But Everyone Else is Doing It: Why There are So Many Illegal Social Media Contests

social media contests

By Kerry Gorgone, {grow} Contributing Columnist

As an attorney turned educator, I frequently address groups about the legal aspects of social media and marketing. One topic that never fails to draw some questions is contests. The sea of rules and regulations that marketers, brands and bloggers must navigate is largely uncharted, and sometimes frightening.

For the sake of context, I’ll cover them very briefly here, so you have a sense of what online marketers and bloggers are facing.

First, although people often call their giveaway a “contest” or “sweepstakes,” each word actually means something slightly different, from a legal standpoint. In a contest, the winner is chosen based on merit (e.g. most creative haiku). In a sweepstakes, by contrast, the winner is selected at random. This type of promotion is often called a “giveaway.”

Both of these can be effective ways to promote your business (or a client’s business), so long as you avoid lotteries. A lottery involves paying for a chance to win. If you charge a fee for people to participate in your promotion, your “giveaway” just turned into an illegal lottery.

The tranparency problem

What many people have trouble is understanding that, from a legal standpoint, paying for a chance to win doesn’t necessarily mean dollars and cents. It could mean the time you take to comment on a blog post, complete a questionnaire, or Like someone’s Facebook page. Basically, anything beyond filling out a very simple survey that says where to contact the entrant if they’ve won might be considered “pay to play” in some states, and therefore your giveaway would be illegal.

In social media, another common problem is the lack of transparency in most of these contests and giveaways. The companies don’t require entrants to make it clear that they’ve posted comments or shared photos for a chance to win something valuable. Without any disclosure about the contest, people seeing these posts might view them as unbiased endorsements for the product or service.

“But No One Else is Following the Rules”

Once I’ve explained some of these general rules governing giveaways—they vary from state to state and social network to social network, so the presentations tend to be high-level—someone always asks “then why does Blogger X at BloggerX.com run giveaways all the time asking people to Like her on Facebook or comment on her blog for a chance to win?”

My answer is always the same: just because Blogger X does it doesn’t make it legal. In fact, even if every blogger besides you ran giveaways that way, all those giveaways would still be against the law.

Why does this matter? Because, sooner or later, the law catches up. Justice can be slow, but once people have gotten complacent about breaking the law, it tends to catch up in a hurry and bite unsuspecting people in places they’d rather not be bitten.

Accessories retailer Cole Haan received a warning letter from the Federal Trade Commission (FTC) after they asked people to enter a contest by creating a Pinterest board called “Wandering Sole,” then pin 5 photos using the hashtag #wanderingsoles.

Cole Haan did not require people to disclose that their pinboards and posts posts were an entry to win a $1,000 shopping spree. In the FTC’s view, this made  the hundreds of Pinterest posts hashtagged #wanderingsoles into undisclosed endorsements.

Because the FTC had never publicly addressed social media contests this way before, they did not fine Cole Haan, but now that they’ve clarified their standards regarding social media contests, brands and bloggers can no longer claim ignorance. This will make it easier for the agency to fine the next company or influencer that gets it wrong.

Consequently, the fact that “everyone else is doing it” is unlikely to improve your odds if you’re singled out by the FTC for an enforcement action.

No room for excuses

Think about it: if you get pulled over for speeding and tell the officer “but everyone’s doing 80,” what you’re really saying is “you’re doing a lousy job enforcing the speed limit.” Pointing that out is not likely to gain you any leniency!

Some people are confident that they will never be singled out by the FTC, given the thousands of illegal giveaways taking place. There is some truth to this: you might “hide in the crowd” for a while, but eventually somebody will take issue with you for some reason—whether or not that reason is legitimately based on concerns about the legality of your contests—and they might just file a complaint with the FTC requesting that they investigate you.

Unfortunately, given how competitive bloggers and influencers get, this type of complaint is well within the realm of possibility and the brands that conduct blogger outreach and influence marketing can find themselves caught in the crossfire.

Instead of focusing on what “everyone else” is getting away with, turn your attention to innovating in the social media space. Create contests based on merit that are fun, engaging, and legal. Create lasting relationships with your audience by inviting them to participate in a meaningful way (rather than just “Liking” your Facebook page or Instagram post).

Tips for Keeping it Legal

1. Run contests, not giveaways. Selecting the winner based on talent, creativity, humor or some other factor removes your promotion from the “giveaway” territory.

