April 7, 1999
United States Purchasing Exchange Sweepstakes
Found to be Misleading
Settlement results in dramatic changes in
disclosures and millions of dollars in refunds
Albany, NY (SafetyAlerts)
- New York State Attorney General, Eliot Spitzer today announced a multi-state settlement
that requires one of the nations largest sweepstakes companies to make dramatic
changes in consumer disclosures and provide millions of dollars in refunds to its
Spitzer and the Attorneys General of 47 other
states and the District of Columbia have reached an agreement with United States Sales
Corporation, of Northridge, California, which does business as the United States
Purchasing Exchange (USPE).
The agreement requires USPE to provide clear and
conspicuous "Sweepstakes Facts" containing prize information in grid-format on
the entry form. USPE also agreed to provide a statement that a consumer has not yet won, a
calculation of the odds of winning a prize, and a notice that a product purchase is not
required in win.
"This is a major victory for consumers
throughout the nation, especially senior citizens who tend to be exploited more frequently
by sweepstakes appeals," Spitzer said. "This settlement provides important
reforms and disclosures ensuring the companys future sweepstakes will more
responsibly market its products and offers. The settlement also provides needed relief to
the many consumers who were duped in the past."
Spitzer said some consumers in New York State and
elsewhere, particularly older people, have purchased the products because they believed
the purchases would enhance their chances of winning.
The settlement establishes a fund of $30.4 million
for refunds to consumers nationwide who spent at least $1,870 with USPE in any one of the
following years: 1997, 1998 or 1999. In New York, more than 2,000 people spent more than
$17.8 million, an average of $8,329. Refunds will be provided on a pro-rata basis.
USPE also will pay $1.3 million for the costs of
the investigation and will set aside an additional $3.6 million to pay for the cost of
administering the refund program.
In addition to the restitution, USPE has agreed to
discontinue sweepstakes mailings to any person who makes 25 purchases or spends more than
$935 in a year in response to sweepstakes offers in order to stop unnecessary purchases by
high activity customers. The company will improve its disclosures to consumers regarding
no purchase being necessary to enter its sweepstakes and how consumers can enter without
having received a sweepstakes offer from the company.
USPE also will contact so-called "high
activity" customers with a separate letter to let them know that they can enter the
companys sweepstakes as often as they like and not have to purchase anything to win
The settlement also requires USPE to:
- offer only a single, standard means of entering
sweepstakes, regardless of whether a purchase is made;
- not represent that a consumer received a
sweepstakes offer because he/she is 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 others;
- 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; and
- 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.
Joining Spitzer in this settlement were the
attorneys general from Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware,
District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas,
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North
Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West
Virginia, Wisconsin, and Wyoming.
Individuals eligible for refunds will be contacted
directly within several month
Safety Alerts compiles comprehensive safety recall information for
the United States. SafeMail is a free email service to warn consumers of faulty products
and contaminated foods. For complete information regarding current recalls, past recalls
and timely product warning notification visit: www.safetyalerts.com.
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