Deceptive sweepstakes prompt FTC action and consumer payouts

The FTC’s complaint, in a lawsuit filed in 2023, alleged that PCH used “deceptive and unfair” practices and “dark patterns” to make consumers believe that entering the sweepstakes required a purchase or that purchasing a product would increase the odds of winning. The FTC also charged PCH with deceptive practices on the basis that PCH did not disclose its shipping and handling fees and misrepresented its policies on selling users’ personal data. 

Sweepstakes are also subject to scrutiny on the state level, and companies should be mindful of state-based lottery laws and state consumer protection laws. While state laws vary, general guidelines for compliance with federal and state sweepstakes laws are: 

• Entry into a sweepstakes must include an “alternative method of entry” that is free and offers an equal opportunity to win the same prizes offered to other participants. This method of entry should be as simple as sending an email to a specified email address or mailing in an entry card. Additionally, the participant’s information on the entry should not be used for any purpose other than to enter the sweepstakes. 
• The alternative method of entry should be clearly and conspicuously disclosed. I.e., stated in the Official Rules and wherever the sweepstakes are mentioned. The FTC has required that PCH take this disclosure a step further, by obtaining the participant’s express acknowledgement that a purchase is not required and will not improve chances of winning, and providing an easy-to-access link to the alternative method of entry without any sales messaging. 
• The Official Rules should be easily available to participants when clicking on or otherwise entering the sweepstakes. This can be achieved by hyperlinking the Official Rules—or an accurate short-form version thereof--anywhere where the sweepstakes is advertised. If the sweepstakes are available other than in electronic form, the Official Rules should be printed and available to the participant prior to entry. 
• The Official Rules should disclose key information. This includes the timing of drawings, the odds of winning a prize, how potential winners will be notified, and a description of the prize and approximate retail value (if any). 
• The geographic scope of sweepstakes should be carefully delineated, because laws around promotions vary considerably by country.

Authored by Meryl Bernstein and Rachel Shelbourne.