AFP, States Agree to Set New Sweepstakes Standards
According to Jim Lyons, an investigator for Florida Attorney General Bob Butterworth, the settlement made earlier this month is less than extraordinary.
"These are negotiations that Florida walked away from last month and decided to go on our own course, and other states have made likewise decisions," Lyons said. "Different states have different statutes. Some have stronger consumer protection statutes than others."
Florida officials don't think the agreement "made a significant change to the status quo, which is why we chose to go our own route," Lyons said. The state also is investigating AFP's main competitor, Publisher's Clearing House, on similar deceptive advertising issues. Other states still seeking action are Connecticut, Indiana and New York.
According to AFP, Jersey City, NJ, the agreement sets new standards for sweepstakes promotions and how they are advertised, along with a consistent guide for language used in the sweepstakes promotions that AFP mails nationally each year. Key areas addressed include:
* Standards for the use of the terms "winner" and "finalist" so the mailings cannot say that someone has won when they haven't.
* Further emphasis on the fact that all entries -- whether or not they include an order -- are treated equally.
* Repeated emphasis of the "no purchase necessary" statement in direct mail promotions.
In addition, AFP has agreed to pay $50,000 each to most of the states that sued it for alleged deceptive advertising practices. States that have settled include Illinois, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, Texas and Wisconsin. Seven states -- Alabama, Montana, New Hampshire, Ohio, Oklahoma, South Dakota and Virginia -- and the District of Columbia are part of the agreement, but they will not receive any money because they were not part of the original action.
In addition, AFP is hoping to work with the states that have pulled out of talks and "reach an agreement as well," said spokeswoman Margot DeWitt.
The settlement follows three years of sporadic talks between the attorneys general and AFP.
"We are pleased to have reached this agreement and to have been able to work with the attorneys general to establish these new standards for sweepstakes promotions," Susan Caughman, president and CEO of American Family Enterprises, said in a prepared statement. "In response to concerns, we've voluntarily taken even further action to help ensure that consumers fully understand and enjoy our sweepstakes."
Earlier this year, AFP announced a voluntary five-point program to intensify consumer awareness about its sweepstakes and to highlight, among other things, its no-purchase necessary and money-back guarantee policies.