Sweepstakes marketing campaigns are creative methods by which to spark interest in a business’ goods and/or services. Many companies are coming up with new and innovative contests to generate and retain a loyal client base. A fundamental concern to be aware of, however, when planning a promotion is to ensure that every aspect of your sweepstakes contest is configured in accordance with applicable laws. Without this assurance, the promotion could land you in hot water, in terms of potential regulatory scrutiny, fines, penalties, and unwanted negative publicity. As readers of this blog know, sweepstakes marketing can be done easily and effectively with appropriate legal guidance. And when a contest is set up correctly, companies will likely reap the benefits from their unique marketing efforts.
Specific Claims Against Sweepstakes Marketing Company
A Pro Se plaintiff (one who represents him or herself) brought an action against one of the industry’s leading sweepstakes promotion sponsors. According to the facts of the case, Plaintiff “registered” for what is characterized in the complaint as “lottery-based games” sponsored by the Defendant. Plaintiff alleges that the Defendant-Sweepstakes promoter “disclosed his email address to telemarketers and robocallers who called him approximately 1,000 times per month.” Unhappy with the marketing barrage, Plaintiff brought three different claims against the sweepstakes sponsor for: 1) violation of the Electronic Communications Privacy Act of 1986 (“ECPA”), for unlawfully disseminating his email address without consent; 2) breach of contract, for failing to award him prize money; and 3) breach of good faith and fair dealing. Defendant moved to dismiss the action for failure to state a claim. The Court chose to rule on the motion from the papers only, without holding a hearing. Plaintiff filed for reconsideration of that decision. Ruling in favor of the Defendant, the Court granted the motion to dismiss and denied the motion for reconsideration.
Specific Rulings in Favor of Sweepstakes Marketing Company
The Court reviewed each claim separately and took into account the fact that the Plaintiff appeared “pro se” and was representing himself without an attorney. As to the first claim, Plaintiff alleged that the dissemination of his email address occurred because he received phone calls from telemarketers and robocallers. The Court, however, categorically rejected this claim, stating that “phone calls and email address[es] are not connected.” In so ruling, the Court found that Plaintiff had not alleged facts that could support the conclusion that Defendant disseminated his email address. The Court also ruled that the allegations could not support violations of either the Federal Wiretap Act or the Stored Communications Act. The Court explained that the ECPA expanded the Federal Wiretap Act to protect “electronic communications,” not the disclosure of an email address.
As for the second cause of action, breach of contract, Plaintiff alleged that Defendant owed him cash prizes for each lottery that he entered, but did not receive the money for winning. The Court reviewed the elements of a breach of contract claim and concluded that Defendant’s “offer,” with respect to the sweepstakes marketing materials, was the possibility of winning a prize, not a guarantee of winning a prize. By entering the sweepstakes contest, Plaintiff accepted the offer to be considered as one of among many others who would also be eligible to win a prize. Without a guarantee of winning the sweepstakes prize, there could be no breach. As for the final claim, the Court simply ruled that because no contract existed between the parties, there could not be a breach of the covenant of good faith and fair dealing associated with it.
Important Lessons to Glean from this Sweepstakes Marketing Decision
First and foremost, we are reminded of the importance of disclosing contest eligibility requirements, as well as the ultimate prize(s) that will be awarded to winners. In recent posts, we have discussed the significance of spelling out the specifics of contest rules, including the prospect of winning a prize, as well as prize amounts and numbers of winners. Sweepstakes promotion marketing materials must not guarantee, or a appear to a reasonable consumer to guarantee, that every entrant will win the featured prizes. Furthermore, although it did not come up in this case, there must always be a free, alternative means of entry. Remember that would-be participants must not be required to “pay to play” to enter a sweepstakes game.
Clearly, there are myriad issues to consider when engaging in sweepstakes marketing. As such, businesses should seek counsel before running any contest promotion to avoid potential regulatory and legal challenges. If you are interested in learning more about this topic or require assistance in connection with putting together a sweepstakes promotion, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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