Businesses continue to use sweepstakes promotions as an exciting way to acquire and retain new customers. But beware: sweepstakes regulations are no joke. Companies seeking to offer consumers the opportunity to enter a sweepstakes promotion, must follow applicable state laws, as well as Federal Trade Commission ("FTC") regulations when conducting and marketing their sweepstakes promotions. In general, contest advertisements may not be false, misleading, or deceptive. In addition, sweepstakes contest rules should include, among other things, the promotion's duration, entry eligibility details, winner selection process, prize amounts, number of available prizes, and a free alternative means of entry ("AMOE").
Keep your Eye on the Prize.
One cannot run a successful and legal contest without following all applicable sweepstakes regulations. For example, in a recent case, the Attorney General of Georgia, Chris Carr (the "AG"), announced a settlement resolving allegations against Evergreen Publishing Group LLC, Readers Services, Inc. and their owner, Chris Sidhilall, for engaging in illegal and deceptive telemarketing activities. One of the AG's allegations concerned the fact that the companies and Sidhilall, "[r]epresent[ed] that they were conducting a promotion in which consumers were entering a sweepstakes, and inducing consumers to purchase magazines based on these representations, when, in fact, no sweepstakes were held, and no prizes were awarded."
Not only were no prizes awarded, but the targeted consumers were alleged to be elderly and disabled adults. Most states, like Georgia, have strong consumer protection laws that serve to protect such vulnerable consumers.
Or Else Face Fees, Penalties, and Other Punishment
The settlement agreement, among other things, requires the companies and Sidhilall to pay $15,000 in restitution, as well as $135,0000 in civil penalties, attorneys' fees, investigation, and litigation costs.
To avoid exposure to liability for violating state and federal sweepstakes regulations, an experienced sweepstakes attorney can guide you through what provisions your contest rules must include before your promotion start date. Please note that you must determine all key aspects of your sweepstakes, such as duration, prize amounts, number of prizes, etc., ahead of time when drafting the all-important contest rules.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
