Online Sweepstakes, Games and Contests: Navigating Legal Issues and Pitfalls

Online Sweepstakes, Games and Contests: Navigating Legal Issues and Pitfalls

Online sweepstakes, games and contests are becoming increasingly popular thanks to the widespread use of social media and iOS apps. However, companies often overlook the need to include proper documentation and guidelines required by state or federal laws and regulations. Additionally, today’s new technology often allows web/app users to submit cloned entries or otherwise circumvent online rules. Likewise, collecting personal information for sweepstakes, online games and contests can raise a number of completely different legal issues, often without the knowledge of the host company. Care should be taken before launching new sweepstakes, games or online competitions.

One of the biggest challenges with online lotteries and games is the differences in rules and regulations between countries. Before launching a new sweepstakes, online contest or game, the host must verify that it complies with the laws in each state where it is available. This often requires an analysis of each state’s laws, as many sweepstakes, games and contests are available to residents of all 50 states given the nature of the Internet and iOS/Android apps. Some states require registration for certain types of competitions.

In addition to state laws, online game hosts must verify compliance with federal regulations and laws such as the Children’s Online Privacy Protection Act (“COPPA”) and similar privacy laws. Given the global nature of the Internet, consideration should be given to whether compliance with foreign laws is required or whether access to an Internet sweepstakes, game or contest is restricted to US entrants. The laws of European countries, for example, provide for stricter privacy restrictions than US e-commerce law.

While companies can achieve compliance with state and federal regulations on their own, hiring an e-commerce attorney is recommended due to the complexity of the legal landscape. The first step is to evaluate associated promotional materials and online policies to ensure there are no violations of federal and state laws, including online privacy laws. The e-commerce attorney will then likely analyze the entire contest, game, or sweepstakes framework to ensure overall compliance with both state and federal law applicable to the client. As mentioned, this may require registration in certain states and the posting of bonds. Finally, the attorney will draft general guidelines as a reference to use in any future promotions. These guidelines can be used to reduce costs in the future online lotteriescompetitions and games.

Disclaimer – As with any discussion of legal topics, this article is intended for educational purposes only and is not a substitute for legal advice, nor does it provide legal advice or create an attorney-client relationship with the reader. Please seek legal advice before making any decision. Also, keep in mind that this article will likely not be updated, so the law and circumstances may have changed by the time you read this article.

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