USA Law and Practice Contributed by: Katelyn Patton, Frankfurt Kurnit Klein & Selz
technologies. These regulations add to the strict limi - tations on the use of health data in advertising and marketing. Two new federal rules may affect companies that transfer personal data within the advertising ecosys - tem, as follows. • The Department of Justice’s Bulk Sensitive Data Rule restricts or prohibits transfers of bulk sensitive US data (eg, device identifiers, precise geolocation) to covered persons, even if the data is anonymised or de-identified. It applies to both direct and indi - rect disclosures, including through data brokerage and ad tech transactions, and may require strict security and contractual safeguards. Covered per - sons include any entity that is 50% or more owned or controlled, directly or indirectly, by a person or government of a country of concern (eg, China, Russia, Iran). • The Protecting Americans’ Data from Foreign Adversaries Act 2024 makes it unlawful for a “data broker” – an entity that sells or licenses personally identifiable sensitive data of US individuals – to transfer such data to a foreign adversary country or any entity controlled by a foreign adversary. • Each of these rules implicates companies that operate internationally or utilise tracking technolo - gies provided by vendors or third parties in specific countries of concern. As a result, companies have begun to scrutinise their data flows more carefully. • At the state level, laws in California, Oregon, Texas and Vermont targeting data brokers have imposed new registration and disclosure obliga - tions on companies that provide personal data for the purpose of targeted advertising. These states have focused their enforcement efforts on these businesses, resulting in investigative sweeps and several settlements. 7. Sweepstakes and Other Consumer Promotions 7.1 Sweepstakes and Contests A patchwork of federal and state laws governs sweep - stakes and contests in the USA. What follows are some key general requirements.
• As an initial matter, sweepstakes and contests must comply with general advertising principles and state unfair and deceptive practices laws. Accordingly, all promotional offers must be con - ducted in a non-deceptive, non-misleading man - ner, and the drawing of winners must be fair and unbiased. • As lotteries (except for those sponsored by state governments) are illegal in the USA, promotions must not contain all three of the following ele - ments: prize, chance, and consideration. • In the USA, it is generally impermissible to require participants to make a purchase in order to com - pete for prizes in a game in which chance (not skill) is the predominant factor. Therefore, for such chance-based promotions, a non-purchase alter - native method of entry is required. • Most states require that each sweepstakes or contests be governed by a comprehensive set of official rules that generally serve as the contract between the sponsor and the entrant. Although the details may vary depending on the nature of the promotion, most states generally require such rules to include: eligibility requirements, clear entry instructions, the start and end dates (and times, if applicable) of the entry period, a complete descrip - tion of the prizes and their approximate retail value, how and when the winners may be determined, an odds statement, and the corporate name and physical address of the sponsor. • Most social media platforms have their own set of terms and conditions that govern sweepstakes and contests offered through the platform. 7.2 Contests of Skill and Games of Chance Games of skill are generally those in which the out - come is determined by a participant’s ability or apti - tude instead of by chance. If chance dominates the promotion, it is not one of skill, even if some skill is required to participate. Most states follow the “domi - nant element” test to determine whether a promotion is skill-based, evaluating the following factors: • participants must have a distinct opportunity to exercise skill and must have sufficient data upon which to calculate an informed judgement to the extent required by the promotion;
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