The New York attorney general recently settled with PlasmaNet, the owners of FreeLotto.com, for claims that the company used deceptive and misleading advertising with regards to its lottery-style sweepstakes games. Specifically, the AG charged that FreeLotto.com's e-mails to consumers were misleading. The e-mails stated that consumers were being "notified" of "pending" prizes between $300 and $10 million and told consumers to "Click to Claim" their prize. According to the AG, the consumers receiving these e-mails had not actually won any prizes but rather were unknowingly singing up for FreeLotto.com's monthly "FreeLotto Automatic Subscription Ticket" ("F.A.S.T.") services, which charged consumers $14.99 per month to automatically enter consumers in FreeLotto's sweepstakes without having to visit the Web site. In addition to the e-mails, FreeLotto.com's banner advertisements also informed consumers that they had already won a prize, but did not disclose that the consumer had to first register with FreeLotto.com and agree to receive commercial messages from PlasmaNet in order to claim any prize. Under the settlement agreement, PlasmaNet agreed to refund up to three months of subscription costs to consumers who believe they inadvertently signed up for the F.A.S.T. services.

TIP: When advertising a sweepstakes, do not use language that suggests to consumers that they have already won a prize if they in fact have not yet won. In addition, be careful when using automatic sign-up and renewal methods given the recent scrutiny of such measures by the New York attorney general.