PROMOTION BASICS

Are full Official Rules and legal disclaimers required for every promotion?

No matter the size of your promotion or the prize pool, Official Rules are always necessary, as legally, they are the sponsor´s "contract with the public".  Official Rules are the only document that allows state regulators and other legal entities to ensure you are structuring your promotion in compliance with the applicable laws.

Legal disclaimers are required on any advertisement or publication that references the promotion in any way.  Legal disclaimers are reviewed frequently by state regulators to ensure compliance.

What kind of prizes do consumers want to win?

  • Cash
  • Cars
  • Trips

...in that order.

Do all prizes have to be given away?

Your Official Rules must clearly state the conditions of awarding prizes.

With a sweepstakes (a random drawing) and contests of skill, it is generally accepted that all prizes will be awarded.  However, in many instant win games or contingency insurance promotions, prizes may not be awarded if the winning game pieces are not found or claimed or if the contingent prize remains un-awarded at an insured event.

What are the legal requirements for offering a promotion to kids?

Per the Children´s Online Privacy Protection Act (COPPA), you are not allowed to ask or obtain personal information online from children under the age of thirteen (13).

We have found that the best way to comply with COPPA is to make simple modifications to the standard entry form to ensure receipt of parent's information as well as minimal information from the child when entering an online sweepstakes.

Then, we can send the winner notification to the parent's e-mail address directly to obtain permission and request any additional personal child Information.

We wrote a couple of informative blog posts about promotions open to minors here and here.

GAMES OF CHANCE (SWEEPSTAKES)

What is a game of chance?

A game of chance is a promotion whereby the Sponsor gives away a prize (or prizes) to prize winners.  The prize winners are chosen by a random event (such as a random drawing or pre-seeded instant win prize).  A sample game of chance is a Sweepstakes or an Instant Win Game.

What is the difference between a lottery and a sweepstakes or game of chance?

There are three elements that define a sweepstakes and a lottery:

  • Prizes
  • Chance
  • Consideration

A sweepstakes is a promotional event that must exclude the consideration element in order to be classified as a sweepstakes.

A lottery is different in that the third element "consideration" is required to participate and win.

Consideration can be described as any effort on the part of the consumer that must be given in order to be entered into the sweepstakes.  For example, the purchase of a product or membership requirement would be defined as "monetary consideration" whereby asking a consumer to take a long survey or spend an absorbent amount of time or effort in order to receive a sweepstakes entry would be defined as "non-monetary consideration".

In a sweepstakes where consideration is present, a free alternate method of entry (AMOE) must also be offered.  The AMOE can be a simple online entry form or a write-in entry method.

What are some of the common requirements when running a sweepstakes or game of chance?

Some states require formal registrations (accompanying fees must be paid), as well as surety bonds or escrow agreements that must be established before the promotion begins (those fees depend upon the total prize pool).

There must always be a "No Purchase Requirement" or AMOE for all sweepstakes and games of chance as the element of consideration must be removed before the sponsor can lawfully proceed.

How many states require registrations and surety bonds when running a sweepstakes or game of chance?

For most games of chance and industries, New York and Florida are the only states that currently require formal registration and filing of surety bonds, with Florida being the most active in the enforcement of compliance with its registration policies.

Rhode Island requires registration only.

Alcoholic beverage and some other regulated industry promotions are a separate consideration which are handled on a case by case basis depending upon the nature of the promotion.

Does every sweepstakes and game of chance have to be registered?

No.  The requirements for bonding and registration vary depending upon the structure of the promotion.  Generally, New York, Florida, and Rhode Island require registration and/or bonding only when the total prize pool (the total retail value of all prizes being offered) is more than $5,000 (for NY and FL), or $500 or more (for RI).

It's always best to discuss your promotion structure with us in detail as we will determine if bonding and registration is required.

CONTESTS

What is a contest of skill?

Contests are different from games of chance in that there can be no chance element included in the promotion structure.  Contestants earn entry into the contest by putting forth some level of skill or merit (such as writing an essay or submitting a recipe).  Winners are chosen based upon a pre-set judging criteria and all entries must be judged equally based upon the same pre-set judging criteria in order to determine the winners.

What are some of the common requirements when running a contest of skill?

Like games of chance, the contest must have a definitive start and end date.  Entrants must put forth skill or merit to earn the entry and all entries must be judged equally based upon a pre-set criteria.  There can be no randomness when it comes to selecting prize winners.

In general, monetary consideration (the purchase of a product or entry fee) is allowed when running contests.  Although, certain states (such as VT, MD, ND, AZ & CT) can become problematic when monetary consideration is present.

Are registrations and bonds required for contests of skill?

Generally, no, except in AZ, and only when an entry fee is required.

PROMOTIONAL OFFERS

What is a promotional offer?

An offer is different than a sweepstakes, game of chance or contest of skill in that the recipient automatically receives the intended incentive (while supplies last) as long as he or she completes the required action of participation or purchase (such as participating in a webinar or purchasing a product).

What are some of the common requirements when running a promotional offer?

When running a promotional offer the Sponsor must ensure there is enough incentive to meet the consumer demand.

For example, if a Sponsor is aware that they will have 1,000 webinar participants, they must have 1,000 incentives to provide.  If more than 1,000 webinar participants, the "while supplies last" language would be applicable.  However, if a Sponsor knows they will have 1,000 webinar participants and only has 500 incentives to provide, the Sponsor would not be compliant.

Incentives cannot be awarded at random for a promotional offer.

Are registrations and bonds required for offers?

Generally, no.  It's always best to review your promotion structure with our team to ensure compliance.

REBATES

What is a rebate?

A rebate is a sales-driven promotion that retailers and manufacturers use primarily to incentivize their customers to purchase a product.  Mail in rebates (MIR) are the most common types of rebates offered.

Rebates entitle the buyer to a certain reduction or refund off the original purchase price of a particular product or products, providing the buyer complied with all of the rebate terms and conditions (such as purchasing the products) during a particular time frame at a particular retailer or manufacturer).

What are some of the common requirements when running a rebate program?

Certain states have specific requirements when it comes to running a rebate program.  For example, CT requires retailers pay the amount of the rebate at time of purchase when the net price is advertised.  RI has similar requirements.  Escheatment laws must also be adhered too throughout the US.

Are registrations and bonds required for rebate programs?

No. Registrations and bonds are not required for rebate programs.

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