Promoting Responsibly Within the Law

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Promotion marketing is under siege. Government officials and consumers alike have begun to take a hard look at the way that businesses employ sweepstakes, games, and contests. It seems promotions are almost routinely scrutinized, to gauge compliance with prohibitions on lottery/gambling activities, consumer disclosure regulations, as well as other laws.

Despite contemplation, the source of this trend remains elusive. While theories abound, it might be attributable to a change in consumer thinking. While I have not conducted any study on the subject, it seems a certain segment of the public appears to have become wary or mistrustful of promotional offers.

This consumer malaise is more understandable considering the small band of entities that offer highly provocative promotions, operating on the fringe of lawfulness. As a general proposition, such programs rely heavily on a loose, aggressive reading of lottery laws and consumer disclosure statutes. Momentarily putting aside the issue of legal compliance, materials for these programs perpetuate some of the age-old canards concerning the promotion marketing industry, most poignantly, the thesis that “no one really ever wins” promotions. In sum, a few entities may have poisoned the well for the overwhelming majority of businesses who have historically conducted promotions within the letter – and spirit – of the law.

This strain of public dissatisfaction is manifested in consumers challenging sponsors about the validity of their promotions. Specifically, based on an unnatural, forced reading of the official rules or concomitant advertising materials, one may assert that he or she is entitled to receive a prize. Some consumers construe the news media as the most appropriate forum, airing their grievances with the hope of perhaps generating public support for their “plight.” More troubling still, others seek relief from a court of law. Sadly, in either case, although originally intended to generate good will, the promotion becomes problematic, with the consumer all too frequently cast as an adversary.

Exacerbating consumers’ changed attitudes is the regulatory environment. In the past year, Connecticut and New York have passed somewhat onerous consumer protection regulations aimed principally at direct mail promotions. Such laws require the sponsor to clearly and conspicuously make a series of disclosures. New York law requires, for instance, that program materials contain an odds statement in a specified type size, font, and format; a full description of the prize won, including its value, as well as all conditions and restrictions relative to receipt of the prize; and a full description of the product/service offered for sale by the sponsor.

The New Prohibition California’s State Department of Alcohol Beverage Control has indicated that it may modify its interpretation of existing advertising regulations to effectually ban sweepstakes promotions by alcoholic beverage manufacturers. Under this new, strict construction, license holders (includingmanufacturers) would not be permitted to distribute free goods with the sale or distribution of alcoholic beverages via sweepstakes, games, or other means.

Florida was close to revising its game promotion registration law to require more detailed information in official rules copy, as well as sundry other requirements. The bill failed to pass, but in a stunning development, the Florida Department of State recently announced that it would no longer accept registrations for chance promotions conducted in the state with a prize value of more than $5,000.

And even then, the sponsor still must contend with various restrictions to proceed in Florida. By way of example, the Florida statute governing the registration of chance promotions still requires sponsors to feature the complete official rules in all print advertisements for the chance promotion. State authorities retain a broad interpretation of their jurisdiction, including any promotion in which Florida residents may theoretically participate.

Congress has also taken an interest in promotions. A proposed bill addresses programs offered by direct mail, requiring the sponsor to make a range of disclosures on the outer envelope and in other areas. While federal law has not yet changed, this federal scrutiny presents another disturbing sign. Listening to the rumblings of Congress, it is always possible that the Federal Trade Commission, the Federal Communications Commission, or some other government agency may seek to revisit its policy on promotions.

In encountering the current situation, the promotion marketing industry must proceed with caution. To assure that sponsors and agencies both continue to grow, each proposed promotion must be thoroughly reviewed for its impact on the public.

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