Lorman 2016 Presentation Slides_JB

© 2017 Venable LLP
LEGAL ISSUES IN RUNNING SOCIAL MEDIA
AND MOBILE SWEEPSTAKES AND CONTESTS:
How To Avoid Leaving Your Promotion’s
Success to Chance
January 12, 2017
Melissa Landau Steinman
Partner, Venable LLP
mlsteinman@Venable.com

© 2017 Venable LLP
• Federal and state sweepstakes and
contests laws
• Criminal lottery and gambling statutes
• Federal and state UDTPA/false
advertising laws
• Intellectual property laws
• Laws regulating specific types of
campaigns/marketing techniques:
– CAN-SPAM, mobile/telemarketing,
– FTC Endorsements and
– Testimonials guides (confirm)
– Social media platform rules
– Privacy laws/COPPA
Legal Framework: Which Laws Apply?
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© 2017 Venable LLP
How do we review?
First step in evaluating any promotion is ensuring that
it is not an illegal lottery (i.e., gambling).
Lottery=three elements:
1. A prize is awarded;
2. Winners determined on basis of chance;
3. Participants must submit consideration to enter.
• Consideration=something of value that must be given to
participate.
• Monetary (i.e., a payment or purchase).
• Non-monetary (e.g., an expenditure of substantial time
and/or effort).
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© 2017 Venable LLP
• U.S. Department of Justice brought a case
against World Triathlon Corporation
(known for its Ironman Competitions).
• WTC ran the “Ironman Lottery” with a $50
fee to enter, which afforded entrants with
an increased chance of being selected.
Winners were selected randomly and
given the “prize” of participating in the
Ironman World Championship.
What are the stakes? Big $$$
• DOJ: Requirement to pay money to enter the
lottery = illegal consideration and violated FL
criminal gambling laws. Gov’t seized $2.7 million.
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© 2017 Venable LLP
• If consideration is requested to enter (such as purchase of brand
item), free alternative method of entry (“free AMOE”) must be
included.
• Equal Dignity: cannot favor one form of entry over another.
• Free AMOE must be clearly and conspicuously disclosed.
– NY Attorney General active on this issue: consent orders
with CVS, Tylenol, A&P, H&R Block.
– See FTC Dot.Com Disclosures, state settlements on what
that means.
• Other states prohibit sponsor from making certain representations,
e.g.:
– Chance of winning will be improved by purchase of product.
– Person is a winner, is specially selected, or is a finalist (unless
true).
– Mailing is urgent or time-sensitive.
Sweepstakes/Games of Chance
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© 2017 Venable LLP
Rules Requirements
Sweepstakes laws (federal and state) often include
specific requirements regarding rules:
– Rules should be readily available to all participants and clearly set
out details of promotion.
– Require specific disclosures in advertising/official rules document:
e.g., eligibility, deadlines, odds of winning, prize description/ARV,
sponsor contact.
• FL game promotion regulation is a good guideline for “material terms”
that must be included in “abbreviated rules,” although some states may
require additional disclosures. See
http://www.freshfromflorida.com/Divisions-Offices/Consumer-
Services/Business-Services/Game-Promotions-Sweepstakes.
• Federal DMPEA provides requirements for direct mail promotions
– Some states require posting rules (e.g., NY, RI).
– Winners’ lists.
– Generally advisable to include publicity and liability
disclaimers/releases; right to modify or change rules, link to
privacy policy.
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© 2017 Venable LLP
Registration and Bonding
– New York and Florida require registration and bonding for sweepstakes
where total value of all prizes given away is over $5,000.
• NY: 30 days in advance
• FL: 7 days in advance
– Rhode Island: registration of sweepstakes runs through retail outlets
where total value of prizes exceeds $500.
– Arizona: “Amusement contests” must be registered.
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© 2017 Venable LLP
Additional Considerations
• Are you advertising or promoting on social media, and which
platform(s)? What are the rules and requirements?
• Are you asking for user generated content?
