We have talked about the variety of scams and illegal promotions out there (previous blog). These scams can impact people financially and also have a negative effect on legitimate promotions. Because of these scams, consumers can be hesitant to enter your sweepstakes or contest. Sometimes it becomes difficult to award the prize. We have all heard the phrase “If it is too good to be true, it probably is.” Unfortunately, that can work against you when you are awarding prizes. Here are a few common ways people react and what you can do to minimize these problems.
“I thought it was a scam.” As part of your promotion, be sure to educate people and show them how to differentiate between legitimate promotion and a scam. Clearly spell out the notification process in the official rules. You may even consider having a FAQ page that includes how you are going to notify winners. You can also include a general section on do’s and don’ts when replying to winner notifications. For example, DO respond within the required time frame. DON’T be afraid to reply to an email or phone call but don’t provide personal information upfront. DON’T send money upfront for taxes – ever. Many prizes end up awarded to alternate winners because the original potential winner did not respond or didn’t believe the promotion was legitimate.
“I didn’t think people won these things.” We hear this from potential winners all the time. People really do win all the time. Explain that any legitimate promotion is required by law to award the prizes as outlined in the official rules. When talking to the winner, be sure to provide your name and contact information in case they want to call you back and ask all the questions they may have. Confirming with the winner that they remember physically entering your promotion can also be helpful. Some people won’t believe they have won until the prize is delivered. Do your best to put them at ease and make them happy winners. ESG lives by the 10 to 100 rule. If someone wins they will tell ten people, but if someone feels that they have been treated unfairly, they will tell 100 people. With today’s social media, those numbers have only gone up.
“What is this going to cost me?” It won’t cost them anything (except taxes, depending on the value of the prize). Be sure to explain that to them. The scammers usually ask for money. All you need, as the sponsor, is the proper information such as an affidavit and/or the confirmed delivery address in order to award the prize.
“How much are the taxes?” This is one of the few questions you shouldn’t answer. Tax liability depends on the value of the prize. Prizes under $600 don’t require 1099 reporting but any prize $600 or over in value will require a 1099-misc form to be issued to the winner and the IRS. Every person’s tax situation is unique and providing bad tax advice could be a legal or PR nightmare for you. The best thing you can do is recommend they talk to their accountant or a certified public accountant. Don’t forget that winners are not required to accept a prize. They can forfeit it, if they choose. Be sure to have a mechanism in place to document the forfeiture so it doesn’t become an issue later if the winner changes their mind.
“Can I give my prize to my friend/child?” In a fairly run sweepstake or contest, you never know who is going to win. Sometimes a winner and a prize don’t make a good match. A trip to Glacier National Park in Alaska might be a difficult prize to accept for a senior citizen or someone with mobility issues. How you handle this situation should be decided before your promotion starts. You must state in the official rules if the prize is transferable. The vast majority of promotions do not allow prizes to be transferred, but it is up to you. Sometimes, offering a cash option instead might be the best way to go.
You will never be able to anticipate all the questions a potential winner might have, but being prepared for the most common ones is a good start. Every company has different goals in mind when they run a promotion. The one thing they all have in common is giving the winners a great experience.