Baseball fans love clambering for soaring fly balls, and
it's generally a harmless endeavor. Except when the entire
happiness of a Word-Series-bereft ball club depends on it. In the
infamous Steve Bartman Incident, a spectator's
impulsive grab for the ball interfered with a possible out by Cubs
left fielder Moisés Alou. Right idea, Steve; wrong time.
In sports, as in sweepstakes, the lesson holds true: Sometimes
trying to do the right thing at the wrong time can lead to
trouble.
That's what happened recently when a client asked us to help
create a relatively standard nationwide sweepstakes. The online
sweepstakes offered an alternative mail-in entry method. The prize?
A to-die-for winter vacation package to the Caribbean.
We told the client that awarding a travel vacation package for
only one person was unusual. Typically a travel prize of this type
included two people. However, the marketing budget apparently would
only allow a prize for one person's travel.
The prize, which included airfare, hotel, meals, and ground
transportation, etc., was valued at $3,500. Because the prize's
Approximate Retail Value (ARV) was well below the $5,000 threshold
for registration under New York and Florida's statutes, the client didn't
need to register the sweepstakes in either of these states.
The nightmare began about three weeks into the five-week term of
the sweepstakes. The client's in-house lawyer reviewed the ads
for the promotion and discovered that the prize had been increased
from a trip for one to a vacation for two. And the ads listed an
ARV of $5,200.
In a frantic telephone call to the marketing department, the
in-house lawyer learned that, at the last minute, the company's
marketing department had decided to follow our advice, increased
the prize package and revised the official rules accordingly.
But because the ARV of the prizes exceeded $5,000, they had
unwittingly created a sweepstakes that should have been registered
in both Florida and New York but wasn't.
I explained to the perturbed in-house lawyer that the best way
to deal with the failure to register this sweepstakes was to
immediately contact the regulators in both New York and Florida and
be completely upfront with them. We called both states and
explained the situation. While the client did incur nominal fines
in both states, the effects of failing to register could have been
much worse if the regulators had discovered this on their own.
What could have been done to prevent this nightmare from
occurring?
Here are a few suggestions:
1. Make certain marketing personnel realize
that no changes can be made to the official rules, abbreviated
rules, ads, etc., after they are approved by the legal department,
unless the same lawyers specifically approve the changes.
2. Also, make certain the marketing department
understands that if the ARV of the prizes exceeds $5,000 and the
sweepstakes is available in New York or Florida, it will probably
need to be registered in those two states before it can be
launched.
3. Be honest and up-front when dealing with
enforcement personnel in New York and Florida (or any other state
or federal authorities who have jurisdiction over your
sweepstakes). I have found these people to be very understanding
and appreciative if you are straightforward with them about your
compliance with their regulations.
4. Carefully check the ads, e-mails,
point-of-sale signage and other promotional materials that will be
used in connection with a sweepstakes. Confirm that they do not
conflict with or misrepresent the official rules, and that all
disclaimers are accurate and appear in clear and conspicuous
manner.
5. Circle back with the marketing people
responsible for the sweepstakes two days before the launch date to
determine if there are any problems, questions or potential changes
they want to make to the sweepstakes.
In most instances, changes can be made to a sweepstakes
virtually up until the time it is launched. If the promotion must
be registered, however, changes can only be made up until the
registration is filed.
After a sponsor launches a sweepstakes, rules changes are
generally not an option. If changes are absolutely necessary,
consult an experienced sweepstakes lawyer.
Please note: We compiled this example from some of our
actual cases. We modified the products and details to protect the
parties' privacy.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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