Holding social media contests is an excellent ways to promote your business online. When you hold a social media contest, you make your blog or social network much more engaging. However, there are many laws associated with running a social media contest that you need to consider.

Why Are Social Media
Contests Regulated?

I bet you didn’t think you could get in trouble with running a contest on Facebook or Twitter. Neither did SAS until their illegal Facebook contest was shut down. SAS ran a contest on Facebook to promote about 1 million deals they offer. Facebook ended up shutting them down, because their contest used some of Facebook’s own features. This was a violation of the terms of service agreement.

Facebook isn’t the only organization you have to risk getting in trouble with. Many government organizations scrutinize social media contests. These include:

1. The ATF

2. The IRS

3. The FTC

4. Numerous state and local government regulators around the world

These organizations want to protect the public from fraud and make sure you are abiding by all laws in your jurisdiction. Before you get started with your social media contest, it is essential that you understand the policies you must abide by.

Laws You Must Be Aware Of

You’d be surprised how much red tape associated with running a simple contest. Some of these laws include:

1. Prizes May Be Taxable. What do you intend to give away as prizes? If you are planning on giving away a big prizes, you may need to let the IRS know. According to the IRS guidelines, all prizes exceeding $600 in value must be reported.

2. You Need Official Rules. The rules to your contest must be clearly stated. They must also be somewhere your participants can find them. If there is a possibility no one will win the contest, you need to state that. Once you have set the rules for the contest, you will be bound by them.

3. Drugs, Alcohol and Tobacco. When you set up a contest, you must be aware of the laws of your jurisdiction regarding controlled or illegal substances. There are no universal guidelines, because every state has its own laws as to what is legal. Check the regulations of the area you live in. Under no circumstances should you encourage anyone to purchase or distribute illegal substances. You are just begging the DEA to come down on you. Hard.

4. Your Contest Must Be Fair. When you run a contest, you must make sure there is a fair chance of winning. This is especially true if you intend to have people run a contest where they have to give something of value (whether their money or a sample of work you intend to use in some way). If you accept payment of any kind and don’t give participants a fair chance to win something of value in return, you can get in major trouble with the FTC.

5. Handling Personal Information. You must be very careful how you deal with personal information such as Social Security Numbers, email addresses, mailing information and phone numbers. Do not give away any information unless you disclosed you would do so ahead of time and to who.

You must follow the law whenever you hold any social media contest. You don’t want to end up in the same boat SAS found itself in.

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