But Everyone Else is Doing It: Why There are So Many Illegal Social Media Contests

social media contests

By Kerry Gorgone, {grow} Contributing Columnist

As an attorney turned educator, I frequently address groups about the legal aspects of social media and marketing. One topic that never fails to draw some questions is contests. The sea of rules and regulations that marketers, brands and bloggers must navigate is largely uncharted, and sometimes frightening.

For the sake of context, I’ll cover them very briefly here, so you have a sense of what online marketers and bloggers are facing.

First, although people often call their giveaway a “contest” or “sweepstakes,” each word actually means something slightly different, from a legal standpoint. In a contest, the winner is chosen based on merit (e.g. most creative haiku). In a sweepstakes, by contrast, the winner is selected at random. This type of promotion is often called a “giveaway.”

Both of these can be effective ways to promote your business (or a client’s business), so long as you avoid lotteries. A lottery involves paying for a chance to win. If you charge a fee for people to participate in your promotion, your “giveaway” just turned into an illegal lottery.

The tranparency problem

What many people have trouble is understanding that, from a legal standpoint, paying for a chance to win doesn’t necessarily mean dollars and cents. It could mean the time you take to comment on a blog post, complete a questionnaire, or Like someone’s Facebook page. Basically, anything beyond filling out a very simple survey that says where to contact the entrant if they’ve won might be considered “pay to play” in some states, and therefore your giveaway would be illegal.

In social media, another common problem is the lack of transparency in most of these contests and giveaways. The companies don’t require entrants to make it clear that they’ve posted comments or shared photos for a chance to win something valuable. Without any disclosure about the contest, people seeing these posts might view them as unbiased endorsements for the product or service.

“But No One Else is Following the Rules”

Once I’ve explained some of these general rules governing giveaways—they vary from state to state and social network to social network, so the presentations tend to be high-level—someone always asks “then why does Blogger X at BloggerX.com run giveaways all the time asking people to Like her on Facebook or comment on her blog for a chance to win?”

My answer is always the same: just because Blogger X does it doesn’t make it legal. In fact, even if every blogger besides you ran giveaways that way, all those giveaways would still be against the law.

Why does this matter? Because, sooner or later, the law catches up. Justice can be slow, but once people have gotten complacent about breaking the law, it tends to catch up in a hurry and bite unsuspecting people in places they’d rather not be bitten.

Accessories retailer Cole Haan received a warning letter from the Federal Trade Commission (FTC) after they asked people to enter a contest by creating a Pinterest board called “Wandering Sole,” then pin 5 photos using the hashtag #wanderingsoles.

Cole Haan did not require people to disclose that their pinboards and posts posts were an entry to win a $1,000 shopping spree. In the FTC’s view, this made  the hundreds of Pinterest posts hashtagged #wanderingsoles into undisclosed endorsements.

Because the FTC had never publicly addressed social media contests this way before, they did not fine Cole Haan, but now that they’ve clarified their standards regarding social media contests, brands and bloggers can no longer claim ignorance. This will make it easier for the agency to fine the next company or influencer that gets it wrong.

Consequently, the fact that “everyone else is doing it” is unlikely to improve your odds if you’re singled out by the FTC for an enforcement action.

No room for excuses

Think about it: if you get pulled over for speeding and tell the officer “but everyone’s doing 80,” what you’re really saying is “you’re doing a lousy job enforcing the speed limit.” Pointing that out is not likely to gain you any leniency!

Some people are confident that they will never be singled out by the FTC, given the thousands of illegal giveaways taking place. There is some truth to this: you might “hide in the crowd” for a while, but eventually somebody will take issue with you for some reason—whether or not that reason is legitimately based on concerns about the legality of your contests—and they might just file a complaint with the FTC requesting that they investigate you.

Unfortunately, given how competitive bloggers and influencers get, this type of complaint is well within the realm of possibility and the brands that conduct blogger outreach and influence marketing can find themselves caught in the crossfire.

Instead of focusing on what “everyone else” is getting away with, turn your attention to innovating in the social media space. Create contests based on merit that are fun, engaging, and legal. Create lasting relationships with your audience by inviting them to participate in a meaningful way (rather than just “Liking” your Facebook page or Instagram post).

Tips for Keeping it Legal

1. Run contests, not giveaways. Selecting the winner based on talent, creativity, humor or some other factor removes your promotion from the “giveaway” territory.

2. Use “Void Where Prohibited” and “No Purchase Necessary.” Void where prohibited” means that anywhere your promotion would be illegal, people are ineligible to win. “No purchase necessary” is a way to avoid turning your giveaway into an illegal lottery by allowing people to enter who haven’t bought anything, completed your survey, liked your Facebook page, etc.

This is why you’ll often see fine print in the giveaway terms and conditions instructing people to mail a 3×5″ card with their mailing address to an address in Dover, Delaware (or wherever), to be entered into the giveaway.

3. Encourage disclosure. Require people participating in your contest or giveaway to mention that the posts they create, the comments they make, or the content they share is part of a promotion, and that they’re posting for a chance to win.

Stay resolute, even in the face of seemingly everyone else doing things wrong. When the law comes to town, your nose will be clean, and you’ll have built trust with your audience in the meantime. As a bonus, you’ll also save money on legal fees, since you won’t have to defend against an FTC enforcement action.

kerry gorgoneKerry O’Shea Gorgone is a writer, lawyer, speaker and educator. She’s also Instructional Design Manager, Enterprise Training, at MarketingProfs. Kerry hosts the weekly Marketing Smarts podcast. Find Kerry on Google+ and Twitter.

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