Key Legal Developments Affecting Sweepstakes, Contests, Disclosures &

Digital/Social Media Presented by Donna DeClemente

DDC Marketing Group American Sweepstakes & Promotion CoAlliance Sweepstakes Services

www.ddcmarketing.comwww.american-sweeps.comwww.alliancesweeps.comBlog: Donna’s Promo Talk

Email: ddeclemente@ddcmarketing.com Twitter: @ddeclementeFacebook: Donna.DeClementeLinkedIn: donnadeclemente

Shadow

Izzie

This session will address an array of legal regulations and guidelines• sweepstakes, giveaways and contests • social media, digital media • disclosers and intellectual property

Echo Jack

My Daughter, Alex, and her island pets.

Student at Ross University of Veterinary Medicine

Frankie

Roti

The Basics: Sweepstakes, Contest, or Lottery

• Prize + Chance = Sweepstakes• Prize + Skill = Contest• Prize + Chance + Consideration = Lottery

What is Consideration?

• A Purchase or Payment of any kind• Time: No more than 30 minutes max• The Supreme Court did rule that watching a 30

minute show to find the code or answers in order to enter isn’t too much time

What is Consideration?

• Alternate Method of Entry (AMOE) - If there is consideration (purchase, payment or time), the sponsor must offer a way to enter without purchase/consideration

• Not Consideration: – Postage – Visiting retail establishment (but not multiple visits)– Internet access– Filling out entry form

What is Consideration?• Social media entry requirements do not usually have

consideration, however…• Writing about the product or taking a photo or video of the

product may be consideration:– Take a photo of yourself with the shoes could be done in a store– Take a photo of yourself with the shoes “out & about the town” is consideration– Dunkin Donuts take a photo of yourself taking a bite of a donut – can’t return the donut

• Can the participant effectively compete without actually purchasing the product

What is Consideration?

• Degree of Effort Required is a big trend in social media sweepstakes

• Earn extra entries from different challenges - Does it requires too much time?

• Bonus entries for sharing/referring – not likely to be deemed consideration– But may raise Can/Spam or endorsement issues

What is Consideration?• Do text and data charges constitute Consideration? - Still no definitive answer - No regulatory action or challenges - Class action lawsuits pending regarding premium text challenges• Some lawyers still recommend AMOE

– No legal basis since Wi-Fi is regularly available• Still should always state that data charges may

apply and to consult their providers

What is a Contest?

• Judged based on a degree of skill or uniqueness • Must clearly define objective judging criteria• Needs to follow lottery laws• Purchase may be required only if needed to create a

submission• You may receive fewer entries for a contest, but

entrants normally are more engaged with the contest itself—and with your brand

User-Generated Contests

Most popular forms of user-generated Contests:

– Photo – Video– Essay – Recipe – Design

User-Generated Contests

• Include specific submission guidelines defining what you will and won’t accept• Clearly communicate that entrant must have the

rights to use any of the submitted content and that it does not infringe on copyrights.

• Don’t encourage people to submit a video that will require music without providing royalty-free music – i.e. a dance contest

User-Generated Contests

Voting Contests Beware of Contests solely based on public voting - Lack objective criteria- Mostly a popularity contest- Considered a game of chance if no judging- Vulnerability to voting fraud and bots- Brands have been moving away from this

User-Generated Contests

Voting Contests • Instead make public voting a part of the total

judging criteria Example: Judging Criteria:

- 45% public appeal (number of votes)- 30% creativity and originality - 25% composition and quality

• Or, use phased judging- Chose Finalists then open Voting

Contest Tips

• Don’t be involved in the contest creation• Providing samples or templates (balancing act)• Avoid claiming ownership

- Take a license only for rights you need• Screen/monitor/filter• Be specific/avoid ambiguities• Prohibit all 3rd party content or only infringing content• Prohibit all trademarks• Remember everything is transparent

Contest Tips

• Don’t ask people to write an essay about your product

- Expect low entry rate if you do• Don’t ask your entrants to get too outlandish

with their submissions - Keep it simple and real• Don’t ask entrants to post items that they may

not want to share with the public - Is it too private or embarrassing?

Facebook Updates

• Facebook no longer allows Like Gating • Can still ask fans to like your page, but do not make it mandatory

- “Don’t forget to Like our page” • You can now run a promo on your FB page vs. a FB app

- difficult to collect data on participants- difficult to contact winners

Facebook Updates

• Still can’t give participant extra entries for sharing on their timeline

• Can allow a refer-a-friend feature for an extra entry - App creates a personalized URL to share - Friend enters promotion from this URL - Original participant gains an extra entry

• Don’t suggest that Pinterest sponsors or endorses you or your promotion • Don’t require people to Pin from a selection - let them pin what they like

• Don’t make people pin or repin your contest rules – This is a biggie

• Don’t run a sweepstakes where each pin, repin, board, like or follow represents an entry

• Don’t encourage spammy behavior– such as asking participants to comment

• Don’t ask people to vote with pins, repins, boards, or likes

• Don’t overdo it: contests can get old fast.• Don’t require a minimum number of pins -