2. Use “Void Where Prohibited” and “No Purchase Necessary.” Void where prohibited” means that anywhere your promotion would be illegal, people are ineligible to win. “No purchase necessary” is a way to avoid turning your giveaway into an illegal lottery by allowing people to enter who haven’t bought anything, completed your survey, liked your Facebook page, etc.

This is why you’ll often see fine print in the giveaway terms and conditions instructing people to mail a 3×5″ card with their mailing address to an address in Dover, Delaware (or wherever), to be entered into the giveaway.

3. Encourage disclosure. Require people participating in your contest or giveaway to mention that the posts they create, the comments they make, or the content they share is part of a promotion, and that they’re posting for a chance to win.

Stay resolute, even in the face of seemingly everyone else doing things wrong. When the law comes to town, your nose will be clean, and you’ll have built trust with your audience in the meantime. As a bonus, you’ll also save money on legal fees, since you won’t have to defend against an FTC enforcement action.

kerry gorgoneKerry O’Shea Gorgone is a writer, lawyer, speaker and educator. She’s also Instructional Design Manager, Enterprise Training, at MarketingProfs. Kerry hosts the weekly Marketing Smarts podcast. Find Kerry on Google+ and Twitter.

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  • This topic is annoying to me on a few different levels.. on a professional level as a marketer, I can’t tell you how many times I have had to talk to my clients like a teenager when they gave me the “everyone else is doing it” line. Sure, they may be but they’re not my client, you are and you’re not going to do it. And a personal level as a professional blogger when all around me I see other bloggers doing it and reaping HUGE rewards from it because they just don’t care.. the benefits outweigh the perceived punishment. A lot of them just honestly don’t know that they’re doing something illegal and we’re back to the “EEIDI” response.

    Sometimes, it makes me feel like prudish snitch for actually maintaining my ethics and integrity.. but at least my sites won’t be penalized for it.

  • Okay, once a month on my blog I giveaway a little basket of soaps to someone who commented. They aren’t my soaps. I wanted to give back something to people who take the time to comment. Is that illegal. O.O Do I need to add a disclosure? Name it differently? Now I’m worried! (My blog is very small time. My “brand” is my books. I’m an author. I don’t ask for likes or anything.) Should I make it “reward” based? Best comment of the month?

  • It’s not a matter of disclosure if you paid for the soaps yourself. If you’d gotten them free from a sponsor, that’d be different. I would suggest giving them away based on some criteria (in other words, not randomly to any commenter). It could be the first commenter, the most imaginative, the one that rhymes best, the most interesting, or whatever. Just make it about skill or have some criteria. When the giveaway is random (“a game of chance”), that’s when the potential trouble starts.

  • You’re right: lots of people do it wrong and don’t care. They get away with it, until they don’t. And then we’ll see lots and lots of posts from people complaining about how unfair it is that they got fined. It’ll be a while, but that’s what will happen, unless the FTC decides it’s not worth pursuing, which seems unlikely.

  • Thank you for writing this Kerry! I get asked about this more times than I care to count and now I can point them to this. Social media contests are so frustrating because the different platforms do not police them so there’s a large amount of illegal ones going on. I feel like I am robot sometimes telling clients the same thing over and over – no, you can’t do it and be sure to include the fine print (I’m married to an attorney so I cover my bases).

  • Kristen – I know EXACTLY how you feel. I feel like that too with my clients. It seems we turn into their social media moms, lol.

  • It’s tough to walk the straight and narrow when other people don’t, but the legal headaches can well outweigh any benefit if your contest happens to be singled out for scrutiny. You’re doing the smart thing, Mandy!

  • I totally pay for them myself. I’ll try making them about something other than random. Thanks so much! There’s been a lot of discussion about this topic on some of my author loops. Thanks!

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  • Interesting thanx for these insights.

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  • Chad P

    Thanks Kerry, this is very helpful! Why the recommendation on contests over sweepstakes? In my experience you then have to provide some kinda of judging criteria for a contest. It’s always felt easier to just say a random commenter will win a prize.

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  • Kim

    Thank you for this information! It was very helpful. What about just sometimes selecting people (social media followers, newsletter subscribers, past clients) who have done something nice (posted a review, referred a friend) and giving them small prizes? Does this fall under the merit-based/legal contest category?

