There are different laws that would govern these type of promotional activities, but they don’t fall under gaming regulations for sweepstakes, contests, or lotteries.

      Reply
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  95. Matt

    Hi, Sara. Thank you not only for posting the original piece but also for your many, many follow up posts.

    Here’s the reason I googled and found your page.

    In January, a company that I had followed that makes a product I like but cannot afford started a contest. The ask was to make a video explaining why you should get a free product and one winner would be selected to receive the product. Additionally, you had to like them on Facebook, post your video to your own Facebook timeline and allow them to repost it to their Facebook and YouTube presences. Consideration, check. Time and effort, check. The rules stated that they would choose the winner based on what their executives thought of the videos as well as how many Likes the videos received on Facebook. Contest, not Sweepstakes.

    While there was no declared end date, the rules did state that they would award the prize after they received 500 videos. Though the rules stated that they would work with the winner to determine which version of the product they gave as the prize, based on needs, the model they pictured in the rules was for sale for greater than $5,000.

    After a few weeks, there were only a few videos posted. I wrote them on Facebook and said that if they were really waiting for 500 videos it didn’t seem like they were really going to give something away at this pace. They responded that they would give it away, please send the video, they gave away five last year. Several weeks later I wrote and asked if the deadline had passed or if there was still time and they responded that there was time (though when I dug deeper, I saw that they had define a different deadline date to another commenter, which had already passed, most likely trying to create some urgency around sending in videos). Long story short, I entered.

    A bit over three weeks ago, they posted that they would announce the winner that night and asked for any videos that had not been sent in. After a few days I wrote them an email and asked who had won. Two days after that they posted that they had a clear favorite but that new videos were coming in now and they asked which their Facebook audience liked the best. They did not post any of the new videos that came in, so this was an odd ask.

    It’s been another 17 days since their last post and they have made no announcement. It’s obvious that they were disappointed in the number of videos they got and clear that they are reluctant to give the product away having received significantly less promotional value than they had hoped for.

    My question is this: To whom do I complain? Do I complain to the AG in my home state (NY), the state in which the company operates (PA), to the FTC? I sympathize with the lack of response they got, but I put significant effort and actual dollars into making the video I submitted and I feel quite wronged that the efforts of myself and the other contestants did not lead to an honest outcome (if there was one better than mine or more Liked, so be it). Rules, as they say, are rules and the company did not even follow their own rules, whether or not they were legally compliant.

    Thanks in advance for your answer.

    Reply
    1. Sara

      IF you have a complaint, it is best to file your concern with all the agencies that could have jurisdiction as you never know which one(s) may be able to help you more quickly. In addition, by filing with all governing agencies you assure that your concerns are connect with others who may also have filed complaints. The more people who file complaints, the greater the likelihood the agency will take action.

      Reply
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    1. Sara

      Jeannie, I can’t see you facebook page. In Canada, games of pure chance are prohibited. In the US, a Sweepstakes is a game of pure chance so you can’t have a sweepstakes in the US and Canada without requiring Canadians to meet the required skill test under Canada law. In addition, there are additional requirements if Quebec is included. Perhaps this information will help since I have no way to know what you are doing. ~ Sara

      Reply
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  98. Heather

    Hello Sara,
    I’m very impressed with your blog and your willingness to continue to answer questions 3 yrs later. — It just goes to show how important your blog has been to a lot of people. I find the idea of a skills test very intriguing. I have a science based website, and I like the idea of asking visitors to answer 5 science questions to enter a sweepstakes for a free prize. My question is — if I randomly choose the winner only from the pool of visitors that answer all 5 science questions correctly, is it still a sweepstakes? It’s not entirely merit based, but it’s not entirely random either.

    Regardless, I’ll still try to think of a way to for free entry — mail me a postcard with 5 facts about your favorite scientist, or something like that. My website has ads along the side frame, so I’m assuming that forcing visitors to coming to my website to submit an entry could be construed as consideration correct?

    Reply
  99. marke

    Great article, Sara. Interesting point about (legal) consideration – I haven’t seen that mentioned on other sites and it’s a tricky issue since there don’t seem to be any clear guidelines.

    If a blogger is using the names and emails of entrants to promote products to those entrants after the sweepstakes has ended (even with the consent of the entrant) do you think there could be a valid argument that (legal) consideration is involved since an email list is a valuable asset to a blogger?

