What is “Consideration” in a Sweepstakes?

Posted by Jennifer Hibbs on March 31, 2014 in Articles, Compliance, Consultation, Promotion Planning, Sweepstakes | 33 Comments

33 Responses to What is “Consideration” in a Sweepstakes?

  1. Valerie Wolf says:

    Thank you for a clear, concise explanation of the elements of what makes a contest legal or not. My husband – a life-long broadcast professional – would recite the “Prize, Chance, Consideration” mantra frequently, when pointing out the pitfalls of my efforts at charity fundraising that might (inadvertently) be illegal. This lays it out perfectly.

  2. Bryan says:

    Consideration can play a role as long as 100% of all procedes goes to a charitable organization correct?

    • Jennifer Hibbs says:

      Your question will need to be answered it 2 parts. The first is what is consideration – which in the example in your question is making a donation in order to enter; and therefore would require an alternate means of entry to be a legal sweepstakes.
      And, the second pertains to cause marketing and co-venture laws which is dependent upon the Charity and which States your promotion will run. For further information, please contact us directly @ expert@mardenkane.com.

  3. Brandon says:

    Is asking fir a name, address, phone number and email address falling under “consideration”? Furthermore, if I use this as a method of compiling an email list for marketing purposes, does it then become “consideration”?

    • Jennifer Hibbs says:

      Collecting personal information such as name and contact information to be used in awarding a prize does not typically fall into the realm of consideration. However, to use the collected information for other marketing purposes we recommend that you disclose this information and provide an opt-in (and opt-out mechanism if you ever use the collected data). For specific recommendations that might apply to you, contact us or your attorney.

  4. Steve Hutchinson says:

    my golf club is considering a sweepstakes funded by the club to attract attendance at our weekly happy hour. The club will supply $25 each week and a drawing will be held from a list of all member numbers. If the member is present they will win the prize. If not the club will add another $25 next week and so on. The event will be advertised and in fact be no purchase required. You must just be at the club at the time of the drawing and the time will be advertised and held the same time each week. Do you think we are okay? Is requiring people to be at the happy hour consideration? Thanks for your help. Steve

    • Jennifer Hibbs says:

      Legal experts might say that requiring people at the happy hour is consideration, although your risk may be low. There are other factors to consider as well, like if alcohol is served, and are all members able to be there or does the timing or location create a hardship. It only take one disgruntled person to file a lawsuit and create a problem. Best practice would be to get a promotional agency or lawyer to draft official rules and help you sort through the details.

  5. Melanie says:

    Is it “consideration” when you ask for entrants to like or follow you on social media to enter to win a pize?

    • Jennifer Hibbs says:

      That is not normally deemed “consideration” as long as the social platform is free, open to everyone, and the social platform’s promotion guidelines allow it. Facebook, for instance, has it in their promotion guidelines that you can’t require a “like” or “follow” for entry into a promotion.

  6. Jean says:

    I want to giveaway points(with points you can redeem prizes) on my rewards website. You can enter te giveaway by sign up to the website and clicking the entry button. You can only click the button once every hour for a entry and you can only enter if you are signed up. Is this legal in terms of consideration? Can I let people shorten the time between entries by letting them spend a few points if they have points available?

    • Jennifer Hibbs says:

      From the info you provided that could be a viable solution. We would need to know more to give any guidance. Contact us if you need help.

  7. OG says:

    Hello. If patrons who purchase today are interred tomorrow into a sweepstake ending that day, is that legal prior consideration not requiring an AMOE? If not, can you give a similar example of legal prior consideration? Thanks so much.

  8. Jimmy Bob says:

    Very informative post – thank you.

    Would requiring an entrant to watch a short (<1 minute long) 3rd party ad video be considered consideration?

    • Jennifer Hibbs says:

      Requiring that your entrant watch a short video may be ok, but there are other factors to consider. be sure to consult us or another promotional marketing agency with specifics before you run your promotion.

  9. Caroll Prevette says:

    Would asking entrants to answer 10 survey questions to be entered into a sweepstakes be “consideration”? The entrants can only enter the sweepstakes via an email invitation and are requested to answer the survey questions. If they do not answer/complete the survey questions they are still entered into the sweepstakes.

    • Jennifer Hibbs says:

      If they aren’t required to complete the questions to still be entered this is not consideration. If the survey responses were required, then the length of time it would take to complete the survey would have to be evaluated, along with a few other factors, to be able to determine if it was consideration. You can contact us for assistance on your specific case at the contact us link.

  10. spiro andritsis says:

    Interesting, how about if everyone is given a free entry into the sweepstakes but are also allowed to “spin the wheel” to win even more entries? Can players purchase additional “spins”?

    • Jennifer Hibbs says:

      To avoid it being consideration, you must allow someone to earn the same amount of entries without purchase that one can through a purchase.

      • spiro andritsis says:

        That’s what iI was wondering, even when all participants have the same chance of winning more entries as they would be entering through the method involving consideration. So even though they all start equal they must end up equal. Is that correct?

        • Jennifer Hibbs says:

          In a sweepstakes, all entrants must all be able to obtain the same amount of entries for free as they would by obtaining them with purchase.

  11. Emery Kohn says:

    So if I run a sweepstakes and make it free to enter via email address, could I legally give more entries with a purchase on the site?

    • Jennifer Hibbs says:

      No. You always have to have the max number of free entries available be equal to the amount that can be earned in other ways, including purchase.

  12. Chis says:

    If a web site offers a free trial that allows the user to enter the giveaway would this be considered legal?

    • Jennifer Hibbs says:

      Possibly. You would have to look at what was required from the trial, who could participate, etc. You should consult a promotional marketing company with the particulars to make sure everything is legal where you plan to run it to make sure.

  13. Wan says:

    Could you give examples of non monetary considerations?

    • Jennifer Hibbs says:

      The most common non-monetary forms of consideration is time. Asking someone to complete a 15 minute survey or go to a retail store to enter (which could take both time and money to get there) are both forms of consideration.

  14. Jason Willis says:

    Is it “consideration” when you require entrants to install an app on their phone in order to claim a prize?

    • Jennifer Hibbs says:

      We would need to know more info, but as long as anyone can download the app without cost or restrictions, it sounds reasonable.

  15. Ralph Thomas says:

    Entrants must drive a considerable distance (up to 50 miles) and be there to win the grand prize. They all get a T-shirt for coming. Consideration?

    • Jennifer Hibbs says:

      We would need more info. Depending on the state where this is happening and other factors it might not be legal. If this is a promotion you are thinking of running, we would recommend consulting us or a company like us to ensure the promotion is being run legally.

  16. Abigail says:

    I am considering running a summer reading program, where people read books to receive entries to win prizes (can read any books they like, not determined by me). Kind of like library summer reading programs. Would requiring them to read a book to enter be considered “consideration”? I (and my business) do not benefit from them reading the books, I just want to encourage reading and give back to my audience/community by giving away some fun prizes at the same time!

    • Jennifer Hibbs says:

      Consideration would be determined based on the length of the book, the age of the individual reader, and what the prize is, as well as if this is a local or national promotion. Always consult as attorney or promotional marketing expert to be sure your promotion is legal.

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