Advertising Law Blog

As detailed in the AG’s complaint, as part of its promotion and marketing campaigns, Hopkins and Raines Inc. (“H&R”) sent out mailings to Indiana recipients, promoting sales events at its dealer clients.   The mailings each “contained a game piece that purported to determine whether a recipient was the winner of one of the prizes referenced” on the mailings. The AG alleges that every game piece professed that the recipient was a “winner,” therefore the individual game piece received by the recipient did not actually dictate if they won a specific prize. Rather, the mailing, separate from the game piece, displayed a confirmation or claim number that would be used to make such a determination.

According to the AG’s complaint, the mailings included a game piece “only to generate excitement and deceive recipients into believing they won a significant prize,” and to increase attendance at the sales events, thus providing H&R and their dealership clients an enhanced opportunity to sell motor vehicles to recipients. The AG claims that recipients who attended the sales events to “claim” their prize were “subjected to sales pitches from employees of H&R and the sponsoring dealerships, attempting to sell consumers motor vehicles.”  Moreover, the AG alleges that “no recipient was awarded the specific prize represented” on their mailing or game piece, and that H&D did not award a prize valued at more than $12.00, despite the fact that the advertised prizes included $25,000 cash, a Honda ATV, a 70 inch television, and $1,000 cash.

The AG states that the mailings were deficient in certain key ways, including that they failed to include the name and address of the promotor of the sales event, failed to include a statement of the odds of winning each prize in close enough proximity to the listed prizes, failed to include a statement of the actual and verifiable retail value of each prize in immediate proximity to the prize listing, and failed to disclose that recipients may be required to hear a sales presentation as a condition of receiving their prize.

The AG has claimed that such activities violate Indiana’s Promotional Gifts and Contests Act and Deceptive Consumers Sales Act.

Takeaway: This recently filed complaint serves as a reminder to advertisers and promoters to ensure compliance with applicable laws when operating promotions, particularly those involving direct mail sweepstakes promotions and to ensure that the advertised prizes are awarded.