“No Purchase required” contests and promotions

Question

My question is about promotional contests/sweepstakes in the United States.

Like many, I have received e-mails and hear advertisements directing me to buy something at a store with the promise that I will be entered into some prize drawing (free coffee for life, $1,000, etc.). They always seem to mention that there is no purchase necessary and the contest is only open to people of a certain age. Here is except from a common disclaimer:

NO PURCHASE NECESSARY. OPEN TO LEGAL RESIDENTS OF THE 50 UNITED STATES (D.C.) 18 AND OLDER. ENDS ON . . .

I suspect the no purchase necessary disclaimer is to avoid gambling laws; however, I am not sure and I don’t know which law.

So, why is there a disclaimer? If it’s a gambling issue, what is/are the specific law(s)?

Answer 1

As with most questions in U.S. law, the answer to "Which law governs this?" is "Which state are you in?" I'm in the state of Connecticut, so here's the text of the law that necessitates that disclaimer for products sold in my state:

Sec. 42-296. Sweepstakes. Restrictions on advertisements. No person may advertise a sweepstakes if there is any condition or restriction attached to the receipt of any prize a person wins in the sweepstakes, unless the condition or restriction to claim the prize is through any method which does not require any purchase, payment of a fee or any other consideration, such as (1) a telephone call in the participant’s extended local calling area, (2) a telephone call to an 800 number, or (3) a visit to a retail establishment in the local marketing area which does not require the participant to attend a sales presentation.

Most states presumably have similar laws. Note that this law is technically not part of the "gambling laws" of Connecticut: it's part of Title 42, which covers "Business, Selling, Trading, and Collection Practices". However, the "no purchase necessary" disclaimer is also referenced in Title 53, "Crimes", in the chapters referring to prohibited gambling activities (italics mine):

Sec. 53-278g. Gambling: Excepted activities. (a) Nothing in sections 53-278a to 53-278g, inclusive, shall be construed to prohibit the publication of an advertisement of, or the operation of, or participation in ... a promotional drawing for a prize or prizes, conducted for advertising purposes by any person, firm or corporation other than a retail grocer or retail grocery chain, wherein members of the general public may participate without making any purchase or otherwise paying or risking credit, money, or any other tangible thing of value or a sweepstakes conducted pursuant to sections 42-295 to 42-301, inclusive.

This raises the question of why grocers can't run sweepstakes in Connecticut. I really have no clue there.

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From the Dept. of You Didn't Ask But I'm Telling You Anyways: If you run into a sweepstakes that requires a "skill-testing question", you're probably in Canada instead of in the US. (Or you've encountered a sweepstakes that runs throughout North America.) Canadian federal law, specifically the Competition Act, bars companies from engaging in any activity in which prizes are awarded on the basis of chance alone:

74.06 A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product, or for the purpose of promoting, directly or indirectly, any business interest, conducts any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit by any mode of chance, skill or mixed chance and skill whatever, where

...

(c) selection of participants or distribution of prizes is not made on the basis of skill or on a random basis in any area to which prizes have been allocated.

Thus, Canadian residents who win a sweepstakes are usually asked to answer a "skill-testing question", which is usually a relative straightforward math problem such as "What is (7 x 9) + 12 - 30?"

Answer 2

The reason that clause is in there is because the law does not permit a company from requiring someone to make a purchase in order to participate in a contest. As such, the company can/must offer an alternative means of participating to anyone who wishes to. For instance, they can give you the option to write to a specific address to submit an entry, or perhaps they ask you to complete an online form of some kind.

Because winnings are potentially taxable and the prizes themselves may be items which have age restrictions on ownership (cars, for example), contests may be limited to people who are 18 years of age or over. There are other legal issues pertaining to people under the age of 18 which make such restrictions necessary.

Other restrictions (such as geographic limitations) are in place to ensure compliance with applicable law. For example, certain types of contests may not be lawful in certain states or in foreign countries, so companies take this into account when offering contests.

I hope this helps.

Good luck!