So, you’ve decided to run a sweepstakes drawing to promote the popularity of your company and the goods, products, and services you offer to consumers. It’s an excellent idea, but one that comes with specific legal requirements that can cost you if you don’t abide by them in the long run. There are different laws and requirements for each state. However, there are some that are common to all sweepstakes promotions. Let’s look at them to ensure you don’t wind up in a costly legal situation unintentionally.
“No Purchase Necessary”
Make sure that there is no purchase or entry fee to enter or win the sweepstakes promotion. If you must have a purchase requirement, ensure that there is at least one free way to win that doesn’t need mandatory consent for marketed products.
You can also offer a prize where you don’t give out physical products. For example, instead of winning something like a bike, you get a special mention or bragging rights. Make sure the “free” method of entry is disclosed in the sweepstakes official rules and advertisement.
Regardless if there is a free method for entry, make sure that the charge is for an actual product or service instead of just entrance into the promotion. That will avoid any prohibitions about “pay to play.”
Equality for All Participants
Regardless of how the promotion participants entered the sweepstakes, they should all be treated equally and given the same opportunities. They should all have the equal chance to enter and win. If there was a purchase entry fee, the sponsor must reward the same number of products to a winner that paid versus one that joined for free.
Reflecting on specific state’s requirements, Rhode Island requires that if the actual retail value of a prize is higher than $500 and the promotion is offered through a retail establishment, that it be registered there. Not registering the sweepstakes will automatically disqualify Rhode Island residents from entering or winning the promotion.
New York or Florida
Other states that have specific requirements are New York and Florida. If the total retail value of all products won is greater than $5,000, then you must register and bond your sweepstakes to keep citizens who reside there from disqualification. Be mindful of the additional fees that come with registering and bonding your promotion. The highest value of the grand prize will determine the costs.
Sweepstakes are excellent and innovative ways to promote your business and increase the popularity. Just remember that each state has different laws and requirements. Being aware of the regulations regarding your sweepstakes promotion could keep you from paying the price later for violations. Contact CFA with any questions you might have about setting up your sweepstakes. We specialize in planning and managing sweepstakes, contests, and other promotional campaigns. We offer quality information and low prices for contest management services. CFA wants to increase the enthusiasm your customers have for your products and services and give them a reason to talk about your company on multiple platforms.