    Most, if not all, official rules state something to the effect that the sweepstakes is void where prohibited. How does one know if the sweepstakes is prohibited in a specific state? Or, stated another way, how does one know that the winner of the sweepstakes isn’t from a state where the sweepstakes is prohibited by law?

    Reply
    1. Sara

      Marke, the legal concerns regarding legal consideration in the digital age have not been fully defined. It is quite possible that many types of entry methods would be deemed legal consideration, if challenged. The fact that dollar values are placed on social media followers, subscribers, shares, etc. clearly indicate that there is value in these.

      How does one know that a winner of a sweepstakes isn’t from a state where the sweepstakes is prohibited by law? It would be up to the sponsor and/or administrator to verify this information. A winner’s list is required to be made available but the information provided is not standardized. As such, if there is concern and the prize is sufficiently valuable hiring legal counsel may be necessary.

      Reply
  100. Pingback: How to Run a Giveaway Contest? | The Blogger BabesThe Blogger Babes

  101. Kim

    Can a sweepstakes be called a “Lottery” as a promotional tool. there is no consideration, but hourly drawings of numbers are involved and contestants search for the numbers, find a winning number and win a prize. We’d like to call it a Lotto in advertising as a slogan.
    thank you!

    Reply
    1. Sara

      Kim,

      Referring to a sweepstakes as a lottery could raise concerns regarding the validity of a promotion. Lotteries are highly regulated and using the word may cause regulatory agencies to investigate the promotion.

      Reply
  102. Patrick - omnicontests

    First of all, I’d like to thankful for such an informative blog. I think it’s the first blog wherein i got the descriptive info about sweepstakes, contests, giveaways, its govt. rules, tax, bonding and lot more.

    Reply
  103. Jana

    Thanks for this info! Question–is it legal to enter a giveaway you’ve contributed to financially? For instance, if I was hosting a group giveaway, could I legally allow my co-hosts to enter and possibly win the giveaway themselves even if they pitched in money for the prize?

    Reply
    1. Sara

      Jana, allowing contest/sweepstakes sponsors and/or administrators (as well as their employees, agents, or relatives) is not strictly prohibited. However, because the laws relating to sweepstakes and contests are purposefully vague there are many other laws that fill in the gaps. Contests and sweepstakes are not governed solely by one set of laws, but, rather, it is an interwoven set of laws related to fair business practices that also apply.

      It is the general practice among professional sweepstakes sponsors and administrators that employees, officers, agents, and family members are prohibited from entering the game. This is done because even if everything is on the up-and-up, the appearance of impropriety may lead to legal and/or criminal liability.

      Hope this helps,
      Sara

      Reply
  104. Holly Storm-Burge

    I have a question and maybe you can answer?

    I just unsubscribed from a blog newsletter I didn’t subscribe to. Under feedback, I clicked the box that says I did not subscribe. I then got a snotty email from the blogger saying that I subscribed via her giveaway and as proof, she copy/pasted the entry from the rafflecopter…a tweet entry. So I tweeted on her giveaway and she harvested my email and added it to her newsletter list. Is this illegal???

    Reply
    1. Sara

      Holly, While there are no specific laws with regarding to email subscriptions within the Sweepstakes law field there are many laws that apply to email marketing. The CAN-SPAM laws are key for those who wish to obtain emails for commercial marketing purposes. Implicit email opt-in is often part of a sweepstakes or contest, despite being troublesome. Just because Rafflecopter allows something doesn’t mean it’s legal. It’s up to each user to ensure they are using a product or service legally and in compliance with an platform terms of service. Every sweepstakes is required to have Official Rules. Without Official Rules, there are both state and federal laws that may be violated. In addition, without Official Rules an entrant may not be properly informed of any implicit opt-in agreement which could raise liability. Even if there is no violation of law, email marketing best practices suggest a verified opt-in to avoid situations such as that which you mentioned.

      Reply
  105. Kim Anderson

    I’m glad you mentioned the 3rd party thing because I’ve been wondering if “likes” and such could be interpreted as “consideration”. I really appreciate your blog and that you are out there helping people in the blogging world navigate all the laws! What would you say is the least sticky way to run a contest? Do you have any 3rd party recommendations that keep it simple and perfectly legal? I really just want to run something that I offer to my email people who are already signed up. Any info would be great!

    Reply
  106. Sarah Wight

    Thank you so much for this post! Great info. However, my audience is mostly high school students, do you know where I could get information on having a sweepstakes/contest for minors?

