Legality
- Policy to ensure advertisers have no legal liability
- EV payments in Paybuyer are not gambling instruments
- Mandated purchases
Policy to ensure advertisers have no legal liability
Paybuyer uses chance payments in a novel way. It is not a conventional sweepstakes that people enter when they buy a product. Because it's different, it is not legally required to have a No Purchase entry option.
However, attorneys have advised us that the system is so new that if this conventional entry option is absent, shakedown lawsuits could be filed against Paybuyer and its advertisers.
So, to prevent frivolous lawsuits and protect our advertisers, Paybuyer will initially and temporarily offer No Purchase entries.
See the No Purchase entry rules.
EV payments in Paybuyer are not gambling instruments in the U.S.
In U.S. law, gambling involves three elements: prize, chance, and consideration.
If a contract, offer, or game is missing any of these elements, it's not a gambling instrument.
EV payments in Paybuyer have prize and chance, but they are missing consideration.
What is consideration? Consideration means that a person pays or gives something to the provider of a chance to win a payoff.
- For example, if you pay $1 for a lottery ticket with a $100 payoff, that $1 is consideration, and the ticket is a gambling instrument.
In the U.S., it is illegal for a company to give you a sweepstakes entry or lottery ticket on the condition that you buy that company's product. That's because part of your purchase payment could be thought of as payment for the sweepstakes entry or lottery ticket.
- For example, it's illegal for Proctor & Gamble to offer you a sweepstakes entry on the condition that you must buy a tube of their toothpaste, Crest.
Thus, when companies in the U.S. offer sweepstakes entries when you buy their product, they also offer a No Purchase Necessary entry option.
By contrast, in Paybuyer-type system, you must buy a product to receive an EV payment, yet your purchase payment is not, and cannot reasonably be interpreted as, consideration.
Here's why: If you visit an advertiser's site or call an advertiser, the EV payment generated by the visit or call is valid if, and only if, you buy a product from the advertiser's competitor.
- For example, Proctor & Gamble might give you an EV payment that is valid only if you buy their competitor's toothpaste, Colgate Total.
Thus, in the Paybuyer process you pay nothing to an advertiser that provides you an EV payment. You give no consideration for the EV payment. In legal terms, no consideration "flows" from you to the advertiser.
It's true that to receive an EV payment you must spend a few moments reading an ad or few minutes on a call with the advertiser. But, sweepstakes laws do not regard these amounts of time to be consideration:
"Today, consideration [payment] for gambling almost always means betting money. This is particularly true when it comes to Internet gambling. Even if players have to spend time at a web page and effort in filling out a form or playing a game, and the web site operator gets more eyeballs looking at its banner ads, there is no consideration. If participants get prizes based on chance, but they do not risk any money, it is not gambling."
I. Nelson Rose in Gambling and the Law, 2001
In the Paybuyer process, the time you must spend to get an EV payment is less than the time it would take you to collect a free entry in most sweepstakes. For instance, it is less than the time you have to spend on most phone surveys that reward you with a sweepstakes entry. Ergo, the time you spend viewing an ad, or on a short call with an advertiser, is not consideration for the EV payment.
Essentially then, EV payments in Paybuyer are not gambling instruments because recipients do not pay for them.
Legally speaking, an EV payment in Paybuyer is a gift from an advertiser to a recipient.
Mandated purchases
A mandated purchase is a purchase required by law, such as the purchase of auto insurance. In these special cases it is especially obvious that in a Paybuyer system no consideration flows from buyers to the advertisers that give those buyers EV payments.
Imagine Progressive Insurance offers you $10 EV for calling them, on the condition that you buy auto insurance from one of their competitors within 10 days of your call.
Obviously, you are not buying the insurance to collect this $10 EV; you are buying it because it's the law.
The purchase of auto insurance in no way stems from your receiving an EV payment from Progressive. In legal terms, no consideration flows from you, the purchaser, to Progressive, the EV payment provider.
Of course, it's also clear that a person who receives an EV payment from Progressive does not give Progressive any consideration if he buys from one of Progessive's competitors.
