Two More Sweepstakes Bills Introduced / Direct Newsline 02/05/1999

DirectNewsLine-Media Central, February 5, 1999

Two More Sweepstakes Bills Introduced

Two more bills clamping down on the direct mail sweepstakes industry have been introduced in the Senate.

The two bills, which were introduced Wednesday--the Deceptive Mail Prevention and Enforcement Act by Sen. Susan M. Collins (R-ME), and the Deceptive Sweepstakes Mailings Elimination Act, by Sen. Carl Levin (D-MI)--are the second and third measures on the matter put before the Senate in recent weeks.

Collins, chair of the Senate's Permanent Subcommittee on Investigations, plans a series of hearings soon to examine the sweepstakes industry and "document the nature and extent of the problem and how these deceptive mailings affect Americans, particularly senior citizens." She said her bill was designed to "stem the tide of deceptive mailings that are flooding the mailboxes of the people of Maine and throughout the country."

Collins' bill would strengthen the law prohibiting mailings from resembling official government documents or creating the impression that the mailing is connected with or endorsed by the federal government. It would also give the U.S. Postal Inspection Service subpoena powers to probe fraudulent sweepstakes operations and subject violators to graduated civil penalties of between $50,000 and $2 million, depending on the size of the mailing. Her measure would not pre-empt any existing state or local laws controlling sweepstakes mailings.

Levin's bill, endorsed by Collins, complements Collins' measures as it would "stiffen the penalties for deceptive mailings; give the U. S. Postal Service administrative subpoena power; restrict the use of misleading language and symbols and require better disclosure about the chances of winning and statements that no purchase is necessary to win," Levin said in a statement.

Errant sweepstakes mailers would face a civil penalty of $10,000 "for each piece of mail" that violates the law and any regulations imposed by the USPS under Levin's bill.

The first bill, the Honesty in Sweepstakes Act, was introduced by Sen. Ben Nighthorse Campbell (R-CO), late last month shortly after two nearly identical measures were introduced in the House. All three have been referred to committee for review.

Campbell's bill, a slightly different version of a similar measure he introduced last year that died in committee, would require sweepstakes mailers to clearly state in their promotional materials, and in any contest entry documents, that the mailing is an offer to participate in a sweepstakes or game of chance and that no purchase is required to win or enhance a chance of winning.

He, like Levin, proposed a graduated scale of civil penalties that could be levied against violators that ranges from $50,000 to $2 million.

The LoBiondo and Rogan House bills basically mirror Campbell's proposal. Both would require the same notices on the envelope and its contents and would not pre-empt tougher state regulations or laws.

Rogan's bill would subject violators to civil penalties of up to $10,000 a day for each offense and possible criminal prosecution for fraud; LoBiondo's measure is silent on the subject.

The Direct Marketing Association is reviewing all five measures and has not taken a position on any of them according to Jerry Cerasale, senior vice president, government affairs.

While admitting the existence of "fraudulent" sweepstakes operators in the direct mail industry, Cerasale said, the DMA will support any legislation that will "get rid of fraud in the sweepstakes areas because that makes it better for legitimate sweepstakes companies." The DMA is committed to working with lawmakers on developing legislation to clean up that aspect of the industry, he added.