Time Magazine To Amend Sweepstakes Promotions
Attorney General Spitzer today announced a multi-state settlement with one of the nation's leading news and entertainment magazine publishers that will require dramatic changes in what the company tells consumers in sweepstakes mailings.
Time Inc., which promotes its sweepstakes under the Guaranteed & Bonded trade name, sends out millions of pieces of mail annually offering consumers the opportunity to enter a sweepstakes together with solicitations for subscriptions to its many magazines, books, audio or video collections.
"This settlement embodies the reforms called for by the National Association of Attorneys General after extensive hearings confirmed that thousands of consumers were duped into buying magazines and other products because they believed it would improve their chances of winning," Spitzer said. "Companies that solicit their products through the use of sweepstakes should be put on notice that my office will not stand for continued deceptive practices."
"Far too many consumers have invested a significant portion of their life savings as well as their hopes and dreams in these sweepstakes and it's time the companies clean up their act and conduct solicitations in a more truthful way."
The agreement marks the third major multi-state settlement since hearings were held last year by Attorneys General across the nation regarding sweepstakes marketing practices. Other companies settling states' investigations include the United States Sales Corporation in April and Publishers Clearing House earlier this week.
The settlement requires that Time end the use of "headline copy" misrepresenting consumers as winners. In the future, Time will be required to provide in equal prominence the important qualifying conditions necessary for winning.
All sweepstakes mailings sent out by Time will provide a "Sweepstakes Facts" box which makes important disclosures including uniform statements that buying won't help someone win a sweepstakes, that the recipient has not yet won, that the consumer doesn't have to buy anything to enter the sweepstakes and the odds of winning a prize.
Spitzer pointed out that some consumers in New York State and elsewhere, particularly the elderly, have in the past purchased products solicited through sweepstakes because they believed it would enhance their chances of winning.
Additionally, under the terms of the agreement, Time will not be able to use a personalized simulated check to mislead someone into believing they've won a prize, fraudulently tell consumers that they have a better chance of winning a sweepstakes than they actually do or represent that the sweepstakes package has been sent by special courier or a special class of mail, if it has not.
The settlement signed by Time and the Attorneys General of 48 states and the District of Columbia establishes a fund of over $4.9 million to be used for payments to consumers who were "high activity" sweepstakes customers in any one of calendar years 1997, 1998 or 1999. In addition, Time will pay the states more than $3.2 million for attorneys' fees and the costs for the investigation. Consumers who spent more than $500 in any of these years will be contacted for reimbursement.
In New York State, nearly 390 consumers will be eligible for funds from a restitution pool of $300,000.
Attorney General Spitzer also highlighted an important reform, the "Sweepstakes Do Not Promote List" which requires Time to stop sending certain consumers new sweepstakes solicitations. If upon a review of its customer records, Time finds a customer who has spent, as a result of sweepstakes promotions by any combination of Time entities or businesses, in excess of $500 in the preceding 12 months, all sweepstakes solicitations must stop.
Joining New York State in today's settlement were the Attorneys General of 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, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming and the Corporation Counsel of the District of Columbia.
Time provides sweepstakes opportunities through a number of its subsidiaries and magazines including: Time, Home Entertainment, Entertainment Weekly, Fortune, Sports Illustrated, People, In Style, Teen People, Life, Money, and This Old House.
This case was handled by Assistant Attorney General Shirley Stark of the Consumer Frauds and Protection Bureau.