Last Monday, the Iowa Attorney General's Office announced that it has settled its concerns with Florida-based Tactical Marketing Inc. d/b/a Prize Research Agency (PRA) and Prize Finders Network (PFN) ("Tactical Marketing"), as well as the company's owner and president, Mr. Raymond Jastrzemski. The sweepstakes marketer has been permanently banned from delivering allegedly deceptive direct mail "reports" and must refund a number of its customers.
What put Tactical Marketing on the Attorney General's radar, and how can sweepstakes marketers and sponsors avoid similar enforcement action?
Tactical Marketing's Promotional Materials
According to the Iowa Attorney General's Office, Tactical Marketing and Mr. Jastrzemski informed recipients through direct mail "sweepstakes cash & prize" and "enumeration" reports that they were entitled to substantial prize winnings. Although consumers were allegedly encouraged to pay a $25 "research," "document" or "administration" fee and led to believe that they had won a prize, the mailings included disclosures that consumers were actually purchasing a list of publicly available sweepstakes and contests.
Attorney General Tom Miller claimed that consumers likely thought that they were required to pay the sweepstakes marketer's fee in order to collect prize winnings. "These sweepstakes report mailings are designed to deceive . . . . Only in fine print do the mailings admit that they are not award notifications and that the recipient has won nothing," stated Mr. Miller.
Settlement Agreement
After conducting an investigation of consumer tips and banking records, the Iowa Attorney General's Office targeted Tactical Marketing and Mr. Jastrzemski for sending the subject promotional materials. On June 15, 2015, the sweepstakes marketer and AG's Office reached a settlement agreement, which permanently bans Tactical Marketing and Mr. Jastrzemski from the advertisement and sale of reports and newsletters identifying sweepstakes, games and/or contests that are directed to residents of Iowa or conducted from an Iowa location.
The settlement also requires the subject sweepstakes marketer to stop billing Iowans and to issue full refunds to Iowa consumers, including any Iowan who requests such a refund.
Sweepstakes Marketers: Keep Your Promotions Legal
As Tactical Marketing's run-in with the Iowa Attorney General's Office demonstrates, sweepstakes and contests that appear unfair or deceptive are often investigated by state and federal regulatory authorities. Sweepstakes marketers whose promotional materials do not comply with applicable regulations risk substantial – and sometimes personal – liability.
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