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Colorado Passes New Sweepstakes Law Sweepstakes sponsors will either have to conform all of their mailings to the requirements of the Colorado statute or produce a special mailing for Colorado consumers. Robert A. Schwartz Alison De Gregorio e-mail this article URL Colorado recently passed what Colorado Attorney General Ken Salazar calls "the country's strongest sweepstakes bill." This bill, which took effect October 1, 2000, places strict requirements on sweepstakes sponsors and reflects the Colorado Legislature's finding that "there is a compelling need for more complete disclosure of rules and operation of sweepstakes." Although it appears to apply to direct mail sweepstakes due to the way it defines sponsors, until more is known about how Colorado intends to interpret and enforce it, the strict requirements of the statute will be problematic for all sweepstakes sponsors. The definitions reflect the Legislature's intent to protect consumers from deceptive practices in connection with the advertisement and operation of sweepstakes. For example, the definition of "no purchase necessary message" requires that the message be in "at least ten-point," "bold-faced" type. Indeed, most of the statute's provisions detail not only what information must be disclosed, but also the font-type and placement of such disclosures. In general, information that the Colorado Legislature deemed to be important must be in either ten or twelve-point type or not smaller that the nearest typeface used to invite consumers to enter the sweepstakes. It is this regulation of content and style of disclosures that makes complying with the Colorado sweepstakes statute problematic. Sweepstakes sponsors will either have to conform all of their mailings to the requirements of the Colorado statute or produce a special mailing for Colorado consumers. Either way, the new legislation in Colorado burdens sweepstakes sponsors. Among the most restrictive requirements of the statute are the rules pertaining to the disclosure of material terms and conditions. The statute sets forth certain information that must be "clearly and conspicuously" disclosed in addition to the information that is routinely included in the official rules. If a sponsor represents that a person may be or may become a winner of a prize, all of the following must be disclosed: the fact that the person has not yet won, the no purchase necessary message, the retail value of each prize, the estimated odds of receiving a prize, the name of the sponsor and the address of the sponsor's actual place of business and the address at which the sponsor can be contacted, a statement that the prize is subject to a restriction (if the prize is subject to a restriction), the deadline for submission of an entry, and the official rules. The statute is so specific that it qualifies these requirements. For example, if a sponsor represents that a person has been specially selected, the sponsor must disclose the maximum number of persons with the enhanced likelihood of receiving a prize. This disclosure must be "immediately adjacent to" and "in the same type size and boldness" as the representation that the person has been specially selected. In addition to requiring the disclosure of the above information, the statute prescribes where a sponsor must place these disclosures: either immediately adjacent to the first identification of the prize and in the same type as the reference to the prize or in a separate section of the official rules entitled "Consumer Disclosure." The statute regulates almost every detail that sponsors encounter when preparing advertisements for a sweepstakes. Even the statement of the odds of winning a sweepstakes must comply with a specific "formula": "____ [Number of prizes] out of ___ prize notices distributed." Additionally, any representation that a prize notice is urgent must include a final date by which a reply action by the consumer is required. This disclosure must be in the same type size and boldness "as each representation of urgency." The strict requirements of the statute are not the only aspect of Colorado's law that make it "the country's strongest sweepstakes bill." The scope of the statute is purposely broad, and the Legislature advises that "the terms of this [bill] shall be construed liberally in order to achieve [its] purpose." Moreover, there are very few exemptions to the statute. Onlysolicitations made in connection with the sale of goods by certain catalog sellers are exempt from the rigorous regulations. The detailed requirements of Colorado's newest sweepstakes statute show that the Colorado Legislature strongly disapproves of unfair and deceptive tactics by sweepstakes sponsors. Due to the meticulous directives, it is likely that many sponsors will opt to exclude Colorado from direct mail solicitations for the simple reason that preparing a special mailing to comply with Colorado law may be too costly and time-consuming. Sponsors that decide to include Colorado in their sweepstakes are well-advised to be very familiar with the terms of this statute. © 2000 Davis & Gilbert LLP       Davis & Gilbert LLP • 1740 Broadway • New York, NY 10019 tel: 212.468.4800 • fax: 212.468.4888   Privacy Policy • Terms & Conditions