Online businesses often rely on social media sweepstakes and skills games to raise brand awareness and showcase products and services to consumers. If your company’s marketing team is planning an online contest to expand your visibility, Kronenberger Rosenfeld can advise you on the right way to run a compliant competition and avoid common and burdensome pitfalls.
The combination of our years of experience representing clients in the performance marketing industry and our FTC defense practice is what distinguishes our firm when providing legal advice on online sweepstakes and promotions.
For years, sweepstakes have been heavily regulated by a multitude of state laws, based on the degree to which they resemble games of chance, which are generally prohibited. Some state laws even treat sweepstakes as lotteries if cash prizes are large enough. And most states require your company to prohibit officers, employees, and certain individuals from participating in the contest. Your company may be required to file official rules upfront, pay fees, post bonds, and file a detailed winners’ list. Penalties can include significant civil penalties and even criminal sanctions.
In addition to this patchwork of state regulations, social media sweepstakes are increasingly considered “promotional” in nature by the Federal Trade Commission, and thus subject to FTC jurisdiction. For example, the FTC has warned companies that exchanging social media “Likes” for contest entries creates additional disclosure requirements under the FTC’s consumer protection laws. FTC enforcement actions carry more than just financial penalties – your company may end up being subject to a court injunction and a mandatory compliance program, in addition to financial penalties.
We can help your business navigate state or federal regulations and avoid these negative outcomes by offering the following services:
For additional details about our services regarding online sweepstakes and contests, we welcome you to contact us through our online case submission form or call us at 415-955-1155, ext. 120.