Giveaways are great marketing tactics for generating leads, but are you using Terms and Conditions to protect yourself?
Of course, while it’s ideal to have a legal team to refer to for all contests and sweepstakes you host, this isn’t always possible for small businesses.
Considering that about 33 percent of contest participants are open to receiving information about the brand and its partners, it’s important to ensure that everything you do is not only engaging but “above board,” legally speaking.
First, we’ll dive into the difference between typical types of promotions since they have different expectations tied to them. (And these expectations have different legal ramifications, of course.) Then, we’ll break down the basic components of Terms and Conditions (aka “Official Rules”) that you can understand and include with your next promotion, as well as other considerations you should be aware of.
The differences between contests, sweepstakes and giveaways
A contest is a promotion where entrants can win a prize based on merit. Therefore, contest prizes are not awarded randomly and are subjectively awarded based on judging criteria through a judging panel or a voting process.
A sweepstake is a promotion in which entrants can win a prize through a random drawing. Do not call a sweepstake a “contest.” This is important to remember.
While contests and sweepstakes are legal terms, a “giveaway” is technically not a legal term and can be used interchangeably between the two in casual reference. Never use “giveaway” in any legal language tied to your contests or sweepstakes.
Components of Terms and Conditions
Think of your Terms and Conditions like the written rules of a board game. Not only will a giveaway without Terms and Conditions lead to confusion and potentially chaos, but you also leave yourself legally vulnerable.
The following are explanations of the main components you’ll find in many Terms and Conditions. You can always add or remove sections as they pertain (or not) to your promotion in question.
Your title is simply the name of your giveaway (whether it’s a sweepstakes or a contest). This should be the relevant official title of the promotion.
No Purchase Necessary
The law requires that entrants know that a purchase won’t increase their odds of winning. Of course, this also means participants cannot pay a fee to enter, but they are required to pay the taxes on anything they win.
If you are running any sort of promotion that requires entrants to purchase something or pay a fee, stop it immediately.
This is the high-level description of your giveaway, where you include the dates and times of when it begins and ends (and in what time zone). Be sure to also include the:
- Sponsor company of the giveaway
- Administrator (if applicable)
- Contact email address for participants to send any relevant questions
It’s important to outline who is eligible to enter and potentially win the prize(s) you’re giving away. Factors to consider:
- Geographic location
- Minimum age
Also detail who is specifically not eligible to enter, such as employees of the sponsoring company and their family members, for example.
This goes beyond the description of the prize(s). Include how many prizes are being giving away and how many winners will receive each prize.
Be sure to include the average retail value (ARV) of the prize(s) because this could be relevant if the winner wants to exchange it. Of course, make a note of whether an exchange for cash or gift card is available if requested. If there are multiple levels of prizes, detail how many winners and prizes there are at each level.
You also might want to include how many prizes will be given out per household. If you’re shipping the prize to the winner, you cannot charge that winner for that shipping cost, even if it’s expensive. So, you might want to think through how winners can claim their prize(s) as well.
How to Enter
Explain what participants must do to officially enter your giveaway. It’s fine if an entrant must participate in multiple ways, just list each way in detail here.
If relevant, you also include how not to enter, such as not with a bot or other service that can automatically enter a participant.
If you’re running a sweepstake, specify that winners will be chosen at random (including who will be choosing the winners and when winners will be chosen). Do you best to list the odds of winning the giveaway, which is obviously dependent on how many participants choose to enter.
If you’re running a contest, list all parameters for the judging process. Again, list who will be choosing the winners and when.
Detail how and when your giveaway winners will be contacted. You’ll also want to describe how long each winner will have to claim his or her prize. If the prize isn’t claimed by a specified date or timeframe, outline what then happens to the prize.
Consider using email marketing or sms marketing for sending your winner notifications.
Ideally, the participants who are entering your giveaway are exchanging their information with you to enter. This could involve filling out a form, sharing their email address, even their demographic information.
