When it comes to marketing to consumers, a variety of federal and state regulations can come into play, especially in the following industries: Financial services, alcohol and tobacco, firearms, and pharmaceuticals. In addition to federal or state regulations, some industries have their own standards and regulations, especially the financial services field. Some states outright forbid the use of incentives in certain industries or in certain circumstances.
One of the most frequently overlooked regulations involves the use of sweepstakes and contents. No organization other than a registered not-for-profit group can require anyone to pay to participate in a sweepstakes or contest – i.e. conduct a lottery. Any contest or sweepstakes used by a commercial firm must have an alternative entry method, even technically those targeted at business buyers.
The following article and white paper will provide more detailed information on legal issues related to consumer incentives: “Promotions Law: Your Questions Answered” and “Tax Considerations for Incentive Programs.”