Boosting Your Business: An Introduction to Legal Compliance for Promotions and Giveaways

Feb 3, 2021 | Compliance, FTC, Promotions, Giveaways, Contests

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What makes a business great? The best ones constantly seek ways to improve, whether that’s developing better products or adopting more efficient processes. They develop intentional business plans, which are then put into motion. Every business needs a marketing plan in congruence with its business plans. Marketing plans help businesses to promote its products and services to its target audience. Ultimately, marketing is what drives sales, and without sales, businesses operations may prove to be unsustainable.

A marketing plan can dramatically improve the success of your business by increasing engagement between consumers and your brand, thus fostering ongoing and loyal customer relationships. Often, marketing plans are designed to reach new customers and retain current ones. Promotional strategies fit under the marketing umbrella, and such strategies may include contests, giveaways, and sweepstakes. When developing their marketing and promotions strategies many companies do not realize, however, that these types of marketing schemes must adhere to strict regulations and require certain documentation and disclosures. 

In this month’s quarterly SMB business topic, we will taking a deep dive into running legally compliant giveaways, contests, and other promotions. This is a topic on which we frequently are asked consult with our clients who love using promotions to increase brand awareness, introduce new offerings, and reward their customers.

Did you know? Promotions, contests, sweepstakes, and giveaways mean different things under the law! 

Promotional giveaways or sweepstakes have proven to be an effective marketing strategy for increasing brand awareness and sales. One of the fastest ways to get your business featured in conversations is to give people a chance to win your products. From a single promotion, you can gain subscribers, new customers, an upsurge in sales, and greater brand recognition.  Giveaways are products or services given away for free without conditions to more than one person, whereas sweepstakes are a race or contest in which the entire prize may be awarded to a single winner.

A contest is a competition of skill that is judged by a set of criteria. The winner is selected on the basis of merit. On the other hand, giveaway and sweepstake winners are selected on the basis of luck without having to demonstrate any particular skill.

Promotional efforts, in various forms, have been widely used as a means to promote business for hundreds of years. They are a great way to draw attention to new products, reach new customers, and promote long-term brand awareness and loyalty. Often, contests, giveaways, and sweepstakes function as low-cost marketing strategies that yield high exposure.

Want to know more? For more information integrating promotions and giveaways into your business and marketing plans, we suggest you download our free E-Book “How to Hold Legally Compliant Contests & Giveaways” or check out our Contests & Giveaways Legal Document Bundle.  

Up Next: A dive into what makes a sweepstake a sweepstake under the law. 

Quarterly SMB Topic: Promotions & Giveaways
Table of Contents

  1. Boosting Your Business: An Introduction to Promotional Strategies
  2. Enter for Your Chance to Win…: What is a Sweepstake?
  3. ‘You Get a Car!’: What is a Giveaway?
  4. Promotional Contests: What are They and How Can I Host One?
  5. Reaching Your Target Audience
  6. Contest and Sweepstake Laws
  7. How to: Hold a Sweepstake
  8. How to: Hold a giveaway
  9. Social Media and Promotions
  10. Games for Contests, Giveaways, and Sweepstakes
  11. Prizes
  12. Hosting Promotions: Legal Don’ts

Free E-Book: How to Hold Legally Compliant Contests & Giveaways

Contests and Giveaways are one of the easiest ways to increase company visibility and generate leads. Running a legally compliant promotion is not as easy, however, as creating a campaign on social media and is, in fact, highly regulated and easy to get “wrong.” That’s why we wrote this ebook and why we’re providing it to you free of charge!

Here are a just a few of the useful things you can expect from this free ebook:

  • Legal differences between a sweepstake, giveaway, and contest
  • The law of “no purchase necessary”
  • Bond and registration requirements
  • Official terms and conditions considerations
  • Using social media for promotion

As a bonus we have included a detailed survey of legal requirements by jurisdiction / state!

Rebecca joined the Octans Legal team in July 2020 as a law clerk. Rebecca is finishing her last year of legal studies at the University of Illinois College of Law – Urbana/Champaign where she is a notes editor on the Law Review. She will take the Illinois Bar Exam in July 2021. 

Rebecca Yeh

Law Clerk, Octans Legal, PLLC


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