Wait-and-See Attitude Adopted as Committees Debate Sweeps Bill

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Direct marketers are preparing for the ramifications they may face when and if the Deceptive Mail Prevention and Enforcement Act, sponsored by Sen. Susan Collins (R-ME), is passed.


The bill, S. 335, is under review by the permanent subcommittee on investigations -- which Collins heads -- and the updated bill may be marked up by the Governmental Affairs Committee, chaired by Sen. Fred Thompson (R-TN), Thursday.


"We'd like to move this quickly. We think that's in everybody's best interest," said Kirk Walder, an investigator with the subcommittee who spoke at this month's 1999 Governmental Affairs Conference in Washington.


If the bill reaches the Senate floor and is passed, it will move to the House, where it will be picked up by Rep. John McHugh's (R-NY) postal subcommittee. McHugh is expected to have a hearing next month with associations and large organizations attending.


Collins' legislation is designed to impose new standards for, and strong financial penalties and tougher law enforcement against companies that send deceptive sweepstakes mailings and government look-alike mailings. Penalties would range from $50,000 to $32 million, depending on the size of the mailings.


In general, the bill says the words "no purchase necessary" must be included in the mailings, everything needs to be clear and conspicuous, and companies must clearly tell consumers that a purchase won't increase their chances of winning. It also gives the U.S. Postal Service the ability to grant temporary restraining orders and gives it subpoena authority.


"There is the common perception that we are going to tell people what they can and won't say … or [the size] of type they can use," Walder said. "We think you ought to just be clear."


In addition, Walder said Collins strongly believes in letting the individual states oversee the matter. "We think the states need the authority to continue to enforce their own laws and take actions where they feel necessary," he said.


Basically, Collins' bill would set a minimum level of protection of measures that sweepstakes companies and those who use them have to abide by. But, if a state chooses to go beyond that, it has the right -- and this concerns the direct marketing industry.


"We want to make sure that if there are truly deceptive practices being done, that they are stopped," said Robert J. Martin, director of corporate and community services at Rodale Press, Emmaus, PA, which uses stampsheet sweepstakes such as those offered by Publishers Clearing House to sell some of its magazines. "But the problem is that the bills that we've seen -- not just the congressional bills but those by the states' attorneys general -- have been basically efforts to just try to legislate this whole marketing channel out of existence.


"This poses additional challenges for us in trying to get our message out because it's not going to be just whether Sen. Collins' bill is passed, it's going to be whether Sen. Collins' bill is passed and whether we can then work with the attorneys general to make sure that those kind of protections are reflected in anything they do in the states."


Martin said the best way to handle this is by having a uniform set of guidelines, "so that we are not sitting in Pennsylvania trying to figure out whether we are following the guidelines in Connecticut but not following them in Maryland."


The Direct Marketing Association is concerned as well.


"This is having a profound effect on our industry," said H. Robert Wientzen, president/CEO of the DMA. "While you might say, 'I don't do sweepstakes,' or 'So few people use sweepstakes today,' [if ] you are a printer, list company, processor, database company, catalog company, etc., it is affecting you because there are fewer names being added to lists all over the place."


Wientzen said response rates to sweepstakes mailings have dropped and many magazines are suffering. In addition, Standard-A mailings that advertise these magazines has decreased.


"If you're using sweeps, you would be well advised to play scrupulously by the rules," he said, "to stay far from the edge and not to push the edge."


Regardless, the Senate subcommittee is forging ahead.


"We think we can produce tough legislation -- but fair legislation -- that is not going to harm the [direct marketing] industry," Walder said. "It's clear to us that improvements need to be made, and we'd like to make sure that the legislation will meet our goal of reducing deceptive mailings so the consumer is better protected."
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