Deceptive Sweepstakes Draw NY Fines

In June, H&R Block settled charges brought by the New York Attorney General arising from two sweepstakes programs involving instant-win scratch-off cards. The cards were available at retail when purchasing tax-return preparation services, or online via free registration. The advertisements online, in print, and on radio and television mentioned “no purchase necessary,” but the mentions were fleeting or not conspicuous, according to the NY AG. Further, in-store advertising did not include these words, nor were Official Rules posted in the retail stores. The NY AG noted that under these circumstances, customers who found about the promotions in retail stores had no way to know they could enter online at no charge. The NY AG alleged the lack of disclosure in stores about free entry, coupled with unclear or minor disclosures in the other ads, was false and deceptive. To settle, H&R Block agreed not only to clearly post the Official Rules at participating retail offices, but also to pay $245,000 in penalties and costs. The settlement also requires H&R Block to train employees to direct consumers to information about no purchase means of entry and clearly disclose that alternate means of entry are available whenever advertising mentions entry is available by purchasing an H&R Block service.

There are complex state laws that cover how promotions, chance, skill or combinations, are to be advertised and operated. When marketing globally, rules are more complicated with language, currency, prize notification and disclosure regulations, as well as age and consent requirements on national, provincial or trading-block scale. What is a “skill” or when is “no purchase” required? When does the chance of winning have equal “dignity” when entering without a purchase? These are often subject to varying interpretation—online and offline. Compliance (registration and bonding in some jurisdictions) can seem an endless legal quagmire. Fortunately, Rimon’s Advertising Technology & Media lawyers around the world can help.

FTC Issues Final Rule on CAN-SPAM

The FTC issued its Final Rule concerning certain aspects of the CAN-SPAM Act May 12, 2008. The Final Rule: (a) allows multiple marketers to designate an otherwise legally qualified entity as the single “sender” for purposes of compliance. The sender still must comply with the opt out, identification and other requirements of the Act, but no longer must be the entity that controls all the content or determines all the email addresses to which the message will be sent. In practice, this means only the designated sender (not the other marketers) needs to honor opt-out requests, and only the designated sender needs to have a physical address in the message; (b) prohibits conditioning an opt-out request on paying a fee or providing some personal information other than an email address; (c) allows senders to use a P.O. Box as the physical address if they have accurately registered the P.O. Box with the United States Postal Service; and (d) defines the word “person” to include business entities. As part of its ruling, the FTC also refused to change the amount of time (10 business days) a sender has to comply with an opt out request from an email recipient, and also rejected putting any time limits on how long an opt-out request from a recipient would remain valid and in effect.

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