On November 20, 2014, a class action complaint was filed in the United States District Court for the Southern District of Florida against FanDuel, Inc. ("FanDuel") alleging false advertising. The claim concerns FanDuel's advertised "free" "dollar for dollar" fantasy sports bonus promotion. The advertised bonus promises that FanDuel will match up to $200 "dollar for dollar" for any deposit left by a consumer. However, according to the complaint, FanDuel's advertising is deceptively inaccurate.
Allegations of False Advertising by FanDuel
To set up a FanDuel account, consumers are required to deposit money which can be used for entry fees into FanDuel's various daily fantasy sports games. According to the complaint, FanDuel advertises (via radio, television and the Internet) that it will "double your deposit" and "match up to 200 bucks, dollar for dollar." However, the named plaintiff alleges that consumers can only realize the $200 in matching funds by investing "over 2500% [of] the initial deposit."
According to the complaint, the plaintiff opened his FanDuel account with a $25 deposit. When the plaintiff spent the entirety of the deposit, FanDuel only released $1.00 of the allegedly advertised bonus. The complaint alleges that for the plaintiff to receive FanDuel's advertised "dollar for dollar" fantasy sports match bonus, he would have had to spend a total of $625.00.
Florida False Advertising Law and the Fantasy Sports Bonus Promotion
The class action complaint filed against FanDuel alleges violations of Florida statutory and common law. Specifically, the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA") prohibits any person or business from advertising free goods or services that actually require payment to receive the subject goods or services. According to the complaint, FanDuel's services are "free" under the FDUTPA because FanDuel "offer[s] to match initial deposits, 'dollar for dollar.'" The plaintiff alleges that FanDuel's advertisement violates the FDUTPA and that its associated matching practices also constitute a breach of contract. The plaintiff seeks to certify a class of "[a]ll Florida Citizens who purchased FanDuel, using a Promotion Code."
Next Steps
It is likely that FanDuel will move to dismiss the complaint by arguing that its services are not "free" under the FDUTPA. Should FanDuel be unable to dismiss the complaint, it will be subject to discovery, class-action certification, and ultimately a trial on the merits. In addition, although not raised in the complaint, FanDuel's alleged deceptive advertising may run afoul of the federal Truth in Advertising Act. As we have previously blogged, the Federal Trade Commission has been vigorous in enforcing its rules for false advertising. We will continue to monitor this case.
If you are interested in learning more about this topic, want to start a fantasy sports venture or need to review your marketing practices, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.
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