• Are you collecting personally identifiable information (“PII”) for
marketing/data collection purposes?
• How are you going to address tax considerations?
• Are you allowing your own or third-party employees to enter?
• Are you offering additional entries for “referring a friend” or
asking people to “text-to-win”?
• Are minors eligible to enter?
• Are you limiting to US residents?
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© 2017 Venable LLP
Skill Contests and User-Generated
Content Promotions in Social Media
Contests and social media/UGC promotions have many of the same issues as
traditional sweepstakes, BUT they present unique issues as well:
• Test for whether a “mixed game” is truly chance or skill may vary by state:
• Any chance
• Dominant element
• Material element
• Consideration:
– Games of skill do not include the element of chance, so consideration may be
permitted
– BUT: A number of states do not permit consideration in skill contests, e.g., AR,
CO, FL, MD (VT until last year)
• Judging and voting
• Third-party platform rules and terms of use
• Intellectual property
• Practical risks inherent in asking the public to submit content, particularly open-
ended requests (e.g., Bill Cosby “meme me” situation)
• Compliance with FTC Endorsements and Testimonial Guides, native advertising
issues
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© 2017 Venable LLP
Judging in Contests
Rules drafting considerations:
– Judging criteria: nature and value of each
should be clear
• E.g., Faithfulness to topic (30%);
Originality (30%); Creativity (40%)
• Be careful to make criteria for tiebreakers
clear as well—do not inadvertently insert
chance into the process
–Judges must be objective, qualified, and
must follow the judging criteria
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© 2017 Venable LLP
• Voting adds interest, but increases the possibility of fraud and
hacking
• Include modification/cancellation clause
• Identify user by IP address:
• Limit: one (1) voter per person per email address, per day.
Void multiple votes received from any person or email address
• Prohibit obtaining votes by any fraudulent or inappropriate
means, including, offering prizes /other inducements.
• Leaderboards add “sizzle,” but also increase possibility of
complaints and fraud
• Undetermined whether voting = chance or skill
• Include both voting and judging phases
• Have public vote on area of expertise – e.g., “public appeal”
• Put in place technology solutions that will not allow votes to exceed
number limit
Public Voting Concerns
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© 2017 Venable LLP
User Generated Content
• Different Types:
– UGC Contest
– Closed “feedback” or “advisory” community
– Open submission program
– Program created specifically with user
participation (“crowdsourcing”)
• Risks & Benefits:
– You can get really creative entries, or
– You can end up with a boat named
Boaty McBoatface….
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© 2017 Venable LLP
UGC Best Practices
• Social Media Platform Rules do not necessarily give you the rights you
need—what rights do you want?
• Terms and conditions: need clear delineation of IP rights
– Participants should “accept” terms
– IP reps and IP license
– Ongoing participation in content development?
– Clear submission guidelines
– Judging and voting rules
– Prizes or gifts given are subject to all applicable laws (lottery,
Endorsement Guides, etc.)
• Third-party clearance: do not rely on participant reps/warranties
• Moderate/screen entries
• Submitter/Winner Agreement: reference the requirement for signing
agreement in the rules
• Consider a background check for the sweepstakes/contest winners
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© 2017 Venable LLP
FTC v. Cole-Haan: Application of the Endorsements
and Testimonials Rules to Social Media Promotions
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© 2017 Venable LLP
Social Media Promotions and Disclosures:
FTC v. Cole-Haan
• Basic rule: Under FTC’s Endorsements and Testimonials Rules, if an influencer has received
material consideration in return for talking about a product on social media, it must be
disclosed.
• Sweepstakes/Contests corollary: In 2014, FTC closed its investigation into Cole-Haan’s
Wandering Sole Pinterest Contest, which asked entrants to pin images that included
product and hashtag #WanderingSole.
