Once a company has decided to launch a giveaway to generate excitement and buzz around their brand, there are several legal considerations that must be thoroughly reviewed and complied with before proceeding. These typically include rules and regulations around eligibility, entry requirements and prize fulfillment, among others.
In addition to complying with legal requirements surrounding rules and eligibility, there are other crucial factors that companies must consider when launching a giveaway campaign. First and foremost, it is essential to choose the right format for the giveaway based on target audience, the company’s objectives and the desired outcome. Additionally, partnering with the right organizations can help maximize the reach and impact of the giveaway; however, careful consideration should be given to selecting reputable and trustworthy partners. Finally, companies must prioritize protecting customers’ privacy throughout the giveaway process and comply with data privacy laws, especially when collecting personal data.
Choosing the Right Format
There are many ways to run a promotional giveaway – from prizes to entry periods to advertising tools, there are endless possibilities when organizing a contest or sweepstakes. The format and platform a company chooses will depend on its budget, goals and target audience.
Today, many companies use social media to host giveaways to increase their followers, boost engagement and improve brand awareness. However, Instagram, Facebook, Twitter and TikTok all have different and unique rules for running a giveaway. Failure to follow each platform’s rules could lead to a company’s content being deleted or banned. In fact, certain social media websites have promotion guidelines including specific language which must be used in the post to inform the entrant that the website is not affiliated nor a sponsor of the giveaway. For example, Instagram requires that promotions include “[a] complete release of Instagram by each entrant or participant” and “[a]cknowledgement that the promotion is in no way sponsored, endorsed or administered by, or associated with, Instagram.”
Similar considerations should be made when broadcasting prize promotions on the television and radio. Specifically, the Federal Communications Commission (the “FCC”), states that the material terms of the promotion should be disclosed via “periodic disclosures broadcast on the station” or “[w]ritten disclosure on the station’s Internet Web site, the licensee’s Web site, or if nether . . . has its own Web site, any Internet Web site that is publicly accessible.”
Choosing a Third-Party Administrator
If a company is not running the giveaway independently, it will need to hire a third-party administrator. It is important to choose third parties that have good reputations and are familiar with the laws and regulations governing promotional giveaways. If a third-party administrator is involved in the giveaway, a company must clearly identify the third-party by name, be clear in the official rules about what entrant information the third-party may receive to conduct the giveaway and ensure the third-party will delete the entrant information as soon as possible at the conclusion of the giveaway. Failure to properly identify the third-party administrator’s role and how information is retained could lead to serious privacy and data security liability.
Protecting Customers’ Privacy
Generally, companies should avoid storing personal information or sharing said information with third parties beyond that necessary to conduct the giveaway. Ultimately, the giveaway must comply with data privacy laws, and its official rules must adequately outline how information will be collected, used, retained and disposed.
Companies should not use the entrant information to create a giveaway/sweepstakes mailing list without requesting consent and providing a method to opt-out. For example, as noted in the CAN-SPAM Act, if an entrant is given the option to consent to future e-mails, all future messages must include a clear and conspicuous method to opt-out. Likewise, pursuant to the DMPA, the promoter of a mailed giveaway “must establish and maintain a notification system that provides for any individual . . . to notify the system of the individual’s election to have the name and address of the individual excluded from all lists of names and addresses used by that promoter to mail any skill contest or sweepstakes.”
Giveaways are an excellent vehicle to promote brand awareness and to engage with a company’s audience. If you have any questions or would like to review your giveaway rules to ensure compliance with state and federal laws, please contact your Varnum attorney.
*Please note, the information in this advisory should not be construed as an exhaustive list of everything that should be included in the official rules of a giveaway nor a list of all laws that should be reviewed and factors considered when drafting and promoting a giveaway.
 47 C.F.R. § 73.1216(b)
 15 U.S.C. § 7704(a)(3)
 39 U.S.C.A. § 3017(c)(2).