Not Saying It's A Scam or Not , All Contest That Giveaway Products Must A Legal Contest Rules Page...... FYI ....... In the US, the legal requirements relating to promotional contests and sweepstakes are driven by one goal: To avoid operating an illegal lottery. Gambling is heavily regulated on a state-by-state basis, meaning that if you want to run this kind of promotion, you either must comply with all 50 states' laws or specify that residents of Florida (for example) are not eligible to enter. An illegal lottery includes these elements:
Payment of consideration (such as an entry fee)
Winner chosen by random chance
The two types of promotions commonly used by marketers are contests and sweepstakes. A contest requires skill of some kind and judging is involved to choose the winner. You can charge an entry fee for a contest (so you have #1 and #3). A sweepstakes is a drawing for prizes by random chance alone (#2 and #3 above). It's critical that you pick one or the other and don't mix the two. Never charge an entry fee, or require any other form of consideration, for a sweepstakes! That would make it an illegal lottery. Hence "no purchase necessary" in the fine print of just about every sweepstakes you've heard of.
The rule is the opposite for contests. "Consideration" can include anything that requires significant effort; it doesn't necessarily mean the payment of money. So in a contest (think American Idol), you can require participants to invest time and effort in creating an entry, pay an entry fee, or both, provided that entries are judged on the merits, with no random chance involved. Online contests often start with a mechanism for users to vote for their favorite entries, narrowing down the field to a few finalists, and then a panel of judges picks the winner. (You could do it the other way around but it requires a lot more work.)
Now that we've managed to keep you out of jail, here's the Cliffs Notes version. Please note that I am not your lawyer, dear reader (unless you choose to engage my firm) and therefore this is general information, not legal advice:
Every contest or sweepstakes needs Official Rules. They are what keep you out of trouble. They all look similar but are not boilerplate and need to be carefully tailored to the specifics of your promotion. This isn't rocket science, but it is important.
The Official Rules need to be readily accessible to anyone who wants to enter. If it's a web-based entry form, make sure to link to a printable version if you can't just include the rules below the fold on the page itself. In ad copy, make sure to state where the reader/viewer/listener can find them ("see our website at ... for official rules and entry form"). The Rules are Official for a reason; make sure you abide by them and strictly enforce start and end dates, methods of entry, etc.
Start by determining eligibility. When in doubt, limit it to US residents over 18 (21 if alcohol or gambling is involved). Minors have separate issues involving parental consent. "Void where prohibited" is good CYA language since it's tough staying on top of 50 states' laws.
Is the prize worth more than $5,000? If so, you'll need to register the sweepstakes in New York, Florida and Rhode Island (or prohibit their residents from entering). NY and FL also require that a bond be posted equal to the total value of the offered prizes.
Official Rules must cover the following at a minimum: No purchase necessary; start and end dates; eligibility requirements (age, residency, any exclusions); method to enter (including a “no purchase” method); limitations on the number of entries by a signal person or household; odds of winning; description and approximate retail value (ARV) of prize; how the winner will be selected and notified; restrictions on receiving the prize; and sponsor’s name and address.
That "restrictions on receiving the prize" thing is important. If you're looking to get any PR
or media coverage from the promotion, make sure to state in the Official Rules that the winner will be required to sign a release and affidavit of eligibility. Those documents will allow you to use the winner's name and likeness, etc.
You'll need to report the prize to the IRS as income to the winner on Form 1099-MISC, so make sure your accounting folks are in the loop.