The Federal Communications Commission has proposed a rule change that would allow broadcast stations to disclose on the Internet the material terms for contests that they sponsor.

As currently written, Section 73.1216 requires that a “licensee that broadcasts or advertises information about a contest it conducts, shall fully and accurately disclose the material terms of the contest, and shall conduct the contest substantially as announced or advertised. No contest description shall be false, misleading or deceptive with respect to any material term.”

In response to a petition from Entercom Communications Corp. seeking a rule change in recognition of modern technology – as well as the fact the Commission has fined several broadcasters under the existing requirements – the FCC published a Notice of Proposed Rulemaking in which it suggested a change to allow online disclosures.

The FCC noted that Section 73.1216 describes “material terms” as the factors that “define the operation of the contest and which affect participation therein.” Although the material terms may vary widely depending on the exact nature of the contest, they will generally include “how to enter or participate; eligibility restrictions; entry deadline dates; whether prizes can be won; when prizes can be won; the extent, nature and value of prizes; basis for valuation of prizes; time and means of selection of winners; and/or tie-breaking procedures,” the Notice stated.

Entercom told the agency that by placing the material terms on a Web site, listener confusion could be eradicated. Listeners unsure about the contest requirements could simply read the terms at the Web site at their leisure or check back to see whether the contest was conducted as promised.

The Commission opened for public comment the proposal that would create the online posting as an option, while still retaining the current on-air disclosure method.

For example, the agency asked whether the full URL for the online disclosures should be referenced each time the contest is mentioned on the air. “[W]e believe that requiring licensees to broadcast the website address where contest terms are available each time they mention or advertise a contest will better inform the public of material contest information and is not unduly burdensome,” according to the Notice. “We believe that such a requirement is less burdensome than requiring a licensee to periodically broadcast material contest terms in full.”

The Commission also proposed that if the material terms change after the contest is first announced, the station would be required to announce on air that the contest rules have changed and to direct participants to the Web site to review the changes. How frequently stations must issue this statement and for what length of time remain open questions.

As for the “material terms” themselves, the Commission queried whether the broadcaster can satisfy the posting requirement by listing the full set of contest rules or whether it must also provide an additional list of the “material terms” to highlight the important requirements.

How can stations ensure the material terms are easy for listeners to find, the FCC asked? Would the rules need to be indexed on the station site’s principal landing page? What about stations that do not have a Web site? The Commission wondered whether such a station could post its contest terms on the site of a third-party organization to comply with the rule, such as a state broadcast association or other company.

The agency also noted that the on-air disclosures must match the Internet disclosure.

To read the FCC’s Notice of Proposed Rulemaking, click here.

Why it matters: Section 73.1216 has proved challenging for broadcasters, who have faced $4,000 fines from the Commission over the last few years for failing to broadcast the material rules often enough to satisfy the rule and inform the listening public. In a statement accompanying the Notice, Chairman Tom Wheeler said the proposal “advanced the ball in a significant way,” as the agency took “an important step to modernize the way Americans receive and understand information – specifically contest rules – in the digital age.” The proposal is currently open for public comment.