5 Pitfalls Of Refer-A-Friend Sweepstakes Options

Author:Mr Dale Joerling
Profession:Thompson Coburn LLP

When I saw an ad for a new Mexican restaurant that opened near my office, I thought about trying it. When I received a 10% off coupon in the mail, I thought about it again. But when my brother told me it was now his favorite restaurant, I went there for lunch on that very same day.

Without a doubt, a referral from your current customers is the best source of new customers. The same principle applies to sweepstakes and contests: You can increase participation through use of referrals.

As a result, "refer-a-friend" options are becoming very popular in the sweepstakes world, particularly with promotions pushed online or to social media sites.

These options appear in a various forms: " Refer-A-Friend," "Send-A-Friend," "Tell-A-Friend," " Tweet-A-Friend," and other variations, all of which basically do the same thing. Facebook's "Share" feature has a very similar function.

Sweepstakes sponsors routinely incentivize their customers with rewards of coupons, gift cards, products, or additional entries into the sweepstakes if they forward the promotion to friends. It's clear: Refer-a-friend options are here to stay.

However, refer-a-friend options carry some risks. Before you ask sweepstakes or contest entrants to refer the promotion to a friend, be aware of five potential pitfalls:

Being careless with consideration Make certain referring a friend doesn't constitute the "consideration" required to enter the sweepstakes. If there's no other way to enter the sweepstakes other than referring a friend, that requirement could be viewed as "consideration" under state law, which may result in authorities classifying the sweepstakes as an illegal form of gambling. Sending messages that could be 'spam' Be aware that providing gifts or rewards to incentivize an entrant to refer your promotion through an e-mailed message to a friend may result in the application of the CAN-SPAM Act. Under the CAN-SPAM law, the sponsor may have to comply...

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