A sweepstakes promoter agreed to a permanent ban from direct mail marketing and faces a $9.5 million judgment pursuant to a settlement with the Federal Trade Commission after she violated the terms of an earlier agreement.
Crystal Ewing was one of several individuals charged by the agency in 2007 for operating a deceptive sweepstakes promotion. According to the FTC, the defendants tricked consumers into sending them money in order to receive a cash prize that did not exist.
At the time, Ewing reached a deal with the agency prohibiting her (as well as the other defendants) from conducting prize promotions.
But Ewing subsequently began working with Puzzles Unlimited LLC, a prize promotions company that the FTC said scammed consumers using direct mail ads with titles like “Notice of Grand Prize Payout” and “Grand Prize Guaranteed.” Believing they had already won money, recipients completed a form and paid a “processing fee” of $10 to $15.
However, the prizes never materialized. Instead, consumers received additional rounds of puzzles that they were required to solve correctly in order to claim the prize money. To heighten the drama, the defendants often told consumers they were “tied for first place” in the promotion. Even those who correctly solved the puzzles did not receive a prize.
Ewing’s endeavors violated the earlier deal, the FTC alleged. Admitting that she ran afoul of the 2007 order, Ewing agreed to pay more than $9.5 million—the amount of consumer harm attributable to Puzzles Unlimited—and the imposition of a permanent ban on any direct mail marketing. She is also prohibited from making material misrepresentations about goods and services, and from profiting from consumers’ personal information. In addition, she must properly disclose consumer information.
To read the stipulated final judgment in FTC v. Ewing, click here.
Why it matters: The FTC used the case to illustrate the penalties that will be levied against companies that fail to comply with settlement agreements. “There’s a price to pay to violating a court order in an FTC case,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “In this case, that’s $9.5 million and a permanent ban on direct mail marketing.”