  • The background I had in the broadcast industry helps a lot, as I’ve had a professional lifetime of “no purchase necessary” and “void where prohibited” Lottery=prize, chance, and consideration. Bringing this all to social media is new, and the contests I’ve run have been enough to have me tearing my hair out. A voting contest is almost unmanageable with the “contest pigs” (professional contest players who buy and trade votes) in the mix. I’m still looking for adequate legal disqualifying language.

  • Thanks Kerry, this is very valuable information for all of us.

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  • paulaschuck

    My head hurts now. Blogger here. I don’t think anyone knows this information. So then the random tools that are there for bloggers to use such as giveaway tools etc and random.org would be good for what exactly? So if I read this correctly, then choosing someone based on most creative comment is legal and giveaway tools choosing random commenter is not legal. Same rules in Canada?

  • This is such a great post. I’ve never seen this subject (contests, giveaways, etc.) discussed with such clarity. I guess the rules are pretty simple but social media marketing companies can make a “Like” seem easy enough. People don’t realize that likes, tweets, comments, etc. are worth something. I’ll be using this post as a guide. Thank you!

  • If they do something and you decide after the fact to give them a gift, that’s not a contest or giveaway: they weren’t motivated to post or act for a chance to win. You just chose to make a gift later! Should be fine.

  • You definitely have to provide judging criteria, and you can’t change it once the rules are posted. Still contests are easier than “giveaways” because of how strictly some jurisdictions interpret the “purchase” in “no purchase necessary.” In Florida, for instance, the court found one online giveaway illegal because you had to have access to the Internet to enter. In other words, the “purchase” was your having to get Internet access!

  • Rules in Canada are actually stricter: you can’t give something away based on chance. That’s why you’ll see a trivia question asked before people can claim their prize! As far as tools go, the creators pass all liability along to you in the terms. They don’t know if it’s legal where you are to run a giveaway, and they don’t care. Just because they give you the mechanism doesn’t mean it’s legal to use it. The landscape is complicated, and it’s up to brands and bloggers to weight the risks and benefits.

  • Thank you! Glad you found the post helpful. Giveaways are tricky because the rules are different in every state (and country), and each social network has its own picky requirements. I have a more detailed post about contest law on my blog at KerryGorgone [dot] com.

  • You’re welcome, Jason!

  • White Lopez S. M

    This is one of the most informative post i have had the privilege of reading nice one! Luis A. White Jr.

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  • Unfortunately, our industry if full of legally questionable activity.

  • Thanks so much for this Kerry. Had a client about to do a giveaway and you totally saved us, thus we changed it to a contest!

  • craig

    so I can run a “contest to win 1 of 10 copies of XYZ. then add to the bottom of a blog posts set up with FB comments. “Comment below why you would like to win XYZ and the best 10 replies will win. Void Where Prohibited. No Purchase Necessary” enough?

  • I’d specify what makes the comment “best” and who decides. Example: “Employees of The Motley Fool will judge the contest. Submissions will be judged on their creativity and originality. All decisions of the judges are final.” http://www.fool.com/legal/contest-rules/generic-social-media-contest-rules.aspx

  • Glad to hear it, Luiz!

  • Agreed, Steve, although I believe much of that questionable activity is due to ignorance of the law, which I’m trying to remedy. Little by little! 🙂

  • Thanks very much, Luis!

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  • craig

    ok thanks…seems like a real hassle just to give something away for free!

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  • Michi

    I am hosting a pet party as a pet blogger. I have items that crafters have donated to me to raffle off during the party. There is no charge for the raffles. I am also giving a toy to the dog with the best trick. I keep looking for answers and since I am not charging anything is seems legal? But I feel like I should be doing something more or missing something. Where would I have to post the “rules” for this raffle? On Facebook if I put an invite to the party on there? I 100% want to do everything legal.

  • dee cee

    What are the laws pertaining to contests (judged by merit?) Are taxes due on prizes from contests as well?

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  • Brian

    Hey Kerry, great article.

    I work for a sports manufacture and we have tons of extra sample products we are trying to get rid of via Instagram. If we posted a photo of the product and in the caption wrote “For a chance to win….Be a follower, Like this post, Tag 2 friends below & comment why you want to win. The funniest response (judged by our marketing team) will be chosen next week. Void Where Prohibited, No Purchase Necessary.”

    Would this be legal? If not, do you have any ideas on how to make it legal?

    Thank you,

    Billy

  • Brian

    @kerryosheagorgone:disqus please see below.

    Thank you!

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