A Mompreneur’s Guide to Operating Giveaways & Contests…The Right Way!

Giveaways can be a fantastic way to gain exposure for your business.  But they can just as easily be detrimental if not done properly.  Most giveaways I see are hosted on Facebook, and most of them are not done properly.  This opens a business up to (insert gasp here) having their Facebook page deleted!  Oh the horror!  As if that weren’t bad enough, did you know there are also many laws regarding how giveaways and contests may be operated?  Most mompreneurs seem to either overlook them, or, are unaware of them altogether.  Losing your Facebook page or endangering your business are the last things you want as a mompreneur.  But don’t worry, we’re here to help!

Below, I’m explaining, in detail, Facebook’s promotion rules as well as common legalities regarding promotions so that you can make sure you’re playing it safe moving forward.  I’ll break them down, explain how they relate to you, and make suggestions for ways to remain compliant.  But, before we begin, a quick note.  I am not an attorney and this is not legal advice. :)  This information is knowledge I’ve picked up along the way of being a business owner, and while I’m fairly confident in my explanations and recommendations, please consult your attorney if you have any questions. :)

Moving on…

Promotions and the Law

Your first step in running a giveaway is to make sure you’re running it legally.  So you’ll need to know a few things first about how the law looks at promotions.  Essentially, there are 3 types of common promotions that the law governs: contests, lotteries and sweepstakes.  A lottery is a drawing for a prize that people offer consideration (typically money) to be included in.  This is not common among mom-run businesses, but read on below to see if you could be running a lottery and not even know it.  Contests are where a prize is offered, but the entrant has to do something to win that prize based on merit.  Photo contests, which are common among mom-run businesses, fall into this category.  Finally, we have the sweepstakes, which are where prizes are awarded in a promotion by complete luck of the draw.  When a business uses the term “giveaway,” they’re more than likely holding a sweepstakes.

Accidental Lotteries

When we think of lotteries, we think of scratch off tickets and prizes worth millions.  But, that’s not always the case.  A lottery is defined as a promotion that meets three criteria:  prize, chance and consideration.  The prize can be anything, not just money.  The chance is essentially just the luck in winning or not.  But the tricky part, consideration, is where things get a little murky.  Consideration is something that an entrant puts forward in order to have a chance to win.  Typically, we think of money as the consideration for lotteries.  But what if it wasn’t just money?  What if it was something as simple as asking for a Facebook like or asking a person to take a survey?  One of these actions could potentially be classified as consideration.  Lucky for you, though, the law isn’t clear at up to this point, and no one has been slapped on the wrist for asking for a Facebook like in exchange for a chance to win.  It was worth mentioning, though, and I’ll leave it up to you if you’re willing to take your chances or play it safe on this one.

Who Can Enter

This is another area that I see done wrong ALL the time.  For the average mompreneur with no legal knowledge or experience in the corporate world, it may seem pretty simple to just offer your giveaway to everyone.  Only it’s not that simple.  Giveaways are governed in the US by  the Federal Trade Commission (“FTC”), the Federal Communications Commission (“FCC”), the United States Postal Service (“USPS”), and the United States Department of Justice (“DOJ”).  They are also governed by state regulatory agencies and each state has their own set of laws for how promotions are handled.  But, seeing as most mompreneurs don’t give away prizes that cost thousands of dollars, you’re not likely to find any trouble complying with state law.  Finally, there are international laws that also apply, the largest and most likely to affect you are those from Canada.  Let’s dive into this one as I often see this violated.

Oh, Canada

Canada requires that winners of promotions can’t be determined by luck alone.  There must be some sort of skill involved in entering to win.  That means you can just have a regular ‘ol “like me” type of giveaway and allow people from Canada to enter.  If you would like to include our lovely friends to the north, you must structure your promotion as a contest rather than a giveaway.  You can have a photo contest, essay contest, referral contest, etc.  Anything that gives the entrants a task to complete that they’re judged upon will fly.  Selecting a winner through Random.org will not.

