The FCC has shown a heightened interest in monitoring the way on-air contests, promotions, sweepstakes and giveaways (collectively referred to as "contests") are conducted at radio stations across the country. On March 2, the FCC released four separate Notices of Apparent Liability for Forfeiture (NALF) finding several radio stations apparently liable for their apparent violation of Section 73.1216 of the Commission's rules. That rule requires a broadcast licensee to "fully and accurately disclose the material terms of a contest ... and conduct the contest substantially as announced or advertised." Material terms include those factors that define the operation of the contest and how a listener can participate in the contest. Although the material terms may vary depending upon 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; the basis for valuation of prizes; time and means of selection of winners; and/or tiebreaking procedures.
In one instance, the FCC fined a Kansas broadcaster $4,000 in connection with a station contest entitled "Guess What Is in the Santa Sack." The complainant alleged that the station failed to award her the $1,000 cash prize for guessing correctly what was in the sack. After the station conducted a series of internal investigations, it was revealed that the station in fact had failed to award the cash prize to the complainant and broadcast over-the-air material terms of the contest. The licensee explained that the prize had not been awarded due to employee error, that the program director responsible for conducting the contest had been reprimanded, and that a letter of apology along with the $1,000 cash prize had been sent to the complainant. The FCC stated that "inadvertence or employee oversight" does not excuse a station from liability and that "licensees are responsible for the actions of their employees."
In another case, the FCC fined a New Jersey broadcaster $4,000 in connection with a contest entitled the "Treasure Vault," in which the eighth caller that could guess a four-digit code would win a cash prize of $275. The complainant used multiple telephone lines to call the station. He reached the station on one line first and was informed that he was the "seventh caller" and that he should "please try again." When the station picked up the complainant's second telephone line, making him the eighth caller in line, the complainant was informed by station personnel that he was still considered only the "seventh caller." The station eliminated the complainant from the contest on the basis that the use of multiple telephone lines constituted only one call. The contest rules in effect during the contest contained no restrictions on the use of multiple phone lines by contest participants. The FCC faulted the station for changing the rules of the contest, without notice to the public, by restricting the method by which a potential participant could be chosen. The FCC stated that the licensee's contention that the rules change was not intended to exclude the complainant specifically, or that the station did not award the advertised prize to anyone else, did not mitigate its liability.
The FCC fined a Philadelphia broadcaster $4,000 in connection with a competitive eating contest entitled "Wing Off," in which the winners would be offered the opportunity to compete in another popular competitive eating competition called "Wing Bowl 13." The station revoked the prize after determining that the winner belonged to a competitive eating association, the Association of Independent Competitive Eaters (AICE). The licensee stated that AICE is a rival of another competitive eating association historically associated with Wing Bowl 13, the Independent Federation of Competitive Eating (IFOCE). Thus, the licensee argued that the complainant should have known that members of associations in rivalry with IFOCE could not compete in the contest. By the licensee's own admission, the contest rules did not specify or permit disqualification of persons associated with AICE. Therefore, the FCC faulted the station for failing to disclose material terms, such as eligibility requirements, prior to the contest. In addition, the FCC stated that the fact that the station had previously disqualified a contestant for similar reasons suggested that the eligibility requirements were not self-evident to contestants and put the licensee on notice to include information about this material term in the rules for the Wing Off contest.
In the last case, the complainant won the grand prize in a contest conducted by a Massachusetts radio station. The prize consisted of a free two-year lease on a 2005 Buick LaCrosse automobile, or its cash equivalent, from the co-sponsor, Bob Pion Pontiac, and a "trunk load full" of memorabilia of the musical group Aerosmith. The complainant alleged that although he was assured by the station's staff that all of his prizes would be delivered to him by July 22, 2005, he was still awaiting delivery of the memorabilia portion of the prize as of December 31, 2005. Although the contest-specific rules in this case were silent on the issue of when the prizes were to be delivered, the FCC stated that "licensees are obligated to provide all promised prizes in a reasonably prompt manner in such circumstances, consistent with their overall duty to conduct broadcast contests fairly and without deception." Furthermore, the FCC stated that timely fulfillment is an implied term of any contest in which prizes are advertised, unless contest rules expressly state to the contrary. Based on these criteria, the FCC found that the licensee's six-month delay in awarding the memorabilia prize was significant and that it constituted a failure to comply with the duty to provide prizes in a reasonably prompt manner.
Given the FCC's heightened level of scrutiny in this area, stations are well advised to plan and execute contests very carefully. As the Commission has said, "the standards are high, for while contests are particularly susceptible to abuse, abuses can be prevented by diligent licensee attention to the planning and conduct of contests."