Online giveaways, games, and contests have become increasingly popular thanks to the widespread use of social media and iOS apps. Businesses, however, often overlook the need to include the proper documentation and guidelines required by state or federal laws and regulations. Also, current new technology often allows web / app users to submit cloned entries or bypass online rules. Similarly, the collection of personal information for sweepstakes, online games, and contests can trigger a variety of entirely different legal problems, often without the knowledge of the host company. Care must be taken before launching new sweepstakes, games, or contests online.
One of the biggest challenges with sweepstakes and online games is the differences between states in terms of rules and regulations. Before launching a new giveaway, online contest or game, the host must verify that it is complying with the laws in all states where it is available. This often requires an analysis of each state’s laws, as many sweepstakes, games, and contests are available to residents of all 50 states, given the nature of Internet and iOS / Android applications. Some states require registration for certain types of contests.
In addition to state laws, online game hosts must verify compliance with federal laws and regulations, such as the Children’s Online Privacy Protection Act (“COPPA”) and similar privacy laws. Given the global nature of the Internet, attention should be paid to whether compliance with foreign laws is required or whether access to the Internet sweepstakes, game, or contest is limited to US entrants. The laws of European countries, for example, establish stricter privacy restrictions than the e-commerce laws of the United States.
While businesses can achieve compliance with state and federal regulations on their own, hiring an e-commerce attorney is advisable due to the complexity of the legal landscape. The first step is to evaluate the associated promotional material and online rules to ensure that federal and state laws, including online privacy laws, are not violated. The e-commerce attorney will then likely review the entire contest, game, or sweepstakes framework to ensure overall compliance with the state and federal laws that apply to the client. As mentioned, this may require registration in certain states and the issuance of bonds. Finally, the attorney will write the general guidelines as a reference for use in future promotions. These guidelines can be used to lower the costs of future sweepstakes, contests, and online games.
Disclaimer: As with any discussion of legal issues, this article is intended to be educational only and is not a substitute for legal advice, does not provide legal advice, or form an attorney-client relationship with the reader. Seek legal advice before making any decisions. Also, please note that this article may not be updated, so the law and circumstances may have changed by the time you have read this article.
