Sign up for email updates from SBAReceive helpful business tips and upcoming events in your area.


Privacy Policy
Log in to SBA.gov:
Enter your SBA.gov username.
Enter the password that accompanies your username.

Community Header Banner

Is it legal to do a monthly giveaway to members only on my website?

by AMadrid, Window Shopper

  • Created: January 10, 2011, 6:49 am
Share:
7 comments

I am starting a web site that for the most parst is free to view. If people want to become a member they have to pay $1.00 membership fee a month.  10 cents of evey dollar goes to charity. Members will be automatically entered in a monthy drawing to win prizes. Can i leagally do that?

Tags: Discuss Popular Topics, Other Business Issues
‹ Meet and Greet non-medical transportation ›

sharmil | Performer | 2/12/2011 - 4:05 am

You should talk to a lawyer licensed in your state. Sweepstakes and contests that require a purchase to participate are illegal in the U.S. It would appear that to enter your contest, I would need to purchase a membership to your website. This sounds like a violation of the law. In addition, sweepstakes are governed by the Federal Trade Commission, the U.S. Postal Service, and the Federal Communications Commission. And finally, if your website attracts children, you have a higher level of responsibilities. And one more thing, most states also regulate sweepstakes and fundraising. So, you need to check with your state Attorney General for guidelines. Good luck. Sharmil McKee Business Attorney Philadelphia, Pa http://blog.mckeeoffice.com
Professional Web Site: http://blog.mckeeoffice.com

jerechojoshua | Window Shopper | 2/6/2011 - 11:03 pm

It is not illegal since websites has an right to conduct a monthly draw for their members. It's a part of marketing and it can drive more members to the website.
Professional Web Site: http://www.krilloilbenefits.org/

waynearln | Contributor | 1/10/2011 - 6:49 am

I don't see anything illegal in what you have described. As long as you are declared as a business and report to the tax authorities about your income you are in good legal status. Also, you should check all of this with an accountant, it could be that your charity work can reduce your taxes.
Professional Web Site: http://www.workinghomeguide.com

mike82 | Window Shopper | 2/23/2011 - 3:57 am

Show Replied Text…
I don't see anything illegal in what you have described. As long as you are declared as a business and report to the tax authorities about your income you are in good legal status. Also, you should check all of this with an accountant, it could be that your charity work can reduce your taxes.
I think MarkAse has a good point about what you are giving away. The other issue can be with the value, if it is over a specific value in some states, I think you have to register the competition/giveaway. You would definitely be best talking to a lawyer in your area though.
Professional Web Site: http://www.megaonlinestore.com

MarkAse | Contributor | 1/10/2011 - 8:22 am

Show Replied Text…
I don't see anything illegal in what you have described. As long as you are declared as a business and report to the tax authorities about your income you are in good legal status. Also, you should check all of this with an accountant, it could be that your charity work can reduce your taxes.
For the most part, it shouldn't be a problem. The question really becomes, what are you giving away exactly? For example, in my wine business I can't give away wine to anyone pretty much for any reason, but I could have a free wine opener etc!

DaveFrench | Window Shopper | 1/14/2011 - 9:34 pm

Nothing's legal about that as long as it's all reported on taxes.. the question is whether or not the giveaway will end up as a positive ROI opportunity for you!

jthorf | Contributor | 1/16/2011 - 5:23 am

I believe there is nothing illegal about that. Just make sure that everything is documented. Even the charity part.