DMers Herald Approval of New Sweeps Bill

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The direct marketing industry supports H.R. 170, the House version of the Deceptive Mail Prevention and Enforcement Act, which was approved unanimously by the House postal subcommittee late last month. The bill - a less restrictive version of Senate bill S. 335, which was approved by the Senate in August - does not include "prominently" to describe where disclosures be placed on sweeps mailings.

The original Deceptive Mail Prevention and Enforcement Act was introduced in January by Rep. Frank LoBiondo, R-NJ, and is designed to curb deceptive practices of sweepstakes mailings while allowing states to impose their own regulations. A key sticking point to the later S. 335, however, was an amendment that said all warnings - including the specific odds of winning a prize and all contest rules - must be displayed "clearly and conspicuously and also prominently."

At a hearing on the Senate bill this summer, marketing associations, including the Promotion Marketing Association, the Direct Marketing Association and the Magazine Publishers of America, agreed that the word prominently should not be added to the bill. Michael Pashby, executive vice president of consumer marketing at the MPA, said that "adding the word prominently introduces an unnecessary and potentially troublesome ambiguity into the bill."

According to Jerry Cerasale, senior vice president of government relations at the DMA, "The House bill avoids the confusion of prominent, which is a very important factor. From our perspective, the House bill is better than the Senate bill because of this."

The House bill - co-sponsored by the panel's chairman Rep. John McHugh, R-NY, and Chaka Fattah, D-PA - also differs from the Senate bill on other key areas: The Senate bill, for example, would require sweepstakes operators to remove the names of people who do not want to receive their offers within 35 days, while the House bill would extend that time period to 60 days. The House bill would also permit individuals to sue sweepstakes operators for failing to remove their names from mailing lists in a timely fashion, while the Senate bill does not. In the House bill, for example, consumers can receive $500 from a sweeps company when their name is not taken off the list, or they can collect actual damages, whichever is greater. The House bill also grants the U.S. Postal Service's administrative judges subpoena authority during the course of a relative hearing about deceptive mailings.

Both bills require sweepstakes mailings to "clearly and conspicuously" display statements informing recipients that no purchase is necessary to enter a contest, and a purchase will not increase their chances of winning. It also requires marketers to disclose all terms and conditions of sweeps promotions, the sponsor or the mailer of the promotion, as well as the odds of winning. Both versions of the bill grant the USPS investigative and prosecutorial authority over the sweepstakes industry, including the ability to issue fines of up to $2 million to companies that don't comply with the regulations. Both bills also continue to allow states to craft their own sweeps legislation.

However, shortly before the bill hit the subcommittee, it contained a measure that would have pre-empted states from passing additional sweeps laws. The clause, which received heated opposition from the National Association of Attorneys General, Washington, DC, was knocked from the bill Sept. 29, the day before it hit the subcommittee.

H.R. 170 now goes to the House Government Reform Committee for consideration. Committee chairman Rep. Dan Burton, R-IN, is expected to schedule action on the bill within the next two to three weeks. Then it must be passed onto the full House and then onto a House-Senate Conference Committee. It then must have one more go around with the House and Senate before it's signed into law by President Clinton.

The DMA's Cerasale is convinced that a final version of the bill "will be signed by the president before the end of this session of Congress, which ends at the end of October."

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