DM Views: Marketers Face Restrictions Under New Law
The new act will also require -- starting in December -- direct marketers to build in a mechanism for removing the names of those who no longer wish to receive such solicitations through the mail.
Marketers may have a number of questions about the act. Here are answers to 10 of the most frequently asked questions:
1. If the sweepstakes or contest mailing does not contain entry materials, does it need to comply with the act?
The disclosure requirements and the prohibited practices apply to only sweepstakes and contest mailings that contain entry materials. However, all sweepstakes and contest mailings must contain the address or toll-free number which people can write to or call to be removed from the mailing list.
2. If I include a sweepstakes insert in a cooperative mailing, must I comply with the provisions of the act if the sweepstakes is not personalized or does not request a purchase?
The exemption for sweepstakes advertisements that are not personalized or do not request a purchase applies to only advertisements appearing in newspapers, magazines or similar periodicals. Therefore, sweepstakes inserts presented in co-op mailings would be subject to the provisions of the act. Of course, if the insert does not provide an opportunity to enter the sweepstakes, it would not be subject to the disclosure requirements.
3. If a mailing has multiple entries or game pieces, must the disclosures that "No purchase is necessary" and "A purchase does not enhance an individual's chances of winning" appear on each entry form?
The act permits these disclosures to appear on the entry form or the order form. If you have multiple game cards or entry pieces but only a single order form, you can comply with the act by placing the disclosures just on the order form. However, if you do not have an order form or if multiple entry forms contain order forms, these disclosures would have to be repeated on each form.
4. What is the standard for "clear and conspicuous" disclosure?
The act's definition of "clear and conspicuous" is consistent with the Federal Trade Commission's definition. Specifically, the act defines "clear and conspicuous" as "displayed in a manner that is readily noticeable, readable and/or audible ... and understandable to the audience to whom it is disseminated."
5. What does "more conspicuously" mean? Does it mean that it has to be larger or bolder than the other disclosures?
Not necessarily. In adopting the term "more conspicuously," Congress certainly intended that the two disclosures subject to this standard (i.e., "No purchase necessary" and "A purchase does not improve one's chances of winning") be held to a higher standard than other disclosures. Congress, however, very deliberately avoided imposing any specific type size or placement requirements.
The report that accompanied the bill recognizes that the "more conspicuous" standard "may be accomplished in a variety of ways as befit the format and layout of different promotional mailings." The report goes on to state, "In determining whether these two disclosures meet the 'more conspicuous' standard, it is intended that consideration be given to the manner in which these disclosures are presented in relation to the other material appearing on the same page or document on which these disclosures appear."
It is not the act's intent to require that these two disclosures necessarily appear in a larger type size, bolder typeface or similarly more prominent graphic depiction than the other disclosures required which may be appearing elsewhere in the solicitation materials. For example, these two disclosures appearing on the entry or order device may, by virtue of their very placement and location, be deemed to be displayed more conspicuously than other disclosures appearing elsewhere in the solicitation. Note that this is a key section of the law, and marketers are advised to consult with legal counsel on how to satisfy this requirement.
6. If there are not three separate components to a mailing -- e.g., solicitation, rules and entry form -- how many times and where must the "No purchase necessary" and "Purchase does not enhance one's chances of winning" disclaimers appear?
The report that accompanied the bill suggests that if there are not three separate components, disclosures can be made on the entry or order form and in the rules.
7. Do I still need to comply with state laws?
Federal law does not preempt existing state laws. Therefore, you still must comply with the various state laws governing these types of promotional programs.
8. Who is responsible for establishing and maintaining the name removal system?
The law places responsibility for complying with name removal requests requirements on the "promoter" of the sweepstakes. The promoter, in turn, is defined as any person who originates and mails or causes the mailing of the sweepstakes or contest. The intent of the act is to place this requirement on the party that is primarily responsible for the operation of the sweepstakes or contest. The report that accompanied the bill states that "The Committee does not intend to cover the person who merely prints or mails matter for a skill contest or sweepstakes unless that printer or mailer also originates or materially assists with creating the sweepstakes or contest. Only the originator of the sweepstakes or contest that is the subject of the mailing must comply ... rather than the middleman who simply prints or sends the mailing."
9. What exactly must a promoter do within 60 days with the names of those who ask to be removed from the mailing list?
The 60 days refers to the time period within which the promoter must remove the individual's name and address from mailing lists used for sweepstakes and contests. It is conceivable, therefore, that an individual will still receive a mailing after the 60-day period has expired, since the list used to select recipients of that mailing would have been released prior to the 60-day period.
10. What If I inadvertently mail to someone who has asked to be removed from the list?
It is an affirmative defense to an action brought for violation of the act that the promoter has established and implemented with due care reasonable practices and procedures to prevent mailings to people who have submitted a name removal request. Therefore, promoters of direct mail sweepstakes and contests would be well advised to establish guidelines and procedures for the establishment and maintenance of this system to protect them in the event of an inadvertent error.
Note: For more information about direct marketing and the act, a brochure is available for download from the Know-How section at www.adlaw.com or by e-mailing firstname.lastname@example.org.