Sweeps Bill Headed for Passage - sweepstakes law

Circulation Management, Dec, 1999

At press time, passage of federal legislation aimed at deceptive mailing practices appeared imminent. The Honesty in Sweepstakes Bill (H.R. 170), introduced by Congressman Frank LoBiondo (R-NJ), was approved by voice vote in the House in early November, and passed onto the Senate shortly thereafter. The bill is expected to be passed by the Senate and signed by President Clinton before year's end.

The bill up for passage contains the somewhat tougher requirements of the House bill, as compared to the Senate bill passed unanimously last August, but was renamed S. 335 in order to facilitate quick passage by the Senate.

The bill requires sweeps mailers to set up toll-free opt-out numbers and provide that contact information in their mailings. The bill sets a 60-day limit for sweepstakes companies to remove consumers' names from mailing lists after they call. Those who receive a follow-up mailing despite having requested removal from a mailer's list would have a "private right of action" against the mailer, a provision modeled after one in the Telephone Consumer Protection Act of 1991.

Sweepstakes mailings also will be required to "clearly and conspicuously" display statements in the rules and order form that no purchase is necessary to enter the contest, and that purchasing does not improve the recipient's chance of winning. Promotions must also state all terms and conditions of the sweepstakes promotion--including the rules, entry procedures, number and retail value of each prize, schedule of prize payments and estimated odds of winning--in language that is easy to find, read and understand. The sponsor or mailer of the promotion and its principal place of business or other contact address must be included. In addition, the bill prohibits sweepstakes mailers from making statements that entries must be accompanied by an order or payment for a product previously ordered, or that an individual is a winner of a prize unless that individual actually has won a prize.

The bill allows the U.S. Postal Service to impose civil penalties for sending mailings that are not in compliance of up to $25,000 for each mailing of less than 50,000 pieces, and $50,000 for mailings of 50,000 to 100,000 pieces, with an additional $5,000 for each additional 10,000 pieces above 100,000. Any person who, through the use of mail, evades or attempts to evade the terms of an order would be liable for twice the amount of the civil penalty. There is a $1-million cap on penalties.

The Direct Marketing Association voiced approval for the legislation. "We believe that these clear and conspicuous disclosures should help resolve any misunderstanding some consumers may have about sweepstakes promotions," says Jerry Cerasale, DMA senior VP, government affairs. However, the DMA, Magazine Publishers of America and other industry groups lost the fight to make the bill supercede future sweepstakes laws that may be passed on a state level.