Trying to figure out how to run a legal giveaway? It’s easier than you think – or not, depending on where you are running your giveaway, who can enter, how you collect and use data, and what you are giving away.
First, there are some basic things to know about the legalities of a giveaway. In the United States, a giveaway, or sweepstakes in legal terminology, is when you collect entries and then randomly select a winner. There are many other federal and state laws to be aware of as well, which may include bonding, state registration, and other legal requirements. Here are a few of the bigger things to consider:
Rules: You must allow people a way to enter without requiring a purchase (you can see why here), and you must have official rules posted that govern the sweepstakes.
Prizes: Some states require that you file winners lists at the conclusion of the giveaway. In addition, if you are giving away prizes that have a retail value over $5000 total for all prizes, or over $500 for any one prize, you have IRS filing requirements for winners.
Social: If you are using social media, each platform like Facebook or Twitter or Instagram has promotional guidelines that you must consider if you run your giveaway using their social channel to collect entries. A social platform may shut your giveaway down if you are not complying with their guidelines and terms. Also, the FTC requires special disclosures be included in any sweepstakes entries on social channels.
Data: You need to consider how you collect and use your entry data. If you are using a sweepstakes widget that you are placing on your site or blog, look into the fine print as many sweepstakes widgets or apps resell your data or may not collect information securely. With any data like emails or phone numbers you should be keeping that data secured and only use the information you collect for the purpose stated in the rules.
Compliance: There are government and consumer organizations like the FTC and the FCC that could fine you or take legal action if they feel like you are violating TCPA, COPPA, CAN-SPAM or social advertising guidelines.
If you find yourself saying “but I only want to give away a few t-shirts” or “but why is everyone else doing it without all this” you are not alone in your sentiments, but legally you are responsible for ensuring that the law is followed. Not complying could result in legal fees, fines or worse.
The best way to ensure that all of your legal bases are covered is to use a reputable promotion agency to help you write official rules and ensure that you are not breaking any laws. Some agencies will even help you draft a rules template so you can reuse them if you are giving away the same types of things on an ongoing basis.
Marden-Kane has been writing official rules and consulting with small and large businesses on how to run a compliant, legal sweepstakes and contests for almost 60 years. Contact us and we can help.
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hello! I won a giveaway that was supposed to hold a 50 dollar gift card but I never got my prize. I offered to lower it down to 10 dollars (and they accepted) however I still haven’t gotten my prize because “they need to wait for their pay day”. I was wondering if any of this is legal at all amd if I never get my prize that I can take action. I would very much appreciate it!!
You could consult an attorney about taking legal action. However, since it sounds like they don’t have the funds to get you a $50 or even a $10 prize, I am not sure what you would hope to gain by taking legal action.
I am interested in playing a game on social media that is limited to the people in my friends list. My profile is not public and the give away is only to those people in my friends list. The prize is less than $10 and there is no purchase required. We are playing a game and the winner gets some samples of a product that they could not otherwise get without purchasing them. Anyone in my friends list is welcome to play. What should I know about doing this?
Legally you should still have Official Rules that define the game. Contact us or another promotion marketing vendor for your specific case.
Is it legal to do a “Every 10th order free” promotion? Is that still considered a sweepstakes?
You can’t legally require purchase. It can be one of the methods of entry, but you still must have a free method of entry and then it is considered a sweepstakes, unless there are other stipulations. You might want to look at our blog on “What is Consideration” to help clarify https://www.mardenkane.com/articles/consideraton-sweepstakes.html.
So I got this gift card for a store I don’t plan to go to. But I don’t want it to go to waste, I heard I could hold a fan page and giveaway that card to someone selected at random. But then I came across this legal stuff and was wondering if what I plan to do is legal?
The card is worth $100 to a digital store.
As you know from reading our post, there is some level of risk involved if you run a giveaway without checking the legal restrictions in your country/state. Be sure to weigh the risk before you proceed.
So as long as there is one method of free entry. I can then sell entries through merchandise?
Not exactly. There must be equal chance to earn as many free entries as purchase entries. So if someone can purchase a million dollars worth of merchandise to earn a million entries, you must also give people the chance to earn a million free entries.
Is it legal for someone to promote a giveaway and then not give anything away? What if the winner of the giveaway asks to remain anonymous? In that case, how would anyone prove that the merch was actually given away?
You would have to consult the official rules of any giveaway that lets a prize go unawarded. There may be language in the rules that explains the conditions when a prize is not awarded, such as if the giveaway is cancelled or the prize becomes unavailable. And typically, prizes aren’t awarded to a winner who won’t at least allow their first name and first initial of the last name and perhaps a city may be included in a winner posting. These are reasons why full official rules are necessary to cover the sponsor of the giveaway to cover these contingencies.
Is it legal for someone to hold a free gift card giveaway on YouTube and not give out any prizes?
It all depends on what their official rules say. Sometimes there is language in rules that covers the unforeseen cancellation of the program for various reasons. Always check the rules.
Is it possible to provide a token gift to anyone that buys anything from me online. I have a crap load of old marketing things, stickers, key rings, tee shirts, etc that I would like to provide randomly to anyone that orders something online. I don’t want to advertise they have to buy something, just send out a link with the digital receipt with instructions on how to retrieve one of a few different items. Since this would not be something that would be “won” are there rules about including a free random item with an order?
This is a called a “Surprise & Delight” tactic and you can read about how that works on our post: https://www.mardenkane.com/articles/what-is-a-surprise-and-delight.html
Hello!!! I’ve been doing international giveaways on my twitter account. The highest prize has been 350$ and I always state the rules of the giveaway in the first tweet. I’ve read this blog and it’s links but I just wanted a second opinion. Nobody ever pays to enter my giveaways and the way they enter is by retweeting and commenting on the post. Is this okay?
The short answer is no. Running an international sweepstakes is problematic as sweepstakes laws are different in every country and some countries do not allow sweepstakes. Furthermore, a good set of official rules that covers you in case of a legal dispute are going to be longer than can fit in one tweet. You have to decide if you are willing to take the risk. If you want to make your giveaway more legal, consult a promotional marketing attorney, or a promotional marketing firm (like us!) to help you come up with something more official.