Florida-based travel promoter All in One Vacation Club, and its principals, agreed to pay civil penalties to the FTC of $275,000 for allegedly violating the Do-Not-Call list and other Telemarketing Sales Rule (TSR) provisions. The company used a direct mail sweepstakes entry to entice consumers to obtain a chance to win a vacation. The official rules purported to constitute consent by the entrant to be removed from any no-call registry for the specific purpose of allowing the sponsor to contact the entrant for marketing purposes. All in One took the position that the fine print of the official rules constituted a “written agreement” for purposes of compliance with the TSR, but the Commission disagreed. The FTC stated that any such written agreement must be “clear and conspicuous,” and must include the customer’s signature demonstrating the consumer’s assent. Stuffing the consent provision in the official rules of a sweepstakes wasn’t going to cut it.

Why this matters: This is not the first time a regulator has expressed concern about hiding in the official rules of a sweepstakes, language that would purport to give the sponsor the right to override the consumer’s decision to be placed on the Do-Not-Call list. Back in 2005, then New York Attorney General Eliot Spitzer challenged A&P grocery stores and Kitchen Magic, Inc. for virtually the same marketing practice. Promoters put all sorts of goodies in their official rules. Most of the time, these terms are construed as valid provisions in a contract between the consumer and the sponsor. But, when you seek to undermine a consumer’s statutory or regulatory right by virtue of the consumer’s entry into a promotional offer, watch out. Not only might the provision be unenforceable, but it could also be a violation of federal or state law. (See also Michigan’s Consumer Protection Act, §445.903(t).)