• Key significance of case:
– FTC announced for the first time that pins and hashtags could be endorsements
– The fact that the pins/hashtags were incentivized by offering an entry to win a prize was
a material connection that would not reasonably be expected by consumers
– This material connection must be disclosed in all hashtags/pins/posts that are
requested as entries
• FTC nonetheless closed the case, because:
1. New issue for FTC
2. Relatively small promotion
3. Cole-Haan committed to improve its policies
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© 2017 Venable LLP
Compliance Takeaways: Cole Haan
Sweepstakes rules
must require
entrants (in
rules/abbreviated
rules) to include
disclosures/hashtags
in their entries such
as:
#[company] Sweepstakes;
#contestentry;
NOT #sweeps or other abbreviations
May be two hashtags (e.g., #[Company name] #[sweepstakes], which can help ensure unique “constellation” of hashtags for purpose of
ensuring that any “sweep” of social media platform for entries does not pick up “false positives.” [To be discussed.]
Sponsors must
monitor and enforce
requirements with:
Policy
Contractual requirements
Enforcement
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© 2017 Venable LLP
FTC Endorsement Guides FAQs: May 2015
• Even small incentives with little financial value can be a material connection that must be disclosed.
– E.g., Entry into sweepstakes, rewards points
• Use of the word #contest or #sweepstakes may sufficiently disclose material connections, but
abbreviations are not sufficient
– Recommends “sweepstakes” and “contest,” not “sweeps,” “sponsored” and “promotion” versus
“spon” or “promo”
• Placement of disclosure is important:
– Material connections disclosure should be made in each individual post containing an
endorsement
– Disclosure on a profile page or in a description section insufficient because may not be seen
• Content does not have to be expressly positive to qualify as an “endorsement” – merely posting could
convey an individual’s opinions or beliefs about the product
– For example, pinning an image of a product on Pinterest could imply the poster likes or uses the
product and may require disclosure
– FTC still determining the weight given to Facebook “likes,” etc.
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© 2017 Venable LLP
Social Media Language for Official Rules
Social media entry instructions should include requirement that entrants
include disclosure hashtags
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© 2017 Venable LLP
Sweepstakes and Product Reviews:
The Scotts Company, LLC, #5889 (10/5/15)
• Scotts awarded $25 gift cards to some individuals who posted online reviews of Scotts products.
• Official rules for the promotion required entrants to include a disclosure in reviews that the review
was part of a sweepstakes entry, but requirement was not clearly identified in the email sent to
consumers about promotion and did not appear in the sample review.
• Competitor filed complaint that Scotts used sweepstakes to inflate social media presence and alleged
that TV commercials portrayed competitor product in a false light.
• In responding to the complaint, Scotts noted that, once it became aware that consumers were not
including the disclosure in submitted reviews, it:
– Tagged each of the reviews as a “sweepstakes entry” and ensured tag traveled with reviews to
other sites when reposted;
– Enhanced the discussion of the necessary disclosures in later emails about promotion; and
– Added a disclosure of the requirement on the review portion of the promotion website.
• NAD concluded Scotts’ remedial actions were sufficient and took no further action, BUT expressed
concern about such programs because they call into question reliability of consumer reviews.
Caution: Promotion sponsor must not only require disclosures, but must monitor and enforce
compliance.
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© 2017 Venable LLP
Issues with Use of Incentivized Consumer
Reviews and Similar Techniques
Use of
incentivized
consumer
reviews
continues to be
controversial
• NAD: Vacuum manufacturer
could not support “most
recommended” claim based on
consumer reviews
• Amazon’s recent ban on use of
incentivized consumer reviews
on platform
• Facebook now prohibits
“likegated” promotions, which
require that one must “like” a
page to win, thus providing an
inflated number of “likes” for a
brand page.
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© 2017 Venable LLP
Social Media Promotions:
Understanding the Social Landscape
Each social network
has its own set of
advertising rules and
usage guidelines—
strictest for
sweepstakes and
contests.
IP rights grant does
not necessarily give
you the right to use
for commercial
purposes.
You don’t always get
the right to contact
users.
Consequences of
violation? Your
page/promotion
may be pulled
down!
