United States: Promotion Law 101

In order to avoid creating an illegal lottery one of the following must be eliminated: 1) the award of a prize, 2) determined on the basis of chance, 3) consideration is paid to participate.

All states permit sweepstakes in connection with promotions of other products or services provided that no consideration is required. Thus, "No Purchase Necessary and an explanation of the " Alternate Means of Entry" (" AMOE") must be prominently disclosed. The chances of winning through the AMOE must be equal to chances of winning through purchase of the product. A stamped self-addressed envelope may be required (except State of Washington) in order I.O obtain the AMOE. A store visit is not consideration (except Ohio and Michigan). Certain states pose specific problems: Bottle cap (Alabama. West Virginia. Hawaii, Puerto Rico); In-Pack (Minnesota. Wisconsin, Vermont).

A skill contest may require an entry fee (or proof of purchase) (except Maryland and Vennont) but any element of chance must be eliminated. Thus, the winner cannot be based on a future contingent event or educated guessing. The judging must be based on specific criteria and the judges must be competent. No tie-breaking by coin flip or splitting of the prize between winners is permissible, since this would introduce an element of chance. Consideration may be an issue in certain states (Arizona, Florida. Maryland, Vermont).

The rules of the sweepstakes are the terms of an offer resulting in a contract and .are subject to varying state law requirements. In addition to explaining exactly what contestants must do and what they may win, the rules should specify the following: 1) Entry method; 2) Selection of winner; 3) Eligibility may be customers limited to customers or those who are likely to be customers (u., age, sex, residency , occupation) and should be limited to exclude anyone connected to the sponsor including their families and household. to avoid the appearance of a "f1X"; 4) Deadlines for any submissions, including the deadline for AMOE; 5) Limitations on entry one per family, person. store visit, envelope; 6) .Odds several states require specifying the odds of winning (often "determined by the number of entries"); 7) Boilerplate while supplies last decisions of the judges are final. void where prohibited, no prize substitution, whether all prizes will be awarded (Fla.). by entering consent to use of name and likeness. .., taxes are responsibility of winner, not responsible for lost, mutilated, illegible…, must sign affidavit of eligibility within 10 days of notification; 8) Total value of prizes may be required; 9) to obtain list of prize winners may be required; 10) Washington and Vermont prohibit requiring a stamp on the self-addressed envelope sent in to obtain the AMOE.

Certain states have particular disclosure requirements regarding the rules and their display (Florida, Connecticut, Maryland, Massachusetts, Minnesota, New Mexico, New York, Rhode Island, Texas).

New York, Florida and Rhode Island require registration of sweepstakes (and the rules) and posting security in advance (N. Y. 30 days) when total prize value exceeds $5,000. These states also require filing list of winners (in order to release the security). Other states require registration for skill contests depending on the circumstances U, Arizona where proof of purchase is required; California for 900-number promotions).

Promotions presented in point of purchase material are subject to special regulations e.g., FTC Food Retailing and Gasoline Station rules. Certain States require posting of the roles in retail outlets (e.g., Florida, New York, Rhode Island). Certain states require posting of a description or value of prizes and the geographic area (Michigan, New York, Rhode Island). Washington limits the frequency and duration in grocery stores, and Connecticut prohibits sweepstakes in narrowly defined grocery stores.

Many states have specific regulations of promotions where everyone wins: California, Florida, Louisiana, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma, Rhode Island, Tennessee, Vermont, Virginia, West Virginia, Wisconsin Wyoming.

Promotions where the consumer wins a prize by making a purchase or a visit to a location are subject to special considerations in many states: California, Georgia, Louisiana, Maryland, Nevada, New Jersey, North Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, Vermont. Virginia, Washington, West Virginia.

Certain products may be subject to special requirements or promotional contents: alcoholic beverages, tobacco, gasoline food retailers, banking, dairy products.

Preamble - cost, name, description - parental consent is required. You must disclose the odds of winning. All advertising must disclose the method of free entry. Many states have additional requirements.

There is an open question of how to view Internet access in terms of consideration. Fees to an on-line service or to access a site may constitute consideration making an AMOE necessary .The world-wide reach of the Internet also makes eligibility a most important issue.

Ideas are not protected. Use of characters, photography, artwork etc. will need to be cleared. You should obtain a written agreement (purchase order) from anyone who is not your full-time employee specifically conveying rights to any creative material.

Selection of a trademark entails searching for possible confusingly similar marks. (Many contest names have been trademarked.) Other people's marks may be used for informational purposes provided there is no confusion, dilution or disparagement.

Written permission is necessary to use a person's name or likeness in advertising. This may apply to merely conjuring up a famous person's identity. Dead celebrities are not necessarily ok. Look-alikes and sound-alikes pose special problems.

The stock house generally provides only a license from the photographer (copyright). Any persons who would appear in the photograph must supply a release. Any otherwise copyrightable subject matter in the photograph must also be cleared.

Don't ask for a license until you have considered possibly doing a joint promotion.