United States: Promotional Marketing Concerns Associated With Online And Mobile Media

Last Updated: October 8 2013
Article by David O. Klein

The use of promotions and contests in connection with online and mobile marketing can be a dynamic and cost-effective way to increase conversions, build a database of engaged consumers and increase brand awareness. However, businesses must be aware of the fact that governmental entities, including the Federal Trade Commission (FTC), Federal Communications Commission (FCC) and various state attorneys general, are tasked with regulating, investigating and sanctioning non-compliant marketing practices. In this article we address the legal issues surrounding the promotion-related online and mobile marketing space.

Online and Mobile Sweepstakes Marketing

The appeal of promotional contests, games and sweepstakes is obvious: consumers are attracted by the opportunity to win prizes. Despite the allure of the sweepstakes model, there are specific state and federal laws that apply to promotional games, as well as platform rules for marketing on social media websites, such as Facebook®, Instagram® and Twitter®. You could incur substantial liability if these laws and platform rules are not closely followed.

In assessing your liability risk, the baseline question to ask is whether the promotion is a game of chance or skill.  Games of chance are considered illegal lotteries, unless there is a free means of entry, with no strings attached. Alternatively, games of skill are an enticing option; but, depending on the structure of the prizes awarded and the degree of participation of the entity running the promotion, certain anti-gambling laws may still apply. 

When running such contests, it is important that your associated marketing approach comply with other applicable laws and guidelines. For example, you must at all times comply with intellectual property laws. This is especially true when you are offering the opportunity to win a prize that carries a registered trademark, such as an iPhone®, or when you are marketing your contest within a social media environment, such as Facebook®, and you wish to use the Facebook® name and/or logo in your marketing material.

Blog and Social Media Website Marketing

Although a slightly different approach to contests and games, several businesses have recognized the promotional advantages of incorporating their branded messages within various blogs and Internet web pages. Some have even begun creating fake blog/social networking site pages masquerading as review sites, and posting fake articles that include paid testimonials.

While potentially lucrative, this conflation of marketing with blogs/social networking media carries significant liability risk. Because of the historical nature of the Internet as a place for the public to voice their opinions, there is an expectation that the blogger/site member in question is not a paid spokesperson. But when a blogger/site member is engaged in marketing products for a fee, or when that person is an employee of a company that is selling products on the blog, there is an inherent conflict of interest when these relationships are not properly disclosed. Under those circumstances, the blog/website can amount to a form of deceptive marketing.

In fact, the FTC recently updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising to address these issues. The essence of the guidelines is that online marketing material must prominently display a disclaimer that informs the reader of any financial interests that the bloggers or writers have in connection with the products being featured/discussed. Similarly, the author of a fake article must disclose: 1) that the article is not real, but rather, a marketing device; and 2) what the author stands to gain in connection with writing/posting same.

The guidelines also make clear that fake or fictitious testimonials are strictly prohibited and, when using an authentic testimonial, the blogger or writer must not edit or change it from the original in any material way. Finally, where the provider of the testimonial stands to gain by providing the testimonial, this fact must be disclosed to the reader.

Daily Deal Website Marketing

The "daily deal" business model, which is most closely associated with industry leaders Groupon® and LivingSocial®, offers a unique means for businesses to promote their brand and attract customers through "daily deal" coupons, discounts and other perks. However, many businesses are unaware that state and federal laws may apply to these discount offers. Problems arise due to the fact that the discount offers expire after a certain amount of time. Because consumers must pay a fee for these "daily deals," the offers may be considered gift certificates and, therefore, fall under the purview of the Credit Card Accountability, Responsibility and Disclosure Act ("CARD Act").

The CARD Act, and its state law counterparts, requires that all gift certificates have an expiration date at least five years from the date of purchase. While Groupon®, LivingSocial® and their competitors maintain that the discount offers in question are coupons, and not gift certificates, attorneys general in multiple states have begun to scrutinize this business model to determine the nature of the offers. Additionally, multiple class action lawsuits have been filed alleging violation of the CARD Act and corresponding state law.

E-mail and Mobile Marketing

While games, contests and other promotional vehicles are valuable marketing tools, e-mail and mobile marketing should not be neglected as another way that businesses can monetize their client databases. Many companies do not take full advantage of these marketing options because they are unfamiliar with the federal and state laws that govern e-mail and mobile marketing and, thus, do not want to risk the significant penalties that may be incurred if they unwillingly violate those laws. If a company does choose to engage in e-mail and/or text message marketing, or to engage the services of a third party to manage and market to its databases, the company should ensure that it and/or the third party marketer is complying with all applicable laws, as well as its privacy policies.

Please be aware of the fact that the FTC and FCC require that you obtain prior written consent from consumers before sending any auto-generated or pre-recorded text messages to cell phones. The consumer's express informed consent to the receipt of text message marketing and e-mail marketing, as well as the privacy policy and website terms and conditions should always be obtained from consumers at the time of sign-up.

Additionally, the federal CAN-SPAM Act of 2003 (CAN-SPAM) sets forth specific additional requirements that must be followed when marketing to consumers via e-mail. Under CAN-SPAM, use of false or misleading header and sender information is prohibited and the applicable e-mail subject line should accurately reflect the products/services that are being advertised in the subject e-mail. CAN-SPAM mandates that when sending a commercial e-mail message, businesses must clearly identify the e-mail as an advertisement, include a valid physical postal address for the sender, and provide consumers with a mechanism for opting out of the receipt of future e-mail marketing.


While the use of promotions, gaming, consumer reviews and blog posts in connection with online and mobile marketing can garner great benefits for your business, you must also be cognizant of the associated pitfalls, which may put you at legal risk. As such, businesses should always consult with a knowledgeable attorney before commencing any online or mobile marketing campaign.

Original published in Website Magazine

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

David O. Klein
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions