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New York Attorney General Announces Three Settlements over Alleged Sweepstakes Violations

The New York Attorney General’s Office recently announced three settlements with companies that sponsored sweepstakes and allegedly failed to provide sweepstakes entry procedures for customers who did not purchase certain products and/or failed to adequately advertise such no-purchase entry methods.

In two of the three settlements, the companies agreed to make sure that alternate methods of entry that do not require a purchase are advertised with equal prominence as methods of entry that require a purchase.  These enforcement actions make it clear that the New York Attorney General’s office is being more aggressive about enforcing sweepstakes laws, and that clear and conspicuous disclosures in sweepstakes advertising are critical.

CVS Sweepstakes

In the spring of 2004, CVS sponsored a sweepstakes for a trip to Hawaii; ads for the sweepstakes explained that consumers who visited a CVS store, purchased digital pictures, and used a CVS ExtraCare card were automatically entered into the sweepstakes.  A footnote in the ads said “No purchase necessary” and directed consumers to a CVS web site to enter and view the official rules.  There was no other mention in the ads of a non-purchase method of entry.  To obtain such information, consumers had to use a computer and have Internet access to reach the CVS web site.

On the web site, consumers could enter the sweepstakes and were told they could obtain free entry forms at CVS stores, but such forms were not available in at least two CVS stores. 

The AG initiated an inquiry and later settled with CVS over charges of deceptive practices and deceptive advertising.  CVS agreed to post in a conspicuous place in all its stores rules and non-purchase entry forms for any future sweepstakes that provide an automatic in-store method of entry for purchasers.

CVS also agreed to set forth with equal prominence an alternate no-purchase method of entry in all advertisements that promote a sweepstakes with an automatic in-store method of entry for purchasers.  CVS agreed to pay a fine of $75,000 and reimburse the AG’s office $2,000 for the cost of the investigation.

The NY AG press release for the CVS settlement suggests that an online alternate method of entry is not enough, and that companies that sponsor an in-store sweepstakes must also provide an in-store method of entry that does not require a purchase. 

A&P Sweepstakes

The NY AG settled with A&P food stores in May, 2004, involving a similar sweepstakes that allowed consumers with an A&P Bonus Savings Card to be automatically entered in the sweepstakes when they bought certain products.  Advertisements told consumers to visit stores for details, but consumers in at least two stores were unable to obtain information about alternate methods of entry that did not require a purchase. A&P also failed to post in its stores the rules and regulations about the sweepstakes and the minimum number and value of the prizes, failed to maintain an adequate bond, and failed to register the sweepstakes with the Secretary of State.   A&P agreed to pay a fine of $38,000 as part of the settlement.

Tylenol Sweepstakes

The NY AG alleged that McNeil Consumer & Specialty Pharmaceuticals failed to adequately tell consumers how to enter its sweepstakes without purchasing a Tylenol product.  Newspaper and magazine advertising for the sweepstakes contained large, bold print directing the reader to “Buy Tylenol” to enter.  The words “No Purchase Necessary” appeared in fine print at the bottom of the ads.  In TV ads, the voice-over stated “For your chance to win just buy any Tylenol product”, but the voice-over failed to state that no purchase is necessary.  The words “No Purchase Necessary” appeared briefly, in small type at the bottom of the screen.

As part of the settlement, McNeil agreed to clearly and conspicuously state with equal prominence all alternate methods of entry that do not require a purchase, in future sweepstakes advertising.  McNeil agreed to pay $52,000 in civil penalties and costs.

This report is a publication of Loeb & Loeb and is intended to provide information on recent legal developments. This report does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.

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