Our office recently got into a discussion about contests and giveaways online. You see it all the time – some social media “guru” with some gumption offers up a free iPad on his Twitter account, and gives it away once he reaches a certain number of followers. Odds are, that guru failed to consult with a lawyer and might end up being the guy with the most Twitter followers in the county lockup.
A contest is not just a simple giveaway, and legal concerns in this day and age are significant. This excellent post from Sara Hawkins at the Social Media Examiner breaks down the major forms of giveaways online and the differences between them. From Sara’s post:
• Sweepstakes are prize giveaways where the winners are chosen by the luck of the draw. Prizes can be almost anything you can think of, from handmade cards to an all-expense–paid trip.
• Contests choose a winner based on some merit. The winner is chosen based on some criteria such as best photo, most votes on a video, best recipe, etc.
• A lottery is a prize drawing where people must pay money to buy a chance to win. Lotteries are highly regulated and should not be run without consulting legal counsel.
All three need some form of legal coverage, including (but not limited to!) rules, winner release forms, contest indemnity forms, 1099 forms, and more. All of these forms whittle away the winner’s rights to complain about the prize won; specifically, they go into copious detail about the kind of prize and the amount of money the prize is worth. Without this information, you may open yourself up to lawsuits from winners expecting a different prize (and they’d actually have a case). All that to say, it’s far easier (and cheaper) to work with a lawyer on the front end of a contest than on the backend.
Lawyers I’ve dealt with in the past have said you can avoid a “contest” proper by doing limited window giveaways of products, such as:
“For the next hour, anyone who retweets this message gets a free product key for Product X! #productX”
It’s not ideal but it is FAR easier than preparing rules to giveaway something simple online. The problem, of course, is your tweet might take wings, and you end up giving away hundreds or thousands of units of your product. If that’s the goal, though, you may be able to bypass the legal documentation this way. Of course, it wouldn’t hurt to still draft up some simple rules just to cover yourself. This stuff can get messy.
Remember: being careful up front is better than being sued later on. Always.