Susan invited me to participate in a discussion about blogger-run contests and sweepstakes. So many bloggers are doing this, but are they aware of the liability implications?
Susan sought out Donna DeClemente, an expert on the subject and author of Donna's Promo Talk, for some answers and guidance. You can see their discussion here. She also asked if I'd be interested in reaching out to someone in the legal profession and talk about this from a policy perspective.
Entrepreneurship, and particuarly women's entrepreneurship, is an issue I examined in great detail while working on Capitol Hill. One of my biggest thrills was drafting legislation with people from the National Association of Business Incubators that was called the "LEADERS Act" - Linking Educators and Developing Entrepreneurs for Reaching Success. The bill never got through the Senate, but it had bipartisan support and got a lot of people talking.
Of course, the bill was drafted before the advent of the "mommyblogger based business," but one of the things I learned was many entrepreneurs (online or off) lack the basic administrative infrastructure and knowledge to ensure the sustainability of their businesses. One of the most important things to keep in mind when building a business is the advice a boxing referee gives the fighters just before they touch gloves: "protect yourself at all times." That's because in America, anyone can be sued for anything at any time. Entire blogs have been built on this premise. The fact that you're online may make things a bit more complicated, but I've never seen something like that stand in the way of an aggressive trial lawyer with a client and an axe to grind.
So at Susan's invitation I sought out someone the mommybloggers will wholeheartedly accept as one of their own, and also has the legal chops to teach us all: Stephanie Himel-Nelson, an attorney at the firm of Vandeventer Black, LLP in Norfolk, Virgina. Stephanie may be known better in the blogosphere as Lawyer Mama. Stephanie also writes for DC Metro Moms.
This information is meant to bring awareness to the topic and is not intended to be used as legal advice. If you have questions about any of the information above or related matters, please contact an attorney licensed in your state.
Online Giveaways: Sweepstakes? Or Lottery?
Be mindful of state and federal laws. The FTC and federal authorities will carefully investigate allegations of unfair or deceptive promotions. If you are not careful to run a fair promotion, you can run afoul of the Federal Trade Commission or mail and wire fraud statutes. The attorney generals of every state are also empowered to investigate alleged violations of state consumer protection laws. Trust me, you don't even want an investigation into your online practices started. It's better to play it safe and disclose as much information about your contest as you can.
Make sure that the contest, giveaway or sweepstakes that you're conducting doesn't fit the definition of a "lottery." A sweepstakes or giveaway is usually a giveaway involving chance. Anyone can enter and no purchase or "consideration" is necessary. A lottery, however, is an entirely different animal. An animal prohibited by state and federal law, with the exception of lotteries run by the individual states. A lottery will generally have a prize, some sort of chance, but it also involves consideration, meaning money or something else of value is given by the entrant. Even requiring your readers to give you detailed consumer information can sometimes be considered "consideration," transforming your "giveaway" or "promotion" into an illegal "lottery." After all, in this day and age, consumer information has a great deal
Things you can do to ensure that your giveaway won't be seen as an illegal lottery:
1. List your rules on your site and make sure the contest is run fairly:
- How many entries are allowed per person?
- When will the contest end?
- When will the prize be awarded?
- Are there any geographical restrictions?
- Are there any age restrictions?
- What information is required for entry?
2. Provide an alternate or offline method of entry. Allow people to enter by fax or mail if they choose, without giving online information or drafting a quid pro quo blog post.
So you've listed your rules on the site; you've provided an alternative method of entry; you're sure that your contest can't possibly be considered a lottery. Are you good to go?
Several states have enacted strict disclosure requirements for sweepstakes and giveaways, including California, Connecticut, Florida, Iowa, Maryland, Massachusetts, Minnesota, New Mexico, New York, Rhode Island, Tennessee, and Texas. If your online contest is open to everyone, you need to comply with the most stringent of these rules or exclude entrants from those states. Have international readers? Have you thought about international laws regarding giveaways and sweepstakes? If not, you should limit your contest to U.S. entrants. And don't forget to include those all important words in your contest rules: "Void where prohibited."