How to Avoid a Horse Blogger Giveaway that Breaks the Law

It's been so interesting to see the number of 'horse lifestyle' blogs or blogs by amateur riders hosting giveaway contests for large and small brands alike.  This can be GREAT equine business savvy, but there is also MAJOR legal red tape to navigate!


Sometimes the blogger receives free riding clothes or horse gear and writes a review, and then offers a reader a chance to win a similar item.  Often an entrant is required to follow a multi-set of rules to be entered into the giveaway.  At times I have seen extensive lists for entry! Such as:

1. Follow my blog
2. Like my page on Facebook
3. Like the product or service company's page on Facebook
4. Post on your blog about this giveaway
5. Tweet/ Pinterest/ etc. this giveaway
6. Come back and leave a comment on my blog to let me know you completed all steps

That is a lot of requirements to entry!  So have you ever been curious whether these giveaways are in compliance with the law? Or if you want to host a giveaway, have you considered whether it will violate the law?

Giveaway vs. Sweepstakes vs. Lottery

These are all separately defined and have separate federal and state laws that regulate them, and you need to know which you are hosting to make sure you are following the right restrictions.
 
Sweepstakes:
winning is based on pure luck
Contests: winner is chosen based on quality or worthiness of entry (i.e., leave a comment why your horse business would benefit from winning and our blog team will make our selection based on the comments)
Lottery: winner is chosen at random, but entrants have to pay or do something to be entered into the opportunity to win

In general, you do not want to be defined as a Lottery unless you are prepared to comply with all lottery requirements.  Followers are valuable! Did you know that requiring someone to like or follow you could put you into a lottery category?  Also, did you know that because "time is money" that requiring an entrant to navigate away from your page, do a task, and return, that you could be requiring consideration to entry?  

So the MORE steps you require the MORE likely you are subject to lottery laws!  It is legally untested thus far in the blog world how many steps gives rise to consideration, but the general consensus seems to be that you shouldn't require more than one simple step for entry, and that offering the opportunity of additional actions as "extra entries" may also be in violation of lottery laws.

Legal Compliance

Problem: If a person is eligible to enter the giveaway, then you as the host must comply with all the laws of the jurisdiction where that person is located.

Tip: If you do not want to follow the laws of every jurisdiction, then limit WHO can enter.  For example, minors are treated differently under giveaway laws so you may want to restrict entry to those 18 and older.  Also, Canada has very unique (and rather burdensome) laws for giveaways, so you may want to restrict entry to your country only.

Problem: Lotteries are strictly regulated (think of your state's lottery system- same rules!), so you most likely want to host a SWEEPSTAKES giveaway, not a lottery.  However, CONTESTS can also be a great option if you are choosing the winner based on specific criteria and the entrant's qualification, not on chance.

Tip: Follow the sweepstakes checklist below.  Also, if it is a big company providing you with the product, ask them to give you their sweepstakes/ contest/ lottery rules.  Remember: YOU are your only advocate and are the one responsible for protecting your own and your blog's legal interests- the big company just cares about promoting itself. If you are hosting a CONTEST, follow the checklist below but substitute #4 and #5 to match your contest requirements.

Sweepstakes Checklist

Fortunately, creating a sweepstakes can be pretty straightforward.  This article has an excellent checklist and I highly recommend reading the entire article for a more comprehensive look at the laws for bloggers giving equestrian items away to readers.  I have provided here, your blogging convenience, what to include in your sweepstakes announcement to make it legally compliant:

1. WHAT is the prize?
2. WHO can enter, and WHO cannot? (age, country, etc.)
3. WHEN will the sweepstakes begin and WHEN will it end?
4. HOW does someone enter? (Tip: avoid falling into "consideration" as discussed above)
5. WINNER: what random process will be used to select the winner?
6. OTHER: what are the terms of the giveaway? Duplicate entries, how to ask questions, technical site issues, prize no longer becomes available, disclaimers, etc.?

Important Tax Issues

Taxes! Everyone's favorite legal compliance issue.  If the total prize value is worth more than a certain amount of money then the prize has to bonded or insured against loss within a certain timeframe of the giveaway.  This is unique to each state.  As this article points out, in New York the monetary threshold is $5,000.00.

IRS! Where there is financial value, the IRS invites himself over.  If the prize value is more than $600.00 then the recipient must report that as income to the IRS, so entrants need to be told the value of the prize, and that the entrant is responsible for any tax liability that arises- not the host.  For example, when Oprah gives someone a car, she is most likely not going to also pay the winner's taxes on the car's value.

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Remember how in our Copyright post for Horse Bloggers we mentioned how unchartered it is to apply traditional laws to this new online platform?  Giveaways, sweepstakes, and lotteries are an even greater unchartered territory for bloggers.  I know complying with all the laws isn't as fun as just throwing up a giveaway and getting a lot of likes and follows in the process- but read through this post a couple times, follow the checklist, and consider having a page on your blog with "Terms & Conditions" related to giveaways (tip: go and read the T&C of other big horse companies, like Ariat, if you are curious what it might look like).

Do you ever get annoyed with some of the requirements to enter a blog contest?  Have you ever even considered that your blog's giveaway must follow the law?  If any other comments related to this developing field- let me know!

p.s. there is no prize involved, but if you like this post then feel free to do one (or all!) of those 6 steps to follow this blog, google+ the post, or like the page on facebook, as listed at the top of the post! Thanks!