Indignance in Indianapolis
With allegations of massive fraud prompting probes of sweepstakes in seven states, a coalition of companies using sweepstakes to market products recently defended their practices at a meeting of state attorneys general in Indianapolis.
Speaking at a public hearing held by the Indiana Office of the Attorney General, Promotion Marketing Association attorney Linda Goldstein argued that 80 percent of sweeps entrants don’t buy any products, and that only a small percentage don’t understand the rules. “Our members are not in the business of misleading customers,” she said.
But 11 state AGs in attendance criticized as inadequate the industry’s efforts to eliminate deceptive gimmicks and other fraud that they say prey on the elderly. “I want to find out if this industry has a conscience,” said Mississippi AG Mike Moore.
The National Association of Attorneys General is drafting a model state law to regulate sweepstakes fraud. Under a new Senate bill sponsored by Sue Collins (R-ME), sweepstakes that deceive people into buying products would face up to $2 million in fines.
The industry panel made the following points:
* “No purchase necessary” statements are easy to find, read, and understand.
* As many as eight in 10 American households are offered the opportunity to enter sweepstakes, and 29 percent of the public have taken advantage of the opportunity.
* Sweepstakes are utilized by as many as 73 percent of all American companies.
* Businesses understand that a very small number of consumers who respond to promotional offers may be confused, and are committed to finding solutions to address the problem, including cooperation with Congress, the U.S. Postal Service, and state governments.
An official of the Indiana AG’s office, who asked not to be named, indicated dissatisfaction with some of the industry statements. “It sounded a lot like blaming the victim to us. If the ‘no purchase necessary’ statements were as clear as they say, why are we having the problems we have?”
The Wall Street Journal reported that state probes into the marketing practices of Publishers Clearing House as well as Jersey City, NJ-based American Family Publishers have caused sales of their magazine subscriptions to fall by as much as 30 percent. Neither company returned phone calls.
In a related move, Indiana Attorney General Jeff Modisett added to the latest round of lawsuits against Port Washington, NY-based PCH, alleging that the sweepstakes firm uses deceptive mailers to trick people into believing magazines purchases will help them win big cash prizes.
In a lawsuit filed in Marion Superior Court in Indianapolis, the state has asked a judge to order PCH to stop mailing or delivering promotional material that does not state the odds of winning the grand prize, and to print those odds nearby and in the same size as the amount of the prize.
In a statement, PCH countered that its sweepstakes are “legitimate” and that no reasonable person could be misled by the promotions it sends to millions of Americans each year. Wisconsin sued PCH last month, alleging that PCH targeted the elderly and infirm with promises of wealth to get them to purchase merchandise. PCH is also being investigated by the state of Florida.
