Direct-mail sweepstakes draws about 70 complaints in Md. Colo. sues Calif. company over alleged scheme

August 24, 1996|By Rafael Alvarez | Rafael Alvarez,SUN STAFF

If a piece of paper resembling a check for $7,500 arrives in the mail -- "cash due you," according to an accompanying letter -- you could wind up with less money than you had before opening it.

The practices of Direct American Marketers Inc., a direct-mail sweepstakes company located in Irvine, Calif., have generated about 70 complaints to the consumer protection division of the Maryland attorney general's office. The company also is being sued by the state of Colorado for the alleged scheme, which encourages people to call a $3.98-per-minute 900 number to enter the contest.

People who dial the number have wound up paying about $30 for the call, while receiving $1 and a bunch of discount coupons in return, according to state officials. The odds of winning the grand prizes are about one in 5 million.

According to Larry K. Fryer, a U.S. postal inspector, the practice is technically not illegal in Maryland because the company's letter says how much the call will cost and fine print on the back of the ersatz check states the astronomical odds against winning.

"Businesses like this prey on people who like to win things," said Fryer, who said the Postal Service also has received a number of complaints against the company but has not begun a formal investigation. "The golden rule for consumers should be: Nobody is in business to give things away." The Maryland attorney general's office has been forwarding its complaints to law officials in California, who in 1992 struck a deal with the company in which consumers will be reimbursed for money lost on the phone call.

Anthony Brown, the company's president and CEO, said the company directly issues 50,000 refunds a year to consumers. The Maryland government should have no problem with the solicitations, he said, adding that the phone service has a 70 percent rate of repeat customers.

"And 70 complaints out of millions of pieces of mail going out just isn't that many," Brown said.

Marylanders seeking restitution may call the attorney general at (410) 528-8662.

In Denver, Colorado Assistant Attorney General Jan Michael Zavislan said: "We're alleging that the totality of the solicitation is misleading. They're a pretty aggressive marketer. They're marketing to a lot of states, and it's all designed to get consumers to believe they will win something [valuable]. Why else would someone spend $30 to win $1?"

Pub Date: 8/24/96

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