And then there’s Quebec.  In an effort to protect their citizens, the Quebec government has established some pretty hefty guidelines that businesses must follow when offering a promotion to their residents. They include:

  • Register the sweepstakes rules and all advertisements used to promote the contest with the Quebec government at least 30 days ahead of the sweepstake’s launch.
  • Pay a fee of up to 10% of the sweepstake’s value, depending on who is allowed to enter.
  • Agree to allow the government of Quebec to mediate any lawsuits arising from the contest.
  • Follow strict guidelines about the contents of the sweepstakes rules.
  • Allow the Quebec government to determine if the sweepstake may be changed or canceled once it has started.
  • File a written report after the contest has concluded, attesting that the prizes have been delivered or attempted to be delivered.
  • Agree to follow a number of other rules and guidelines. See the Quebec Sweepstakes Laws.
Wow!  For this reason, many people will void the promotion in Quebec if they do structure it for Canadian residents.  Something to think about.

Running Your Promotion

So you’re ready to run a promotion, now what?  Once you’ve established what you’d like to offer and the type of structure you’d like to hold your promotion as, it’s time to set the rules.  Having official rules for your promotion is another important CYA tool that you certainly don’t want to ignore.  In your rules, you’ll want to include the following items:

  • No purchase necessary.
  • The alternative method of free participation.
  • Geographic area of the sweepstakes and/or who is eligible to participate in the sweepstakes.
  • Opening date and scheduled termination date of the sweepstakes.
  • Complete name and address of the sponsor and promoter of the contest.
  • Number of prizes, the accurate description of each prize, the retail value of each prize and the odds of winning each type of prize.
  • Whether all prizes offered will be awarded and how the prizes will be awarded.
  • Manner of selection of winners and when a determination of winners will be made.
  • Where and when a list of winners can be obtained.

Make sure that your rules are prominently posted where your entrants can see them.  And also make sure that once you set your rules, you stick to them!

Where to Host My Promotion

When all of your ducks are in a row for getting your promotion off the ground, it’s time to decide where you’re going to host it online.  The first thought of many is to host it on Facebook.  There are thousands upon thousands of giveaways on Facebook at any given time.  Most require you to comment on a post or photo, like the sponsor’s page or share a status update or photo.  Since they’re so common, this must be the way to go, right?  WRONG!  Last year, Facebook enacted new guidelines to the running of promotions and all of the above actions are in violation of their terms.  And we know what happens when terms get violated….pages get deleted!  We certainly don’t want that to happen, so let’s review Facebook’s promotion guidelines to see what we can and can’t do.

Facebook Guidelines

First things first, if you run a promotion on Facebook, it must be using a third party application.  That means no promotions based on any of the features above.  There are several apps that I see used often, like Wildfire, so if you don’t have a blog or website to host your giveaway on, you’ll need to find one that works for you.  The majority of them do have costs involved, so that’s certainly something to consider.  Now, all that said, my personal advice is not to use a third-party app.  My suggestion is to host the promotion on your own blog.  Don’t have a blog?  Well this is the perfect opportunity to get one!  Blogs have so many benefits to a business, which is another post for another day!  If you don’t have one, take this opportunity to educate yourself on setting one up and use this promotion as the official launch event for your blog!

So you may be thinking, if I don’t host my promotion on Facebook, I don’t have to follow their rules then, right?  Well, that depends.  If you plan on posting about  your promotion on your Facebook page to get your fans to come over and enter, then yes, you actually do.  Facebook explicitly states that if you use Facebook to communicate about or administer a promotion (such as a contest or sweepstakes), you are responsible for the lawful operation of that promotion, including the official rules, offer terms and eligibility requirements (e.g., age and residency restrictions), and compliance with regulations governing the promotion and all prizes offered in connection with the promotion (e.g., registration and obtaining necessary regulatory approvals). So, yeah, we need to follow their rules, and here they are.

  1. Release and Disclosure:  You must include a disclaimer stating the following…Facebook giveaways are in NO way sponsored, endorsed or administered by, or associated with Facebook. Information collected is NOT collected by Facebook. In signing up for this promotion, participants release and indemnify Facebook from all liability.
  2. Condition:  You are allowed to condition entry on standard acts such as liking a page, checking into a place or using an app.  You can not condition entry on using any of Facebook’s features or functionality such as liking a post, commenting on a photo or sharing something onto someone’s wall.
  3. Method of Entry:  You can not use Facebook features as the only means of entry.  For example, if you require a page be liked, the act of liking that page alone can’t automatically enter someone to win your promotion.  You must also collect their information in another manner.
  4. Notification:  While you can announce your winner on Facebook for all to see, you can not use Facebook as the primary means to notify the winner.  You must send them a separate email letting them know of their good fortune.

