Giveaway Requirements You Should Know

In the spirit of the holidays, this blog tackles the three things you must include before launching your next Instagram giveaway. We often see giveaway posts or campaigns on Instagram, but most brands don’t understand or meet the Federal Trade Commission (FTC) endorsement guidelines and Instagram’s requirements. 

With increased enforcement these days, it’s important to have the necessary tools and knowledge before launching your next Instagram giveaway. Without further ado, let’s get into the details. 

1. Terms and Eligibility Requirements

If you’re going to use Instagram to communicate or administer a promotion, a.k.a. your giveaway, you’re responsible for the lawful operation of that giveaway. You can state the official rules of your giveaway campaign through post captions. Make sure to give your audience an understanding of the offer terms and eligibility requirements. For example, is there an age or residency restriction that your audience needs to know about? If so, include it. 

2. Consumer Involvement

Consumer involvement means the engagement from your audience in your giveaway campaign. Did you know that a giveaway conducted on social media can trigger an application of the Endorsement Guidelines? The FTC considers receipt of a giveaway entry in exchange for a giveaway post as a material connection. If a business asks a consumer to promote its products, services, or brand on social media in exchange for the chance to win a prize, the official rules and call-to-action should require the entrants to disclose the fact that the entrance post is an entry to a giveaway. 

Moreover, the entry post should include a “clear and conspicuous” disclaimer (the legal standard) that a consumer has received an entry in the giveaway in exchange for the post. For example, the business could require entrants to use a specific hashtag, disclosing that the post is an entry to a giveaway or simply using #giveaway on their stories or posts. 

Of course, the business should disqualify any entry that fails to make that disclosure. This rule may be easy, but it’s often overlooked on social media. Most of the time, when I go through my stories, I see a shared post, and it’s pretty clear that it’s for an entry to a giveaway. However, my friends or the people I follow aren’t acknowledging it for an entry to a giveaway because they don’t know better and the company likely doesn’t either… 

If you want to lead by example (as required by the FTC Endorsement Guidelines), you should tell your entrants that for them to get an extra entry by sharing their stories, they must also include a #giveaway. With this simple addition, you and your entrants are both in compliance with the FTC Endorsement Guidelines. Again, with increased regulation and enforcement these days, these steps are really important. 

3. Disclosures: Acknowledgement and Instagram Release

Promotions on Instagram must include a complete release of Instagram by each entrant or participant. You’re probably wondering, “how do I do that?” It’s pretty easy. In your caption, you’re going to state “By entering into this giveaway, they completely release Instagram.”

Next up is acknowledgement that “This promotion or giveaway is in no way sponsored, endorsed, or administered by or associated with Instagram.” You can put this exact statement at the end or first part of your caption.

What to Do When You Have a Winner from your Giveaway

Before we wrap up this blog, let’s discuss briefly what happens when you have a winner from your giveaway campaign. After selecting the lucky winner, you may want to send them an affidavit. 

Affidavit

What’s an affidavit? An affidavit is a legal document that contains a written statement promising certain facts are true. Of course, we have an affidavit in our giveaway bundle. But this is actually important because it’s legally stating the official rules and eligibility requirements as mentioned earlier in this article.  

Taxes

When it comes to taxes, there’s a $600-rule related to sponsors of giveaways. Sponsors are required to submit a 1099 form for prizes and awards that weren’t for services, especially if those prizes are valued above $600. So, if your giveaway prize is above $600 and isn’t for services, having an affidavit will help you collect the information you need to properly submit a 1099 form and document it with the Internal Revenue Service (IRS). 

In the United States, prize winners must pay taxes on their prizes as if they were income. There’s no $600-rule, and it’s kind of a persistent misunderstanding. But if you want to give away this season, make sure you clean it on taxes. You definitely want to make sure you’re not caught in between a misunderstanding or miscommunication when it comes to your taxes and any taxable income you’re claiming. 

Conclusion

I hope this blog was helpful in understanding that it’s really simple to run a giveaway that both encourages the engagement you’re looking for, but does it in a way that not only abides by Instagram’s platform requirements but also by the endorsement requirements required by the Federal Trade Commission. 

With that, happy holidays and enjoy this giveaway season. I hope you’re spreading plenty of cheer whether you’re doing an Instagram giveaway or just merely posting on social media.

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12/06/2021

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Giveaway Requirements You Should Know

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