One is plenty

Twitter Guidelines

• Discourage posting the same Tweet repeatedly • Don’t create a sweeps where the most

retweets win• Ask Users to include an @ reply to ensure all

entries are viewed

Google +

Google+ still does not allow you to run any promotions on their platform- Only use it as a way to promote

FTC Endorsement Guidelines

FTC updated their Endorsement & Testimonial Guidelines• Sparked by an investigation into a Pinterest-based

contest conducted by Cole Haan which instructed participants as follows:Create a Pinterest board titled “Wandering Sole” Pin 5 images of shoes from Cole Haan’s Pinterest board Pin 5 images of participants “favorite places to wander”Tag all with #WanderingSole Cole Haan would then judge all entriesAward winner a $1,000 shopping spree

FTC Endorsement Guidelines

FTC Concluded the following:• The act of pinning the images of the advertiser’s product constituted

endorsements• So the act of pinning as well as tweets, videos, photos, etc. may

constitute endorsements• Any incentive no matter how minimal may be an endorsement• Must require disclosure

FTC now recommends:• Use of sweepstakes title along is not adequate, • Must also include #Contest or #Sweepstakes or #Entry or similar

designation in hashtag - #WanderingSoleContest

FTC Disclosure Guidelines

• FTC also focused on disclosures in traditional media – 60 warning letters were issued

- Small type size- Placement at the bottom of the page- Light type font- Insufficient contrast- Placement in large/dense photos- Insufficient duration on the screen

Social Media Content

• Think before you reuse any 3rd party content – No clear legal guidance

• If you retweet it, post it, like it, you own it and is that a risk? - Depends on risk tolerance levels

• Who has initiated the conversation?• Does the profile picture include other people, minors?• What is the content?

– Does it include a photo, who’s in it, does it make a claim you can’t support

Social Media Content

• Duane Reade tweeted a photo of Katherine Heigl taken by a paparazzi with their bags and were sued

• They made it look like an endorsement

Social Media Content

On the other hand, Arby’s posted a Tweet with @Pharrell during the Grammy’s that worked

Social Media Content

Use of Celebrities• Any use of celebrity tweets/posts presents a

high risk of a right of publicity violation• Courts taking an increasingly narrow view of

“commercial use”• Celebrities are earning big money to tweet

Social Media Content

Bud Light Recently apologized for this tweet:

“The perfect beer for removing ‘no’ from your vocabulary for the night,” followed by the requisite “#UpForWhatever” hashtag.

Official Rules

• All promotions - Giveaways, Sweepstakes, Contests ….

• Should have official rules that are readily available to all eligible participants that clearly set forth the terms and details

• Official Rules are your contract with the public

Official Rules1. No purchase necessary (for games of chance) – clearly and

conspicuously disclosed2. Void where prohibited, void in (list states that must be

voided/sponsor wishes to void) 3. Sponsor’s official name and address4. Start and end dates5. Eligibility – national vs. local, age, also who is not eligible –

Sponsor’s employees, immediate family, partners, agencies, etc.

6. How to enter – web/blog url, Facebook, Twitter, hashtag, submission, etc.

Official Rules

7. Prize(s) description–ARV of each - $600 or over must send 10998. Drawing date – Winner announcements9. Info on how to obtain winner’s list10. If utilizing Facebook as a method of entry: “This promotion is in no way sponsored endorsed, administered by, or associated with, Facebook.”

Notifying Winners

• Contact Winners first before you announce their names and get their permission

Bonding & Registration

• Only applies to Sweepstakes (Games of Chance)• Consumer promotions only when total prize value

exceeds $5000• A surety bond to cover prize redemption and sweeps

registration required for NY & FL • Rhode Island registration only for retail sweepstakes

that prize value exceeds $500 • Quebec requires bonding and registration plus all

communications to be produced in both English and French-Canadian

Global Promotions

• No such thing as an International promo• Each country has it’s own laws, regulations, tax issues,

registration fees, privacy policies…• Contests are not as restricted as sweepstakes• US & Canada can be included together (except

Quebec) - minor addition to the rules - winner must answer a mathematical question

Applications

Facebook - Create Facebook apps with built-in voting restrictions and fraud prevention

Twitter - Increase engagement with sharing incentives

Instagram - Use the link in your bio to direct traffic to your Campaigns

Pinterest - Drive traffic to your eCommerce sites. Display custom content to users in different countries

Website and Blog - Embed Campaigns on your website or blog, or publish them to the web where they function as landing pages

Shortstack.com

Applications

Rafflecopter makes it easy to run a giveaway online Create & launch a giveaway in minutes

They provide a template for “Terms and Conditions”- Available for a paid account

“The currency today is not money It is user engagement and their content

But it is full of risks, and we all must be cautious”*

Thank-you*Quote from Linda Goldstein, Partner, Manatt, Phelps & Phillips, LLP, from the BAA 2014 Annual Marketing Law Conference.