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Promotions and Data Privacy: What are the Risks?

July 29, 2016

By Catherine Otto

Sweepstakes are a great way to build interest in your business or product. Consumers seem to be more than willing to hand over their personal information (in the form of name, email address and phone number) for the chance to win a gift card, free merchandise or free tickets. Sweepstakes are fun, catchy, and it seems like everyone is doing a promotion either in store, on their websites or via Facebook or other social media outlet. However, if you are considering running a sweepstakes, there are many issues that you need to be aware of before you get too far into the planning process.

Review your Promotion Plan

As with any sweepstakes, you need to do a complete review of your promotion plan (preferably with an attorney), to make sure you are abiding by all relevant sweepstakes and lottery laws as well as any social media guidelines if you are using a social media site as part of your promotion. You will also need to develop official rules for your sweepstakes that outline with specifics of how you will run the sweepstakes, the details of the prize, how the prize will be distributed, etc. But one detail that is often overlooked when operating a sweepstakes is how the business will handle the personal information collected from the consumers. By collecting their names, phone numbers and email addresses, you have collected information from the consumers. While this information might be consumer information, it is not personal information that is afforded a protected status in most states (because it does not include SSN, credit card numbers, etc.). Information such as name, telephone number and email address is generally considered to be “directory information” and thus does not obtain special protection under the law. Regardless, you should use your best efforts to protect this information provided to you by a consumer. For example, you should maintain the data on secure servers that encrypt the data, and you should shred and accurately dispose of any hard copies of entry forms.

Have A Privacy Policy In Place

Hopefully, your business already has a privacy policy in place. If you collect information from consumers or have any type of web presence, you should have a privacy policy on your website. Ideally, the consumer information that is collected as part of your promotion should be afforded the same protection as any other consumer information that you collect (aside from financial information and personally identifiable information, which is afforded a higher level of protection).

Be Up-Front With Consumers

Additionally, if you plan to maintain information that you collect from consumers as part of your promotion, you need to make sure that you notify consumers that you are keeping their information for use beyond possible notification of whether they won the sweepstakes.

Say What You Are Going To Do, And Do What You Say

A good rule of thumb when handling consumer information – say what you are going to do and do what you say you will do. DO NOT use consumer information beyond the bounds of what you have received permission from the consumer to do. Please note that even if you put the consumer on notice that you plan to keep the information shared to provide additional information or sales opportunities, and the consumer consents to such use (the method of consent varies depending on how you collect entries), you must still consider issues that are raised by the CAN SPAM Act, the Telephone Consumer Protection Act (TCPA) and various other federal and state law concerns, which may restrict such uses.

Be Careful

The issues surrounding promotions and data security are a minefield. Protecting the personal data of individuals should be of upmost concern to any business handling personal data or consumer information. A misstep could prove costly for a business’s reputation and good will as well as costly in fees related to correcting and recovering from a data breach. State and federal regulators are heavily focused on protecting consumers and consumer’s rights and are not hesitating to issue formal letters of notices of violations.

Promotions are still a good idea for business. Sweepstakes are still a good way to build excitement about your business and product, but you need to be sure that your promotion and any data collected during your promotion are in full compliance with the law and with your own privacy policy. Copying the rules from a business similar to yours is not a safe or smart alternative. This area of the law changes frequently and is heavily followed by regulators. There are times to call in a professional, and running a promotion is one of those times.