Senate Targets Deceptive Contests It Passed A Bill That Would Curb Misleading Direct-mail Sweepstakes. The Measure Now Heads To The House.

Posted: August 03, 1999

WASHINGTON — The Senate acted late yesterday to curb the worst excesses of magazine sales sweepstakes and other direct-mail promotional games that prey on the gullible and the elderly.

The legislation, passed 90-0, would require sweepstakes mailers to note clearly and prominently in their solicitations that no purchase is necessary to enter a contest and that a purchase will not enhance the chances of winning a prize.

And the U.S. Postal Service, which now is legally limited in its efforts to police misleading and deceptive solicitations, would be given subpoena power to investigate alleged abuses. Civil fines for violations could run as high as $2 million, depending on the number of mailings involved.

Sweepstakes promoters also would be obligated to spell out all the terms and conditions of their promotion, provide their principal place of business or another address where they can be contacted, and clearly reveal the estimated odds of winning each prize, according to Sen. Susan Collins (R., Maine), the bill's chief sponsor.

Because of the Senate's emphatic support for the bill, the sweepstakes industry's lobbyists are expected to train their efforts on sidetracking the bill in the House, according to one Republican aide. The bill's fate depends on whether the House GOP leadership pushes it, observers said.

Rep. John M. McHugh (R., N.Y.), chairman of the House Government Reform and Oversight Committee's postal service subcommittee, said he would begin sweepstakes-promotion hearings tomorrow.

McHugh said he was concerned about "the way some sweepstakes mailings entice consumers" to believe that purchases will increase their chances of winning prizes.

Sweepstakes companies have sent out more than a billion mail solicitations annually in recent years, Collins said. The top four - Reader's Digest, Publishers Clearing House, American Family Publishers and Time Inc. - post hundreds of millions of mailings a year.

Some solicitations have been "misleading and deceptive," Sen. Carl Levin (D., Mich.) contended. "Companies with good names have, in my opinion, engaged in deceptive practices, and, frankly, they ought to be ashamed of themselves."

Executives of some of the biggest companies operating sweepstakes showed "not a sign of remorse" during Senate hearings on the bill, said Sen. Arlen Specter (R., Pa.).

The senators cited numerous instances in which people, many of them elderly, were induced to buy thousands of dollars in merchandise, including magazine subscriptions and videotapes, after lengthy bombardments from mailers.

One 82-year-old in her state, Collins said, was cajoled into buying and renewing magazine subscriptions through 2018. "Another elderly man bought hundreds of videotapes even though he didn't own a VCR, in the mistaken belief that he had to buy something to have a chance of winning," she said.

A woman postponed needed surgery because she was convinced by a misleading solicitation that she had already won a valuable prize and was afraid to leave home and miss its delivery, Collins said.

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