Wednesday, July 23, 2014

Promotional Giveaways—Are You Legal? by Laura McClellan

Laura McClellan is an attorney and writer. Today, she's giving us a general heads up on using those popular giveaways to market ourselves and our books. -- Sandy

Laura: Many writers use giveaways as a form of marketing, to gain attention for their books or subscribers to their blogs. They can be effective, and readers love them, but many of us are not aware that there are legal requirements that must be met. The full scope of the requirements is too great to adequately address in a short blog post, but I’ve tried to hit the highlights. Please note: this article contains only a general, very superficial, discussion and does not constitute legal advice. You should consult an attorney for legal advice concerning your specific activities.
The main thing to know is that a giveaway in which the winners are drawn at random may be considered a sweepstakes. Each state has its own laws governing these, but the laws are similar in many ways from one state to the next. Following are some of the basics you should think about in planning your giveaway.
Registration Requirements: Some states—for instance, New York, Rhode Island, and Florida—require some sweepstakes sponsors to register with the state prior to commencement of the promotion. Usually this applies if the promotion is based on chance (i.e., a random drawing) and the total value of prizes awarded exceeds some minimum dollar amount (e.g., New York and Florida set a $5000 minimum, while Rhode Island’s minimum is only $500). Check the website of your state’s Secretary of State to see if there’s such a requirement, and what the process and costs would be.
Consideration: In some states, the act of entering the sweepstakes by getting online (or, for example, submitting a blog comment or posting a tweet about the contest) may constitute “consideration” (a legal word for compensation) to the sponsor. It’s advisable to offer an alternate entry method such as a mail-in entry or toll-free number.
Geographical Restrictions: The Internet offers worldwide exposure, which is a boon for marketing, but it could subject your giveaway “sweepstakes” to foreign laws that may actually prohibit this type of online activity. Consider restricting participation to U.S. residents only, unless you’re aware of and intentionally complying with a foreign country’s laws.
Age Eligibility Restrictions: Similarly, consider restricting participation to those over the age of 13, since an online promotion or sweepstakes that gathers information from children under 13 probably is subject to federal COPPA (Children’s Online Privacy Protection Act) requirements.
Timing of Entries: Specify both start and finish dates and times, including the time zone. For example, “All entries must be submitted between 12:01 am EST on August 1, 2014, and 11:30 pm EST on August 31, 2014.” If you offer a mail-in alternative (as discussed above), specify the postmark deadline.
Official Rules: A sweepstakes sponsor should publish official rules and make them available to potential participants. Those rules should provide specific information addressing the issues discussed above, including:
  • an opening paragraph, in all capital letters, stating that NO PURCHASE IS NECESSARY and including the restrictions for entry;
  • the sponsor’s address;
  • the methods for participating;
  • a description of each prize, including verifiable retail value, odds of winning, and any restrictions, limitations, or conditions associated with the prize;
  • the method of redeeming the winning entry;
  • eligibility for participants (e.g., age, residence, etc.);
  • any general conditions (e.g., applicability of federal, state, and local laws and regulations, submission deadlines, etc.);
  • a statement of limitation on the sponsor’s liability and a disclaimer of warranties (the latter including specific language in all capital letters);
  • a choice of law provision; and
  • information about how a list of winners may be obtained.

In many cases specific language is required to protect both the sponsor and the participants. An example of official rules used by one blogger group can be found on the well known Seekerville blog at http://seekerville.blogspot.com/p/legal.html. (NOTE that these rules state they were most recently updated in September 2013, so they might not be current; they also might not be sufficient in your state.)
Giveaways are a fun and easy way to increase your visibility and boost engagement at your website or Facebook page, but be sure to learn and comply with the laws governing them in your state. Feel free to contact me if you have questions.

Did you realize there is so much involved in those author giveaways that are so popular? Do you have questions for Laura?

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Laura McClellan (www.laura-mcclellan.com) has been married over 35 years to the same man (she says she was a child bride). She’s mom to five, grandmother to five, and a partner in a large Dallas law firm. During her “spare time” Laura is polishing her first novel, a winner in several fiction contests.

20 comments:

  1. Laura, thank you so much for sharing this. I had no idea!!

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  2. My sakes! Everything is so complicated! Do all these rules apply it I'm giving away a $12 book?

