Sweepstakes Scams – Keeping Games in Compliance with the Law

How many times have you come across a super sweepstakes or contest and thought, “Is this too good to be true?” Simply enter in some information about yourself for a chance to win a million dollar shopping spree.

So what’s the deal? Are sweepstakes just scams?

If the business or company offering the sweepstakes are legitimately offering a person a chance to receive a grand prize just by releasing an email address or some other personal information – then, no, the sweepstakes are in compliance with federal laws.

If, however, a company is luring consumers to pay to win – then the sweepstakes are illegal. Charging someone a “price” to enter a game, where a “prize” is awarded on the basis of “chance,” is unlawful. The exceptions include federal and state-run lotteries, nonprofit raffles, and licensed bingo games.

Case in point: In 2007,  several Nevada companies were fined more than a million dollars for luring people to pay to enter contests. 

A legal sweepstakes is one that is free for you to enter. Furthermore, the company operating the sweepstakes must provide and obey accurate game rules – including eligibility criteria, prizes and prize values, odds of winning, and how winners are chosen. There are also separate laws that deal with mail and telephone solicitations.

Here is the fine line between sweepstakes and contests.

A contest is a when a winner isn’t determined randomly but through skill. If rules are followed, contests are completely legal – and most states, like California, let sponsors charge participants a fee. Bottom line: If you have a price and prize – it’s not a illegal. Throw in a mere random chance to win, and it IS ILLEGAL to charge or pay to win.

It’s critical that companies keep games in compliance with the law. Consultant a California Business Attorney in San Diego and gather as much information about local sweepstakes and contest laws before the game is launched. And, of course, if you have been a victim of an illegal sweepstakes scam – contact a San Diego Personal Injury Lawyer to collect for damages and compensation you may be entitled to.

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Steven Elia

Founder at Elia Law Firm in San Diego

Mr. Elia has extensive litigation experience having appeared at more than 1,000 civil hearings including jury and bench trials, over 500 depositions, and hundreds of mediations. Some of his cases have made national headlines. He specializes in personal injury, business law and civil litigation in and around San Diego.

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