How to Run a Giveaway Without Getting in Trouble

Running a giveaway is a great way to build your following and email list. However, if not run correctly it’s possible to get into legal trouble. Every region, country, and state has different laws involving giveaways. It can be easy to get into trouble if those laws are not followed properly. In this post, we’ll see how to run a giveaway without getting in trouble.

First, this article isn’t meant to replace legal advice. It’s meant to point you in the right direction. When in doubt, it’s best to consult legal counsel than make a costly mistake.

1. Follow the Laws for Every Region

Choose the regions you’ll run the giveaway in, and then follow the laws for those regions. The laws for giveaways are governed by the location the contestant lives. Every location or region has laws about giveaways and they’re not all the same. Also, the rules may vary depending on the value of the prize.

Most regions restrict the types of prizes that can be given away. Some require certain notifications to be included. Others require a contest. Others require certain types of entries. Every region is different. Thoroughly research the laws in your region and follow them completely.

If you plan to run a giveaway outside your region, you’ll need to follow the laws of every region where you’re running the giveaway. It’s best to only run the giveaway in your country or state and don’t allow anyone outside of that area to enter the giveaway. This gives you control over which laws you’ll have to follow.

2. Use the Correct Terminology

The terms you use for your giveaway can affect how the giveaway must operate. For example, a giveaway and a drawing might refer to the same thing in one region but can refer to different things in another region with different requirements for each.

Depending on how it’s set up, the giveaway can be a sweepstakes, a contest, or a lottery.

Sweepstakes

A prize is won based on chance alone. A winner is chosen at random, and no purchases of any value are considered in the random drawing. Some locations consider contact information as a valuable exchange if it’s to be used in marketing efforts. To be a legal giveaway, there must be a free method of entry. The contestants can have one entry or multiple entries. A sweepstakes is the best model for giveaways. This is the model I recommend for most giveaways.

Contest

The winner is selected based on certain criteria such as a skill or a talent. It’s a competition where the competitors are judged based on pre-set criteria. It does not include chance. Popular contests include baking, singing, or any other type of skill or talent.

Lottery

The winner is chosen from a group that has exchanged something of value for a chance to win. They’ve usually made a purchase, such as a lottery ticket. Only those that have purchased a ticket are entered to win. This is considered gambling in many locations and is regulated and can even be illegal. For example, it’s illegal for US citizens to participate in foreign lotteries. If you’re not careful in your wording, you can even run a lottery by accident. I recommend avoiding a lottery.

3. Specify the Type

Be sure to specify the type of giveaway you’re running. It’s important to get the working correct because there are different laws regarding each type of giveaway. Make it clear up front in the terminology you use before they sign up. They shouldn’t give you their information and then discover the type of giveaway they’re entering or that they’re not qualified because of their location or similar circumstances. Stating the type of giveaway incorrectly can result in legal trouble.

4. Show the Rules Prominently

To run a legal giveaway, you must clearly show the rules and they must be easy to understand. You can write the rules yourself, but they must comply with the laws of your country and the platform where you’re hosting the giveaway. Posting the rules will help decrease the risk of liability.

The rules tell the restrictions, beginning and ending dates with time zones, and methods of entry. The restrictions can include people in certain locations, age limits, physical addresses rather than PO boxes, and certain types of entries. Also, explain how the winner’s information will be used and the rights the winners have.

The rules will also include how the winner will be chosen and how and when they’ll receive the prize, how they will be notified, and what happens if they don’t respond by a certain date. Be sure to include the rules for every location you’re running the giveaway. Include a link to your privacy policy and follow the procedures the same as any data collection.

The rules must state that no purchase is necessary and that a purchase does not affect the chances of winning. It also should mention that the giveaway is void where prohibited. Also, it should include information about the AMOE. Be sure to include the information if the winner will owe taxes on the prize.

5. Clearly Identify the Prize

Include the exact name of the prize and its value. Don’t make them think they might win a Toyota and then give them a toy Yoda. This example was a real prize for a competition, and it didn’t end well for the company that held the giveaway.

6. Follow the Rules of the Platform

If the giveaway is held on a social media platform, research their rules for giveaways. They might require a notification that the platform is not affiliated with the giveaway. Just to be safe, it’s always a good idea to mention this even if they don’t require it.

Here are links to the rules for giveaways on a few popular platforms:

• Facebook

• Instagram

• Twitter

• Pinterest

• YouTube

7. Include Proper Disclosures

Giveaways can be sponsored. This creates a relationship between you and the sponsor that the contestants should be aware of. Always disclose the circumstances involving the giveaway. For example, if you’re getting something for free in exchange for running the giveaway, you’ll need to disclose this information. This lets your contestants understand your motivation behind the giveaway, which is especially important when endorsing products.

