If you have decided to run a sweepstakes or skills contest, you need to be aware of the often overlooked complex legal glaze that comes as a package deal. In the competitive, tech-savvy marketplace that today’s society offers, businesses heavily rely on cutting-edge promotions on social networking platforms to increase their popularity and sales. However, if your company fails to comply with the laws of the digital world, you could face some considerable financial consequences. Before you begin administering your promotion, consider the following compliance issues that others have faced when dealing with the applicable legal requirements.

 

Documentation

You should have the following documents on file before beginning your sweepstakes or skills contest.

  • Advertisements: You will advertise your promotion in some way such as the internet and television. All copies and elements must contain an abbreviated set of rules that vary depending on the state in which you are advertising the promotion.
  • Rules: Every promotion must contain a set of official rules that govern the way you complete the skills contest or sweepstakes. The rules must also meet the necessary state laws and requirements.
  • Winner Releases: The sponsors of your promotion will most likely require all main prize winners to sign an affidavit of liability/publicity and eligibility.
  • Guest Releases: If a winner of a promotion wins a prize that allows a guest to accompany them to reap the benefits of the winnings, the sponsors will require them to sign a release as well.
  • Contracts: You should have signed agreements on file for all third-party organizations that will use your company’s trademark for their promotions. The contracts should spell out the third party’s obligations and reimbursements to your company in case of a breach of the deal.

 

Requirements

The following requirements are standard for both sweepstakes and skills contests.

  • Start and End Dates: If your promotion offers several ways for contestants to enter, the dates must all be the same.
  • Eligibility: You must list all eligibility requirements on the official rules and ad copies.  
  • No Payment or Purchase to Receive or Claim a Prize: Charging contestants to claim or receive prizes in your promotion is not recommended.
  • Description of Prize: The promotions official rules and ad copy must contain a full disclosure of prize details, including the actual retail value.
  • Winner Selection, Clearance, and Taxes: Make sure that you thoroughly perform each aspect of the promotion as described in the official rules.
  • Approvals and Risk Management: Make sure that all elements of the promotion are consistent. Entries must be stored and processed in secured locations.  
  • Record Keeping and Winners Lists: You must keep all entries, winner list, and documentation for a minimum of four years after the promotion.

 

Conclusion

Skills contests and sweepstakes are excellent ways to promote your company, increase popularity, and gain business. Be aware of the laws and procedures required by the state in which you will perform the promotion. That ensures that you don’t run into any legal problems that could cost you financial repercussions. If you seek further information about rules and regulations for your promotional event, contact us at CFA.