How do you know if the giveaway you are entering is legitimate?
If you are planning to run a giveaway for your business, how do you make sure you cover yourself legally?
Whether you are entering an online competition or creating one, it’s important to understand exactly what should be included in the rules.
It can be exhausting and confusing trying to research the terms used in the rules of a giveaway. So, we decided to put it all together for you in one place.
Don’t forget to bookmark this page so you can quickly reference it when you need to.
Before we begin
We would like to start by saying that this article has been written based on our experience with competitions, sweepstakes, and other types of giveaway promotions. We are not lawyers, and the information in this article may not be the same for the laws in your country or state.
If you are unsure about something, do some investigating or contact a local authority to be 100% sure you get it right. DoorLuck is based in The US, so we’ve based the information in this article around the laws here.
We love sharing our knowledge and experience with our audience; just understand that we won’t take responsibility for actions taken on any of the information provided here as it’s up to each of us to make sure we comply with the laws and rules in our area.
Let’s start by covering a few of the basic terms used in the rules of a giveaway. Terms like competition and sweepstake sound similar but it’s important to understand the difference as different rules apply to each.
So, let’s make sure you understand the type of giveaway you are running in the first place.
Giveaway is the umbrella term that covers competitions and sweepstakes. When someone says giveaway, they are generally referring to an opportunity where you can enter and win something. Competitions and sweepstakes can both be referred to as giveaways.
In a sweepstake, prizes are given out at random and entry is via some sort of action that doesn’t involve payment. There are three components that define a sweepstake:
- 1. There is a prize that can be won by entrants.
- 2. The winner or winners are randomly selected.
- 3. Anyone can enter without payment or other conditions (except conditions outlined in the giveaway’s terms and conditions)
You can think of sweepstakes as a game of chance, like playing the pokies without needing to pay.
Competitions are based on some sort of skill, performance, or demonstration that can be judged. The winner isn’t chosen at random but decided based on their merit.
It is illegal to charge for entry into a competition as some states will then class your competition as a lottery (which has much tighter rules and regulations).
In a lottery, contestants pay for the chance to win a prize or money. Lotteries are drawn at random but may not result in a winner every time. Only a state government can hold a lottery, so it’s important to make sure your giveaway isn’t classed as one.
A lottery has these three components:
- 1. A prize on offer
- 2. Winners are selected at random
- 3. There is some sort of consideration (more about what this means further down)
A raffle is similar to a lottery where participants pay to enter. The difference between a raffle and a lottery is that a raffle always has a winner or winners, whereas a lottery does not.
Raffles are usually done on a smaller scale than lotteries and are almost always run to promote a cause. Laws about raffles vary slightly in different states, but they all agree that raffles are designed for non-profit organizations. So if your company isn’t a non-profit, you should consider running a sweepstake or contest instead.
Standard terms used in the rules of a giveaway
Now that you understand exactly what the different types of giveaways are let’s look at some of the common terms you will find in the rules of a giveaway and what they mean.
Consideration in the world of giveaways is defined as some sort of value that is exchanged for entering a promotion. Value can be monetary or based on time and effort from the entrant. For example, asking people to attend an event or fill out a time consuming survey will count as consideration.
It’s important to understand consideration because it’s what sets a giveaway apart from a lottery. If your giveaway requires some sort of consideration, you run the risk of it being classed as an illegal lottery.
No Purchase Necessary
When you see “no purchase necessary” in the rules of a giveaway it means that you do not have to make any type of purchase or payment to enter.
Often first-time competition hosts want to make purchasing from their store a condition of entry for their giveaway. Again, the problem with this is that once you do, your giveaway will be classed as an illegal lottery.
Here are a few commonly misunderstood conditions that violate the no purchase necessary rule:
- Asking winners to pay for shipment of their prize
- Making it a requirement for entrants to show a receipt of purchase of your products
- Giving entrants the option to pay to increase their chances of winning
What to include in the terms and conditions
If you are running your own giveaway, you will need to include the terms and conditions and make them available to the public.
You can do this by:
- Publishing them in an uneditable Google doc,
- publishing them on your website; or
- including them in a social media post if that’s where your competition is being run.
Here’s a list of the fundamental things to include in your giveaway’s terms and conditions.
Your business information
As the sponsor of the giveaway, include your business name and contact information in the giveaway details.
The giveaway’s closing date
Make it clear when the closing date is for entries.
How the winner will be determined
Disclose how you will determine the winner and when they will be announced. If you are running a sweepstake, make it clear in the terms that you will be drawing the winners at random. If you are holding a competition, describe how you will be judging the best entry.
When prizes will be awarded
State how and when the prizes will be distributed. Also, explain what will happen if prizes are not collected within a specific time. Be clear about how you will contact winners so that they don’t accidentally miss out.
You will need a way to contact the winners to let them know they have won, as well as making a list of winners available to anyone who wants to see it. It’s becoming more common for this information to be listed on a website or announced on the business’s social media pages. As long it is recorded and made available to the public.
It may be that not everyone is eligible to enter your giveaway. Consider things like whether you can deliver the prize internationally or if entrants need to be in a particular location. Remember that you can’t ask winners to pay for shipping, so consider how much shipping to different areas will cost and whether or not this is affordable for you.
