Here's a quick disclaimer. This is not specific legal advice, this article serves as an educational resource only. You should always speak to an attorney about your specific situation to get the best advice for you. If you're looking for representation you can contact me here.
Contests and sweepstakes on social media can feel like a goldmine- free or low cost exposure to people through their friends and family? What better way to reach new customers is there?
Social media contests are so ubiquitous that it seems like there must be nothing to them: you have a contest, pick a prize, pick a winner, and you're done! But they're not really as simple as they seem.
Plenty of internet contests have gone wrong due to a lack of preparation, foresight, or luck.
The UK's Natural Environment Research Council launched an online poll to name a research vessel, and the public popularly voted for the name Boaty McBoatface. Funny, but not helpful to the NERC.
Taylor Swift set up a contest to perform at the U.S. school that earned the most votes, and the internet took over. If Taylor Swift had followed through on the results of the contest she would have been performing at a school for the deaf.
A small regional paper company with a whimsical manager ended up paying out five winning tickets to a single client and took a hosing after failing to limit each contestant to one winning outcome.
Failing to take into account the mechanics of running a contest, the details of who the winner will be, how they will receive their winnings, and what the legal implications are can lead to embarrassment at worst, and lawsuits at best. These notes should help get you thinking about how to run your upcoming contest or sweepstakes.
Big Picture Questions
Before getting into the nuts and bolts of how you should run a contest you should ask yourself why. Will this bring new customers? Will this educate consumers about how to use your product? Will a new product be developed from this contest?
If you've thought long and hard whether this is a must for your company, then you're probably ready to hear about what running a contest will entail.
You might be considering hiring an outside company to help you with your contest, or maybe you're hiring new team members. Here are some points to suss out with the potential hire.
Perhaps most important question for shopping out consultants is, "Are they big enough to indemnify you?" If they fail to perform on their contract; if they can't provide adequate security for attempts to manipulate the contest; if a consumer sues; if the FTC sues - your indemnity contract means nothing when they are unable to actually financially support the indemnification.
How should your contest look? Is it a "share for an entry" post? A luck of the draw game? Customers will be quick to point out flaws in your contest if you fail to run a fair contest. Here are some considerations for various forms of contests and sweepstakes.
You want to make sure that your customers and participants in the survey believe that you're trying to hold a fair contest that engages them in the game.
Dealing with Winnings
You've determined who's going to run the contest. You've determined how the contest will be run. Now, you need to make sure your contest doesn't run afoul of the law.
How you pick the winner is just as important as determining the rules for the contest. Make sure you put some forethought into how the winner selection will play out.
Some Final Notes and Best Practices
Alex is a startup-tech nerd trapped in an attorney’s body. One of his favorite hobbies is hearing about other people’s new ideas and watching them succeed. He has a few ideas of his own, and, like many attorneys, enjoys talking about them. If you want to talk about your projects or hear about his attempts to automate the practice of law, reach out through the contact page.