In December of 2010, Facebook relaxed the rules on creating and implementing promotions designed to drive user “Likes” to company Pages. It did so in part due to the marketing industry’s recognition that the value for each Like to a company Facebook page can be calculated in real dollars. For example, Sycapse, a social media management company, conducted a study that calculated the average value of a Facebook Like to be over $70 of extra spending by each user on the company’s goods or services. To capitalize on this interest in the platform, Facebook eased the process to set up a promotion from a technical perspective and no longer requires companies to obtain specific approval from Facebook for each promotion run on its platform. Despite this lowered bar to entry, companies and social media managers should take note that although Facebook relaxed its internal rules, each promotion still should be evaluated carefully in light of various state and federal laws that may be implicated when running this type of promotion.

Each state has specific laws governing contests and sweepstakes targeting its citizens. For instance, promotions that target children may have a different set of requirements under state law than the same promotion that targets only adults—and these requirements may vary from state to state. However, as a general rule, all promotions must be accompanied by clear contest rules that are available to any individual prior to entering the contest. Companies therefore must follow those rules to the letter when conducting contests and selecting winners. If a contest rule is drafted in a way that violates state law, or if the company deviates from its own rules, then the company may expose itself to significant liability.

In addition, it is critical to be mindful of intellectual property rights of others who may be either directly or indirectly involved in the promotion. While most consulting firms that develop Facebook promotions are careful to obtain the required licenses or releases for the images or logos used in the promotion, few smaller companies take the time to ensure compliance with intellectual property laws. For example, a company might contract with an independent graphic developer to create a fantastic splash page for a Facebook promotion that includes copyrighted images of the giveaway item. If the promotion is published prior to obtaining permission to use those images (likely from the company that manufactures the product being given away), then the promoting company likely will be in violation of federal copyright law and could find itself subject to a copyright-damages award. Statutory damages under U.S. copyright law can be as much as $30,000 per work found to be infringed (and up to $150,000 per work found to be infringed willfully).  

These are but two examples of the way Facebook promotions can expose a company to legal liability if not carefully considered. Before any promotion is undertaken on Facebook, a company should consult with an experienced attorney to draft contest rules, review promotion materials, and monitor contest implementation to ensure compliance with state and federal law.