    Reply
    1. Sara

      Sarah, sweepstakes and contest involving minors need to also comply with COPPA with regard to marketing to children. In addition, these programs also need to consider issues related to children being unable to enter into binding agreements without parental consent. It’s a mish-mash of laws, so to speak, that are woven together to protect children as opposed to a clear set of laws specifically focused on sweepstakes/contests aimed at children.

      Hope this helps, Sara

      Reply
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  108. evadzelarayan2013

    Hello,
    I’ve read many of these comments and replies and they have been very helpful; yet I haven’t found the answer to my question. A lottery must have three of the following in order to be considered a lottery, from what I’ve learned here and online: a prize, a purchase, and winning is by chance/random. If one of these three is missing then it is not considered a lottery anymore correct? Therefore if a creative contest requires a purchase to enter, a prize for the winner, and winners are chosen by the creators of the contest, is it still a lottery? My questions are actually two: 1) Is what I described considered a lottery still or not anymore since winners are not chosen at random? 2) Whether or not it is a lottery, is it illegal?

    Your response is highly appreciated! Thank You!

    Reply
    1. Sara Hawkins Post author

      There are 3 types of promotions: Sweepstakes, Contests, and Lotteries. A lottery will have all 3 elements – prize, purchase/consideration, random selection. As stated in the article, lotteries are highly regulated and are illegal unless authorized by the government. A sweepstakes and a contest will have 1 or 2 of the elements. A sweepstakes: prize & random selection. A contest: prize and may or may not have the entrant make a purchase/provide consideration but the winner will always be chosen based on some skill.

      Hope this helps.

      Reply
      1. evadzelarayan2013

        Thank you for your prompt response Sara! Based on your reply, I’m able to determine that what I am describing is not a lottery. You definitely helped me and answered my question. Anther question arises, if a creative contest requires a purchase to enter, a prize for the winner, and winners are chosen by the creators of the contest, is this legal? Is it legal to charge for a contest entry on a small Facebook page, for example?

        Thanks!
        Eva

        Reply
  109. Pingback: What You Need to Know About Blogging Giveaways (Or Why Mine are Only Open to US Residents) | Atlanta Mom of Three

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  111. Jeff

    Are there any legal rules regarding something simply titled a “giveaway”? (e.g. Is it illegal to require a purchase to be eligible to get the prize?)

    Reply
  112. Shawn

    We are starting a new site and we want to give the 1st customer one year free. It is mandatory that they sign up for an account and use a coupon code: ONEYEARFREE.

    Is it really a giveaway? Isn’t it like a 100% off sale for one person?

    Reply
    1. passdrow

      Just an attitude from someone who has seen these “first customer only” giveaways is

      How do you avoid your other customers wondering whether the actual winner was someone that your boss picked to give that free product to? How do you make it appear 100% fair to everyone.

      I remember sites that promised that the first 100 people who logged on after a certain time would win, but i logged in two minutes early, and all 100 prizes had already been given away.

      I like what some snail mailers do, they advertise in big print that the first person who returns the card will win the prize, but in the fine print they state that if more than one person returns the card before a certain date, the winner will be chosen at random from all cards received before that date.

      ANYWAY … if you require that they purchase a product before they enter your contest, then it is illegal by my understanding of the rules, because there is an entry fee involved, the cost of that product. Instead, why don’t you give the winner that product with the prize, or you could try to say that the prize will be “one year free of such-and-such with the purchase of that-and-that.” That might at least be on safer ground than requiring that all entrants purchase the product.

      Reply
  113. Mario

    Hello Sara,

    First, incredible follow-through with your answers to everyone’s questions. It must take some time for you to maintain this blog. Kudos.

    That being said, I have some questions of my own….

    I have an online store where we sell solar garden/security lights. I would like to offer one of our products (worth $40 on my website) for $1. Now, this would go for 30 days where I would gather “entries” for the light. Would this be considered a “sweepstakes” or a “lottery”. Since we already sell these items and have a reseller’s permit to do so, would gathering entries for a drawing at the end of the 30 days be within my boundaries as an online retailer (thus, not being considered as a lottery and all the hassle that goes with that)? If it is considered a lottery, do I just need to contact the State Board of Equalization to get permission? I would post a video of the drawing on our website and YouTube (to give credibility to the entries and show that there is an actual winner).

    Thanks for any and all information you may have. I very much appreciate it. :)

    -Mario

    By the way, I see that the California Lottery is no longer posting its drawing results videos. Now that looks suspicious.

    Reply

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