When done right, sweepstakes and contest promotions are a great way to generate leads, build your social media communities and promote your brand. But when they go wrong, things can get ugly. The best way to avoid trouble is to hire a professional sweepstakes management agency to handle your promotion. In the meantime, here are some surefire ways to sabotage your promotion.
MISTAKE #1: Is It A Sweepstakes Or A Contest Or A Duck?
People use the terms interchangeably, but sweepstakes and contests are different animals and are subject to different rules and regulations, so it pays to know the difference. A sweepstakes is a promotion in which winners are chosen by chance. Contests, on the other hand, involve some element of skill (submit a recipe, make a hole-in-one, write an essay or upload a picture of your precious pup ). Contest entrants must be evaluated under objective, predetermined criteria by one or more judges. In many states, you can include a fee to enter a contest — but never for a sweepstakes (see Illegal Lottery below).
MISTAKE #2: Hey! Let’s Run An Illegal Lottery!
Lotteries are highly regulated (and mostly banned), so it’s important to know what they look like so you can avoid them. You’ve got yourself an unlawful lottery when all three of the following elements are present: 1) a prize, 2) chance (random drawing), and 3) consideration (a purchase or fee).
MISTAKE #3: Using Last Year’s Rules.
Believe it or not, some companies figure that sweepstakes rules are pretty much boilerplate and “repurpose” old rules to cover a new promotion. Big mistake. The rules are your contract with the consumer and should be carefully drafted for every promotion by experienced legal pros to ensure compliance with the law. Without solid legal rules that incorporate the latest state and federal regulations, your risk of liability increases. So although the majority of people will never read your official rules, they are a non-negotiable must have.
MISTAKE #4: Hiding the Rules.
Your rules can only protect you if they are properly disseminated to the public, so don’t hide them! Post them conspicuously wherever participants enter the sweepstakes or contest. We understand that space can be an issue, especially on Twitter and other online platforms. Use shortened links to your website or a third party application to publicize rules, and remember to obtain entrants’ consent to the official rules prior to entry.
MISTAKE #5: Forgetting the Small Print.
Abbreviated rules and disclaimers should be included in all of your advertising materials (print, radio, television, web, etc.) to ensure they’re consistent with the promotional offer and with all federal and state regulations. If you see ads or banners or other promotional messaging without the “mice type,” that company is not playing by the rules.
MISTAKE #6: Letting the Big Apple Bite You.
Certain states require the registration and, in some cases, bonding of promotions. New York, for example, requires that consumer sweepstakes be registered and bonded 30 days before the commencement of the sweepstakes if the value of the prize offered is more than $5,000.00. Make sure your promotion meets all such requirements or you could face stiff penalties and sanctions.
MISTAKE #7: Getting All Up in Facebook’s Face.
The last thing you want is for your brand or business to be banned from any major social network. Each platform has strict rules and guidelines about running contests and promotions, so before you even think about launching one, you need to know what they are.
MISTAKE #8: Dissing Uncle Sam.
You are responsible for reporting winners who receive $600 or more in prizes and will need to prepare and issue the appropriate IRS tax forms to all applicable winners and submit the appropriate documentation to the IRS. This is important