Groups Face off on Sweeps Issues

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Sweepstakes marketing -- and how it can be conducted properly -- was at issue yesterday during a public hearing in Indianapolis sponsored by Indiana Attorney General Jeffrey Modisett.


Meanwhile, more lawsuits were filed against sweepstakes marketers, including one by Modisett accusing Publishers Clearing House of luring consumers into buying mail-order products they don't want or need.


Linda A. Goldstein, chairwoman emeritus of the Promotion Marketing Association and a partner at Hall, Dickler, Kent, Friedman and Wood, told hearing attendees that marketers want to find a solution, even if it includes legislation. Officials from the Magazine Publishers Association and Direct Marketing Association also spoke at the hearing.


"The American public loves sweepstakes, Goldstein said. "They are legal, legitimate and the public has the dream and the opportunity to win millions of dollars, travel, cars and more."


Nearly eight of 10 American households get a chance to enter sweepstakes each year, she said, and 29 percent take advantage of the opportunity. Marketers "recognize that a small number of consumers who respond to promotion mailings may be confused by them, and we are committed to working toward solutions to address this problem."


Goldstein also said sweepstakes marketers support state attorneys general, Congress and the U.S. Postal Service in their desire to stop fraud and deception and will help with legislation to protect customers while letting sweepstakes marketers continue to conduct their business.


Congress is looking at Elements of Sweepstakes legislation, which have been adopted by all three associations and integrated into a bill that Sen. Susan Collins (R-ME) and Sen. Thad Cochran (R-MS) introduced this month. The legislation includes that:


* A "no purchase necessary" message be prominently disclosed on mailings.


* There be full disclosure of all material terms and conditions of the offer -- including odds and the nature and value of the prizes.


* All disclaimer language be clear and conspicuous.


* There be prohibitions against false representations that the recipient has won.


The MPA also released its own series of guidelines yesterday.


Bob Sherman, general counsel to the DMA, said the USPS, Federal Trade Commission and the DMA have published a brochure on how to spot fraudulent sweepstakes and are working on a brochure for caregivers of individuals who make inappropriate decisions.


The hearing, which was chaired by Wisconsin Attorney General James Doyle, was attended by attorneys general from Florida, Ohio, Oklahoma, Michigan, Mississippi, Missouri, Pennsylvania and Texas. They will use information obtained from the hearing to determine whether new federal law or state laws are required to curb problems caused by misleading sweepstakes.


Other defendants included Ken Hunter, chief inspector of the U.S. Postal Inspection Service, and Tim Shea, chief counsel and staff director of the Senate Subcommittee on Investigations. The subcommittee will have a joint hearing about sweepstakes with the International Security, Proliferation and Federal Services Subcommittee on March 8-10.


In the lawsuit Modisett filed against Publishers Clearing House, he said PCH violated Indiana's Promotional Gifts and Contests Act, which says customers must be told the odds of winning each prize and the odds must be printed in the same size type and boldness as the prize in each place the prize listing appears.


"Publishers Clearing House failed to comply with any of these provisions required by law," Modisett said.


In addition, DM News received a letter this week from David Olson, an executive with Dominion Marketing Group, Ashburn, VA, explaining that his father-in-law has written more than 150 checks -- totaling more than $2,000 -- to three banks that have sent him direct mailings that solicit payments. Even though Olson is being reimbursed by two of the banks, he is dismayed that this kind of activity is taking place.


"Attorneys that I have spoken to say these activities are within the letter of the law," he said. "But in the cases where older Americans are responding to contests and sweepstakes, we have yet to enact some protections for them."


The letter was addressed to Rep. Frank Wolf (R-VA) and sent to other parties, including the DMA and several other media organizations.
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