When good promotions go bad
Kellogg Co. announced in April that a computer error in its American Airlines’ American Dream sweepstakes led to erroneously informing several thousand entrants that they had won 25,000 Advantage Miles. Only 60 prizes were available, however. Kellogg corrected the error, sent the entrants an apology along with 500 miles as a goodwill gesture, and allowed the sweepstakes to continue. This incident demonstrates that even carefully planned promotions do not always run as planned. In fact, these sorts of errors occur more frequently than many companies might think.
What you do in the hours and days following the discovery of an error can be critical to determining whether the promotion can be salvaged and how consumers will react. How do you handle these errors? The precise answer depends on the structure of your promotion and the nature of the problem. However, by taking the following five steps, you can increase the likelihood of getting your promotion back on track and avoiding legal liability.
- Assemble your team
Most online promotions involve the efforts of many parties, including marketers, attorneys and programmers. Sometimes parties outside of your company, such as co-sponsors, fulfillment agencies and prize providers, may be involved. As soon as you learn of an error, assemble a team with at least one person from each group and a leader to coordinate team efforts. Require sub-contractors to inform you immediately upon discovering an error that affects the sweepstakes and to cooperate with your efforts.
- Find the error
If the problem is obvious and can easily be fixed, the sweepstakes may be able to continue uninterrupted. If the problem proves difficult to diagnose or correct, you may need to suspend the sweepstakes while you investigate. A good set of rules gives you the flexibility to suspend and modify the sweepstakes. Make sure to test the sweepstakes before you take it back online.
- Plan a course of action
Once you have diagnosed the error, you will need to determine whether the sweepstakes can continue or whether it is beyond repair. Before you decide, consult the official rules that govern the sweepstakes. If you’ve planned ahead, the rules will contain provisions that address what your responsibilities are in the event the sweepstakes cannot run a planned. Even if you cancel the promotion, you may need to find a way to award the remaining prizes. Regulators are less likely to investigate if all prizes have been awarded.
- Coordinate your response
You are likely to get questions from consumers, the media, and perhaps even law enforcement officers. Make sure that your team leader coordinates a consistent response to all inquires. It is a good idea to distribute a set of talking points and answers to frequently asked questions to everyone who may be contacted. Remember that whatever you say to the public now could be held against you later, perhaps even in court. Make sure that your legal department has cleared all statements you plan to issue to the public.
- Deal with complaints
Even if you address errors in a reasonable manner and award all prizes, you may still receive complaints from consumers or regulators. Forward complaints to your legal department team. Many complaints will disappear if you simply explain the error or give entrants a “consolation prize,” as did Kellogg. In a worst-case scenario, entrants may sue your company for breach of contract, fraud, or violation of a state deceptive practices act. Apart from cases where sponsors failed to comply with the law or their rules, plaintiffs have rarely been successful in such suits.
Although these steps are critical when addressing errors after they occur, your success will depend largely on the steps you take before a sweepstakes even begins. Keep in mind that the rules form a binding contract between your company and each entrant. If errors occur, a carefully drafted set of rules could be your best defense. Therefore, when drafting the rules, you should think through the ways the sweepstakes can go wrong and include provisions to protect your company. Many companies run into trouble when they copy provisions from other sweepstakes rules — provisions that work well in one promotion may not work in another. Work with your legal team to determine the best way to use the rules to manage risk.
John P. Feldman and Gonzalo E. Mon are marketing, advertising, and trademark law attorneys at Collier Shannon Scott PLLC. Reach them at [email protected] and [email protected].
