Stop and Think, Before you Run a Social Media Giveaway or Contest

You may want to drive visitors to your website, Facebook page or Twitter feed by giving away a free facial at your salon or a free collar at your pet store. Many small business owners don’t know that a random giveaway is a sweepstakes under NC law, and it is subject to the North Carolina anti-gambling statutes.

If your giveaway winner will be chosen at random, you are hosting a sweepstakes and thus you should comply with the laws regarding sweepstakes. Here are some things to think about:

[if !supportLists]1. [endif]Identify the prize with enough detail to make it attractive to your readers. You should include the approximate retail value. You need to make sure it is legal to give away this item (e.g., probably can’t give away an alcoholic product).

[if !supportLists]2. [endif]State the rules clearly. When exactly will the winner be chosen, and how? What happens if there are technical glitches? What are the odds of winning?

[if !supportLists]3. [endif]Think about who is allowed to enter, as well as those excluded (e.g. age, users of your products, people who first sign up for your newsletter). Is there a limitation on how many times someone can enter? Can family members of your employees, vendors or sponsors enter?

[if !supportLists]4. [endif]Clearly tell the participants how to enter your sweepstakes.

[if !supportLists]5. [endif]Do not require a purchase to enter. This makes your legal sweepstakes an illegal lottery. Do not require an essay or an element of skill. This makes the winner not random.

The Official Rules need to be readily accessible to anyone who wants to enter. If it's a web-based entry form, make sure to link to a printable version. You need to include: no purchase necessary; start and end dates; eligibility requirements (age, residency, any exclusions); method to enter (including a “no purchase” method); limitations on the number of entries by a signal person or household; odds of winning; description and approximate retail value (ARV) of prize; how the winner will be selected and notified; restrictions on receiving the prize; and sponsor’s name and address.

Is the prize worth more than $5,000? If so, you'll need to register the sweepstakes in New York, Florida and Rhode Island (or prohibit their residents from entering). NY and FL also require that a bond be posted equal to the total value of the offered prizes.

You'll need to report the prize to the IRS as income to the winner on Form 1099-MISC, so make sure your accounting folks are in the loop!

Taking some time to plan and prepare for your social media giveaway or contest can keep you on the right side of the law!