DMA Tells Sweepstakes Marketers to Comply With Law

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The Direct Marketing Association has begun conducting a series of conference calls to sweepstakes marketers, alerting them to the failure of some marketers to comply with sweepstakes laws.

Jerry Cerasale, senior vice president of government affairs at the DMA, said the agency began making the calls to major sweepstakes marketers earlier this month because it was concerned that not all sweepstakes mailers were complying with the Deceptive Mail Prevention and Enforcement Act, S. 335, which was signed into law in December and took effect in April.

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

"We are just talking about where we've been, what we've done, and what we need to do to go forward," Cerasale said.

He said most sweepstakes marketers are complying with the act. However, he said, "we are just trying to make sure that everyone is complying."

S. 335 gives the U.S. Postal Service authority to subpoena any records that the postmaster general considers relevant to its investigation and gives the USPS new powers to issue civil penalties to any party deemed to be deceptively seeking money or property through the mail.

While the DMA would not say which marketers were not complying, two major sweepstakes mailings from McCall's magazine and the Reader's Digest Association are being investigated by the U.S. Postal Inspection Service to ensure that they do not violate S. 335.

The McCall's magazine mailing was dubbed "Live Like A Millionaire Sweepstakes." It solicited recipients 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 in the form of a certificate with the headline, "$5,200,000.00 Winners Selection Process Entry Certificate."

Paul Griffo, a spokesman at the USPIS, said the agency, which began looking into the mailings in July after they were mentioned at a Senate subcommittee hearing, is still investigating the mailings. He added that since the law took effect in April, the USPIS has served two subpoenas and has applied for another.

If the USPIS rules against the companies, it can issue civil penalties calculated on a sliding scale: $25,000 for each mailing of fewer than 50,000 pieces; $50,000 for each mailing of 50,000 to 100,000 pieces; and an additional $5,000 for each additional 10,000 pieces, not to exceed $1 million.

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