Is your giveaway breaking the law?

Date Fri, December 13 2013

The thing with blogging is that there are far more considerations you have to take than you might initially realize.  There’s a whole slew of things I didn’t realize I’d have to deal with when I started Reviews By Cole some five years ago.

Could your blog get you arrested?

Could your blog get you arrested?

  • PayPal fees
  • FTC disclaimers
  • Nofollow links
  • Google penalties
  • Media kits, press releases and pitches
  • Tax requirements

And this is only a hobby for me. For some people, blogging is their career. They register companies and tax IDs and have to deal with a lot more than I do.

However, one thing that I have in common with other bloggers is that I host giveaways. This might seem like one topic where legalities aren’t involved, but that’s not actually the case. In fact, many bloggers are technically illegal, but you probably don’t know it.

For the purposes of this post, I’m discussing American bloggers as I’m not well versed in other countries’ laws.

In the United States, what us bloggers call a giveaway is legally a sweepstakes because the winner is chosen at random. A contest winner has submitted the best of something, while a lottery typically requires that entrants submit money or something else of value.

To be a true sweepstakes, there must be a free entry. If you’re using Rafflecopter and your “mandatory” entry is something other than the free option, you’re breaking the law. The same is true in a half a dozen other situations:

  • Your mandatory entry is a follow on GFC, Feedburner, Facebook or other social media site
  • Your mandatory entry is that your readers must post a comment with specifications as to content/length
  • Your mandatory entry requires other engagement

Now, none of these are wrong or “bad” as long as they’re bonus entries but to be in line with the letter of the law, you need to allow your readers to enter without doing absolutely anything.

This can seem counterproductive. After all, we hold giveaways as a way to generate traffic, get new readers and keep our current followers coming back. I wouldn’t be so naive as to pretend that my reasons for holding giveaways are entirely altruistic.

Technically, Canadian laws make this sort of sweepstakes altogether more complicated. This is because all contests must require some sort of skill, so things become complicated if you’re allowing people outside of the USA to enter your giveaway.

To keep things inside the law, you should:

  1. Restrict all giveaways to entrants 18 and older.
  2. Display entry rules for every giveaway, including the length, prize, method of choosing a winner and restrictions for entrants.
  3. Provide a free method to enter.
  4. Outline the sponsor of the giveaway.
  5. Explain prize delivery.
  6. Choose your winner randomly — always.
  7. End the giveaway when stated. Do not extend the end date.

In some places, you may be legally liable for providing a prize or equivalent prize if your sponsor doesn’t come through.

The law goes on to require any prize winner to file a claim with the IRS for prizes worth $600 or more. Sponsors must provide that form, which means winners must provide their Social Security number to the sponsor.

In some states, prizes with especially large values (think trips) must be registered and bonded.

Now, here’s the question. Does it matter?

Legally, yes. Is it likely that the FTC and FCC would target you if you’re a blogger who has been holding technically illegal giveaways? I couldn’t tell you. But it matters if that’s not a risk you’re willing to take.

For more information about law specifics, check out these posts:

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