Limitation of Liability
This section outlines how liable you are if the giveaway does not go as planned. As the sponsor of the giveaway, it’s important to explain what happens, for example, if a 12-month-long giveaway is hindered by the company going out of business six months into it. Think through all possible scenarios to appropriately outline your liability.
Social Network Disclaimers
It you are promoting or running your giveaway on any social media platform (especially if your participants must perform an action on a social network), then you should include a disclaimer that explicitly releases any relevant social media networks from any kind of liability.
Participants have a right to know who won your contest or sweepstakes, and they often will want to know. Traditionally, entrants were expected to mail a self-addressed stamped envelope to acquire a winners list, but these days, it’s common for sponsors to list winners on a web page and/or social media post. Whatever the plan, you can communicate it in this section.
As the giveaway sponsor, you’ll want to list your company contact information that includes your:
- Company name
- Mailing address
- Email address
If your giveaway has an administrator, this is where you can list that company contact information. A common scenario where a giveaway has an administrator is when an advertising agency is managing a giveaway on behalf of a client.
Terms and Conditions certainly follow a logic in the legal sense, but every giveaway is different, so it’s important to not only think through the above components and the following additional considerations.
Recurring daily or weekly winners
While slightly more complicated and involved, a giveaway with daily or weekly winners can be more fun and more engaging for participants. When running this type of giveaway, be sure to include a timetable in your Terms and Conditions that describes the entry periods, including when they start and end and when the winners will be drawn for each entry period.
You’ve likely seen the “Retweet and follow for a chance to win” campaigns before. If you’re running a giveaway that is entirely hosted on a single social media platform, remember that you must think through how to contact winners since you’re not collecting email addresses or other contact information. On Twitter, you’ll only be able to contact potential winners through Twitter, where accounts need to follow each other in order to direct message each other.
Because of that restriction, you’ll want to state in your Terms and Conditions that participants must continue following your Twitter account for a particular period of time, especially since it’s more common for winners to be contacted via DM than in a public tweet.
Of course, this consideration is referring to Twitter specifically, but the same thought process can be applied to any social media platform being used for a giveaway in the same way.
In the United States, special requirements apply to giveaways in the following industries:
- Financial institutions
If any of these industries apply to you, be sure to dig deeper to avoid violating any laws.
Where to host your Terms and Conditions
You have a few options when it comes to hosting your Terms and Conditions. One option is linking to a non-editable Google doc, especially if you don’t have a website. Another option is publishing them on a webpage that you have full control of (likely somewhere on your website).
Either way, you’ll want to link to them in your promotional campaigns for any giveaway.
Remember that no matter what the method, the important aspect is that they are easily accessible to participants.
Entry deadlines cannot be extended
You are required to stick to your first-stated deadline for giveaway entries. It doesn’t matter how many entries you receive (or how many you would’ve liked to have received). Consider your Terms and Conditions a binding contract with your participants.
If you did not get any entries at all, then you should start a second promotion rather than extending the first one.
You must accept all valid entries
The benefit of the doubt here goes to your participants. For example, if one of the actions an entrant must take is to name his or her favorite product of yours, but an entrant says instead: “I don’t know. I’m entering anyway,” this is a valid entry.
Of course, on the flip side, if you state in your Terms and Conditions that only one entry per person is allowed and it turns out that an entrant violated that rule, then that is not a valid entry.
A prize must be awarded no matter what
Let’s say that you are offering a prize from another entity for your giveaway. However, that deal falls through during your promotion. It doesn’t matter.
You are still obligated to award the stated prize (or equivalent product if the original prize is unavailable). It is your responsibility to honor your side of the Terms and Conditions with your participants. Remember, this is a binding contract with those entrants, not your prize sponsor.
Legal side note
This blog article does not serve as legal advice in any way. You and only you are solely responsible for your promotion’s compliance with the law and the legality surrounding your promotions. Please consult with a local legal expert to ensure you are in total compliance with all the laws that are applicable to you.