7 important lessons from past FCC contest cases

by Thompson Coburn LLP
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(This post is Part 2 of a two-part series on the Federal Communication Commission’s Contest Rules. Part 1 described the FCC regulations pertaining to contests and sweepstakes. This post will focus on how the FCC has enforced its Rules over the past few years.)

The FCC’s Enforcement Bureau has brought a number of cases against broadcasters who conduct or advertise a contest on air. These cases range from failure to accurately disclose the end date for a sweepstakes, to a station’s employee rigging a contest so that his friends and family would win.

Below is a brief summary of a few of these cases, which provides an overview some of the types of enforcement actions that the FCC has pursued in recent years. Hopefully they will provide a lesson or two about how to avoid becoming a defendant in one of these matters.

  1. Greater Boston Radio Inc. conducted a contest and in an on-air broadcast stated that the winner would receive their choice of one of three new cars. After being qualified for a chance to win, the entrants were told that the prize was actually a two-year lease of one of the three cars. The contest’s official rules stated that the prize was a two-year lease, but the station’s on-air announcements did not describe the prize as a lease and did not refer entrants to the rules, which were posted on the station’s website. The FCC found that broadcasted information about the prize did not “fully and accurately” disclose the Material Terms, and constituted a violation of FCC’s Rules.
    Lesson: Disclose all contest rules fully and accurately during announcements and in the official rules.
  2. The South Central Communication Corp case involved a Par 3 putting competition. Shortly after the contest began, the station realized it did not want to allow professional golfers to enter. The station then changed the rules to exclude golf professionals from participating. The FCC ruled that changing the contest eligibility requirement after the contest has begun violates the FCC’s Rules. The opinion also mentions as an aside that changing a prize after the contest starts would also be a violation.
    Lesson: Once a contest begins, don’t change the rules.
  3. The CBS Holdings, Inc. case stemmed from a “Cutest Baby Contest” in which pictures of each contestant’s baby were placed on a station’s website and the winner was determined by votes received from the public. The rules and on-air announcements stated that the contest would end on September 4. However, the station allowed votes to be counted that were received on September 5. The FCC decided that although the station technically disclosed the end date (a Material Term) it failed to conduct the contest rules in accordance to the rules, which violated the FCC’s Rules.
    Lesson: Conduct the contest strictly according to your official rules.
  4. The Journal Broadcast Corp case involved Journal’s “Ultimate Garage” contest, which included a large number of prizes. However, the broadcast and written rules did not disclose the number of winners or when the winners would be selected. The FCC found that the time and means of selecting the winner as well as the number of winners were Material Terms that needed to be in the contest rules and any advertisements. The Journal’s failure to do so violated the FCC’s Rules.
    Lesson: Make sure to specify how and when the winners will be determined.
  5. CBS Radio of Philadelphia conducted a competitive eating contest called “Wing Off.” The winner of the contest was disqualified and his prize revoked when it was discovered that he was a member of the Association of Independent Competitive Eaters (AICE). AICE is a competitor of the Independent Federation of Competition Eating (IFCE), which had historically been associated with the “Wing Off” Contest. (This case is one of my personal favorites simply because I didn’t know such organizations existed.)

    The contest’s rules did not mention either organization with regard to eligibility requirements, but the station stated that the winner should have known he was not eligible because the previous year’s contest winner had been disqualified for the same reason. The FCC found the station has an “affirmative obligation” to prevent misleading or deceptive broadcast announcements. The station is also responsible for including all of the Material Terms, which includes all eligibility requirements.
    Lesson: Eligibility is a key material term and must be included in both the official rules and broadcasted or written announcement.
  6. Saga Communications of New England conducted the Grand Prize Giveaway, a contest with a grand prize of a two-year lease of a car and a “trunkful” of Aerosmith memorabilia. There was nothing in the rules as to when the prizes would be awarded but the winner was told it would be approximately one week. In fact, the winner didn’t receive any part of the prize until 30 days later and the rest of the prize was not sent until five months later. The FCC found that although it is not mentioned specifically in the FCC’s Rules, “promptness” is a Material Term and in this case the winner could reasonably expect to receive the complete prize within 30 days.
    Lesson: If you can’t deliver the prize within 30 days, include the anticipated time of delay in the official rules.
  7. CBS Broadcasting Inc. conducted the “Extra Point Sweepstakes” in which the prize was a trip to the Super Bowl. The contest rules stated that the prize was worth $8,450. However, the winner of the prize determined that all of the aspects of the trip cost only $4,218. He was concerned that his tax liability would be much greater than the actual value of the trip. The station explained that the additional $4,232 of the total value was a payment to the agency that arranged to trip. The FCC found the use of a specialized agency to obtain the vacation package was common and reasonable in the circumstances and could be included as part of the prize value. Accordingly, in this case there was no violation of the FCC’s Rules.
    Lesson: All costs of obtaining the prize should be included in the official rules and advertisements.

These are only a few of the enforcement cases that the FCC has filed over the past few years. If you have any concerns about a contest or sweepstakes that you are conducting or advertising on-air, you should contact lawyers who are familiar with the FCC Contest Rules.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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