Earlier in June, The Great Atlantic & Pacific Tea Co. (“A&P”) settled a case with the New York Attorney General (“AG”) arising out a sweepstakes it offered called the “A&P Frozen Food Month 2013 Sweepstakes.” Consumers who purchased more than $50 in frozen-food products using an A&P Club Card were automatically entered in the sweepstakes at checkout for a chance to win gift cards. The New AG alleged that A&P failed to properly inform customers that they could enter a sweepstakes without having to make a purchase. Store circulars said that: “Every time your spending reaches $50 on frozen food, you’re automatically entered for a chance to WIN!,” but failed to adequately detail that the entry could be made through the mail without a purchase; it was solely included in the fine print. So even though the official rules for the sweepstakes contemplated an alternative method of entry (“AMOE”) that allowed customers to mail in a card containing the entrant’s name and address, which would allow them to enter without making a purchase, A&P failed to make customers aware of the free entry option in the advertising materials promoting the sweepstakes. Additionally, the official rules for the contest were not posted in stores, which is required under New York’s contest law

A&P settled with the New York AG by agreeing to pay a fine of $102,000 and changing its policies to make certain that customers are aware of the free entry option in the future by using larger signage, placing copies of the official rules in the stores, and advertising the AMOE with “equal prominence” to other methods of entry. In addition to the fine, A&P agreed to hire a compliance officer to assist with running sweepstakes in the future.

A&P’s settlement with the New York AG should serve has a wake-up call for sweepstakes operators who believe that they are in compliance with applicable laws when they choose to only include a description of a free method of entry in their official rules. Any sweepstakes where a consumer is required to make a purchase to enter (or where other forms of consideration are present), the AMOE must be available to customers and promoted equally with any other method of entry. That means not only do customers need to know about the free entry option by informing them of it in the advertising copy, but just as importantly, the sponsor’s employees at the point of entry must be aware that the free entry method exists. Employees should also be able to explain to the customer what they have to do to utilize that method of entering, if a customer were to ask, and be able to provide the customer with a copy of the official rules that clearly explains how the customer can enter the sweepstakes for free. Of course, as a reminder, once the sweepstakes sponsor receives the entries from both methods (purchase method and through the AMOE), the sponsor must treat all entries the same and give all entries the exact same chance of winning

In light of the increase in lawsuits and regulatory inquiries regarding contests and sweepstakes, sponsors are advised to review their marketing and promotion practices to ensure full compliance with the provisions of the numerous laws governing contests and similar promotions. Review by an attorney experienced in sweepstakes, contests and marketing prior to launching a promotion is a modest investment compared to the cost of regulatory action or a lawsuit, which can impact not only the sponsor, but also any co-promotion partners or agencies involved in the promotion. Edwards Wildman’s Advertising, Digital Media & e-Commerce Practice Group regularly counsels clients on online and mobile advertising, marketing and promotions issues. If you would like us to review your contest and sweepstakes practices for compliance with the federal and state laws that govern in this area, please contact the author.