March 12, 2012

International Sweepstakes and Contests

Seller Beware: Consumer Protection Insights for Industry

This is part three of our series on Challenges in Running International Sweepstakes and Contests. Our prior post focused on local language requirements and taxation issues. In this post, we discuss limits in giving away the same prize across all jurisdictions and the challenges in complying with the range of often-conflicting promotions laws and regulations across different jurisdictions.

Issue #4: Many Prizes Cannot Be Made Available In All Countries

Popular prizes to give away in sweepstakes and contests include gift cards, mobile devices, and DVDs. Gift cards may be for retailers that do not operate in the winner's country or, if they do, the particular gift card being given away may not be usable in that country. Many mobile devices built for the US market either do not work or cannot be imported into other countries without special licenses. The same is true for DVDs, which are usually encoded for particular markets. The US government also severely restricts trade with several countries, such as Cuba and North Korea, so it may be illegal to ship a prize to one of those countries, even if the prize would be useful in that country.

Issue #5: Compliance With Promotions Laws In Many Countries Is Challenging

Even if a marketer jumps over all the other hurdles and believes there is a set of countries in which a particular sweepstakes or contest can be run, it may be very difficult for that marketer to comply with the specific laws regarding sweepstakes and contests in every one of those countries. Many countries that permit sweepstakes and contests have strict laws regarding the specific disclosures that must be made to consumers, how and where those disclosures must be made (e.g., in Official Rules or in all promotional materials), and what choices the marketer must give to consumers who are entering (e.g., what types of personal information can be shared or what uses the marketer can make of the consumers' entries). Moreover, clauses that are common place in Official Rules in the US, such as publicity or liability releases, limitations on liability, and forum selection clauses, are often unenforceable in other countries. In some countries, marketers could be held liable for the simple act of including such clauses in the Official Rules.

This is the final post in this series. By now, it should be clear that marketers should not lightly decide to open their sweepstakes and contests to residents of any country in the world. While it may be possible to open certain types of promotions to residents of particular countries, it is critical to seek appropriate legal and tax guidance first. With promotions, it is always a good idea to READ THE FINE PRINT!

© Arnold & Porter Kaye Scholer LLP 2012 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

Subscribe Link

Email Disclaimer