Posting the Promotion

You’re almost in the home stretch and ready to post your promotion for all to see.  There are several methods to doing this if you plan to post it on your blog.  My absolute favorite tool is Rafflecopter.  This awesome program will help you set up your promotion with ease.  You type in your details, your rules, let it know what you want people to do to enter (such as like your FB page or share the giveaway) and tell it how long to run.  You’re then provided with a fancy, schmancy widget to input into your blog that allows people to enter with absolutely no effort on your part.  It will keep track of the entries for you, then, when you’re ready to pick a winner, just hit one button and a random winner will be generated for you.  Easy peasy!  You can check out an example of the widget on our Giveaway Central page.

If that’s a little too complicated for you,  you can also try Google Docs.  Just set up a simple form for your entrants to fill out, embed it to your blog or post it as a link.  All of your entries will be recorded, and when it’s time to pick the winner, you can head over to Random.org, enter the number of entrants you had and receive a random number and the entrant on that line will be your winner.  Still a bit complicated?  You can also just ask your entrants to comment on your blog post.  Then just enter the number of posts into Random.org at the end, and find the post that corresponds with that number.  Not as fancy, but just as effective.

Final Thoughts

I hope I haven’t scared you away from giveaways or contests at this point.  I know it’s a lot to take in, particularly if you’ve discovered that you’ve been doing things the wrong way!  Please don’t let it scare you off from giveaways.  When done properly, they can have a great impact on your business.

Another point worth noting is to not only follow these rules for giveaways that you host, also look into other vendors that you may be partnering with for giveaways and make sure they’re handling things on the up and up as well.  The last thing you want to do is associate yourself with someone who isn’t doing things properly.  It can drag your business through the mud too.

Finally, if you do host or participate in a giveaway, you’re welcome to post it on the Giveaway List we have running at Giveaway Central.  It’s free to add your giveaway here and will give you more exposure for more success!

 

If you think this post is of value to mompreneurs, please consider sharing it!  You can use the “pin it” feature below to pin to Pinterest, or, use the sharing buttons below to add to your Facebook, Twitter or Google + pages.  Sharing is the ultimate way to let us know you appreciate the information we put out there!

 

 

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About Julie-BAM Owner

Hi! Here are a few fun facts about me: I've lived in the Seattle area long enough where the rain doesn't bother me. I graduated from the University of Washington. I worked in the pet products industry for a lifetime and in 2013 took over ownership of Business Among Moms, a community for mom owned businesses to network and get educated on entrepreneurship.

Comments

  1. Christen says:

    Holy cow! This is a lot of great info – thanks for compiling and sharing it with all of us!

  2. Jessica says:

    This is great information! Thanks for including info for us Canadians too. I am originally from Québec and always wondered why we were never allowed to win anything!

  3. What an excellent and informative post, I really learned a lot. I had no idea there were so many regulations attached to having a giveaway at your website. It certainly does make sense and I have noticed a lot of bloggers are not doing it the right way. Invaluable stuff, thanks for putting it together.

  4. I just completed a contest and now know how to sponsor one the right way…. Thank you so much for this information. MUCH NEEDED!

  5. Very informative. Thank you for taking the time to post this. Here is a link to our first online giveaway.
    http://apps.facebook.com/hooplasoft_giveaways/data?o=D%2BVGE9AR2cdSkFosBoBoodAEvxozuWUOWgpafcYapCs%3D

  6. Thank you for the great information! Just used the info to post my giveaway correctly!

  7. Thanks for such valuable information…..I have read lots of info about FB guidelines but yours is so thorough! Glad I found your site!

  8. Great Info. I’m about to run my first giveaway and this information came in a good time :o)

  9. Thanks for the info!

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  12. Gibran Locati says:

    I have read this post and now have questions. I have a business page on facebook with currently 116 lukes on my page. I own my own small home decor business from home and post items i have available on my page etc. So if i wanted to do something fun on my page to generate activty etc and offer a free item or do some soet of contest then everything yoy posted in your article would aplly to me? If i didnt follow it i could risk having page shut down?
    Please advise
    Thanks

    • Hi Gibran, The rules have loosened substantially since this post was written. Now you may randomly award a prize from your Facebook page. It is a good way to encourage engagement on you page by asking participants to like, share and comment on posts.

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