Sweepstakes and Promotions Law

If you are considering an online sweepstakes or promotional marketing campaign, you may require the counsel of an experienced online promotions attorney.  Hinch Newman knows the intricacies of federal and state laws governing the online advertising of promotions, such as sweepstakes and contests.

Promotions that offer a prize to the winner of a sweepstakes or contest are steadily becoming more prevalent as an effective way to build brand identity and market products and services.  Online and mobile  marketing have enabled companies to market their promotions to far more consumers.  While the accessibility of the Internet and mobile technologies make them attractive from a marketing perspective, the lack of geographical boundaries makes compliance with potentially applicable laws and regulations increasingly more burdensome.

Promotions

State and federal laws contain provisions governing the method of operation and advertising for a prize promotion.  The specific provisions apply, in many cases, to both sweepstakes and contest promotions.  As required in many states, each sweepstakes or contest should have official rules which should be provided to the consumer when the consumer is notified about the promotion within any medium of advertising.  The rules act as contract terms between the promoter and the participant.  All material terms should be conspicuously disclosed.

Although additional requirements may be imposed depending on the type of promotion and the jurisdiction, typical required disclosures include the odds of winning, eligibility requirements, including the name and address of the sponsor, age or geographic restrictions based on state and country of residence, the start and end date and time of the promotion, how the winner will be chosen, specific details about the prize, and, that no purchase is necessary to enter or win the promotion.  Further, solicitation material containing prize promotions must not use language that would suggest that the recipient has already won or has been specially selected, unless the recipient has in fact won the prize.

Hinch Newman provides counsel with regard to the various laws, regulations, and issues that may also be implicated.  For example, privacy and data security issues, promotions that are directed toward children, and mobile technology-based promotions.  Additionally, prize promotions advertised by direct e-mail solicitations must comply with federal and state anti-SPAM provisions pertaining to disclosures and “opt-out” requirements.  Our promotions experience includes online sweepstakes, mobile/sms, and games of skill.

Sweepstakes

It is critical for any business to hire an experienced Internet sweepstakes attorney with a solid understanding of the laws governing promotional campaigns and experience navigating applicable state and federal legal landmines pertaining to establishing, registering, binding, and operating Internet and mobile sweepstakes.

As the popularity of sweepstakes and contests continue to grow and develop, and more such promotions migrate to the Internet and mobile device technologies, marketers will need to stay ahead of and adapt to the variety of local, state, and federal laws regulating such promotions.  Diligent planning and carefully drafted documentation can be a key to making sweepstakes promotions successful.   In some instances, laws that would otherwise make running a planned promotion, at best, very difficult, can be satisfied by deliberately structuring the promotion.  Carefully planning compliance procedures and obtaining professionally drafted documents ahead of time can minimize unnecessary difficulties and problematic consequences.

A sweepstakes is a promotion in which a prize is awarded on the basis of chance, rather than skill.  If a prize is awarded on the basis of skill, the promotion is considered a contest.  A sweepstakes differs from a lottery in a few notable ways, the most distince being that a lottery is a promotion that contains three elements: (1) prize; (2) chance; and (3) consideration.  Eliminating one of the three elements removes the scheme from the scope of lottery prohibitions.  Sweepstakes are promotions where the element of consideration has been eliminated.  Chance and prize remain present where a prize is awarded to a winner selected based upon chance, such as a random drawing.

Different states may treat the issue of consideration in different ways.  Consideration may be monetary, including an entry fee or a product purchase requirement, or non-monetary, requiring that the entrant expend extensive time or effort.  Should an entry fee or product purchase be required, a free method of entry is also required as an alternative and must be offered to all persons on an equal basis.  Additionally, promoters of sweepstakes in Florida, New York, and Rhode Island must register with the state if the total retail value of the prizes exceed a certain threshold.  Some states also require a that a bond be submitted along with the registration.

All sweepstakes promotions must contain official rules and disclosures.  The rules must not change once a sweepstakes promotion commences.  A Hinch Newman online sweepstakes lawyer can assist you to draft terms & conditions, privacy policies, rules, and release forms.  We can also assist with the design and implementation of internal and advertising compliance strategies, as well as applicable state filing requirements.

Depending upon the jurisdiction, channel of the promotion, entry options, and product or prize offered, countless other state and federal laws or regulations may be implicated.  In order to minimize exposure to regulatory investigations and costly litigation, a prudent marketer should consult with an experienced Internet sweepstakes and promotions law attorney for professional guidance prior to conducting a promotional game or contest.