A good sweepstakes promotion is one of the best ways to generate new business and retain existing customers. While effective as a marketing tool, a lawful sweepstakes must be distinguished at its inception from a lottery. For example, a lottery is made up of 3 elements: prize, chance, and consideration. Lotteries may only be offered by state government-run entities. If the element of consideration is removed, a lottery becomes a legal sweepstakes. This is where the alternative method of entry comes in — or “AMOE.” A sweepstakes contest must offer an AMOE in order to meet this important regulatory requirement in setting up a compliant promotion. Please note that a complex array of federal and state consumer protection laws govern such promotional marketing campaigns. Companies must be aware of applicable regulations or risk significant financial and legal exposure.
How to Set up a Lawful Sweepstakes AMOE
Generally, it is permissible to charge consumers to enter a sweepstakes where they get a free entry as part of a product or service purchase, provided that there is an AMOE. Companies can get creative in setting up their sweepstakes AMOE. Some of the ways to accomplish this is by offering people: a mail-in option; an 800 number to call; or visiting a website, among other methods.
As mentioned, an AMOE is designed to remove the consideration element that makes up an illegal lottery. It is not enough to have a sweepstakes AMOE, but it should also be featured in everything related to the promotion. This includes: 1) the contest rules; 2) all of the marketing materials; 3) the sweepstakes entry registration flow; and 4) the sweepstakes disclaimer. Importantly, people who enter via the AMOE must have an equal opportunity to win the same prizes as those that pay to enter. This means that AMOE entrants must be allowed to enter as many times as those that pay to enter the promotion.
Legal Nuances Affecting a Sweepstakes AMOE
There are many state laws that address sweepstakes promotions and the AMOE. In one fairly recent California case, Suski vs. Marden-Kane, Inc., the Court concluded that it may not matter whether the participant was actually aware of the AMOE, provided that the opportunity to enter via this mechanism in fact existed.
Some specific disclosures that all sweepstakes promotions should incorporate include:
- a sweepstakes AMOE, i.e., language explaining that no purchase is necessary for entry, and that any such purchase will not increase the consumer’s odds of winning a prize;
- start and end dates;
- eligibility requirements, such as minimum age and states where entry is prohibited; and
- the odds of winning a prize.
Setting up an Effective Sweepstakes AMOE
State and federal regulators work diligently to protect consumers from allegedly deceptive marketing practices. Setting up a sound sweepstakes promotion, including offering a lawful and effective AMOE, should be a top priority. Companies would do well to consult with an experienced sweepstakes and contest attorney prior to creating and advertising any promotion.
If you are interested in learning more about this topic or require assistance with your sweepstakes AMOE provisions or promotional contests in general, please email 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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