snydeq writes: "Fatal Exception's Neil McAllister warns developers of the hidden risks of entering programming prizes, which are on the rise since NetFlix awared $1 million to BellKor's Pragmatic Chaos in 2009. 'Web and software companies offer prizes for a variety of reasons. Chief among them is simply to raise awareness, interest, and participation in a given software platform or service,' McAllister writes. But the practice of offering and entering software prizes is not without concerns. Privacy implications, class-action lawsuits — many of the prizes leave participants vulnerable to prosecution. Worse is the possibility of handing hard work over to a company without reward. 'Contests like the Netflix Prize are sponsored by commercial entities that stand to profit from the innovations produced by the entrants. Those who participate invest valuable time toward winning the prize, but if they fail to meet the deadline (or to produce the leading results) their efforts could go completely unrewarded. Depending on the terms of the contest, however, the sponsor might still be able to make use of the runners-up's innovations — which, of course, would be a whole lot cheaper than hiring developers.'"