8. Clearly Identify Sponsors

The giveaway can be sponsored in several ways. A third party can provide prizes, or they could pay you to host the giveaway. Show who provided the prizes for the giveaway. Also, disclose if they’ve paid you to host the giveaway. This gives proper credit to the brand and increases credibility.

9. Be Clear on the Entry Requirements

There are lots of ways you can have people join your giveaway. Options typically include:

• Sign up for your email newsletter

• Follow you on social media

• Share the giveaway post with their audience

• Comment on the giveaway post

• Like a post

• Tag friends

• Upload photos or videos (not judged for competition)

• Write a blog post (not judged for competition)

Some giveaways allow for multiple entries and can include all of these options with each counting as an entry. You can even require that multiple methods be completed before they’re entered into the giveaway. Regardless of the entry methods you choose, make sure they’re clear and easy to follow.

10. Provide an Alternate Method of Entry

Some locations, such as the US, require sweepstakes to offer a no-cost AMOE (Alternate Method of Entry). Anyone entering with the AMOE must have the same chance of winning as with any other method.

Popular AMOE’s include:

• Mail
  Send a letter or card to a physical address or PO box.

• Email
  Send an email to an email address designed for the giveaway.

• Phone call or text
  Call or send a text message provided by the company running the giveaway.

• Online entry form
  A form on the website where contestants can enter the giveaway.

• Social media
  Follow, like, share, or tag someone on the brand’s social media platform. This one is popular because it grows the brand’s social media presence.

11. Ensure There is No Purchase Necessary

For a giveaway, you can’t require contestants to purchase to enter the drawing. Many regions include laws that prohibit a brand from requiring a purchase to enter. This includes both monetary and non-monetary forms of payment. Regardless of the types of entries you choose, you must ensure there is an entry method that you cannot financially benefit from. Be sure to label the giveaway as No Purchase Necessary.

For a contest, you can require contestants to purchase a product that will be used alongside their skills for the contest. This must be clearly labeled as a contest and not a giveaway.

12. Choosing the Winner

Winners must be chosen at random. You cannot manually select the winner. Manually selecting the winner can be considered fraud in many locations. All contestants must have an equal chance for their entries. You can allow multiple entries, but each entry should have an equal chance. Use a random number generator or a giveaway platform and make it clear how the winner is chosen.

13. Stick to the Rules

Once the rules have been selected and published, do not deviate from them. Do not make exceptions, do not amend them, and do act against them. If a region is exempt from the giveaway, do not proclaim someone from that region as the winner.

14. Notify All Parties

You’ll have to notify the winner, but you’ll also need to notify all others involved. This includes all contestants and all sponsors. Notify them in the way you’ve described in the rules. Sending an email or posting the winners on the giveaway page are popular options. Keep privacy in mind, so don’t include the full name or any other information that can be used by someone.

15. Send Reminders

If the winner hasn’t responded after a certain amount of time, send a reminder according to the time and method you’ve mentioned in the rules. If they don’t respond by the date provided, move to the next step you’ve mentioned in the rules such as drawing another winner.

16. Taxes

If the winner must pay US taxes on the prize, send them a 1099 form in January of the next year. Make sure this is mentioned in the rules so there are no surprises.

17. Protecting and Maintaining Records

Keep the records of the giveaway for at least two years. This gives you access to the information if there’s an audit or if the giveaway is questioned in any way.

It’s crucial to protect the contestant’s data. Data breaches are common online and, if you’re not careful enough, you could be the cause of someone taking a loss because of a data breach. This can be disastrous to both your contestants and your brand.

If you use a giveaway service, make sure you understand how they protect the data and how long it’s stored for you. This will help protect you and help you protect your contestants.

18. Use a Giveaway Service

There are several platforms designed to run giveaways that handle a lot of the legal issues for you. You’re still responsible to ensure all the laws are properly followed, but they do have almost everything in place, making them a good option. This includes all the proper setup, legal notifications, handling the entries, and choosing the winner.

Some of the most popular giveaway platforms include:

• Rafflecopter

• Rafflepress

• Gleam

• KingSumo

• VYPER

Ending Thoughts

Holding a giveaway is a great way to engage with your audience and grow your following. Regardless of the platform and methods used for your giveaway, you are responsible to ensure that it’s run legally. To keep from getting into trouble, always research the laws around giveaways in your location and follow them completely. It’s better to be safe than sorry. As stated above, this isn’t meant to be legal advice. When in doubt, do more research or consult an attorney.

We want to hear from you. Do you have anything to add on how to run a giveaway without getting in trouble? Let us know in the comments.

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