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    1. Sherry, it really depends on the laws of the state you're in (and where your blog/website is seen), but if it's a drawing by "chance"--a random drawing type of thing--then in many cases the laws consider it to be a sweepstakes and the laws applicable to sweepstakes apply. I'd encourage you to check with a lawyer in your state about how they would look at it.

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  3. Good heavens, I've been terrified to post ANYTHING on blogs after the lawsuit in 2013 over copywritten pictures. And now this? What goes on here in California? I generally give away Kindle copies...is the giveaway a scary, dead thing then? Last thing I want is more gobbledyegook time-wasting. Grrrr. Thanks for the informative albeit disheartening post.

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  4. I'm assuming the same law does not apply if it's not a random drawing- give-away. For example, if I ask a question and choose the best answer, it's a contest, not a sweepstakes, right?

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    1. Laura can speak to this better, Susan, but I think "contests" are even more regulated.

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    2. It really does depend on the laws of your state. And the practical reality you have to consider is whether the authorities would be interested in enforcing those requirements against a small give-away like this. That's the challenge. Those laws are intended, I think, to prevent swindlers from taking advantage of the public, rather than the types of activities we're talking about here. Still . . .

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  5. Laura, you said, "It’s advisable to offer an alternate entry method such as a mail-in entry or toll-free number." Who has a toll-free number, and if you choose a someone who comments on a blog post, how can you have a mail-in entry--time-wise?

    I can't find anything for my state (NC) that talks about sweepstakes, except in the context of the online gaming machines. There's no way to be familiar with every state's requirements, so is our responsibility to be sure we go by the book in our own state? What if we're on someone else's blog and they require a giveaway but aren't in our state? (It's so complicated.)

    Even Rafflecopter's terms of service throw everything back on the author, though, I believe, you are allowed to post terms of the giveaway such as on Seekerville's site and what you list above. As someone who never wants to get in trouble :), this is very daunting as I face my first release and the inevitable giveaways.

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    1. I agree it's challenging. You could certainly talk to a lawyer in your state to see if you could get more specific advice. For me personally (and here I'm talking as a writer and NOT as a lawyer), I feel pretty safe doing giveaways if (a) the prizes are of minimal value (say, a book or an Amazon gift card or something like that), and (b) the readers need do nothing more than leave a comment or subscribe to my blog or something like that. I probably will prepare a page for my website with some standard contest rules that I'll use and link to in future giveaway posts. For me (and again, this is just my thinking, and not legal advice), I will feel comfortable enough that even if I'm technically falling within the definition of a sweepstakes or a contest, it's not egregious enough to raise the ire of the authorities.

      You, of course, need to do what you're comfortable with.

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  6. WOW! Well, I am not sure if I am legal or not. Guess I will have to look into it. Any information on Minnesota?

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    1. Michelle, I don't have any specifics on Minnesota law. You could try googling it, or track down a friendly Minnesota lawyer to advise you.

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    2. Michelle, if you find anything out about Minnesota, pass it on.

      Thanks for the info, Laura!

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  7. Yikes, this writing business just gets harder and harder.

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    1. It does, Terri, but for those of us who just want to give away a book now and then, I'm thinking this issue should not be the hardest thing we face as writers. :-)

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  8. Gals, thanks for mentioning Seekerville in your post! You know we do lots of giveaways and Tina Radcliffe designed our rules page... and we're from all over the country, a scattered bunch so assessing if we're letter-of-the-law legal in every state, for each author or guest's giveaway would be daunting.... and we'd rather write books!!!!

    But having said that, I think most laws (as mentioned above) are designed to keep the cheaters/swindlers/snake-oil salesmen in line. I think if we do the best we can to keep the blog reader or readers in general informed, big brother isn't likely to swoop in and haul you off to the county jail. BUT I'M KNOWN TO BE WRONG, LOL!

    Great post with good advice!!!!! Thank you!

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    1. Ruth, the Seekerville site has always been a fabulous resource for me in terms of craft education and inspiration. And as I mentioned to Sandy above, as a writer (not as a lawyer) I tend to take the approach you do. Try to make sure the readers know what the "deal" is, and be fair, honest, and above-board.

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  9. Thanks Laura for sharing this information. Many states require reporting giveaways for use tax also. Its always wise to do business with integrity and knowledge. Thanks for sharing this info. Oh yes, and thanks for mentioning Seekerville also.

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  10. Great post, Laura! Not sure if Mississippi would bother with something as small as a book giveaway. And I'm enjoying my iPad. lol.

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