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© 2017 Venable LLP
Facebook Rules for Promotions
Be wary of “like to enter” and “share to enter” promotions.
You MUST include specific releases/disclosures re: Facebook: Facebook not affiliated, sponsor
of promotion
You CAN:
• Collect entries by having users comment on a picture or post to be entered or having
users message a page
• Use Facebook functionality as automatic entry mechanism, except for posting content on
personal timelines
• Use Facebook features (e.g., “Like” button) as voting mechanism
• Announce winner on non-personal page or ask entrants to come back to see who won
• Tag entrants (as long as they appear in entry)
You CANNOT:
• “Likegate” a promotion, i.e., require people to “Like” an app or page as a condition of entry
• Conduct prize promotions on personal pages/timelines (ex: “share on your Timeline to
enter” or “share on your friend's Timeline to get additional entries” is not permitted), or
incentivize the sharing of content with entries or points
• Require people to post content on their personal timeline or require them to tag
themselves in content where they do not appear
• DM users who have not consented to your doing so
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© 2017 Venable LLP
Twitter Promotions
Avoid “retweet to enter” and encouraging “spammy” behavior.
• Twitter Terms and Conditions discourage creation of multiple
accounts; include rules regarding retweeting to enter.
• Include limit on number of tweets/entries to one per day. (Do not
encourage retweets to win).
• Make sure the rules require entrants to set their Twitter account to
“public.”
• Recommend including @usernameMention in tweet entries so will
be visible in user timeline.
• In light of the FTC’s Cole Haan letter & the updated FTC FAQs for
Endorsements (discussed later), any hashtag required in Tweets
needs word like “promotion” or “sweepstakes” or separate hashtag
along the same lines.
• Distinctive hashtag also minimizes possibility of including photos
from random users using the tag.
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© 2017 Venable LLP
Instagram Rules for Promotions
Be aware of special issues due to static nature of platform and content requested:
abbreviated rules should go in pic, comment or profile.
MUST include specific releases/disclosures re: Instagram whether Instagram is used to run
the promotion or simply to advertise the promotion, i.e., Instagram not affiliated, sponsor of
promotion.
MUST mention in the official rules that having a public profile on Instagram is an eligibility
requirement for the contest. Private users’ tagged photos will not appear publicly in photo
galleries.
MUST request permission to use user photos in rules--according to Instagram’s terms of
use, users retain ownership rights of their photos.
CAN tag in content (like photos), but you cannot tag content inaccurately, and you cannot
encourage others to tag content inaccurately.
CAN post the official rules via a static link in the picture, a link in a comment, or a “track-
back” reply to any commenters (which is the only reliable way to get consent to the terms and
conditions).
CAN structure entry and winner selection by having an entrant comment on a picture that
includes an explanation of the basics of the sweepstakes or contest.
SHOULD create a distinctive hashtag to minimize the possibility of including photos from
random Instagram users using the tag AND that make it clear that people using such hashtag
are involved in a contest or sweepstakes.
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© 2017 Venable LLP
Pinterest
You can’t make people pin what they
don’t want to pin.
Don’t:
• Suggest that Pinterest sponsors or
endorses the contest
• Require people to pin a specific image
• Allow more than one entry per
participant—prize promotions should
not incentivize users to submit multiple
entries
• Encourage spammy behavior, such as
asking participants to comment
• Overdo it: contests can get old fast
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© 2017 Venable LLP
YouTube Guidelines
It has got to be a skill contest, and you
can’t own the entry!
Extensive guidelines for prize promotions,
including:
• Winner must be determined by a set of
clear judging criteria
• Must be free to enter
• Cannot use YouTube channel functions,
such as video likes or view counts, to
conduct the contest
• Sponsor must not ask users to give all
rights for, or transfer the ownership of,
their entry to the sponsor
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© 2017 Venable LLP
• Snapchat
• Twitch
• Vimeo
• Other issues:
– How to get consent to use
videos?
