USPIS Investigates McCall's, Reader's Digest Sweepstakes

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The U.S. Postal Inspection Service is investigating sweepstakes mailings from McCall's magazine and the Reader's Digest Association to ensure they do not violate the Deceptive Mail Prevention and Enforcement Act.

The USPIS, Washington, learned of the mailings after Postmaster General William J. Henderson replied to a request from Sen. Carl Levin, D-MI, a member of the Senate Subcommittee on International Security, Proliferation and Federal Services, to have the agency look at the mailings.

The McCall's magazine mailing was dubbed "Live Like A Millionaire Sweepstakes." It solicited mailers to subscribe to McCall's magazine and included statements such as "Official Notice of Unclaimed Cash Awards," and "There Has Been No Mistake, [Person's Name]: Our Sweepstakes Results Have Been Fully Verified and You Have In Fact Won One Million Dollars."

The Reader's Digest mailing, "$5.2 Million Sweepstakes," was a sweepstakes mailing written in the form of a certificate with a headline that read, "$5,200,000.00 Winners Selection Process Entry Certificate."

Levin, whose staff members received the mailings at home a few months ago, asked Henderson to track the two sweepstakes mailings because he thought they violated S. 335, the Deceptive Mail Prevention and Enforcement Act, which was signed into law in December and took effect in April.

Under S. 335, marketers are prohibited from making false and misleading statements in trying to obtain orders through the mail. This practice is also illegal under postal laws.

Linda Gustitus, a spokeswoman at Levin's office, said the McCall's magazine mailing, in particular, contained false and misleading statements that created the impression a recipient had won a significant prize when that was clearly not the case.

"It was very much like the old story all over again, with statements that tell the recipient that they have won a million dollars, absolutely and for sure," Gustitus said. "It was a disappointment. Sen. Levin was pretty discouraged by that."

Both the McCall's and Reader's Digest mailings included disclosure statements about winning the sweepstakes that were not printed as clearly as the law dictates, Gustitus said.

S.335 has mandatory disclosure requirements for sweepstakes promotions. For example, the statements "No purchase is necessary" and "A purchase will not improve one's chances of winning" must be disclosed clearly and conspicuously three times. They must be displayed in the rules section of the mailing, on the entry or order form and in the mailing's text.

The words "clearly" and "conspicuously" have generally been interpreted to mean that the words must stand out from the surrounding text by using boldface type and large-sized type. All of the promotion's terms and conditions, including the rules and entry procedures, must be clear. The rules must contain an entrant's odds of winning each prize; the quantity; estimated retail value and nature of each prize; and any schedule of payments of the prize, if it's to be made over time.

"While the mailings contained statements that said you don't have to buy something to win, and buying something doesn't improve your chances of winning, those two statements are supposed to be very prominent, and Sen. Levin thought they weren't prominent enough in both mailings," Gustitus said.

For example, she said, the statements were written in very small typeface and placed at the bottom of the solicitation, ultimately blending in with other parts of the mailing.

However, Gustitus said that in general the Reader's Digest mailing seemed to have improved over mailings from the company in the past. The rules said the recipient "could" win a prize; it does not say the person has automatically won. In addition, the rules and regulations of the contest were clearly laid out.

"Sen. Levin has used Reader's Digest as an example of a mailing that has changed positively," Gustitus said.

Donna Pierpont, a spokeswoman at Reader's Digest, Pleasantville, NY, said, "We are fully committed to following best practices in all of our mailings because we want to ensure that all of our mailings comply with the relevant laws, and if questions come up, then we'll work with the relevant authorities."

A spokeswoman at McCall's, which is published by Gruner + Jahr USA Publishing, New York, said, "McCall's is confident that its sweepstakes mailings are in full compliance with all applicable federal and state legislation, including the new sweepstakes act."

Paul Griffo, a spokesman at the USPIS, said the agency is looking at the mailings but would not offer any further information. He also said that since the law went into effect in April, the USPIS has served two subpoenas and has applied for another.

"It's going to be important how the postal service responds to this issue, how aggressive they are in enforcing this statute," Gustitus said.

If the USPIS rules against the companies, it can issue civil penalties calculated on a sliding scale:

• $25,000 for each mailing of less than 50,000 pieces;

• $50,000 for each mailing of 50,000 to 100,000 pieces;

• an additional $5,000 for each additional 10,000 pieces, not to exceed $1 million.

The act -- though under the sole jurisdiction of the USPIS -- can always be challenged by the Federal Trade Commission or by state attorneys general under their general consumer protection statutes.

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