CONSUMERS : No Sure Bet in Mail Sweepstakes
The familiar pitch goes something like: Congratulations, Mr. and Mrs. Johnson. Today may be the day you’ll remember for the rest of your life. . . . The day you received your lucky $1-million winning number.
American consumers receive direct-mail sweepstakes promotions almost daily. The largest prize offerings come from industry giants such as Reader’s Digest, Publishers Clearing House and American Family Publishers Sweepstakes. Others pour in from smaller companies, marketing everything from condominiums to aluminum siding to various charitable causes.
Do you really win something for nothing?
Yes, but . . . read the fine print.
In the sweepstakes, the odds are astronomical--an Anaheim grandmother who won the $5.2-million top prize in the most recent Reader’s Digest sweepstakes in April beat odds of 1 in 150 million. (That compares, say, to the 14 million to 1 odds of picking all six numbers in the California lottery.)
Some companies tell the odds of their games; others do not.
“I don’t think consumers are interested in the odds,” said David Carlin, a New York lawyer who serves as spokesman for American Family Publishers, which has given out about $30 million in prizes to the public in 10 years. “It’s the dream they’re interested in.”
Most contests have a time cutoff.
And most say you don’t have to buy something to win a prize. That’s because they cannot do so and continue to be legally classified as a sweepstakes.
If the games do require a purchase, they’ll run afoul of the law at some point. If, say, they require a merchandise buy or that you send a small sum, like $1, to be considered for a prize, they, then, legally are lotteries and cannot distribute materials through the mail.
“A lottery requires three aspects--consideration (purchase), chance and prize,” said Herschel Elkins of the California attorney general’s office. “As long as there is no consideration, then it is not (classified) as a lottery. But many of the charities are on very thin ice. They’re clearly in violation when they say they are ‘only selling 1,000 tickets at $100 apiece.’ Some get out of it by saying that there is a recommended donation, however, you can pick up free tickets at a certain location.”
Elkins also blames some firms for deceptive promotions: “They’ll say you are one of four people who can win, when actually the odds are not 1 of 4, but 1 in 10 million. Those companies should be ashamed of themselves.”
As far as learning how many millions of direct-mail sweepstakes are sent out nationwide, forget it.
The big firms guard mailing information like Ft. Knox; the field is so competitive they don’t want anyone to know how many sweepstakes they mail out in a year. Even the U.S. Postal Service won’t give out the numbers, a spokesman said, “because direct-mail sweepstakes are such a competitive market.”
“This is the kind of business where if you know the numbers, you can figure out what the other guy is doing and try to copy them,” Carlin explained.
Companies mail sweepstakes by third-class or bulk postage, which can cost anywhere from 10.1 to 16.7 cents per piece, depending on the size, weight and sorting process.
Reader’s Digest in Pleasantville, N.Y., originated the direct-mail sweepstakes concept in 1962 and since has awarded almost $57 million to more than 1.7 million Americans. Its international subsidiaries also conduct sweepstakes in many foreign countries.
Direct-mail sweepstakes are one of the fastest-growing types of consumer marketing, and they’re popular with the public, according to Donnelly Marketing’s most recent annual survey of promotions by consumer product companies. The number of sweepstakes entrants, the study showed, increased from 57% in 1987 to 70% in 1989.
Firms use sweepstakes as a cost-effective way to market products. What they give away in prizes, they get back in “high-volume sales,” said George V. Grune, chairman and CEO of Reader’s Digest. “That helps keep our costs--and our prices--lower.”
Are most magazine subscriptions cheaper when offered with sweepstakes? Almost always.
Publishers Clearing of Long Island, N.Y., is so confident of its “unbeatable” rates offered in sweeps that it says it will pay subscribers “four times the difference in cash,” if they can show the company “a better deal.”
David Sayer, a spokesman, said the company has “20-some mailings a year,” but the largest is targeted for receipt in most homes in late December and early January; the next largest is the current, July mailing.
The current jackpot is the largest in the firm’s history, more than $22 million in prizes, including one $10-million prize and 12 $1-million winners. Like other big firms, Publishers Clearing also awards lesser prizes during the year.
What about the warning notices in some sweepstakes promotions, telling consumers they may be dropped from lists if they don’t buy soon? (“Order today! Don’t be dropped from our list!”) They may be valid.
“We don’t want to keep mailing to people who never buy--it is tremendously expensive,” insisted Carlin of American Family Publishers. “Every mail-order company does” drop some consumers from its lists eventually. Some firms do so without notice, Carlin said, adding that American Family Publishers gives consumers a warning.
“Some take a shorter time, others longer because we use many overlapping lists,” Carlin said. “It’s possible you can remain on the list for a long time without ordering anything.”
Elkins believes this kind of tactic gives consumers the “impression that they’ll get a chance in the future if they buy something in this one,” he said. “Never, under any circumstances, should consumers pay any money for anything in expectation of a prize. And they should remember there is no free lunch, or even a free breakfast, in regard to free prizes. The cost of a stamp makes it a bad bet. But if they want to waste 25 cents, go ahead.”
SWEEPSTAKES TIPS
* Be wary of phone callers saying you’ve won a sweepstakes prize. Most reputable firms notify winners by mail and do not ask them to appear in person--or finance their trip--to collect prizes.
* Be suspicious if asked for money to claim prizes. Some swindlers claim that “taxes” on a prize--usually merchandise--must be paid before shipping.
* Never give out credit card numbers to collect a prize or enter a sweepstakes.
* Read sweepstakes rules carefully; be aware of deadlines, prize amounts and disqualifying conditions.
* Don’t hesitate to contact a company with sweepstakes questions. Reputable firms will provide information.
* If you think you’ve been victimized, immediately call the state attorney general’s office, the Better Business Bureau, the Federal Trade Commission or local consumer fraud bureau. The faster you do, the better the chance of catching the swindlers.
Source: Reader’s Digest
