The mobile space is currently inundated with mobile apps that serve myriad purposes. If you are in need of a mobile application for a certain function, it’s more than likely that there’s an app for that. Within that competitive environment, it is becoming increasingly difficult for mobile app operators to differentiate their offerings from the crowd and attract users – which is part of what makes the use of promotional games and mobile app sweepstakes such an enticing option.
Promotional contests and sweepstakes are an effective and cost-efficient means to generate buzz and, hopefully, attract dedicated app users. Through the use of promotional offers, consumers can be incentivized to download an app, or make a purchase, by the alluring opportunity to win discounts, merchandise, cash or other valuable prizes.
Are There Any Legal Concerns for Mobile App Sweepstakes Operators?
General Sweepstakes Concerns
Despite the appeal of offering a sweepstakes through a mobile app, operators need to be aware of the fact that there is a complex network of state and federal laws that apply to such games, and any would-be mobile app sweepstakes operator could incur substantial legal liability if these laws are not fully complied with. In order to ensure compliance with applicable law, mobile app sweepstakes operators must first correctly identify the nature of the promotional game itself.
There are, generally speaking, two categories of promotional games: games of “skill” and games of “chance.” Games of skill are typically easier to operate because they have fewer legal obstacles. Games of chance, on the other hand, are considered illegal lotteries in each state, unless one of the following three elements that comprise a lottery is removed:
(1) a prize awarded to the winner;
(2) chance in determining the winner; and
(3) consideration for entry in the game.
Because removal of the prize undermines the promotional aspect of the game for mobile app operators, and because chance is hard to eliminate entirely (many states find that even a small trace of chance in determining the winner satisfies the “chance” element), consideration is the element most frequently removed. “Consideration” can take many forms, including requiring that consumers:
(a) pay an entry fee;
(b) purchase a product; or
(c) engage in a time-consuming or otherwise onerous activity in order to gain entry in the subject contest.
Mobile App Sweepstakes Concerns
In the context of mobile app-based sweepstakes promotions, there is an inherent requirement that the consumer have a smart phone (or similar mobile device) capable of downloading and utilizing mobile apps. Given that many consumers may not own such a device, requiring that consumers obtain one in order to enter sweepstakes promotions may be deemed consideration. In order to eliminate that de facto consideration element, mobile app operators should consider offering an alternative means by which to enter each of their respective sweepstakes contests via a mechanism other than the mobile app itself. This alternative mode of entry (or “AMOE”) can be accomplished, under certain circumstances, via a simple website entry form, or through mail in entry. Bear in mind that social media networks, such as Facebook, Twitter and Pinterest, also impose their own rules with respect to the use of sweepstakes-related “likes,” “mentions” and “follows.”
Last, but not least, it is important to remember that all laws, rules and regulations that apply to sweepstakes and promotions, generally, are also applicable to mobile app-based sweepstakes. For example, if the method for entering the social media-based mobile app sweepstakes is too onerous, such as requiring that an extensive list of social media-based actions be taken, a free and easy alternative means of entry must be offered in order to remain in compliance with applicable sweepstakes laws.
The Importance of Retaining Attorneys Familiar with Mobile Apps and Sweepstakes Promotions
There are specific laws that apply separately to mobile apps and sweepstakes, as well as unique legal issues that arise when mobile apps and sweepstakes are used in combination. Due to the interplay of local, state and federal laws, rules and regulations, and the highly specialized issues that arise in connection with emerging technology and marketing methods, it is crucial that business owners obtain the advice and counsel of qualified attorneys when commencing any sweepstakes promotion or contest, whether through a mobile app or otherwise.
Please note that this is only a brief overview of some of the legal issues involved in connection with offering sweepstakes and other promotional contests by and through mobile apps.
If you are interested in learning more about this topic or require assistance with your mobile app and/or social media-related sweepstakes promotion campaigns, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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