If entrants need to be over 18 to collect the prize, you’ll want to make it clear that only 18 year olds and over can enter. It’s also a good idea to mention that stakeholders of your business are not eligible to enter your giveaway. This way, there doesn’t appear to be a conflict of interest if they end up winning.
Describe your prize
Make sure you describe your prize accurately so that people know exactly what they will get if they win. You should also include how many prizes there are and how many winners there will be.
Including this information in your terms and conditions also helps eliminate the resistance people might feel towards entering your giveaway.
Take some time to describe exactly what will happen if things don’t go as planned at your end. For example, what will happen if your company goes broke before the competition ends? What if the prize is found to be faulty and recalled by the factory that made it?
Decide how much responsibility you want to take on and how you will manage things if they take an unexpected turn.
Social media disclaimer
If your giveaway involves people using social media to participate, like an Instagram photo competition where users need to tag friends to enter, include the social networks terms and conditions regarding giveaways. Mention that the social network is not responsible for the results of the giveaway and can not be held liable in any way.
Here’s an outline of the rules about running a giveaway on the top social media platforms.
The rules about running a giveaway on Facebook
Facebook state in their terms and conditions that pages, groups and events can not promote online gambling, online real money, games of skill or lotteries (which you won’t be running anyway unless you are a state government).
Facebook does not allow giveaways to involve personal profiles. For example, you can’t run a competition from your personal profile, make sharing the competition to a timeline a condition of entry or ask entrants to tag their friends to enter.
You must also get permission from users if you plan to use content they submit to the giveaway. You can do this by making it a condition that by entering the giveaway they give permission for you to share their content.
The rules about running a giveaway on Instagram
If you run a giveaway on Instagram, you are responsible for making sure it is done legally. Instagram also states that you can not encourage users to tag themselves or others in content that isn’t relevant to them at all.
The rest of Instagram’s terms and conditions make it clear that Instagram must be released from every aspect of the giveaway, including liability or association between the sponsor and Instagram.
The rules about running a giveaway on Twitter
Twitter asks that any giveaways include a clause that users can not enter with more than one account. They also state that asking people to re-tweet a post over and over violates Twitter’s rules and may cause the user to be filtered out of their search results. Kindly, Twitter include a couple of handy hints to help run a successful giveaway on their platform.
What laws and governing bodies can I turn to for more information?
There are several official laws and government bodies you should become familiar with in regards to how the rules of giveaways, sweepstakes, and competitions are made.
Here’s a rundown.
The Federal Trade Commission is an independent government body that was put in place to protect consumers. You can check out the rules they have on their website regarding sweepstakes. The FTC recommends that you check the laws with the Attorney Generals Office in the states you want to advertise in. This is a good idea as laws vary from state to state.
The Federal Communications Commission is another agency that helps look after consumers by setting the rules everybody has to play by. They help to regulate communication nationally and internationally from America via radio, the internet, TV, cable, wire, and satellite. They don’t monitor sweepstakes, but they set the rules that can be enforced by other agencies.
The United States Postal Service has its own powers to prevent scams that happen via post. The Deceptive Mail Prevention and Enforcement Act gave the USPS the authority to issue fines to anyone using their service to send sweepstake notifications that don’t comply with the rules.
The CAN-SPAM Act
The CAN-SPAM Act is a law in the US that covers how you can send emails from your business. Its primary purpose is to stop companies from spamming people’s inboxes with promotional and advertising material. The CAN-SPAM Act was introduced in 2003 by the Federal Trade Commission when email spamming had started to become a severe problem.
CAN-SPAM stands for Controlling the Assault of Non-Solicited Pornography And Marketing. Today it covers all types of digital messaging, including texting.
Take note of the information in this Act (covered below) if you have added entrants to an emailing list or intend to send them text messages to inform them that they have won.
Here’s a breakdown of the rules covered in the CAN-SPAM Act.
You must make it clear who is sending the mail and who people will be replying to. Do this by making sure you identify yourself in text messages and have accurate contact information (including your business’s physical address) in emails.
The subject lines in your emails must also be accurate to the content of the email and can’t be misleading or irrelevant. It’s also necessary to disclose that your message is an advertisement.
Include an unsubscribe option
All email and text message communications must include clear instructions about how to unsubscribe from your database. Once a recipient has chosen to unsubscribe, you must remove them from your mailing list within ten days.
Unsubscribing must be simple and not require any payment or drawn-out processes. You also can’t sell an email address once it has been unsubscribed from your list.
What if I’ve broken the rules?
Maybe you’ve been running a giveaway and have now realized that you haven’t exactly been following the rules. This might be a nerve-wracking thing to realize, but unless you have been intentionally trying to scam people, most of the time you can simply correct your mistakes without any issues arising.
The authorities and laws we mentioned above were not put in place to prosecute every business that forgets to add their address to their emails. They exist to stop scammers from taking advantage of people and big businesses that are causing harm for the sake of profit.
It takes quite a bit to get the FTC and FCC involved, so if you’ve accidentally run a few giveaways and not followed the rules, just make sure that from now on, you do.
Ready to run your giveaway?
At Doorluck, we take care of your giveaway from start to finish. You can create, run, and monitor your giveaway all within the Doorluck site.
If you’re ready to get going with your own giveaway promotion, check out our demo giveaway to get familiar with the process.