Office of the Attorney General News Release ArchiveFriday, August 25, 2000
CORNYN ANNOUNCES $8.25 MILLION SETTLEMENT WITH SWEEPSTAKES COMPANY
Includes restitution to consumers and reform in sweepstakes advertising
AUSTIN - Texas Attorney General John Cornyn today announced that his office, along with the Attorneys General of 47 other states and the District of Columbia, entered into a $8.25 million settlement with Time Inc., one of the country's largest sweepstakes mailers. The settlement requires restitution to consumers and dramatic changes in sweepstakes advertising.
"In reaching this settlement, my priorities were providing refunds to consumers and changing these deceptive advertising practices. Consumers must be informed that they do not have to buy anything to have a chance to win and that buying absolutely will not help their chances of winning. Any representation to the contrary violates the law," Attorney General Cornyn said.
Time sends out millions of pieces of mail annually, each of which offers consumers the opportunity to enter a sweepstakes. These mailings also include offers to subscribe to one of the many magazines published by Time Inc. or to buy one of the Time-Life books or the audio or video collections Time produces.
The settlement requires that all Time sweepstakes mailings provide a clear and conspicuous "Sweepstakes Facts" disclosure to consumers. The Sweepstakes Facts will include specific statements including:
Additionally, under the terms of the agreement, Time is prohibited from representing that the sweepstakes package has been sent by special courier or a special class of mail, if it has not been.
Time has agreed to establish a "Sweepstakes Do Not Promote List" for so-called "high activity" customers. This list of high activity customers includes those who, as a result of sweepstakes promotions, either have a current subscription to a magazine published by Time which lasts more than five years or have spent in excess of $500. Time is prohibited in the settlement from sending these particular consumers new sweepstakes solicitations.
The settlement establishes a fund of $4,924,636 to be used by the Attorneys General for payment to consumers who were high activity sweepstakes customers and paid $500 or more to Time in 1997, 1998 or 1999. These consumers will receive a full refund of monies that they paid to Time. In Texas, it is estimated that there are 339 consumers due restitution. In addition, Time will pay the states $3,240,000 for attorneys' fees and the costs of the investigation, of which Texas will receive $75,000.
The settlement is the second with a major sweepstakes company by the multi-state group of Attorneys General since they held hearings on sweepstakes activities last year in Indianapolis. Last April, the Attorneys General settled for $35 million with US Purchasing Exchange.
Following the hearings, the National Association of Attorneys General (NAAG) issued a report strongly recommending that sweepstakes marketers include a standardized "sweepstakes facts sheet" with their mailings to help consumers better understand contest odds and that no purchase is required to win.
In addition to Texas, the Attorneys General from the following states participated in the settlement: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming and the Corporation Counsel of the District of Columbia.
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Contact Mark Heckmann, Heather Browne, or Tom Kelley at (512) 463-2050
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