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Supermarket chain gets freezer burn from $100K sweepstakes fine

June 13, 2013

Once again, a large retailer has been charged with violating New York state law by failing to properly inform customers that they could enter a sweepstakes without having to make a purchase. This time it was The Great Atlantic and Pacific Teas Company. In A&P’s “Frozen Food Month Sweepstakes,” any customer who purchased more than $50 in frozen food products at an A&P store was automatically entered in the sweepstakes. Buried in the sweepstakes' Official Rules was an alternate method of entry (AMOE) that allowed customers to mail in a card containing the entrant’s name and address, which would allow them to enter without making a purchase.

A&P settled the New York Attorney General’s charges by agreeing to pay a fine of $102,000 and changing its policies to make certain that customers are aware of the free entry option in the future by using larger signage, placing the official rules in the stores, and advertising the AMOE with “equal prominence” to other methods of entry.

A&P’s conduct closely resembles that of another retailer who faced prosecution in New York in 2004 and 2006. In these cases, CVS settled charges that it had not provided adequate information to consumers about its AMOE in its photo and pharmacy sweepstakes. Like A&P, CVS’s sweepstakes had an AMOE but the company failed to inform its sales force about the alternative and did not provide adequate entry forms in the stores for entering without a purchase.

More and more, sophisticated companies are realizing that in order to comply with the laws in virtually every state, there must be an AMOE that allows customers to enter a sweepstakes without making a purchase or providing any other type of consideration. Yet what some of these companies keep forgetting is that simply creating an AMOE in the official rules is not enough.

The AMOE must be available to customers and promoted equally with any other method of entry. That means not only do customers need to know about the free entry option, but just as importantly, the sponsor’s employees at the point of entry must be aware that the free entry method exists. They should also know what the customer has to do to utilize that method of entering, and be able to talk to customers about that option. Of course, once the sweepstakes sponsor receives the entries from whatever method, it must treat all entries the same and give them exact same chance of winning.

The A&P settlement provides a valuable lesson to those who sponsor sweepstakes and it establishes several best practices that will help ensure that an AMOE is truly available, such as:

  • Publicize the fact that there is a free entry method in all ads relating to the sweepstakes
  • Provide a copy of the Official Rules in all stores
  • Make certain store employees are aware of this alternative way to enter.

The takeaway here is this: Don’t let your company be the next victim in this chain of prosecution because you have not provided a genuine AMOE.

This post was written by retired Thompson Coburn partner Dale Joerling. If you have any questions about the topics discussed in this post, please contact Thompson Coburn partner Hap Burke.