No Purchase Necessary Law & Giveaways. We get this all the time. Someone emails us a message asking: “Hi Rafflecopter! I’m writing on behalf of The Incredible Widget Company. I’d like to run a giveaway through your app, but we want to require entrants to make a purchase on our site.

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Can we ask people to provide a receipt of purchase for a product a specific giveaway is promoting as an option for them to gain entry?”If you’re familiar with sweepstakes and gambling regulations in the US, you know the answer is “no way!”. You’ve probably read the verbiage . Before continuing, be aware that while many countries have laws surrounding gambling, lotteries, and sweepstakes, we’ll be focusing on the US for the sake of this article.

Additionally, we’ve seen many giveaways run through our platform and while we feel confident in talking about the subject and promise to offer the best knowledge we possibly can, we’re not lawyers. Just a disclaimer ; )Sweepstakes, Contests, Lotteries, & Raffles. First, let’s discuss the differences between a sweepstakes promotion, contest, and a lottery. To understand the differences, it’s important to become familiar with the word “consideration”. When you hear the word consideration, it’s referring to the entrant’s time, effort, or money. It can come in several forms, such as sending a text message, a 9.

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Sweepstakes. Typically when we refer to a giveaway on our blog, we’re referring to what is technically known as a sweepstakes promotion. Rafflecopter specifically helps administer sweepstakes promotions, which is defined as . Winners will be selected at random — it’s the luck of the draw if you’re chosen. To keep a sweepstakes from becoming an illegal lottery, there must be no consideration. Contests. A contest is similar to a sweepstakes, except to win there’s an element of skill involved.

A contest is defined as . Winners will be chosen or judged based on their submission or performance. Like a photo or essay contest where the best photo taken or essay written wins. A contest awards prizes, but replaces the element of luck / chance like you’d see in a sweepstakes with selection of the winner on the basis of skill or intellect. Lotteries. A lottery is defined as .

Lotteries in this country are exclusively government run, and prohibited outright in a large handful of states. A lottery is a game of luck that requires an entry fee. A lottery has three key determinative elements: prize, chance, and consideration. Additionally, you might have a lottery that has no winners, and thus the prize is turned over (perhaps you’ve seen Powerball display “There were no jackpot winners for Saturday’s drawing.

A raffle is very similar to a lottery, where a number of persons buy chances to win a prize (think of a church raffle or charities raising money for a cause). Unlike lotteries however, a raffle will always have a winner chosen. Every state’s laws pertaining to raffles are a little different, but the one rule that’s consistent for all raffles is that they’re specifically meant for non- profit organizations. The organizations that host these events often find that they are a great way to raise funds and to promote awareness for their causes.

If your company or organization doesn’t have non- profit status, you’ll be hard pressed to get a raffle approved by your state.*Psst* Here’s an example of a raffle being run by the Boys & Girls Clubs of Metro Denver, Inc., a Colorado nonprofit corporation. If you read their FAQs you’ll see they’ve registered with the State of Colorado. As an entrant, you cannot participate in a raffle or a lottery without purchasing some kind of ticket, a form of consideration. Sweepstakes and contests are the exact opposite however, and asking entrants to purchase a product or spend money to increase your chances of winning is illegal. This is why if you read the terms and conditions of the giveaway you’re entering, you’ll see the phrase . And if your company isn’t a non- profit, you cannot run a raffle. And unless if you’re the government, it’s illegal to run a lottery.

There are a few government entities that help make sure these promotions don’t break the law: the FTC, the FCC, the USPS, and your state’s regulations. The FTC’s Involvement. The Federal Trade Commission is an independent agency of the government who helps protect the consumer. In the FTC’s small business advertising FAQs, they specify that “sweepstakes- type promotions that require a purchase by participants are illegal in the United States.” The FTC doesn’t directly oversee sweepstakes, but might step in if they see a sweepstakes scam taking place.*Psst* Become more familiar with the FTC’s involvement with giveaways pertaining to the CAN- SPAM Act. The FCC’s Involvement. The Federal Communications Commission is an agency similar to the FTC, except the FCC helps regulate communications over radio, TV, internet, cable, etc. If you’re planning to promote a sweepstakes or contest over any of these communication channels, it’s important to disclose the material terms and conditions of the promotion (eligibility requirements, prizes that can be won, and start and end times for example) and not advertise the sweepstakes in a deceptive way.

Like the FTC, the FCC doesn’t directly oversee sweepstakes, but will step in if they see a promotion violating these rules. To fall in compliance with the FCC, it’s best to communicate the . In 1. 99. 9, the Deceptive Mail Prevention and Enforcement Act (DMPEA) was passed, giving the USPS authority to stop mail and impose penalties to those sending out sweepstakes mailings that are deceptive.

Sweepstakes mailings have to disclose that a purchase isn’t necessary to enter and won’t improve the chances of winning. These disclosures must appear in the mailing, in the rules and on the entry form. They must be very easy to find, read and understand. Your State’s Involvement. And as noted above, laws surrounding gaming, gambling, sweepstakes, contests and raffles all vary state by state.

To find out what the laws are in your state, google “sweepstakes laws + your state”. After a bit of searching, here’s an example doc that goes into detail for our home state of Colorado. What if I’ve Broken the Law?“I’ve been running giveaways asking entrants to purchase an item for my shop for the last six months and I’m just finding out this is illegal — what should I do?”First, we’d recommend you stop. Second, unless you’re a big company whose promotions reach a huge audience, so long as you’re mindful of the rules moving forward, you should be fine. The companies that we’ve seen get in trouble over these laws are large corporations that should have a) had their legal team look over their promotion’s terms before launching them, and b) listened to their consumers before they started filing complaints. It takes a really shady operation and a lot of complaints to stir the pot to get the FTC or FCC involved (thoughit doeshappen)Consumers are also getting smarter surrounding these laws as well. More consumers know that if someone asks you to pay to enter, there’s a good chance it’s a scam.

Therefore, if you ask entrants to pay to enter, even if it’s indirectly, you start to appear like a scam. Might be best to avoid that! No Purchase Necessary: Q& AAgain, while we’re not lawyers, below are a handful of frequently asked questions we’ve received over the past several years regarding rules that surround the . When you run a sweepstakes or giveaway, it’s your responsibility as the giveaway sponsor to ship out the prize.

If you ask entrants to pay for shipping, not only is it against the law, it would be very off- putting to the winner. Question: Can entrants be asked to provide a picture or proof of a receipt? Answer: This question is asked surprisingly often, but again the answer is no.

If you’re asking for a proof of purchase statement like a receipt, that’s directly in violation of ? You need to purchase a drink to get those. Answer: You might be referring to the ever- so- famous Mc.