Junk-Mail Sweepstakes Sow Confusion but Reap Orders

It’s junk-mail sweepstakes time again. Here come the big envelopes marked URGENT, with huge capital letters saying: “CONGRATULATIONS (YOUR NAME), YOU’RE OUR NEWEST $1,000,000.00 WINNER!”

You have doubts? When the letter comes from a company with the credibility of Time magazine? When you’re assured (small letters, but boldface) that the million-dollar prize “listed next to your name is unconditionally guaranteed to be awarded”?

The doubts aren’t surprising. What’s surprising is the interest these letters excite, when a closer reading proves, as always, that what the big print giveth, the small print taketh away.

The addressee still has to enter the contest. His number has to win. And his chances of winning, at least in Time’s sweepstakes, could be as low as 1 in 900 million.

Even more surprising than the public’s continued enthusiasm is the publishers’ continued dependence on sweepstakes to sell their real product. Time, Reader’s Digest, the American Express Publishing Corp. magazines all have apparently found their wares so unappealing on their own merit that they need gratuitous prizes to achieve significant sales.

You’d think that people would be prized out these days. They’ve had years of such sweepstakes. They’ve had decades of land developers drawing them to sales presentations with the promise that they’ve won big money, a fair TV, a cheap camera (guess which you win). The newest game requires the mark to call a 900 number--at $9.95 a minute--to claim some guaranteed prize, which never comes.

Many people assume, wrongly, that sweepstakes are well regulated. But while some states take an interest in such contests, the only specific federal regulations apply to games run by supermarkets and gas stations, which must disclose the chances of winning, the game rules and the winners’ names.

There is, of course, the Federal Trade Commission Act, with its broad, all-purpose prohibition of “unfair or deceptive acts or practices in or affecting commerce.” This can be--and has been--invoked against fraudulent sweepstakes (most famously, the Reader’s Digest’s several decades ago) that failed to award prizes as promised or made people believe that they’d won when they hadn’t.

But who needs law to protect them? Just look at the stuff real close.

It starts with hype, right on the envelopes, that says “Registered Entry” and “Open Immediately!” and comes from an “Office of the Treasurer.” Some say “You May Have Already Won” (American Express Publishing); some say “Guaranteed! You’ve Already Won” (Wildlife Fact-File).

A really classic junk-mail sweepstakes implies, outside and in, that the recipient has already won. Who sees the little italics over the big CONGRATULATIONS, which actually make it read, “If you return the grand prize-winning entry, we’ll say CONGRATULATIONS”? How many realize that the assurance that their stated prize “is unconditionally guaranteed to be awarded” doesn’t necessarily mean awarded to them?

The truth is all there somewhere, of course: Big companies have lawyers to see to that. But “anyone who’s a casual reader and somewhat naive is going to think they’ve won,” says Dale Sekovich, an investigator in the FTC’s Los Angeles office.

In fact, everyone knows that people misread these letters. There “tends to be a lot of confusion,” says Tom Mastrocola, marketing director for the Time-Warner divisions, which get a lot of calls from people about “when they’re going to start getting money, whether or not they’ve won, what they have to do.”

The really small print may even tell these people how far from winning they are. Reader’s Digest has given the odds of winning its grand prizes as 1 in 150 million, even 200 million. Time’s sweepstakes has even higher odds, given a distribution of entries “estimated not to exceed 900 million.” The biggest state lotteries are a shoo-in by comparison: Entrants have a 1-in-18-million chance of winning a SuperLotto game in California.

Some people think that it helps to order a magazine (or book or tape), if they can even find the description of the company’s real product. It may be on the back of the letter about the sweepstakes or, in the case of Publishers Clearing House, not in the letter at all, but in a separate insert.

Most say there’s no purchase necessary. There can’t be because then the whole game would be a lottery--an interstate lottery, which is illegal.

Indeed, many people order nothing. Time gets more returns from people just entering the sweepstakes than ordering merchandise with their entry, and maintains that once the order is processed, the two entry forms are handled exactly the same way. Reader’s Digest once gave its responses as divided half and half.

The companies are delighted with such results--in some cases, their primary source of orders. They get people to open the envelopes, read the letters, perhaps respond.

“The whole purpose of sweepstakes,” Mastrocola says, “is to create an awareness of what your product is.”

So what if a lot of those 900 million people believe that Time’s product is sweepstakes, and many are still waiting for their money?