– Can you contact users directly
without specific consent?
– Other restrictions?
Other Platforms
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© 2017 Venable LLP
Third-Party Rights
Need to Clear and Secure all Third-Party Elements
Copyright
• Videos and images, such as photographs and drawings, are
protected by copyright law, and, in general, can only be used
with the consent of the author
Trademark
• Many company names and most company logos and slogans
are protected by trademark law, and, in general, can only be
used with the consent of the trademark owner
Right of
Publicity
• A person’s name, voice, likeness and image are generally
protected by that person’s right of publicity, and, in general, can
only be used for commercial purposes with the consent of the
featured person
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© 2017 Venable LLP
Third Party Rights and UGC
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© 2017 Venable LLP
Copyright
*Obtain written release from the person if using that person’s name,
voice, likeness or image in any recognizable manner in the content
Copyright is a legal protection for the authors of “original works of
authorship,” including literary, dramatic, musical, artistic, and certain
other intellectual works
Applies automatically, even if the
author/creator hasn’t registered the
“work”
Applies equally to content offline and
content that exists online (i.e., posted
on websites or social media)
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© 2017 Venable LLP
Copyright
•Photos
•Videos
•Music - recording and composition
have separate copyrights
•Literary works – paragraphs, articles,
chapters
•Works from pre-existing works, such
as compilations and derivative works
•Other “works” such as drawings,
paintings, sculptures, movies
Copyrightable
content
includes:
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© 2017 Venable LLP
Trademark
A trademark is a word, logo,
symbol, slogan, product packaging
or product design that identifies the
source of the specific product
* Obtain written release from
trademark owner if using
trademarked content such as a
logo or slogan
BEWARE – risky trademarks such as
NFL/Superbowl, NCAA/Final Four/
Olympic marks
• A trademark is often, though not always,
identified by use of “®” or “TM”
• Other types of “marks”
• Service marks
• Certification marks
• Collective marks
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© 2017 Venable LLP
Trademark - Exception
It is OK refer to business and trade names, or make de minimis
or nominative use of trademark names, without obtaining
permission, so long as such use is necessary in order to identify
the product or service.
• Dick’s Sporting Goods, Inc. is an authentic full-line sporting
goods retailer! – OK (refers to business name, not trademark)
• Dick’s Sporting Goods is an authentic full-line sporting goods
retailer! – OK (de minimis or nominative use)
•
is an authentic full-line sporting goods retailer!
NOT OK (use of logo isn’t necessary here to identify DSG)
• Comes up in referring to prizes in sweepstakes/contests
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© 2017 Venable LLP
Right of Publicity
Right of publicity applies to a person’s name, voice,
likeness or image, and legal protection applies when
content includes any of the above features in a
recognizable manner
• Applies to individual celebrities, athletes, employees and even
members of the general public
• Some states apply protection posthumously
• Does not apply to corporations (but remember, some business names
are protected by trademark law)
*Obtain written release from the person if using that
person’s name, voice, likeness or image in any
recognizable manner in the content
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© 2017 Venable LLP
• Prize promotions with a “refer a friend”
component should be vetted for CAN-SPAM
compliance.
– CAN-SPAM may apply if coupons, points,
additional sweepstakes entries offered in return for
forwarding a commercial email, including a social
media message.
– Facebook message is an email message, so
sweepstakes and contests asking you to refer a
friend using that platform may be subject to CAN-
SPAM.
– Platforms like Facebook and Twitter discourage
“spammy” behavior.
• Prohibits false header information/misleading
subject lines, email harvesting.
• Requires “unsubscribe” and scrubbing against
company “do-not-email’ – list, clear
identification as ad, etc.
Refer a Friend and UGC Promotions/CAN-SPAM
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© 2017 Venable LLP
Mobile Marketing/Text
Promotions
• Under federal law (TCPA), marketer must obtain express prior written
authorization to send marketing messages.
