As a growing number of businesses look to online contests and promotions as part of an Internet niche marketing strategy, challenges to the “accepted rules” seem all but inevitable as new developments in the law trigger lawsuits that weren’t a threat in the past. Natasha Shabani, an intellectual property attorney at the Los Angeles–based law firm Rutter Hobbs & Davidoff (rutterhobbs.com), says these five legal considerations are often overlooked by contest sponsors:

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1. Steering clear of illegal lotteries. If a contest involves a prize, an element of chance, and consideration (something of value, like money, provided by the customer as a prerequisite to participate), it qualifies as a lottery and is illegal. Companies running any sort of contest, promotion, or sweepstakes must avoid or eliminate at least one of those three elements.

2. Complying with state and international requirements. State and international laws vary significantly and impose different procedural requirements. It is important to consult a legal professional for expert advice regarding state and international requirements for entry instructions, eligibility and geographic restrictions, prize descriptions, disclaimers, and more.

3. Respecting intellectual property laws. Contest sponsors must always exercise caution while running their promotions to avoid infringing on the trademark, copyright, or patent rights of others — especially when advertising prizes by using a brand name without consent from the trademark owner.

4. Deferring to privacy laws. Stiff fines may be imposed for contests that invade privacy by collecting personal information — especially from children.

5. Acknowledging additional state and federal laws. Certain types of contests, such as instant-win games and direct mail marketing promotions, may be subject to additional sate and federal laws. To ensure compliance, review by legal counsel is recommended prior to the start of any promotion.

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