AFP Settlement May Impact Sweepstakes
The American Family Publishers (AFP) settlement with more than 30 state attorneys general may have a great impact as to how AFP and other sweepstakes marketers conduct business. While establishing some definite no-nos, the settlement also provides specific guidelines regarding some successful copy writing methods used in the industry.
Although the settlements are in the form of an Assurance of Voluntary Compliance, which are not formally binding on other marketers, they provide great insight as to how the attorneys general think such campaigns should be promoted. Here are some of the important terms of the Assurance:
"Finalist" and "You Have Won" claims One of the key complaints regarding the AFP sweepstakes was the "finalist" claim where nearly every entrant qualified or tied as a finalist. The Assurance restricts, but does not prohibit, nonmisleading finalist claims.
For example, AFP is expressly prohibited from saying: "If you have the winning number, please be advised that it's down to a two-person race for $11,000,000. You and one other person were issued the winning number." This is presumably because the "if you have the winning number" disclaimer was lost on several recipients who flew to Florida to collect what they thought to be their newly won riches.
However, AFP is otherwise permitted to make a finalist or "select group"-type claim even where a vast number of entrants qualify as finalists. It must, however, first describe the size of the select group and disclose in close proximity the basis for the "finalist" claim, for example, that all timely entrants become finalists. AFP then must direct the recipient to the official rules, which must reiterate the basis for the finalist claim and state the average entrant's odds of winning each prize in the sweepstakes, using the format "Your odds of winning the [prize] are 1 out of XXX." The odds of winning must appear using specific type sizes and font.
AFP is permitted to make a "you have won"-type claim only where the qualifying language such as "if you have and return the winning entry" is prominent, taking into account the size, color, and location of the claim. If the claim is visible from the outside of the solicitation envelope, the qualifying language also must be visible.
AFP cannot make a "final round"-type claim unless the solicitation is mailed during the final weeks before the close of the promotion or other disclosures are made. The text also must prominently point out why the sweepstakes is in its final stages and the extent to which the final round will run.
Need not purchase to receive future sweepstakes offers. The Assurance prohibits telling consumers that they must purchase magazines to receive future sweepstakes offers, unless the consumer is clearly told how to continue to receive offers. Thus, the copy can state that persons who do not order magazines will be less likely to receive future sweepstakes offers and those who do order magazines will upgrade, improve or enhance their chances of receiving such offers, under certain conditions.
AFP must disclose in the same message that no purchase is necessary and consumers may receive future sweepstakes entry opportunities simply by requesting one in writing. The contest's official rules must explain how a consumer requests additional entries.
The Assurance requires AFP to prominently display the standard "No Purchase Necessary" disclaimer not only in the official rules but also on the entry form, if the official rules are not attached to the form. The "No Purchase Necessary" statement must be in a separate prominent paragraph in the rules.
The alternative means of entry must be clearly disclosed in the rules. AFP cannot make it appear that those who use the purchase method of entry are more likely to win or that those persons who do not order have a lesser chance of winning.
Taken as a whole, the settlement appears to permit the continued use of creative copy to market goods and services in conjunction with a sweepstakes. However, the attorneys general have made it clear that they want numerous disclosures in the text and clarity in the official rules. For example, there are numerous requirements in terms of type size, font and positioning in the official rules that warrant consideration.
Clearly, all marketers should carefully consider this settlement before mailing their next sweepstakes, as it surely will affect the way the law enforcers view these promotions.
This settlement demonstrates once again the enormous power of the state attorneys general when they coordinate their efforts against a marketer. As part of the settlement, each of the states was awarded its own prize -- $50,000 for the "costs of investigation" for a total of $1.25 million. Four states -- Connecticut, New York, Florida and Indiana -- did not join in the settlement because they do not think it sufficiently protects consumers. They have promised to pursue their own actions "vigorously and expeditiously."
How these continued actions may affect the future of marketing using sweepstakes bears watching.
Andrew B. Lustigman is a partner in The Lustigman Firm, a New York law firm specializing in direct marketing law.