What You Need to Know Now about Running Legal Social Media Prize Promotions

Kyle-Beth Hilfer recently spoke on a webinar offered by The Knowledge Group entitled “Social Media Contests and Sweepstakes: Understanding Legal Considerations and Regulations.” Social media prize promotions  boost engagement and brand awareness and attract customers. While sweepstakes and contests have been around for decades, the social media context creates some unique complications. Here are three important questions you need to ask before running social media prize promotions.

• The FTC’s Acting Commissioner Maureen Ohlhausen has asserted her interest in focusing on “demonstrable harm” for data security issues. Why should I be more concerned now about the legalities of sweepstakes or contests in social media?

Sweepstakes and contests consistently rank in the FTC’s annual top ten list of consumer complaints. So this is an area of inquiry for the FTC that is unlikely to diminish in importance. In addition, data security is a significant issue for social media prize promotion sponsors. They often run these campaigns to collect data on their customers. At the same time, to the extent that the FTC only chooses to focus on the worst offenders, progressive state attorneys general are picking up the regulatory baton. The resulting regulatory activity is likely to be more fragmented, requiring an even more detailed state-by-state analysis of social media sweepstakes and contests.

• What are my biggest areas of concern if my company wants to run a social media sweepstakes or contest?

Determining the proper structure for a sweepstakes or contest in social media is often the trickiest part. Refer a friend, text to enter, and public judging, for example, all require legal vetting. You can implement these strategies successfully if you plan ahead to avoid legal mishaps. While many form rules are available online or through vendors, these documents often overlook important strategic considerations. Are you inviting cheating with your structure? You will want to consider which states or territories to void. Are you asking for more data than you need or can secure? Experienced counsel can help you to cover all subtleties of your promotion’s legalities and implementation. For global promotions, you need global legal clearance.

Many social media promotions involve user-generated content (UGC). This content poses its own set of legal risks, including intellectual property claims, rights of privacy/publicity claims, false advertising risks, and brand reputational issues. While many rules contain indemnity clauses regarding UGC, such clauses may have little practical protection for the brand. Accordingly, your rules need to give appropriate consideration to content submission guidelines for entrants and acquisition of content rights.

Finally, your marketing team’s advertising and promotion of the game must align with your rules and legal requirements. Often, the marketing plan is the Achilles heel of social media prize promotions. Vet your social media posts ahead of time to ensure you meet the disclosure requirements of the FTC’s Endorsement & Testimonial Guidelines, DotCom Disclosures Guidelines, and Native Advertising Guidelines and Enforcement Policy and any applicable state laws.

• All of this legal vetting sounds like it takes time to manage. Social media campaigns move fast. And my competitors are doing all kinds of interesting campaigns without following these rules. How can my marketing team keep up with the marketplace and accommodate legal review on a tight time schedule?

First of all, you have no way of knowing whether or how your competitors have analyzed the risks of their promotions. Even if they have contemplated the legalities of their programs, their risk tolerance may be greater than yours. In short, you should draw inspiration from the creativity of your competitors, but you may not want to shoulder the same potential legal liability.

Second, if you are outsourcing your marketing, it is tempting to outsource legal responsibility to your vendor. Take note you are still responsible for the actions of your agency. Look carefully at the warranties/indemnities sections of your vendor contracts, and consider doing your own legal clearance regardless. It is your liability and your public relations disaster if the agency goes rogue or just acts too quickly without accepting the legal responsibility.

Finally, as to timing, with proper training and monitoring of your marketing team, compliance with all applicable laws is manageable. There is undoubtedly a learning curve. So start early if this is your company’s first social media prize promotion. Consider some in-house tutorials. Make sure you have the appropriate policies set up for third-party influencers and that you are enforcing those policies. Time and time again, the presence of adequately enforced social media policies has spared companies from FTC enforcement action. Consider ahead of time which social media platforms work best for your brand from both a marketing and legal perspective. In short, marketing teams that partner with legal counsel early and often find that they can move the most rapidly and with the most security.