Giveaways are a powerful marketing tool, but they are subject to regulation.
For decades, companies have used giveaways to increase brand excitement and loyalty as well as to collect valuable information on current and potential customers. The rules for giveaways depend on the type of promotion, the manner of distribution and the location where the game, contest or sweepstakes will be played. People or companies sponsoring legitimate, legal giveaways must be aware of federal, state and, in some cases, international laws.
Contests Delivered through U.S. Mail
According to the Deceptive Mail Prevention and Enforcement Act of 1999, rules for contests played or delivered through the U.S. postal system must include clear disclosures about how the contest will be judged, how likely the contestant is to win, the date a winner will be announced and contact information for the sponsoring organization. Contest rules may not change once the giveaway program has begun.
Sweepstakes Delivered through U.S. Mail
Sweepstakes delivered through the U.S. postal system must contain disclaimer notices, according to the Deceptive Mail Prevention and Enforcement Act of 1999. These notices must clearly outline the odds of winning, explain that no purchase is needed to play, and list contact information of the sponsoring organization. Sweepstakes notices may not trick a consumer into believing he has already won a prize.
Bonds for Prizes
Florida and New York require giveaway organizers to purchase a bond in the amount of 1 to 2 percent of the prize value if the giveaway is more than $5,000. These bonds ensure that the prize is actually awarded. The bonds are released once the prize distribution has been verified.
State Registration
In Rhode Island, programs offered by retail stores that award prizes of more than $500 must be registered with the secretary of state. In New York and Florida, giveaways of prizes more than $5,000 must also be registered with state officials. Organizations with giveaways in New York must register with the Department of State's Miscellaneous Records Bureau. Organizations looking to give away $5,000 prizes in Florida must register with the Department of Agriculture and Consumer Services.
Internet Considerations
Any giveaway program that uses e-mail must adhere to federal anti-spam rules, which are overseen by the Federal Trade Commission. Since the Internet does not have geographic limits, giveaway organizers must either ensure they abide by the rules of all states and countries or include an appropriate disclaimer such as "void where prohibited" or "open to residents of the United States only."
Requirements
No matter how they are released to the public, contests, games and sweepstakes must follow specific guidelines. A contest depends on skill such as answering questions, performing an audition or accomplishing a task in a certain amount of time. Contests must also be judged and may require a purchase to enter. Sweepstakes and games depend on chance. Sweepstakes and games may not require purchase or anything that would require an exchange such as test-driving a car or spending an unusual amount of time or clicks on a website.
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