This month a big-chain grocery store has been offering daily mystery boxes during specific timed drops on a first-come, first-served basis, to users who log on to store’s website at a designated time. No purchase is necessary.
Urgency-based promotions, such as “While Supplies Last” offers, are designed to prompt swift consumer decisions and therefore raise a number of legal issues which need to be considered. Purchase-based “while supplies last” offers (unlike this example) are clearly regulated by the FTC Rules regarding bait advertising, deceptive advertising and, for grocery stores, the Retail Food Advertising Rule. But what about when no one needs to make a purchase for a chance to win a time-urgent promotion?
Prize Promotion Laws
Lawful prize promotions contain two elements: chance and prize. Both of these are typically present in a free “while supplies last” promotion. The “chance” element stems from the race to enter, where only a certain number of fast-acting entrants will get a reward. The “prize” element comes from the limited number of these rewards available.
As we know, chance-based prize promotions are regulated in almost every state. The following best practices are encouraged:
Best Practices
- Have full Official Rules. These will form a binding contract with entrants and establish the specified framework for the promotion.
- Have Abbreviated Disclosures. These disclosures should be included whenever the promotion is advertised and should include NO PURCHASE NECESSARY, eligibility musts, and the start and end date/time with “while supplies last, whichever is earlier.”
- Have an end date/time. Although not likely, it’s possible you don’t get sufficient eligible entrants.
- Limit eligibility. This is especially important if it’s an in-store promotion (which should be limited to persons within a reasonable distance from the applicable stores) or a multi-day promotion (which should exclude prior winners).
- Have a specified number and value of prizes. While mystery prizes are fun, many states require disclosure of the number, description, and value of all prizes offered.
- Specify the odds of winning. Here, something such as “Odds depend on time of entry and number of prizes available.”
- Disclose any prize redemption requirements, such as having to come to the store to receive the prize or requiring signed winner affidavits/releases.
- Consider unclaimed prizes. This may be especially important in a multi-day “while supplies last” promotion, since a sponsor will generally “stop” the entries after the initial number of available prizes. But what if one of these “winners” turns out to be ineligible, or doesn’t return a prize release, etc. The sponsor should consider either (i) capturing a sufficient number of entrants from the initial batch as potential winners, or (ii) a second chance drawing disclosed in the Rules including how to enter and the odds of winning.
And thanks to Edgar Dworsky of Consumer World, www.consumerworld.org, for pointing me to this topic.
