Technology: The changing landscape of Internet sweepstakes regulations

Inside counsel should tread lightly when drafting the rules for a sweepstakes or contest

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.

Contributing Author

author image

James Kunick

James M. Kunick is Chair of the Intellectual Property & Technology group at Chicago-based law firm Much Shelist. He has nearly two decades of experience...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.