why do companies always say "no purchase necessary"

[jfall]

every time I see any type of contest where you can win prizes by buying certain products the company always states that no purchase is necessary. Why do they need to say this? Is it considered gambling or something if not?

 

[imported_Kensai]

Marketing Scheme.

 

[KoolDrew]

Originally posted by: Kensai
Marketing Scheme.

 

[dug777]

they want your money.

reverse psychology...

 

[jfall]

Marketing scheme how, what benefit does that give them?

I don't see how saying no purchase necessary would make anyone want to buy the product more.

 

[DaTT]

I forget.

 

[Cobalt]

So it's like if someone were to get something from someone and won that prize, they could still claim even though they didn't purchase the product. Like you need 2 certain bottle caps to get a prize and you have one and your friend has one you need, he gives it to you and you go claim the prize.

 

[Gunslinger08]

They legally have to. Look it up, and don't believe all these other people.

 

[Kenazo]

They're legally required to, otherwise it would end up under the same category as gambling/lotto tickets,etc.

 

[DaTT]

Also...on a sidenote, when a company offers a contest to win a prize, the company doesn't pay for the prize that is won. They take out insurance on it, and if/when someone wins the prize, the insurance company pays it out.

 

[Yossarian]

Originally posted by: Kenazo
They're legally required to, otherwise it would end up under the same category as gambling/lotto tickets,etc.

yep

 

[notfred]

Originally posted by: Kenazo
They're legally required to, otherwise it would end up under the same category as gambling/lotto tickets,etc.

Gambling and lotto tickets are hardly in the same category. Gambling is illegal, while buying lotto tickets is not.

 

[Kenazo]

Originally posted by: DaTT
Also...on a sidenote, when a company offers a contest to win a prize, the company doesn't pay for the prize that is won. They take out insurance on it, and if/when someone wins the prize, the insurance company pays it out.

I'm sure it depends on the size of the prize. For smaller ones they'd probably be better off writting it off as a promo expense.

When Pepsi had that "Who wants to be a Billionaire" thing Warren Buffet underwrote it, or at least a good chunk.

 

[Kenazo]

Originally posted by: notfred

Originally posted by: Kenazo
They're legally required to, otherwise it would end up under the same category as gambling/lotto tickets,etc.

Gambling and lotto tickets are hardly in the same category. Gambling is illegal, while buying lotto tickets is not.

In Canada it's not. Just controlled.

 

[DaTT]

Originally posted by: Kenazo

Originally posted by: DaTT
Also...on a sidenote, when a company offers a contest to win a prize, the company doesn't pay for the prize that is won. They take out insurance on it, and if/when someone wins the prize, the insurance company pays it out.

I'm sure it depends on the size of the prize. For smaller ones they'd probably be better off writting it off as a promo expense.

When Pepsi had that "Who wants to be a Billionaire" thing Warren Buffet underwrote it, or at least a good chunk.

Even with small prizes they insure them. my neighbour works for an insurance company that does this. If the prize is $1 (value), the company pays like 30 cents to insurance company, and insurance takes the rest of it.

 

[ElFenix]

Originally posted by: notfred

Originally posted by: Kenazo
They're legally required to, otherwise it would end up under the same category as gambling/lotto tickets,etc.

Gambling and lotto tickets are hardly in the same category. Gambling is illegal, while buying lotto tickets is not.

gambling is only illegal when someone is making money on the entries (bookies, casinos, etc). the lottery operates the exact same way.

 

[kranky]

Legally, if a purchase is required to enter a contest that would make it a lottery (you are paying for a chance to win a prize). Since lotteries are illegal unless run by the government they have to allow you enter without buying something.

That doesn't mean they have to make it easy. Not too long ago all the McDonald's contests would let you go to the store and ask for a game piece at the counter. Now they make you send away for them.

 

[Goosemaster]

Originally posted by: Kensai
Evil Scheme.

fixed.