Topic:
CONSUMER PROTECTION; FRAUD;
Location:
CONSUMER PROTECTION;

OLR Research Report


September 16, 2004

 

2004-R-0735

BOGUS SWEEPSTAKES

By: Kevin E. McCarthy, Principal Analyst

You asked where a constituent should report misleading mailings regarding a sweepstakes.

SUMMARY

Both federal and state law prohibit a variety of fraudulent practices in connection with sweepstakes. Your constituent may wish to contact the United States Postal Inspection Service or the Federal Trade Commission, which have on-going programs to combat sweepstakes fraud. She may also wish to contact the Connecticut Attorney General's Office, which has filed suits in the past against several sweepstakes promoters for fraudulent practices.

LAWS ON SWEEPSTAKES FRAUD

In addition to generic fraud provisions, the federal Deceptive Mail Prevention and Enforcement Act (39 U.S.C.A. 3001) helps protect consumers against fraudulent sweepstakes promotions sent through the mail. The law prohibits:

• claims that person is a winner unless he has actually won a prize;

• requirements that a person buy something to enter the contest or to receive future sweepstakes mailings;

• the mailing of fake checks that do not clearly state that they are non-negotiable and have no cash value; and

• seals, names, or terms that imply an affiliation with or endorsement by the federal government.

Similarly, state law (CGS 42-295 et seq.) (1) generally prohibits sweepstakes advertisers from placing conditions on receiving a prize; (2) requires them to disclose certain basic facts, such as the value of prizes and the odds of winning; and (3) restricts the distribution of simulated checks in connection with a sweepstakes. A violation is an unfair trade practice. By law, the consumer protection commissioner may investigate complaints of such practices, issue cease and desist orders, order restitution in cases involving less than $5,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. The act also allows individuals to bring suit. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorney's fees; and impose civil penalties of up to $2,000 for willful violations and $25,000 for violating restraining orders.

In addition, state regulations make it an unfair trade practice for anyone to conduct a sweepstakes or other game promotion that requires any kind of entry fee, service charge, purchase, or similar consideration to enter. They also prohibit (1) making deceptive or misleading statements as to chances of winning, the number of winners, the value of prizes, or the availability of the prize; (2) making false, deceptive or misleading statements in publications, literature, or written or verbal promotions. It is also an unfair trade practice to represent that a person is a “winner,” or has been “selected,” or is otherwise a part of a select group to receive a prize when, in fact, the enterprise is simply a promotional scheme (Conn. Agencies State Reg. 42-110b-23).

WHERE TO GO

United States Postal Inspection Service

The U.S. Postal Inspection Service is responsible for enforcing federal laws related to crimes against the U.S. mail, including fraudulent mailings and telemarketing regarding sweepstakes. If the service finds evidence of a violation, it can seek prosecution or administrative penalties against the violator. A U.S. Postal Service Website, http://www.usps.com/websites/depart/inspect/swepmenu.htm, has several pages that deal specifically with sweepstakes and lottery fraud.

People who believe they have been victimized by fraudulent promotional offers may contact their local postmaster. Or they may contact the Postal Inspection Service by email at: https://www.usps.com/postalinspectors/fraud/MailFraudComplaint.htm;

by phone, toll-free, at: 1-888-877-7644; or by mail at:

U.S. Postal Inspection Service

Office of Inspector General, Operations Support Group

222 S. Riverside Plaza, Suite 1250,

Chicago, IL 60606-6100.

Federal Trade Commission

Your constituent can also contact the Federal Trade Commission (FTC). Prize promotion fraud is one of the most common complaints reported to FTC. FTC staff use the information in its complaints database to spot trends, to identify companies that should be targeted for law enforcement action, and to locate witnesses. The FTC also sponsors and operates Consumer Sentinel, a secure Website that law enforcement agencies in the United States and Canada use to access the database. Consumer Sentinel is a joint project of the FTC, the National Association of Attorneys General, and relevant Canadian groups. The database includes complaints from the FTC, law enforcement agencies in the U.S. and Canada, and from private entities such as the National Fraud Information Center, Better Business Bureaus, and the AARP

The FTC has worked with states to combat the deceptive use of sweepstakes, prize promotions, premium awards, and other misleading marketing techniques in mail solicitations, unsolicited facsimiles, and unsolicited commercial e-mail. In addition to its enforcement actions, the FTC publishes and distributes consumer alerts and brochures works to raise the public awareness of deceptive sweepstakes promotions. It also distributes publications to help legitimate businesses that use prize promotions comply with the law.

Your constituent can file a complaint by phone at 1-877-FTC-HELP (1-877-382-4357) or TTY at 1-866-653-4261 (both toll-free). She may also obtain additional information on sweepstakes fraud and file a complaint at FTC's Website, http://www.ftc.gov/.

Attorney General's Office

The Consumer Protection department of the Connecticut Attorney General's Office investigates complaints of consumer fraud, including fraudulent sweepstakes activities. The department's phone number is (860) 808-5400. In the past, the office has sued several sweepstakes and contest promoters for fraud and related offenses on behalf of the Department of Consumer Protection and has worked with attorneys general in other states, the FTC, and the U.S. Postal Inspection Service on this issue.

KM:ts