September 10, 1998 | Read Time: 2 minutes
Congress is considering new restrictions that could limit charities’ ability to raise money from sweepstakes mailings.
At a Senate subcommittee hearing last week, legislators debated a range of measures — including new disclosure requirements — for sweepstakes and other mass-mail appeals.
Their aim is to cut down on what experts say is a growing problem with fraudulent and misleading sweepstakes and other mass mailings that involve games of chance in which recipients may win cash or other prizes.
The proposed disclosure requirement are included in a bill drafted by Sen. Ben Nighthorse Campbell, Republican of Colorado. A similar bill has been introduced in the House.
The bills would require sweepstakes promotions to contain a statement on the outer envelope telling recipients that the offer involves a “game of chance” and that they have not “automatically won.”
Under the bills, such appeals would also have to include a disclosure on the first page of the contents that repeats those statements, as well as the mathematical odds of winning, and that tells recipients that no purchase is necessary to win under the law.
The proposals are designed to counteract what state attorneys general and others at last week’s subcommittee hearing portrayed as a growing problem with sweepstakes mailings that declare recipients “guaranteed winners,” mislead them into thinking that they are finalists for a grand prize, or make them believe that a purchase gives them an edge over other entrants in the contest.
While not specifically aimed at charities, the bill would affect many groups that have long relied on sweepstakes, said Richard Barton of the Direct Marketing Association.
Mr. Barton told Senators at the hearing of the Senate Subcommittee on International Security, Proliferation and Federal Services, that the proposed disclosures would deter people from responding to sweepstakes mailings and harm law-abiding organizations’ ability to use them. Congress, he said, should instead adopt tougher penalties for fraudulent sweepstakes.
Chris Cleghorn, senior vice-president for direct marketing at the National Easter Seal Society, said that increased Congressional scrutiny has led his charity to re-examine its own appeals.
He said that sweepstakes promotions generate only about 5 per cent of the $100-million in contributions the charity raises each year. Even so, Mr. Cleghorn added, the proposed restrictions put charities in a “difficult position” because sweepstakes enable charities to reach people who do not respond to other types of appeals.
