Internet sweepstakes can be an effective and economical way to generate interest in a company's products or services. In particular, a well-marketed online sweepstakes promotion may help drive more customers to a company's website, build buzz around a new product launch and provide a useful tool for collecting information about existing and potential customers. In light of the higher costs associated with conducting sweepstakes through direct mail, broadcast or print media, more and more businesses are turning to the Internet as a cost-effective marketing tool. As a result, the number of sweepstakes that are being promoted using commercial websites has dramatically increased.
Rules of the winding road
While all sweepstakes are subject to Federal Trade Commission regulations, it is important to consider other state laws as well, in particular those that regulate false and deceptive advertising. Because Internet sweepstakes are essentially borderless, they must comply with the relevant laws in all 50 states and, unless the promotion is limited toU.S.residents, international laws. Certain states have gone to great lengths to regulate sweepstakes. For example, underColorado's sweepstakes law, the “No purchase necessary” disclosure (which is required by most sweepstakes laws) must be in “at least ten-point, bold-faced” type.