Marketers yield to sweepstakes curbs

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Marketers succumbed to the congressional rush to increase regulation of sweepstakes last week, agreeing to more disclosures, increased penalties and quicker mail halts in return for retaining some leeway on where to place disclosures.

The last-minute addition of a sweepstakes opt-out provision in one bill approved unanimously by the Senate Governmental Affairs Committee, however, jeopardized sweepstakes offers piggybacked with unrelated mass mailings such as credit card bills.

Language urged by Sen. John Edwards (D., N.C.) forces sweepstakes promotions to list an address consumers can use to get off sweepstakes mailings from any marketer and forces mailers to check the national list every 45 days.

CREATING DIFFICULTY

Promotion marketing executives said that requirement would make it difficult to conduct some kinds of sweepstakes.

Forcing credit card companies and other mailers that include sweepstakes offers in monthly bills to run each of their mailings against the national list and create separate billing packets for people who don't want sweepstakes material likely would prompt the credit card companies to drop sweepstakes offers, they said.

The bill, which now goes to the full Senate, requires sweepstakes promoters posting more than 500,000 sweepstakes mailings a year to purge their mailings against the national list.

"We are concerned some [marketers] might have to face significant changes," said Rita Cohen, senior VP-government affairs for the Magazine Publishers of America.

Sen. Joe Lieberman (D., Conn.), a member of the Senate panel, acknowledged there could be problems with the opt-out plan and suggested changes might be possible before a final Senate vote.

The sweepstakes bill would require both additional and more prominent disclosures in sweepstakes promotions and would impose increased penalties for marketers that fail to comply. The bill, however, dropped proposals requiring disclosures be in type of a certain size or on envelopes.

`NOT DESTROY SWEEPSTAKES'

"We can make changes and [still] not destroy sweepstakes," said Jerry Cerasale, VP-government affairs for the Direct Marketing Association. "There will be some pain, but it is not fatal."

"It's a painful bill," a Time Inc. spokesman said. "We're not happy to have it. We think, however, we'll be able to survive under it and still be able to do sweepstakes. We've been working with the committee and others in the industry to try and come up with solutions to help the small number of people who have had problems with sweepstakes."

GIVING ADEQUATE NOTICE

"Our intent," said Sen. Susan Collins (R., Maine), the Senate bill's chief sponsor, "is to make sure sweepstakes are fair and honest, and to provide sufficient notice so that people aren't deceived by them."

Under the proposed legislation, already required disclosures saying "no purchase is necessary to win" and "buying doesn't increase the chances of winning" will have to be included three times and be "clear and conspicuous," legal terminology that will force marketers to increase the prominence of the disclosures. They also must appear on the sweepstakes letter, the order form and again under a listing of rules.

Disclosures also would be required for "skill" games for the first time and additional disclosures would be required for mailings that mention government programs.

QUICK ACCEPTANCE

The Senate bill won quick acceptance from one major sweepstakes marketer. "Publishers Clearing House supports strong federal legislation that requires clear disclosure," said David Sayer, exec VP-advertising and public relations at the company. "We're behind it 100%."

But Linda Goldstein, an attorney representing the Promotion Marketing Association, said the new requirement could cause some marketers to shy away from using sweepstakes.

"It will have a chilling effect. . . . Some marketers who make occasional use of sweepstakes may not use them," she said. "I don't think you will see marketers abandoning sweepstakes, but they may proceed more cautiously."

Contributing: Ann Marie Kerwin, Carol Krol.

Copyright May 1999, Crain Communications Inc.

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