• There are ways to do this electronically, but must be clear
• Can’t overextend—consent does not reach to other affiliates/brands if
not clearly given,
• Very expensive to get it wrong! Many private class actions: e.g., 2014
class action settlement of $75 million involving Capital One.
• How do you make adequate disclosures with limited space available?
– FTC Dot.com Disclosures provide guidance; FTC has issued mobile
privacy guidelines.
– Florida AG has brought enforcement actions, requires specific
disclosures/format.
– Mobile Marketing Association provides comprehensive industry
standards and best practices guidance.
• Premium text messages can be consideration (Hardin v. Universal and
related cases); unclear whether standard messages are consideration, but
some AGs have indicated it may be.
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© 2017 Venable LLP
In addition to complying with sweepstakes and
lottery laws, promotions directed to children must
also comply with the Children’s Online Privacy
Protection Act (COPPA).
• COPPA applies to websites targeted to children,
and sites that have actual knowledge that they
are collecting information from children.
– “Child-directed” factors include subject matter,
presence of animated characters/celebrities that
appeal to children, language, music and audio
content.
• “Single/multiple contact” exceptions: allow
operators to collect a child’s email address as
long as operator makes efforts to email direct
notice to parents providing certain details.
– E.g., what , why, how, to opt-out/delete etc.
Sweepstakes & Contests Directed to Children
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© 2017 Venable LLP
Charitable Promotions
Charitable Promotion or Commercial Co-Venture (“CCV”) – Arrangement between a charity
and a business in which the business advertises in a sales or marketing campaign that the
purchase or use of its goods or services will benefit a charity or charitable purpose.
(1) Not a charitable solicitation
(2) Tied to purchase of goods/services (*MA)
(3) Benefit charity or charitable purpose
Issues:
– 26 states have laws that regulate CCVs
– Registration / Bonding (4 states)
– Written Contract
– Advertising Disclosures
– Accounting and Recordkeeping
– Lottery Laws (donations are consideration, even if directed towards third-party
charity)
**Not all promotions involving a charity are regulated under CCV Laws, e.g., free action
programs on social media
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© 2017 Venable LLP
Buzz Activations and Experiential Marketing
Marriott #AppYourService
Issues:
• Is it a sweepstakes or a “Surprise and Delight”?
• What kind of terms and conditions are necessary?
• Is preannouncement/PR allowed (or a good idea)?
• Releases—winners, third parties, filming sites
• Third-party IP issues
• What disclosures are necessary under the FTC
Guidelines?
• Potential liability triggered by gifts
• Training and/or guidelines for
blogger/concierges/employees re: disclosures
• Concept of a “war room” to address issues for these
types of promotions
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© 2017 Venable LLP
• Online gaming and sweepstakes law can vary drastically
across countries.
• Important to check with counsel if sweepstakes or game will
occur outside of U.S.
– Some countries prohibit cash awards (e.g., Brazil)
– Others require disclosures in particular language (e.g., Canada)
International Considerations
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© 2017 Venable LLP
Practice Tips
• Have policies in place, e.g., social media influencer policies/agreements.
– Do different types of influencers merit different policies or agreements?
– E.g., celebrities, product testing.
• Forms can be valuable:
• Rules: Sweepstakes, contest/UGC, other types of promotions.
 Releases: Winners, guests, third-party publicity releases, premises releases.
 “Guides” for sweepstakes, buzz activations, etc.
– Comply with the rules imposed by each social network for contacting users.
• Ex., Facebook permits contacting users by direct messaging only with prior consent.
• The technical restrictions of the platform must also be taken into consideration.
– It may also be desirable to get signed releases from prize/gift recipients depending on size of
“surprise” and how you interact with recipient.
• Understand and keep up to date with government guidance and social media platform.
• For joint promotions, obtain indemnification, representations and warranties clause; clarify roles.
42

© 2017 Venable LLP
Contact
Melissa Landau Steinman
mlsteinman@Venable.com
T 202.344.4972
F 202.344.8300
www.AllAboutAdvertisingLaw.com
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