Why Sponsors Must Adhere to Sweepstakes Regulations - Klein Moynihan Turco LLP

Why Sponsors Must Adhere to Sweepstakes Regulations

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.

If you are interested in learning more about this topic or require legal assistance with setting up a sweepstakes and/or other promotional games, 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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Related Blog Posts:

Your Giveaway May Violate Applicable Sweepstakes Laws

Why Sweepstakes Contest Rules Matter

Sweepstakes Promotions: Winner Selection Tips

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