Attorney General's News Release

April 5, 2000

Leading sweepstakes company to make major changes, pay $30M restitution as part of settlement led by Missouri

Jefferson City, Mo. — Attorney General Jay Nixon announced today that one of the country's largest sweepstakes companies will be required to make dramatic changes in what it tells consumers and pay more than $30 million in restitution to consumers nationwide under a multi-state settlement led by Missouri.

Nixon and the Attorneys General of 47 other states and the District of Columbia have reached an agreement with United States Sales Corp. of Northridge, Calif., which does business as United States Purchasing Exchange and USPE. The agreement requires USPE to provide clear and conspicuous "Sweepstakes Facts" for consumers on the sweepstakes entry form itself, including a statement that the consumer has not yet won, the odds of winning a prize and the fact that a product purchase is not required to win.

"With many sweepstakes, this important information is hidden in small, dense type on a separate piece of paper that is easily discarded," Nixon said. "Under this agreement, USPE will put the information out there in plain language for the consumer to read and understand right on the entry form. Sweepstakes players will be better informed of the contest odds and, we hope, will more readily refrain from purchasing products they don't want or need."

As with many sweepstakes mailings, USPE mailings include offers for purchasing products along with the sweepstakes entry forms. In the case of USPE, the offers are for household and personal products. Nixon said some consumers in Missouri and elsewhere, particularly older people, have purchased the products because they believed the purchases would enhance their chances of winning.

"Our investigators and attorneys have visited homes where some rooms were filled floor to ceiling with unopened boxes of trinkets, all bought in the hope that this would give the consumer an edge in these contests," Nixon said. "We're turning an important corner to help consumers better understand sweepstakes with this model agreement."

The assurance of voluntary compliance signed by USPE and the Attorneys General establishes a fund of $30.4 million for restitution to consumers nationwide who spent at least $1,870 with USPE in any one of calendar years 1997, 1998 or 1999. USPE will pay the states more than $1.3 million for the costs of the investigation and will set aside another $3.6 million to pay for the cost of administering the repayment program for the $30.4 million in restitution to consumers.

In addition to the restitution, the company will improve its disclosures of how consumers can enter its sweepstakes without making a purchase, even if they do not receive a sweepstakes offer from the company. USPE also will contact so-called "high activity" customers with a separate letter to let them know that they can enter the company's sweepstakes as often as they like and not have to purchase anything to win a prize. The agreement also requires that USPE:

• Offer only a single, standard means of entering sweepstakes, regardless of whether a purchase is made;
• Not represent that consumers received a sweepstakes offer because they are a customer or that consumers may receive additional sweepstakes offers if they remain a customer;
• Not represent that a consumer has a better chance of winning a sweepstakes than other consumers;
• Not use personalized simulated checks to represent sweepstakes prizes in its solicitations;
• Fully disclose the nature and value of any bonus items offered to purchasers if such items are described;
• Ensure that all sweepstakes have a single response deadline, rather than numerous intermediate response deadlines;
• Maintain a toll-free telephone number for consumers to call if they wish to be placed on the company's "Do Not Contact" list and not receive any future solicitations.

A recent report produced by the National Association of Attorneys General (NAAG) strongly recommended 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. NAAG issued the report following a hearing on sweepstakes last year in Indianapolis.

Nixon's office recently obtained more than $1 million for Missourians from Direct American Marketers and $265,000 from American Family Publishers, and has an active lawsuit against Publishers Clearing House. Nixon said the USPE agreement requiring the facts sheet now sets the standard for the sweepstakes industry.

"I'm proud that attorneys and investigators from the Missouri Attorney General's Office led the way in obtaining this ground-breaking agreement," Nixon said.

Learn how to protect yourself from contest cons.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818