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How to Host a Legal Giveaway to Market Your Online Shop

by Arianne Foulks

June 2, 2015

how to host legal giveaways e-commerce

This post is by Kiffanie Stahle, lawyer and friend to creative businesses.

Is your giveaway legal?

Do any of these look familiar from your Facebook, Twitter, or Instagram feed?

  • My new product is live! Go to my blog to find out how you can enter for a chance to win!
  • #regram this photo for a chance to win my new product!
  • I’m entering to win @bloggers giveaway! Do you want to win too? Go here to enter:

I see giveaway promotions like this every day. You probably do too.

It’s no wonder; a giveaway can be a great opportunity to get exposure for our products. And I’m sure your goals, like mine, include getting your products in front of more of the right people.

Hosting a legal giveaway

When I’m wearing my lawyer hat, most of my job involves understanding the laws and assessing how risky a specific action is for my client. And right now, when I talk to my clients about how to host a legal giveaway, I get a lot of eye-rolling.

I’ll admit no one is really cracking down on the thousands of illegal giveaways that happen every day. But that doesn’t mean that giveaways are the Wild West and anything goes. Or that you aren’t taking risks when hosting an illegal giveaway.

Part of my disconnect stems from the fact these laws are pretty easy to comply with. And since I’m a pretty risk-averse person, it seems like a no brainer to take a couple simple steps and set my giveaway up properly. Especially when doing so removes any possibility that I’ll get in trouble.

And I’m sure you like me, have a million other things that will keep you awake at night that you can’t control.

What might surprise you is that the first step to hosting a legit giveaway is to determine the goals of your giveaway:

  • Who do you want to get your product in front of?
  • What are your ideal outcomes?
  • How will you measure results?
  • Why are you hosting a giveaway?
  • Where do you want the giveaway to be primarily held?
  • When’s the perfect time for this product giveaway?

It’s only by understanding the goals of your giveaway that we can move onto the next step: determining the type.

What you call a giveaway, the law has calls three different things: sweepstakes, contest, and lottery. What’s the difference between these?

  • Sweepstakes = random winner + prize + no consideration
  • Contest = winner selected on skill + prize + consideration
  • Lottery = random winner + prize + consideration

Lotteries are illegal in every U.S. state except for the official state lotteries (and technically some casino gambling). Which means that we need to understand what consideration is so that we can determine how to pick our winner.

(Sorry, Canadian friends, but I’m not even going to touch on the crazy matrix of what kinds of giveaways are and aren’t legal up there.)

What’s consideration?

Consideration is a term you’ll come across frequently in the law. The short definition is that it is monetary or non-monetary payment.

What’s considered consideration?

The laws say that requiring a purchase, making them invest significant time or effort, or giving you something of marketable value equals consideration. But what does that mean?

  1. Purchase:
    – requiring entrants to make a purchase or pay an entry fee
  2. Significant time investment or effort:
    – filling out a long survey
    – going to a sponsor’s website, finding your favorite product, and reporting back
    – creating a Pinterest board using the product photo
  3. Giving you something of marketable value:
    – signing up for your/sponsor’s email list
    – following you/sponsor on social media

What’s not considered consideration?

The law also outlines that the following aren’t consideration:

  1. requiring entry via the internet
  2. calling a toll-free number
  3. filling out a simple survey
  4. visiting a single store

This is why it’s important to understand the goals of your giveaway. Because if your goal were to grow your Twitter following, then entrants would be providing consideration and you’d need to host a contest.

Hosting a contest

Hosting a contest comes with a whole host of headaches. Which is why you need to understand the legal loophole that will turn your contest into a sweepstakes.

Understanding this legal loophole (called an alternative method of entry) gives us the best of both worlds:

  • Random winner
  • Some entry methods requiring consideration

Once you’ve determined the type of giveaway you are hosting, you’ll craft your Official Rules, promote, host, and administer your giveaway.

But the real key to hosting a legit giveaway starts with these two steps: determining your outcome and picking the right type.

Have I convinced you that hosting a legit giveaway doesn’t have to be stressful? Let me know your thoughts in the comments.

Kiffanie Stahle is the founder of the artist’s JD, a community designed to teach creative entrepreneurs that the law doesn’t have to equal scary. She’s on a mission to convince you that it is good to have a lawyer as a friend. Kiffanie has published a quick guide to help you navigate the 5 simple steps to hosting a legit giveaway.

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4 thoughts on “How to Host a Legal Giveaway to Market Your Online Shop”

  1. I guess the next issue is that all of these platforms are global, most giveaways are global, and these are only the US laws… So do the laws apply in the country you’re giving from or to?

  2. Tara, I asked Kiffanie about this for you and she says, “Yes, the laws are all centered around not where you are, but where your entrants are from. So you could be from Canada, but if you allow entrants from the U.S., then you have to play by these rules.”

  3. Hi. Very interesting article. So would a giveaway that only asks gor you to “tag a friend” and then you are entered into a random drawing be considered legit?

    it seems so bc that seems to fall under the no consideration part to me.

    would you agree?

  4. Brady: Most of those giveaways are hosted on a social media platform so you’d have to consider the terms of service of the platform. These types of giveaways can run contrary to those rules (rather than the ones discussed above). Here’s a post I wrote that outlines some of those rules (and has links to many of the social media giveaway rules):


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