The newest promotion trend is to run a pay to play sweepstakes where you can earn entries with purchase. For many e-commerce providers, a sweepstakes with the chance at winning a high value prize can be used to boost sales or donations. Every dollar spent can earn an entry into the sweepstakes, and bonus entries can be earned for purchasing certain products or making a purchase at a certain time. In the United States there are laws, however, that make this type of promotion illegal unless you follow some simple guidelines. Here are three things to do to ensure you run a legal pay to play sweepstakes.

1. Provide a free method of entry.

The most important part of making your promotion legal is that you must provide a free method of entry, also called an alternate means of entry (AMOE). This free method of entry could be earned by mailing in an entry form, performing an action on social media, or by completing an online form. This free entry method must be easy to find in the official rules, and be made readily available to anyone looking. And it must provide equal dignity to all, meaning someone entering without making a purchase can earn just as many entries as the person using the pay to play method.

2. The prize must be given away.

You cannot plan on using the profits from the pay to play entries to buy the prize later. If you don’t make the sales you think you will, you still have to award the prize in a legal promotion. And if the prize is valued at $5,000 or over, you must register and bond the sweepstakes in a few states – the costs of which can be hefty as these are determined by the value of the prize. Registration and bonding are what states do to ensure large prizes are awarded, and not bothering to register, or failing to award the prize(s) can get your business in big trouble with additional penalties and fines. Consider using a third-party promotional marketing company, like us, to help you navigate these legal hurdles and legitimize your promotion.

3. Don’t Engage in Spammy Behavior

If you run ads online to promote your promotion, don’t engage in behavior which could label you as a spammer. If you make it sound too good to be true, or flood people with your messages, then people will think you are running a scam. To prevent that make sure there are disclaimers on all ads so people can easily find out more about the promotion and the rules (including where to find the free method of entry). Similarly, don’t flood peoples with emails or social messaging unless you do your homework and have permission to send them messages. And finally, don’t encourage people to retweet or share an unlimited amount of times about the promotion for unlimited entries as the social platforms could see that as misuse of their platform and suppress those entries in their feed.

If you still have questions about how to make your pay to play promotion legal, contact us! We can help.

To read more posts by Marden-Kane, please visit our main blog page or subscribe to our email list.