Sweepstakes-related letter generates some complaints

Recipients asked to pay $12 for `cash prize data'

October 20, 2003|By Heather Dewar | Heather Dewar,SUN STAFF

If Sam Arnoff ever had a trusting nature, 17 years in the collections business knocked it out of him. So when the Northwest Baltimore man got a letter from American Sweepstakes Publishers offering him "$254,204 CASH PRIZE Data" in exchange for a $12 processing fee, "I said, wait a minute. ... Why am I sending money? And I read it again," he said.

At first the letter looked like an announcement that Arnoff had won the six-figure prize. But instead of a sweepstakes check, the Missouri-based company was offering him a list of sweepstakes he might enter.

"It's a potentially very misleading thing," said Arnoff, 59. "You've got to read it four or five times before you pick up on the fact that all they're going to do is put you on a list of people who are going to send you even more junk."

Arnoff isn't the only Marylander on American Sweepstakes Publishers' mailing list. While he has not filed a formal complaint, the Maryland attorney general's office has gotten three about the company this year, said Assistant Attorney General Rebecca Bowman.

Bowman declined to say whether her office is investigating the mailings. Kansas City, Mo., attorney R. Pete Smith, who represents the parent company of American Sweepstakes Publisher, Sweepstakes Reporter, said he has not been notified of any recent complaints or investigations.

The cash-for-a-sweepstakes-list pitch is new to Maryland, Bowman said, but complaints about sweepstakes-related mailings are not. The attorneys general in 47 states cracked down on misleading sweepstakes pitches in the late 1990s, but Maryland's consumer protection division still gets about 100 complaints a year, Bowman said.

Nationwide, consumer complaints about sweepstakes are on the rise, according to a spokesman for the nonprofit National Consumers League. Prizes and sweepstakes are the second-most-common sources of complaints to the organization's National Fraud Information Center, said spokeswoman Carol McKay.

"Prize and sweepstakes fraud particularly seems to target the elderly," McKay said. In the first half of this year, 68 percent of the center's complaints came from people older than age 60, she said.

Sweepstakes Reporter is well known to the Missouri attorney general's office, said agency spokesman Scott Holste. So are several other companies that the state considers related, Holste said. The companies either share office space in North Kansas City or are represented by the same attorney, Smith.

Four of the companies have agreed to change their business practices after the state attorney general alleged violations of Missouri consumer protection laws, Holste said.

In September of last year, the state required two of the companies to pay a $44,000 penalty and make restitution to some consumers who signed up for "contests of skill" that required entry fees, Holste said.

It is illegal in Missouri, Maryland and many other states to charge a fee for entering a sweepstakes. Missouri regulators decided the wording of the companies' mailings "were leading at least some consumers to believe that the entries were sweepstakes" calling only for luck, not skill, Holste said.

Many consumers entered the contests without realizing there would be several rounds of competition, each requiring a new fee, and ended up losing thousands of dollars, Holste said.

In 1998, after Missouri brought an enforcement action against Sweepstakes Reporter, the company agreed not to "make certain mailings into or out of the state of Missouri," Holste said, "and I note that the [return] address on this mailing [to Arnoff] is Shawnee Mission, Kansas, just across the state line."

People who pay the $12 fee receive a subscription to a quarterly newsletter, said Smith, the Sweepstakes Reporter lawyer.

"A lot of people over the years have made complaints with respect to Sweepstakes Reporter," Smith said, because they mistakenly think the company is offering a sweepstakes entry. "Once they see the newsletter and once they figure it out, they usually drop the complaint."

The Kansas attorney general's office investigated the mailings and concluded "there was nothing deceptive," wrote spokesman Whitney Watson in an e-mail, since "the letter tells what the recipient is signing up for [albeit in fine print]."

But officials in Maryland and Missouri said their standards are different.

"The question would be, `Is there material information either omitted or being misrepresented?'" said Bowman, the Maryland assistant attorney general. "If in great big type there was language that made you think you were getting some prize and then in smaller type it said no, all you were getting is information, that could potentially be a violation of the Consumer Protection Act."

Holste said the Missouri attorney general's office relies on "a broader statute that outlaws misrepresentations in the advertising of goods and services." He said dissatisfied customers can fill out an online complaint form at www.moago.org.

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