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13 Jan
2015

Sanaa AbdulRahiman

Associate Director
 

This post originally appeared on Deluxe by Ron Bergamesca

 

Sweepstakes are a great engagement tool that can play a big part in fueling the rewards cycle that drives desired customer behaviors. But if you’re going to venture into the world of sweeps, you must make sure you follow the federal, state, and local laws that govern sweepstakes administration.

Here are 10 important questions to consider when planning your sweepstakes strategy. This list is by no means exhaustive, so do your research to learn them all and if you have concerns, consult legal counsel.
 

1) Who is your audience and what are the age requirements to enter your sweepstakes?

You have to follow certain laws if your sweepstakes are open to minors. And keep in mind that the age of legal adulthood is different from state to state.
 

2) Should you exclude certain states from your sweepstakes?

There are different sweepstakes laws for each state, and you can choose to exclude one or more. For example, if the retail price of your prize is greater than $500, you may choose to exclude New York and Florida so you don’t have to pay registration and bonding fees.
 

3) Will your sweepstakes be run internationally?

Running a sweepstakes internationally requires more due diligence on your part. For example, if your sweepstakes is open to residents of Canada, you need to include a skill-testing question. You’ll also want to make sure you are careful with how you promote the sweepstakes in Canada, here is a great blog from George Lawton about sending email in Canada.
 

4) Are the marketing materials that mention your sweepstakes compliant?

Work with your marketing team to determine what needs to be included. Sweepstakes marketing collateral and notifications need to say certain things.

Some states have specific requirements and there’s a good chance your marketing department isn’t aware of them.
 

5) Will your Sweepstakes be promoted in-branch?

There’s a chance you’ll need to have it registered and bonded in Rhode Island if the prize value is over $500. Make sure you know the laws in your state so you can stay compliant.
 

6) Is the prize you’re offering legal?

You should always customize your prize to your audience, but there are restrictions and guidelines on the types of prizes you can offer. Regulated items such as certain foods and alcohol should not be awarded as prizes in the U.S.

Make sure you’re allowed to offer the prize you’re promoting.
 

7) Is there consideration needed to enter your Sweepstakes?

Consideration is often defined as money but it could also be time. If you ask your sweepstakes entrants to complete certain actions in order to enter, you may be in violation. Each state’s definition of consideration may vary.

Ensure that your sweepstakes have an equal playing field for everyone to enter with NO consideration.
 

8) What is the total value of your sweepstakes prize?

Prize values should be considered carefully. Prizes above a certain dollar amount always need to be registered and bonded in certain states and this registration and bonding needs to happen within a certain timeframe.
 

9) Are there tax implications for your sweepstakes prize?

Sweepstakes prizes over a specific value must be reported to the IRS. You should make sure your sweepstakes entrants are aware of this and that your winner fills out the appropriate paperwork so you can issue a 1099.
 

10) Is your sweepstakes indeed a sweepstakes and not a contest or worse – an illegal lottery?

Know the difference between them. A lottery is only legal if run by the government, but here is a great resource to help you identify the different between each of these.

Incorporating sweepstakes into your engagement strategy can reap big rewards for both you and your customers. Just be sure you’re up to date on all the laws or that you have a knowledgeable Sweepstakes administrator working with you to ensure compliance. Even if you’re running your Sweepstakes on a small scale, bypassing these laws isn’t worth the risk.

Follow the rules and the returns will be well worth your time.


Source: http://goo.gl/P7OAMb

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