August 2017

Compliance Corner: Sweepstakes fraud and winner verification

A Massachusetts woman was recently sentenced to more than four years in prison for sweepstakes fraud. She called her victim, told her that she had been automatically entered into a sweepstakes when she paid her utility bill, and that she had won $11.5 million. The catch? The victim would need to send money for taxes and miscellaneous fees before she could receive the prize – to the tune of $160,000.

In the world of consumer promotions, this sort of thing happens and it’s really about knowing the right way to handle the situation. In the past decade, the rate of fraud has risen sharply (it’s now at an all-time high) and, understandably, so too has consumer skepticism. Stories like this one might make you think twice if you were told that you had won an incredible prize. And because of it, the steps promotional marketers take to secure a winner are now more carefully thought through to ensure the brand is protected and the consumer feels safe providing their information.

So how can marketers reassure hesitant participants and prospective winners without losing the value of the promotional activation altogether? It starts with understanding what information is needed for verification and how it’ll be used. Here’s a rundown of the major asks, and why they’re necessary in order to turn a consumer from potential winner into the recipient of a once-in-a-lifetime prize.

Addresses : A consumer's address is needed to ensure that they're eligible for the promotion in accordance with the Official Rules. If eligibility is limited to residents of Connecticut, New York and Pennsylvania, and a potential winner indicates that they live in Florida, that person would need to be disqualified and an alternate selected.

Employer Name and Address : Promotion administrators need to verify that a possible winner is not affiliated with any ineligible parties. For example, if a person works for a partner of the NFL, they will likely be considered ineligible to participate in any NFL promotions.

Social Security Numbers : This is the one that raises a flag for consumers, but it's also critical from a legal perspective. If a prize is valued above a certain monetary threshold, brands are required by federal law to file a 1099 tax form. To do that, a prospective winner's social security number is needed.

Promotions have the potential to build buzz for the brand, drive lead generation, create brand stories and relationships with consumers and more. So how do brands continue to activate promotions and give away amazing once-in-a-lifetime prizing without scaring off consumers?

  • Give clear legal disclosure anywhere you mention the promotion. The Official Rules are a legally binding contract and will provide you with the strong foundation that is necessary when discussing sensitive topics like those featured above.
  • Make your creative as memorable as possible. When the consumer can recall entering the promotion or seeing a social post that supports the campaign, they will feel more confident when you reach out to them.
  • Have consistent messaging and a clear call to action. When a consumer gets lost in the process, they lose confidence in the brand.
  • Gather as much information from the consumer up front. The more you know about them when you reach out, the easier the conversation will be.
  • Be patient! Know that the consumer wants to take advantage of what the brand has to offer and be a part of something bigger. But know that they might be hesitant and you will need to take the extra time and effort to walk them through the process.

And once you get to the other side, the results can be amazing. Whether it's awarding a consumer something priceless that money can't buy or having them take part in a life-changing event, all of your efforts will be fruitful. The brand walks away with a newly found brand advocate and the consumer walks away with a memory (and brand impression) that will stay with them for a lifetime.

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By Megan Garguilo
Account Executive