![\"Shelley](\"http:\/\/www.financenewmexico.org\/articles\/wp-content\/uploads\/2010\/11\/Shelley-Gregory.jpg\" "\\"Shelley")
<\/a>Shelley Gregory, President of Media Matched, Inc.<\/p><\/div>\n
Judging by the number of Americans who participate in sweepstakes and other promotional contests, a company owner wanting to generate business might consider hosting some type of giveaway contest as a promotion for its product or service. Advertising the contest can make the promotion even more effective, but a business owner should know the rules before initiating such promotions.<\/p>\n
The Federal Trade Commission has federal oversight over contests on behalf of the tens of millions of Americans who participate every year. But the FTC also advocates for the public when the contests seem rigged and offers sponsors advice about how to run a contest without running afoul of the law.<\/p>\n
The two most important aspects of the federal laws that pertain to contests are that the contest can\u2019t be deceptive and participants must understand they won\u2019t have to pay to participate \u2014 though the law does provide some exceptions to this latter rule.<\/p>\n
Do\u2019s and don\u2019ts for contest sponsors<\/strong><\/p>\n Specific rules spell out how contests can be pitched over the telephone or through the mails, airwaves or cyberspace. The Telemarketing Sales Rule, for example, outlines what can and can\u2019t be said in a telephone solicitation for a \u201csweep\u201d or contest; the company running the contest must reveal the odds of winning or explain how those chances are computed.<\/p>\n Solicitations sent by mail must abide by the Deceptive Mail Prevention and Enforcement Act. One no-no of snail-mail contests is telling people they\u2019re winners when they\u2019re not or sending something that looks like a check without clarifying that the check isn\u2019t valid.<\/p>\n Many sweeps sponsors are drawing entrants via the Internet as costs to sponsors are minimal. Besides being required to comply with all federal and state laws that pertain to sweepstakes and contests, though, the business running an online contest must also comply with the Children\u2019s Online Privacy Protection Act if children under 13 can participate.<\/p>\n The point of a contest is to select winners by chance; it can\u2019t require that a contestant buy a product or pay a fee (including taxes or shipping and handling costs) to improve his or her odds of bringing home the prize. The law does allow sponsors of skills competitions to charge contestants to enter, but these types of competitions are poor venues for business promotions.<\/p>\n Legitimacy is everything<\/strong><\/p>\n The last thing a business wants when planning a promotional contest is to get attention by breaking the law. So the FTC urges businesses to consult its website or an attorney in the state where it\u2019s based for the freshest information about how to run a legitimate event.<\/p>\n Being and looking legit includes using the sponsoring business\u2019s name in all solicitations of contestants. Besides identifying itself, the sponsor should provide participants an easy way to get in touch \u2014 including making contact to get their names taken off the mailing, emailing or telephone list.<\/p>\n The appeal \u2014 no matter what form it takes \u2014 should spell out the contest terms, deadline, rules and odds of winning.<\/p>\n Article 163<\/p>\n Download 163_Know Rules Before Using Contests in Advertising<\/a>\u00a0PDF<\/p>\n","protected":false},"excerpt":{"rendered":" A company owner wanting to generate business might consider hosting some type of giveaway contest as a promotion for its product or service. Advertising the contest can make the promotion even more effective, but a business owner should know the rules before initiating such promotions. Continue reading