Making a Top 10 list is usually something to be proud of, unless perhaps if the list was created by David Letterman’s writers. But being included on the Federal Trade Commission’s List of Consumer Complaints is certainly no honor – especially if you make the Top 10 year after year.
Each year the FTC issues a report that categorizes the thousands of complaints it received from consumers in the previous year. The “promotions for free prizes, sweepstakes and lotteries” category is No. 3 on this year’s list, beating out 27 other types of complaints. In fact, the sweepstakes category been ranked in the Top 10 since the list was created in 1999.
The FTC defines this category rather broadly as “promotions for ‘free’ prizes for a fee; foreign lotteries; and sweepstakes offered through the phone, fax, email or mail; etc.” Nevertheless, the Commission received 100,208 complaints about sweepstakes and lotteries, which accounted for 6 percent of the more than 1.8 million complaints it received in 2011. Within that category, the complaints specifically related to sweepstakes and prizes were four times the number of complaints concerning lotteries. More importantly, the total number of sweepstakes complaints has doubled since 2009.
Many state attorneys general also issue reports detailing the consumer complaints they receive. Sweepstakes, contests and prizes account for a large number of those complaints and sweepstakes and prizes are usually in the states’ Top 10 lists as well.
In most instances, consumers complain to the FTC or their state attorney general when they feel they have been treated unfairly. For example, if they believe a sweepstakes was advertised in a misleading or deceptive manner, they may file a complaint. If the sweepstakes was not run in accordance with its official rules or if the prize they received is not as advertised, they may complain as well. In addition, there are numerous sweepstakes clubs across the country that track pertinent sweepstakes regulations and encourage their members to report violations.
The FTC list tells us several things. First, the use of sweepstakes and contests as a marketing tool has increased dramatically over the past few years, and these types of promotions are being used by a growing variety of businesses.
Second, the complaints to the FTC suggest that there are a significant number of sweepstakes designers and sponsors who either don’t know that sweepstakes and contests are regulated by both federal and state agencies; or if they do know that, they have decided not to comply.
Finally, because of the increased use of these promotions, and the rising number of complaints received by the FTC and state attorneys general, it is only a matter of time before the FTC and state agencies (as well as state legislators) take an even more aggressive approach toward ensuring that sweepstakes and contests are fair to consumers.
This post was written by retired Thompson Coburn partner Dale Joerling. If you have any questions about the topics discussed in this post, please contact Thompson Coburn partner Hap Burke.