Sweepstakes promotions are great promotional tools which serve to engage consumers and attract new ones. When advertising sweepstakes on social media, businesses must be careful to abide by each respective social media platform’s distinct promotional contest rules, policies and guidelines. By way of example, in this blog we highlight the rules that sweepstakes operators must follow when creating and advertising Facebook sweepstakes promotions.
What are Facebook’s sweepstakes policies?
Brands often use giveaways as a marketing tool to create buzz among the consuming public. When done correctly, businesses can see an increase in revenue and consumer loyalty through use of giveaways. However, when a giveaway campaign is poorly structured, brands can suffer irreversible reputational harm. A recent example of a giveaway gone wrong concerns one offered by Reese Witherspoon’s fashion line, Draper James, LLC (“Draper James”). The subject Draper James Instagram giveaway post read: “Dear Teachers: We want to say thank you. During quarantine, we see you working harder than ever to educate our children. To show our gratitude, Draper James would like to give teachers a free dress.” The post did go on to explain that a registration form needed to be completed and that the offer was only “valid while supplies last.” Despite the additional language, the Draper James disclosure proved to be insufficient. After publishing the promotional post, many of the thousands of teachers who signed up believed that they would each receive a free dress, when, in reality, teachers were entered into a sweepstakes for a chance to win one of only a limited 250 dresses available to entrants. After nearly one million entries were received, Draper James’ sweepstakes site crashed. Teachers who did not receive a dress went to social media to express their outrage about the deceptive giveaway. In an attempt to quell the firestorm, Draper James: 1) publicized that it would make an unspecified donation earmarked to help educators support their remote classrooms; and 2) gave every registrant a Draper James discount code. How this response plays out both in the court of public opinion and with regulators, remains to be seen. The Draper James campaign example is a reminder to brands that they need to use clear language to explain when a promotion is, in fact, really a sweepstakes and not a giveaway with prizes provided to all who sign up. In order to avoid situations similar to this, it is wise to speak with a promotions law attorney who is familiar with the nuances of sweepstakes law and other games of skill and chance.
What should brands know when offering giveaways?
October 10, 2019
The world’s population is increasingly reliant on smart phones and other similar mobile devices. Businesses have been adjusting to this new reality by pursuing consumer outreach through mobile applications (or “apps”) that can be downloaded and accessed via smart phones. Regardless of the medium or technology involved, one particularly potent means of attracting and interacting with consumers involves the use of sweepstakes and other promotional contests. Unsurprisingly, given the emerging trends in smart phone usage and the concurrent proliferation of mobile apps, there has been a wave of mobile apps designed to provide business owners with a platform to host their mobile app sweepstakes.
While mobile app promotions may provide business owners with an ideal combination of technology and marketing reach, there is a complex system of laws, rules and regulations that apply to each separately, as well as unique legal issues that arise when they are used together. One such issue centers around whether sweepstakes sponsors need to offer consumers a free, alternative means of entry (often referred to as an “AMOE”) in addition to the entry process made available via the mobile app itself.
Do You Need to Offer Consumers an AMOE with Your Mobile App Sweepstakes?
April 12, 2019
Last month, a federal court in New York dismissed a putative class action lawsuit brought by thirteen named plaintiffs (collectively, “Plaintiffs”) against a national sweepstakes operator (“Defendant”). In this sweepstakes lawsuit, the Plaintiffs alleged that Defendant violated the federal CAN-SPAM Act, the Deceptive Mail Prevention and Enforcement Act (“DMPEA”), and New York General Business Law (“GBL”) Sections 349 and 369-e. Because plaintiffs were granted leave to amend, the sweepstakes law class action remains pending in the Eastern District of New York.
How were Plaintiffs allegedly misled into entering sweepstakes drawings?
December 12, 2018
Sweepstakes promotions continue to be a popular tool that businesses use for customer acquisition, engagement and retention. However, several aspects of these promotional contests can come with legal risks for the sweepstakes operators, from the marketing that accompanies them, to the logistical considerations associated with the running of the contests themselves. Specifically, the method by which sweepstakes promotion winners are selected can create unnecessary legal liability for business owners if not handled properly.
Does it Matter How Sweepstakes Promotions Winners Are Selected?
September 20, 2018
In February of this year, the Federal Trade Commission (“FTC”) and Missouri State officials brought charges against a network of Kansas City area businesses (“Defendants”) which allegedly had used deceptive sweepstakes and other prize mailers to bilk consumers out of more than $100 million. The complaint alleges that Defendants sent prize notices to consumers, claiming that they had won a prize and, in order to receive that prize, consumers would have to pay an acquisition fee of anywhere from $11.89 to $139.99. Additionally, Defendants sent mailers to consumers, offering cash prizes if they could answer a simple arithmetic question and pay a registration fee of anywhere from $9 to $45. In reality, answering the arithmetic question entered consumers into a contest that had multiple rounds of mathematical puzzles, which required additional fees, and eventually ended with a puzzle that very few people, if any, could solve.
In July of this year, a federal judge had frozen the assets of the Defendants because he believed that the state and federal governments were likely to prevail on the merits of the case. Defendants were back in court last week to ask a federal judge in Kansas City to increase their living expenses from $18,000 a month to roughly $45,000 a month. The judge was not persuaded by their arguments and has ordered the Defendants’ assets to remain frozen.
How can I run a legitimate sweepstakes or contest promotion? [Read More]
Illegal gambling is generally defined as an activity where a person provides consideration for the opportunity to win a prize in games of chance. Consideration typically takes the form of currency, but it can be anything of value (hence the idiom, losing your shirt). If there is no consideration, or the game is deemed a game of skill instead of a game of chance, then the game will be legal in most jurisdictions.
Traditional games of chance are lotteries, where you buy a ticket to match randomly drawn numbers to win money, and craps, where the prize is dependent on the roll of the dice. However, the bright line rules of games of chance become blurry when skill is involved. Depending on the state, games of skill fall outside of the scope of state gambling laws (in recent years our firm has written extensively on the issues involved in the fantasy sports games of skill debate). This raises the following question:
How do states determine whether the game is one of skill, one of chance or both?
July 30, 2018
Last month, a federal district court in the State of New Jersey granted a motion to transfer venue filed by Raymour & Flanigan (“Raymour”), pursuant to a forum-selection clause contained in its Sweepstakes Official Rules (“Sweepstakes Agreement”). Evelyn Manopla, the Plaintiff named in the sweepstakes law class action against Raymour, argued that the Sweepstakes Agreement was unenforceable because the hyperlink to the Sweepstakes Agreement was not conspicuous and, therefore, its constituent forum selection clause was invalid. The court found that the forum selection clause was valid and transferred the case to the Northern District of New York.
When have sweepstakes contest rules been agreed to? [Read More]
