Exploring the Legalities of Amazon Giveaway

Last month, Amazon launched its “Amazon Giveaway” program. It offers two no frills sweepstakes options to users. The sponsor signs up, chooses the prize, and Amazon does the rest, including offering the sponsor access to Amazon’s vast shipping capabilities. Amazon Giveaway may draw brands away from social media pages for simple sweepstakes, but its one size fits all approach is not right for every advertiser or every sweepstakes. The program makes legal assumptions about sweepstakes law and may leave brands assuming certain legal risks.

What is “Amazon Giveaway”?

The program allows anyone with a credit card and Amazon.com account to become a sponsor of a simple sweepstakes. The sponsor may award the prize to every “[n]th entrant who submits an eligible entry will be a potential winner, while the specified supply of prizes last.” In the alternative, sponsors may have Amazon conduct a random draw out of a specified number of entrants, thus rewarding those who register quickly with a chance at the prize. Sponsors may also require entrants to follow them on Twitter, in the process sharing your Twitter followers list with Amazon. Entrants find out instantly if they have won the prize. Note that there is only one prize, although there may be multiple offerings of that same prize.

What does Amazon get out of this?

No doubt Amazon will be tracking Twitter data carefully as part of its targeted advertising program. In addition, it brings more users to the Amazon marketplace. While the program is likely aimed at brands that want to build Twitter followers quickly, realistically, any reseller on Amazon can use Amazon giveaway to help boost customer awareness. Finally, Amazon is gambling that brands will want to move their sweepstakes spam off social media onto Amazon, doing away with the hassle of creating rules and administering these simple giveaways.

Who is legally responsible for Amazon Giveaway?

All the sweepstakes, no matter who the sponsor is, have the same rules provided by Amazon. At the same time, the rules make clear that Amazon is just a prize provider and is not responsible for the legality of the promotion, despite the fact that Amazon has crafted the rules that bind the Sponsor. This means that brands have to be completely comfortable with the Amazon rules since they are the contract with the consumer.

While the Amazon rules cover the basics of running a sweepstakes, each brand may want customization. For example, the rules do not contain any governing law provisions. What if the sponsor wants an arbitration clause? It cannot have that with Amazon Giveaway. What if it only wants to open the sweepstakes to those over 21 rather than 18? Amazon Giveaway locks them in. In short, the rules cannot be customized. Brands should consider on a macro policy level whether Amazon Giveaway would provide them with sufficient legal protection.

Are there legal issues with Amazon Giveaway?

The program could be sufficient for really simple promotions. Rhode Island residents are exempt for sweepstakes where the total approximate retail value (ARV) exceeds $500. In addition, the total ARV cannot exceed $5000. Certainly, Amazon has protected sponsors from the registration and bonding requirements of Rhode Island, New York, and Florida by having these provisions.

What about the legal requirements to enter? Typically, a sweepstakes offers a chance to win a prize without requiring consideration, monetary or nonmonetary. Consideration renders the program an illegal lottery. If a sweepstakes method of entry requires consideration, e.g. a purchase or substantial effort, the sponsor employs an alternate method of entry (AMOE).

Interestingly, Amazon Giveaway does not have an AMOE. Its entry methods require Internet access and online accounts with at least Amazon and possibly Twitter. To date, regulators have been loath to say that Internet access is not consideration that would render a sweepstakes an illegal lottery, predominantly because of the cost of Internet access. Amazon is dismissing these concerns by launching its giveaway program, assuming that regulators will not pursue the consideration argument.

Amazon’s thinking is potentially defensible. Internet access is omnipresent and people pay for the access for reasons not connected solely to entering sweepstakes. In addition, opening an online account or following a brand on Twitter, easily reversible steps, does not seem to rise to the level of substantial effort and non-monetary consideration. As Amazon Giveaway takes off, we may see more brands abandoning the AMOE. This trend, however, does not spell the death of the AMOE for more than the simplest of promotions.

How does a brand advertise its Amazon Giveaway?

If a brand wants to mention its Amazon Giveaway in social media or on its website or even traditional media, must it include some form of the rules? Usually, brands will create abbreviated rules for these initiatives. Amazon’s FAQ offer simple advice to link to the rules, mention that no purchase is necessary, and tell participants that they are entering for merely a chance to win. Brands should still consult with their legal teams about the best way to spread the word about their Amazon Giveaways, particularly in space-constrained platforms like Twitter or mobile advertising. After all, the Amazon Giveaway program does not indemnify brands against violations of the FTC DotCom Disclosure Guides.

Will Amazon Giveaway replace social media promotions?

It is unlikely that Amazon Giveaway will make significantly diminish the presence of sweepstakes on Facebook, Twitter, or YouTube. Each of those platforms has loyal followings, and Amazon Giveaway is only useful for really simple promotions. Larger brands may decide it is not worth the legal risk to partner with Amazon when they can easily set up their own equivalently simple sweepstakes. No doubt, there will be a sweet spot for Amazon Giveaway amongst smaller brands and bloggers who want to build their Twitter following through this program and do not mind the co-branding with Amazon.