Sweepstakes, contests & promotions — Beware the laws, rules & regulations!

Contest WinnersSweepstakes, contests and lotteries. What’s the difference?

• Sweepstakes – Also referred to as “giveaways,” where winners are selected in a random drawing.

• Contest – Winner(s) are selected according to established criteria.

• Lottery – A prize drawing for which you have to pay money (or some other consideration) to have a chance to win.

They’re not the same and they each have their own rules, guidelines and legal issues to consider.

Alphabet soup
The network of authorities and laws regulating the various elements of promotions reads like the contents of a can of alphabet soup: FTC, FCC, IRS, DOJ, USPS, COPPA and CARU, to name a few.

And that’s not even counting the mandates of the applicable regulatory bodies in all 50 states. If you’re planning to promote your business or engage the public via a contest or a sweepstakes “giveaway,” you’ll want to be sure to follow the laws and rules and regulations governing such activity.

Here are Maryland’s state statutes regarding contests, sweepstakes and other promotions. While Joshua Dalrymple, Esq. identifies Virginia laws and a few other legal considerations for running lotteries and contests to your ensure promotion operates within the law. You can also find some general tips for structuring online promotions, in this alert from the law firm of Keller and Heckman.

Privacy is an issue
How will you be using the information you collect as a result of your promotion? Be sure you stay within the bounds of privacy rights laws.

Children are protected
If youngsters are your target audience, the rules are stricter still. Be sure you’re familiar with the federal Children’s Online Privacy Protection Act (COPPA).

Taxable income?
Does your sweepstakes prize have a value over $600? The IRS will want its share of the winnings. Is the reward worth $5,000 or more? If so, you might have to register and bond your sweepstakes in some states, and there could be a stiff penalty if you don’t. Marketing professional and former Circuit City contest promoter Williams Rollins helps break down the rules of the regulation road in an easy-to-follow Q&A.

Social media, too
Using social media to communicate about or administer a promotion can present its own problems, as well. Facebook, for example, has a newly updated set of do’s and don’ts surrounding promotions. Even your business blog isn’t exempt from the rules. Attorney Sara Hawkins outlines the laws bloggers and brands need to know.
However, picture and video sharing site Pinterest isn’t quite as limiting, as evidenced by Hubspot’s 8 examples of engaging Pinterest contests.

Rules of engagement
Promotions can be fun, and a great opportunity to engage with customers and consumers.

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