Aguanga, CA asked in Consumer Law, Business Law and Gaming for California

Q: Question about "Customer Appreciation Giveaways"

I am a small business owner and sell a product for $150 which my customers are very happy to get. If I wanted to (without any additional purchase required) do a Customer Appreciation Giveaway to 3 out of every 200 customers of mine, would I be breaking any laws? As far as I can tell since I would NOT be saying raffle or sweepstakes and simply doing a random Customer Appreciation Giveaway using my own profits....would I be able to use this format to build more customer loyalty? Let's say my wholesale cost of the $150 item is $25 - So if I had 200 customers I would have a profit of 200 x $125 or $25,000 - Now, if I wanted to take $5000 of that money and buy 3 items and randomly pick 3 of MY customers and give those items to them...would there be anything illegal about it?

1 Lawyer Answer
Julie King
Julie King
  • Monterey, CA
  • Licensed in California

A: Just avoiding the use of the words “raffle” and “sweepstakes” doesn’t help your situation one way or the other. The law would look at the way the contest operates. If people have to buy something in order to get a chance to win, it’s generally considered a lottery, which only the state can do. That’s why contests almost always say people can fill out a form and enter with NO PURCHASE NECESSARY. You can have people come into your store to fill out a form, so at least you get them to see your products and get a bit of advertising out of it. A lot of people videotape the selection process (the owner literally picking a name out of a jar) then post it on the store’s website, Facebook page, etc. and send a copy of the video via email to their customer lists with the subject line “And the winner is...” to get people to open the email to see if they’ve won. How’s that for some marketing information along with the legal information?!! Best wishes!

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