Leading Sweepstakes Company to Provide Major Changes in Disclosures, $30 Million Restitution in Settlement with California, 47 Other States

April 5, 2000
00-072
FOR IMMEDIATE RELEASE

(SACRAMENTO) – Attorney General Bill Lockyer announced today a multi-state settlement that requires one of the country's largest sweepstakes companies to make dramatic changes in what it tells consumers and pay more than $30 million in restitution.

California, 47 other states and the District of Columbia reached the settlement with United States Sales Corp., of Northridge, Calif., which does business as United States Purchasing Exchange and USPE. Each year, USPE sends out tens of millions of direct mail nationwide that contain a sweepstakes entry form and sales offers for household and personal products. Consumers, particularly older people, have purchased products believing their chances of winning the sweepstakes would be enhanced.

"USPE has taken an important lead by agreeing to include a clear and conspicuous sweepstakes fact sheet in all of its future sweepstakes mailings," Lockyer said. "Through these disclosures, Californian consumers will not be lured into buying goods with the mistaken belief they are improving their chances of winning big prizes. We certainly look to having other sweepstakes companies follow the disclosure standard and protections for high-activity consumers being set by USPE."

Under the settlement, USPE has agreed to include clear and conspicuous disclosures of "Sweepstakes Facts" for consumers who receive mailings. The Sweepstakes Facts will include a statement that the consumer has not yet won; that buying products will not help the consumer win the sweepstakes; that the consumer doesn't have to buy anything to enter the sweepstakes; and the odds of winning a prize. The Sweepstakes Facts also will contain on it the sweepstakes entry form which consumers will have to use to enter the sweepstakes.

The settlement is the first reached with the multistate group of Attorneys Generals since hearings into sweepstakes activities were held last year. In addition to consumer disclosures, the assurance of voluntary compliance signed by USPE and the state attorneys general establishes a fund of $30.4 million for restitution to consumers nationwide who spent at least $1,870 with USPE in any one of calendar years 1997, 1998 or 1999. Consumers eligible for a refund will be notified by mail in the early fall. USPE will pay the states more than $1.3 million for the costs of the investigation and has set aside another $3.6 million for the cost of administering the consumer restitution program.

Lockyer noted that USPE also has agreed to contact so-called "high activity" customers with a separate letter to let them know that they can enter the company's sweepstakes as often as they like and that they do not have to purchase anything to win a prize. To stop unnecessary purchases by high activity customers, USPE has agreed to discontinue sweepstakes mailings to any person who makes 25 purchases or spends more than $935 in a 12-month period. The company also will immediately stop mailing sweepstakes opportunities to anyone who in the past 12 months has purchased more than $2500 worth of products.

Under the settlement, USPE agrees to:

• Offer only a single, standard means of entering sweepstakes, regardless of whether a purchase is made;
  
  
• Not represent that consumers received a sweepstakes offer because they are a customer or that consumers may receive additional sweepstakes offers if they remain a customer;
  
  
• Not represent that a consumer has a better chance of winning a sweepstakes than other consumers;
  
  
• Not use personalized simulated checks to represent sweepstakes prizes in its solicitations;
  
  
• Fully disclose the nature and value of any bonus items offered to purchasers if any such items are described;
  
  
• Ensure that all sweepstakes have a single response deadline, rather than numerous intermediate response deadlines;
  
  
• Maintain a toll-free telephone number for consumers to call if they wish to be placed on the company's "Do Not Contact" list and not receive any future solicitations. "Consumers entering sweepstakes should understand they don't have to buy anything for a chance to win and that buying will not help their chances of becoming instant millionaires," Lockyer said. "The sweepstake facts will help consumers do this."

You Have Not Yet Won Our Sweepstakes. Our sweepstakes are games of chance. If you enter, your entry will have the same chance to win as every other entry. No one will know who the winner is until after the sweepstakes ends.

Enter For Free. You don't have to buy anything to enter. Just complete the Free Entry Form below and return it in the enclosed envelope. You will be entered once in each sweepstakes offered in this mailing.

Enter As Often As You Like. You don't have to wait for us to mail you an entry form. You may submit additional entries by mailing a post card or letter with your name and address to [Entry Address]. Each postcard or letter you mail will be entered once in each sweepstakes offered in our most recent mailing. Each postcard or letter must be mailed separately.

Buying Won't Help You Win. Your chances of winning without a purchase are the same as the chances of someone who buys something. It is illegal to give any advantage to buyers in a sweepstakes.