Mailers, DMA Mull Sweepstakes Bill

More legislation may be on the way for sweepstakes marketers as the subcommittee that sponsored a current bill conducts investigations into smaller companies that use sweepstakes.

A spokesman for the subcommittee would not comment on the investigations last week, but Jerry Cerasale, senior vice president of government relations at the Direct Marketing Association, said Sen. Susan Collins (R-ME), chairwoman of the permanent subcommittee on investigations, was planning to hold hearings on fraud; but “we don't know when or if this going to happen,” he said.

Cerasale said the investigation “is still going forward. Collins is looking at investigating [smaller companies], and she may think up new legislation if she finds some other problems.”

At first look, S.335, the Deceptive Mail Prevention and Enforcement Act, passed by voice vote late last month, is not dangerous to direct marketers. In some ways, Cerasale said, the bill — which requires that a disclosure in “clear and conspicuous language” be posted in three places on sweepstakes letters and on order forms stating that no purchase is necessary and that a purchase doesn't increase the chances of winning — is a victory for direct marketers since it doesn't include any provisions about type size or the location of the disclosures.

“We are pleased that the bill does not have prescriptions of exactly what you have to say, exactly where you have to put it, how big it is or what color it has to be,” he said. “But the fact that there are some disclosures that have to be made — in three places, along with a lot of other required disclosures — is going to force our members to make somewhat significant changes to their copy to meet the exact requirements.”

The DMA is most concerned with a new provision introduced by Sen. John Edwards (D-NC), that says marketers must list a toll-free number and address on a sweepstakes order form to allow people to call or write to get their names taken off the mailing list. Sweepstakes marketers would have to take the name off within 45 business days. This could turn into a logistical nightmare, since it will be difficult to manage and monitor on a nationwide basis, Cerasale said.

“We don't necessarily see exactly how this is going to work,” he said. “There are a lot of different marketers who use sweepstakes as a promotional tool — they are not just sending sweepstakes materials out. They may put sweepstakes notices in magazines or bills, for example. All of these things would have to be run through an opt-out mail list, and the names would have to be taken off the list. It is a very complex problem.”

The U.S. Postal Service has concerns about the provision as well. A spokesman for the agency said it is worried that the inspection service — which, according to the bill, is allowed to grant temporary restraining orders and subpoena authority on fraudulent sweepstakes marketers — may be asked to get involved in monitoring this process, which ultimately will cost money and waste time.

Mailers also expressed concern about Edwards' provision.

“How will this provision be monitored and how does it interact with existing opt-out systems?” asked Robert J. Martin, director of corporate and community services at Rodale Press Inc., Emmaus, PA.

The DMA is talking with Edwards' staff and looking at the practicalities of the service. Cerasale said the DMA has set up an assistance program so consumers can call or write the association or send an e-mail to [email protected] When messages are received, members of the DMA that use sweepstakes will remove names from their customer and prospect lists when requested. As a result, the DMA may be positioned to handle this program.

The bill, nevertheless, is moving along swiftly. Even though senators have said they may add more amendments, it is expected to be passed by the Senate this summer and then go on to the House, where Rep. John McHugh (R-NY), chairman of the subcommittee on the postal service, has expressed interest in it.

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