Hi, I’m Cliff Ennico legal editor of SPTV.com and author of the best selling book Small Business Survival Guide. So you’ve got a terrific website with lots and lots of stuff to sell but people aren’t buying as fast as you would like them to. Is there any way you can direct them to your site by offering a terrific contest or sweepstakes or other fund promotional device.
Where some of the legal and tax things you need to think about when you do a contest or promotion online. Well there are some things to think about, contests are a great way to generate buzz and interest in your website and in the products and services that you sell if you do it the right way. Do it the wrong way and your exposing yourself to a lot of legal liability.
Generally speaking, contests and promotions are legal provided that they are not illegal lotteries. Lotteries in just about every state are prohibited by law except of course if the government does them. Now what makes your content a lottery? Well, there is no easy way to determine. First of all, a lottery is a game of chance not a game of skill.
Your contest in order to be legal, in order not to constitute a lottery is going to have to have some element of skill even if it’s something that is not hard to do. So for example, name the 13th president of the United States an you will qualify to win a free Camaro. By the way, it’s Millard Fillmore. You know people can look that up and just give you the answer. They don’t have to be geniuses to answer that question or, you know, what is the company mascot. You know, what is the company name of our company mascot.
Answer that question— it doesn’t have to be a difficult question but you have to demonstrate some element of skill. There also has to be small element of what we lawyers call consideration. It cannot be totally free, it has to be the person who is participating in the contest has to give a little something even if it is just his time in sending an email, clipping a coupon, doing something like that or sending in a very small amount of money. Be very careful, I’ve seen contests online where people say, you know, to qualify for this contest send us $200.00 and you got to be careful for about that. If you do that the wrong way, if you ask for too much upfront, you may be, you may run a foul of some state laws that prohibit certain types of sweeps stakes without certain types of legal permissions being granted.
So be careful on that front, so when does advice always the people that are doing contest especially online contests look at other websites that are offering contests to sweepstakes and copy what they do as much as you feel comfortable with. And don’t be afraid to copy their legal disclosures to because there is a set of standard disclosures that have developed. So for example, void where prohibited. There are some states that prohibit contests of any kind.
So if you are doing a type of contest and people in Wisconsin are actually prohibited from participating in any sort of online contest. I don’t know if they are I am just making that up. Make sure you say void in Wisconsin or otherwise where prohibited by law and make sure you know have your attorney explain to you what those laws are so that if you are winning subscriber or the winner of the contest turns out to be from that state. You have a gentle way of letting that person down and award the prize to someone who legally can accept it. I am Cliff Ennico formSPTV.com.
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