skip to main content

Does Your Online Contest Have Terms and Conditions?

Has your business sponsored a contest via your website or Facebook?
If so, did you have terms and conditions for that contest? 
Did you make those terms and conditions available online?
If you answered "no" to either of these last two questions, you could potentially be exposing yourself to unnecessary liability.
Online contests are a simple way to generate customer interest and media coverage for your company.  Take Lay’s potato chips as an example.  They are currently promoting a contest via social media ( and their website (!/) to create the next potato chip flavor.  The person that submits the chosen flavor is slated to win $1 million.  The contest has been a promotional success for the company.  Various media outlets have reported on the unique submissions (Cappuccino or Wasabi Ginger potato chip, anyone?).  Additionally, as of the time of this writing, the contest’s Facebook page had 7.2 million Likes.
While a contest helps promote your business, the contest could backfire if you don’t have the proper terms and conditions.  Barnes and Noble was recently sued over a design competition.  According to the lawsuit, the company had partnered with the Fashion Institute of Technology (“FIT”) to solicit student-designed “back-to-campus materials” for a competition.  One of the FIT students, whose backpack design won and was later produced by the company, claimed that she was automatically entered in the contest by the school, without ever having signed anything that would permit Barnes and Nobles to use her design.
Although the lawsuit against Barnes and Nobles has been dismissed, for the most part, it serves as a reminder to include a set of terms and conditions with any online contest that you run.  If you are wondering what should be included in a contest’s terms and conditions, here are a few suggestions:

•    Define the Eligibility Requirements: Laws may set certain eligibility requirements, such as age or residency.  Make sure that these requirements are spelled out.
•    Explain What the Winners Receive: Clearly explain what prizes will be awarded to the winners.
•    Protect Intellectual Property Rights: Require contestants to: (1) transfer any intellectual property rights to your company; (2) warrant that they have not infringed on any other person’s intellectual property rights; and, (3) indemnify your company in the event that they have violated #2.
•    Make the Terms Available: It is not enough to simply draft these terms and conditions; you also must make them available for contestants to view.
Again, these are only a few recommendations.  There are other terms and conditions to be included, as well as various laws to consider.  Additionally, if running the contest via social media, you will have to adhere to the social media company’s requirements.
Before running an online contest, contact a member of MacDonald Illig’s Emerging Technologies Practice Group to discuss what should be included in your terms and conditions.
Also, if you know of someone who may be interested in receiving these updates, have that person contact to be added to the distribution list.