On both sides of the Atlantic, there are causes for concern as to whether prize promoters take their obligations seriously, and that’s only under their own rules, let alone the codes and laws.
Topic: Games of skill and chance
Who: The Institute of Sales Promotion
When: August 2004
- the Office of Fair Trading criticised scratch card prize promotions often leaving consumers "baffled and disappointed;"
- more than 90% of respondents to a US prize promotions survey have said they have concerns about the ways in which these are run;*and
- one major US pharmacy chain paid $77,000 to settle allegations of failure to provide a proper alternative free entry route for a prize draw…;*
* these reports courtesy of New York law firm Manatt Phelps' electronic ad law newsletter www.manatt.com for which our thanks
the UK's own Institute of Sales Promotion published a report showing disturbingly high levels of non-compliance by UK prize promoters.
US enforcer gets tough against prize promoter
In the US pharmacy chain case, CVS Corp. settled allegations by New York State Attorney General Elliot Spitzer that their sweepstake promotion violated consumer protection laws by failing to provide an in-store method of entering the sweepstake for customers who did not make a purchase.
As part of the settlement CVS agreed to make entry forms readily available at participating locations, regardless of purchase. It also pledged conspicuously placed contest rules and regulations, ensuring that the staff were familiar with on-going sweepstake promotions and could direct consumers to non-purchase methods of entry and to set forth with equal prominence an alternate non-purchase method of entry in an ad promoting the sweepstake that offers automatic entry to a consumer who makes an in store purchase.
The US survey into sweepstake attitudes was conducted by Ascent Marketing Partners. 86% of respondents said they were "somewhat" or "very" concerned about fraudulent or unfair sweepstakes or contests. Here in the UK, the ISP's Complaints and Monitoring Report found that a quarter of consumer complaints received over prize promotions revealed significant breaches of either the law or the CAP Code of advertising, sales promotions and direct marketing.
The majority of the complaints related to on-line promotions and areas of non compliance included failure to deliver prizes, not adhering to terms and conditions and not making winners' lists easily available.
Why this matters:
In most US states the law of "sweepstakes" or pure luck prize draws, is very similar to what we have in the UK. This is that if there is no element of skill whatever in winning and it is possible to enter the event by way of a purchase of a product, then there must be a genuine, realistic and unlimited alternative free entry route. Many UK retailers running in-store prize promotions would do well to look at the CVS case, although of course it is unlikely here in the UK that they will face Attorney Generals and $77,000 payouts.
As regards the ISP report, these results highlight the importance of not only taking great care with the wording of prize promotion rules, but also doing what the rules say when it comes to running the promotion itself. It is right to say that the law in this area is likely to be significantly changed within the next year or so and the current law is not being visibly enforced. However, many of the complaints which the ISP processed were passed on to the Advertising Standards Authority since the CAP Code follows the law in many respects, and the ASA will not shrink from reaching a negative finding if appropriate, which can prove extremely embarrassing for a prominent brand.