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!

7 comments:

Lauren @ She Moved To Texas said...

Oh this is reaallly good info as I'm one of those blogs who hosts a decent amount of giveaways. I think I actually fall into the lottery category, even though I don't want to. The only entry I require is to leave a comment (usually) which I think is just a sweepstakes, but I give extra entries for Likes, etcs which pushes it into more lottery territory. Very interesting.

Corinna Charlton said...

It is NOT easy legal terminology to understand- so I totally sympathize! Even the lawyers have a hard time with it since the laws are a bit archaic (in my opinion) when it comes to the new blog frontier.

I would say pick one category (lottery, sweepstake, contest), do a little research on it, then try to follow the basic laws as much as possible. Having some kind of "fine print" terms and conditions as a page link at the bottom of a giveaway post would be a super idea to help you protect your interests. I would be curious what Ariat would say if you asked them to send you their rules when you host a giveaway for them!

If you make money from your giveaways it could be a good investment to have a consultation with a lawyer that knows this field really well.

Thanks Lauren!

Anonymous said...

It seems like all of this stuff with blogs is unregulated. Another aspect of blog contests I dislike are blogs that pretend to be doing a lottery or sweepstakes (they say they'll choose the winner randomly) but then, when the winner is announced, it's (almost) always someone else with a really popular blog. It's a smart move marketing wise since the prize winner will probably post about winning and link to the contest blog, but it's not honest.

Karley said...

Hmm interesting! Who knew there were rules! haha!

Corinna Charlton said...

I think as bloggers make more and more money we will start seeing more legal action being taken for violation of FTC and other relevant laws (or new laws being written to specifically address the blog/ online world). It seems a funnel for a lot of the big blogs is to hook up with a large, centralized advertising company that then takes over all of the business and legal side of things. However, I have started hearing rumors of "sweepstakes trolls" that go around to blogs in efforts to find a violation (we had at least one person in California go to every mom and pop business to find ADA violations and then would file suit- similar idea).

susanfriedlandsmith.com said...

Hi Corinna! This is a very practical, well-written guideline. Thank you for posting. I am a newer blogger so I have yet to do something cool like having an actual contest. I know where to go and what to do when I get to that point. Bravo. :)
P.S. Do you ride in SoCal?

Corinna Charlton said...

I'm so glad you found it helpful Susan! Laws are often much more complex to figure out than they should be- so my goal on the blog is to break them down and make them as easy to understand and as applicable as possible.

I bounce back and forth a lot but am based in N. Cal. :)