(This post is Part 1 of a two-part series on the FCC’s contest rules. Part 2 details some of the FCC’s recent enforcement actions against companies violating the contest rules.)
Our recent post about the possibility that the Federal Communications Commission will no longer require broadcasters to disclose contest rules in their advertisements brought several questions from readers. Most of the questions were about the FCC regulations and enforcement activities. Here is a brief overview of the two major components of the FCC’s Contest Rule.
The FCC’s authority to regulate broadcast advertisements of contests stems from the Communication Act of 1934 (47 U.S.C. Section 509). The Act provides that it is illegal to “predetermine or prearrange” the outcome of a contest or broadcast a “predetermined or prearranged” contest.
The FCC Contest Rule requires broadcasters to accurately disclose the “material terms” of the contest.
The Rule defines “material terms” as including such factors as:
- How to enter or participate in a contest
- Eligibility restrictions
- Entry deadline dates
- Whether prizes can be won
- When prizes can be won
- The extent, nature and value of the prizes
- The basis for the valuation of the prizes
- The time and means of selecting winners
- Tie-breaking procedures
These material terms also must be disclosed in announcements broadcast on the station conducting the advertisements for the contest. The disclosures must be made when the audience is first notified about the contest, and in any subsequent announcements about the promotion. The Rule also requires that the disclosure must not be false, misleading, or deceptive.
The Rule defines a “contest” as “schemes in which a prize is offered or awarded based on chance, diligence, knowledge or skills, to members of the public.” This broad definition includes most contests, sweepstakes, and other such promotions.
Disclosing the material terms and not advertising the contest in a false or deceptive way form the basis for many of the actions brought by the FCC’s Enforcement Bureau.
The broadcast Contest Rule does not apply to any contests that is not broadcast or advertised to the general public or are not available to the general public.
The FCC has not hesitated to enforce the Contest Rule. Part 2 of this post will describe some of the enforcement actions taken by the FCC in recent years.
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.