Danger! Danger! Stagers of sweepstakes ignore state laws at their own peril.
A sweepstakes “has to be done right,” to be effective, says Althea Alder, president and owner of Northbrook, IL-based A-Three Services Agency, a sweepstakes management company. There is “significant danger and risk,” she says, when companies try to run sweepstakes on their own without consulting expert lawyers to determine that the contests meet all existing legal requirements. Corporate lawyers usually are not equipped to tend to all the details.
The chief areas of risk are “chance, consideration, and prizes,” says Bob Borman, vp -general manager of the sweepstakes and contests division at Gage Marketing Group, Maple Plain, MN. He warns that those mounting sweepstakes “must give everyone a fair opportunity to participate,” and that the odds of winning and no-purchase-necessary assurances “must be made really clear.”
“It’s a dumb way to save money to skimp on hiring legal help in setting up a sweeps, only to risk corporate assets,” says Alder.
When states brought lawsuits against magazine sweeps operators like Jersey City, NJ-based American Family Publishers and Port Washington, NY-based Publishers Clearing House, sponsors of bona-fide sweepstakes feared a public backlash. None occurred, because the great majority of sweepstakes are legitimate, with no deceptive advertising, false claims, or pressures to buy merchandise.
Despite states’ close supervision, many consumers don’t enter sweeps because they suspect that their names might be captured in marketers’ databases. In reality, their fears are misplaced. “Legitimate sweepstakes don’t do that,” says Chris Stelly, president of Greenville, SC-based Fulfillment America. “And besides, it would be cost-prohibitive.”
