Those running promotions such as sweepstakes or contests on social media may seek to engage influencers, or individuals with significant social media followings, to enhance their promotions’ visibility and boost engagement. But before doing so, there are a variety of rules and regulations to consider and evaluate, including Federal Trade Commission (“FTC”) rules relating to misleading, deceptive, and unfair advertising, state-specific rules relating to promotions, and social-media-platform-specific rules, among others. This post gives a high-level overview of issues to consider before engaging influencers to boost your next contest or promotion.
The Food and Drug Administration’s Office of Prescription Drug Promotion (OPDP) issued a total of six letters in 2021 — four Untitled Letters and two Warning Letters — to pharmaceutical or biologics companies for promotional materials that allegedly misbranded prescription drug or biologics products. The two Warning Letters issued in 2021 addressed prescription drug promotion. Two of the Untitled Letters also addressed prescription drug promotion, while the other two letters addressed biologic product promotion.
OPDP also sent six letters in 2020; however, the majority that year (four) were Warning Letters, with only two being Untitled Letters. Both Warning and Untitled letters are made public on FDA’s website. Warning Letters are issued for violations of regulatory significance that may lead to enforcement action if not promptly and adequately corrected, whereas Untitled Letters cite violations that do not rise to the threshold of regulatory significance warranting a Warning Letter. Untitled Letters serve as the initial notification that FDA has taken notice of a violation and allow the company to come into compliance without further FDA regulatory action. Historically, OPDP has relied more heavily on Untitled Letters. 2020 was an outlier year with four Warning Letters versus two Untitled Letters, but 2021 signified a return to normalcy, as the agency issued twice as many Untitled Letters as Warning Letters.
As discussed on our blog previously, here and here, a promotion sponsor must finalize Official Rules before a promotion begins. But using a third-party social media platform to administer your promotion or accept entries raises additional issues that must be considered, particularly when the promotion involves the submission of user-generated content (“UGC”).
Using a social media platform to administer your promotion raises two additional issues: (1) ensuring compliance with the platform’s specific promotion requirements; and (2) ensuring that the sponsor is protected from liability if the promotion involves UGC. This blog provides a high-level overview of issues to consider before administering your promotion on a third-party social media platform, and in particular when your promotion involves submission of UGC.
Faegre Drinker Biddle & Reath LLP (Faegre Drinker) launched global operations on February 1, 2020. Faegre Drinker is the combination of Faegre Baker Daniels, an international law firm with deep roots in the Midwest, and Drinker Biddle & Reath LLP, a full-service national law firm with storied East Coast origins.
With more than 1,300 attorneys, consultants and professionals in 22 locations across the U.S., U.K. and China, Faegre Drinker is one of the nation’s 50 largest law firms based on size and projected gross revenue.
We are very excited to introduce TCAMToday, Faegre Drinker’s successor to the DB®anding Blog. Our newly expanded team of over 30 T-CAM professionals will continue to provide fresh commentary on Trademark, Copyright, Advertising and Media topics ranging from anticounterfeiting to sweepstakes and promotions. Watch this space!
“Running an international promotion can’t be that difficult, right? Won’t the same rules work everywhere?”
The rules for sweepstakes, contests, and other promotions vary dramatically by country, and sometimes by province or local jurisdiction. A promotion that is perfectly legal in the United States is not necessarily permitted in any other country – even a nation like Canada can have significantly different rules of the road, including registration requirements in Quebec. In short: assume nothing!
While it is crucial to consult with local counsel in each country to clear international promotions of any kind (and we rely on our network of foreign associates to confirm compliance with current local laws), we thought it would be useful to list a few of the interesting rules and regulations we have encountered in recent years while coordinating global promotions for our clients:
- The promotion’s official rules and advertisements must appear in the local language. (Argentina, Canada, Norway, Russia, and many others)
- Some countries make promotion winners responsible for taxes related to the prize (Malaysia), while other countries place the tax responsibility on the sponsor (e.g., Spain and Mexico).
- Governmental authorities must pre-approve promotions. (Brazil)
- Contestants must provide express written consent to the use of their images, and the Official Rules must specify where the image will be used. (Dominican Republic)
- Only skill-based contests are permissible. (Israel, Sweden)
- The rules must be filed with governmental authorities before the promotion commences, the sponsor must seek a bond, and local authorities must supervise the selection of winners. (Italy)
- Local law specifies the maximum prize value for chance-based games. (Netherlands)
- Proof of purchase promotions for chance-based games may be OK, but the sponsor cannot charge the entrant a fee to enter the promotion. (Australia)
This represents just a peek into some of the twists and turns you might encounter when structuring a global promotion – and the rules are changing all the time. As US lawyers, we cannot, and do not, offer legal advice in connection with the laws of other nations, which is why it is so important to have a network of lawyers around the world who can help a promotion comply across borders and cultures and legal systems. And remember: allow yourself plenty of lead time to confirm local requirements before you announce the promotion!
As we mentioned last month in our kickoff post on this topic, we are excited to dive deeper into the world of sweepstakes and promotions law. This post explores several key elements to keep in mind when formulating the official rules and abbreviated rules for a promotion.
The main goal of the official rules in any promotion is two-fold: (a) to inform participants and the public regarding the details of the promotion, and (b) to comply with a series of federal and state laws and regulations. Both of these goals are critical – no company wants to face either disgruntled participants or angry regulators.
The rules must be in place and finalized before the promotion begins. If you are running a U.S.-based sweepstakes with a total prize value of over $5,000, you may also be required to register and bond the promotion with various state agencies up to thirty days before the promotion begins. Registration will require you to submit a copy of the promotion rules, so keep in mind that in those cases, the rules must be finalized at least thirty days before the beginning of the promotion. That means the clock is ticking! Depending on the type of promotion, other state laws and regulations may also be implicated, so be sure to check well before the beginning of the promotion. Continue reading “Let the Games Begin – But Only After the Rules Are In Place (Sweepstakes & Promotions Series Part 2)”