"A Sweepstakes Attracts Attention": Corporate Executives Defend Sweepstakes Promotions

Abstract: In the 1960s, lottery-like contests designed to publicize products through sweepstakes competitions spread rapidly. In the 19th century, every state banned lotteries--defined as competitions in which chances to win prizes were sold÷to protect citizens. In 1868, Congress prohibited the distribution of lottery materials through the mail. The mid-20th century sweepstakes, however, did not require contestants to purchase tickets or products to win prizes and were thus considered legal. In 1966, the number of national sweepstakes exceeded 600 and consumer groups accused them of deceptive practices. An FTC investigation in 1968 into sweepstakes from oil companies and supermarket chains found evidence of deception. In the following testimony to Congress in 1969, two executives representing firms that conducted large promotional sweepstakes defended them as fair and beneficial to consumers. Congress failed to pass a regulatory bill that year, and by 1998, the FTC estimated that more than 400 million sweepstakes flooded the mail annually and that consumers lost more than $40 billion each year through sweepstakes and telemarketing scams. In 1999, Congress passed the Deceptive Mail Prevention and Enforcement Act. Among other consumer protections, this Act required sweepstakes materials to clearly state odds of winning, value of prizes, and rules.

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