American’s sweetheart advertising lawyer, Myka Todman, notes the class action against the show “Deal Or No Deal” and, as luck is the residue of good legal advice, advises us as follows:
The state Supreme Court in Georgia is hearing a class action law suit against NBC Universal and the producers of the hit show “Deal or No Deal” based on its Lucky Case Game. Before you rush to the show’s official web site, the Lucky Case Game is “taking a short break”. In case you haven’t seen the show, the Lucky Case Game was an interactive text message promotion allowing viewers a chance to play and potentially win a prize during each broadcast. The viewers could participate in the promotion, either via the Internet or text message, by watching, selecting one of six gold cases, and submitting the number of the winning case. The suit alleges that the Lucky Game constitutes illegal gambling because even though viewers were invited to participate online for free, entrants who played via text message were charged a premium fee of 99 cents to enter.
In light of this suit and others which are currently pending, it seems like a good time to briefly review some promotion basics so as to avoid conducting an illegal lottery.
1. Federal and state laws prohibit lotteries unless they are state run. To avoid violating the illegal lottery laws, one of the following elements must be removed from your promotion: chance, consideration or prize.
2. Are you conducting a sweepstakes (game of chance) or a contest (game of skill)? Decide and stick to it. Sweepstakes must be primarily based on chance, as opposed to contests where the outcome must be predominately related to some measurable form of skill. When running a skill contest, do not inject chance into the promotion by picking the winner out of a hat in the event of tie.
3. The “Official Rules” govern a promotion from start to finish and considered a legally binding contract between the sponsor and the entrants. Remember that the rules must contain certain disclosures (e.g., eligibility requirements, odds of winning, number/value of prize(s), deadlines, limitations of liability). Draft the rules carefully, considering all factors, as they cannot be changed midway through the promotion. Because this is a contract between the sponsor of the promotion and the entrant, the Official Rules cannot be amended unilaterally once the promotion has commenced.
4. Limit eligibility to the United States or ensure that you have competent legal counsel familiar with international laws to avoid violating the consumer protection and promotion laws of all countries. In addition, don’t overlook the fact that each state has its own promotion law regime with which you must comply. Tread lightly.
5. What do you want from the promotion? Do you want the right to use all entries (e.g., photos, essays, videos) and how (e.g., print ads, online, in future campaigns)? Will you be returning the entries? Might you want the finalist(s)/winner(s) to participate in interviews related to your brand and/or the promotion? Draft these rights into the rules so that the entrant is on notice and tie acceptance of the prize to the granting of rights so that it is all dealt with ahead of time.
6. Advertise your promotion with caution and make as many disclosures as possible. The rules and regulations vary depending on the type of advertisement (e.g., print, radio, TV, Internet) but all should contain some form of abbreviated rules. For example, the start and/or end dates, eligibility requirements, odds of winning and sponsor name and address should be listed. As with everything else, all ad copy should be reviewed by legal counsel.
7. Consumer generated content is hot. Inviting consumers to create content is a big draw and makes the consumer feel closer to the brand. That said, you have no control over the submission and may be held responsible for its content. There are ways around this – drafting the rules so that no infringing materials may be used (e.g., no music), screening all submissions, disqualifying all submissions containing content not original to the entrant, providing entrants with a toolbox of content for use in the submissions – but no matter what safeguards you put in place, if you plan to place the submissions on, for example, your web site, you should expect some additional headaches along the way. See Doctor’s Associates, Inc. v. QIP Holders, LLC, 2007 U.S. Dist. LEXIS 28811 (D. Conn. April 19, 2007).
8. Plan ahead. Keep in mind that there are many moving parts involved in running a sweepstakes or contest and you need time to keep things running smoothly. By way of example, there are some states that have registration and bonding requirements which must be complied with prior to the launch date. Also, remember that once a winner has been selected in a skill contest or game of chance, there is still work to be done – you need time to contact the winner and send out and receive certain documents (e.g., affidavit of eligibility, publicity/liability release) before making any announcements or you may find yourself with an uncooperative winner and no recourse.
9. Include a privacy statement or a link to your policy in the Official Rules. Entrants should be told exactly how their personally identifiable information will be used. Such information must be used in accordance with your guidelines which are legally binding. Bear in mind that if you conduct a promotion geared towards children under the age of 13, the Children’s Online Privacy Protection Act will apply.
10. As mentioned, there is a lot of confusion surrounding entry into a promotion through a text messaging component. Right now, this should probably be avoided at all costs and if not, under no circumstances should you include a premium fee on top of the standard text messaging fee charged by the carrier. Otherwise, you are likely undermining the entire promotion in the process.