Sweepstakes entrants’ lack of knowledge of free method of entry insufficient to constitute violation of California Penal Code.
A Northern District of California case styled Suski v. Marden-Kane, Inc. (decided August 31, 2022) has resulted in a significant ruling in the field of sweepstakes law. A sweepstakes sponsored by Coinbase, a popular cryptocurrency exchange, and administered by Marden-Kane offered the chance to win valuable prizes to Coinbase users who bought or sold Dogecoin, a well-known “meme” token, on Coinbase for a total of $100 or more. The sweepstakes offered an alternative method of entry that did not require the trading of Dogecoin or incurrence by the entrants of any other expense. However, this free alternative method of entry was not well-publicized.
Olshan’s Advertising, Marketing & Promotions Practice is providing pro bono legal support on a sweepstakes run by In Good Taste, a fundraising initiative whose goal is to help ease the suffering caused by COVID-19 and racial inequality.
In the context of the coronavirus pandemic, many companies have turned to online sweepstakes and promotions as a means of both promoting their brand and showing support to coronavirus relief efforts. Certainly, sweepstakes and promotions can be an effective way to achieve these dual purposes. As we previously reported, brands that have hastily run promotions without thinking through the consequences of various events have run into a firestorm of negative publicity as well as potential class actions. Making sure that the promotion incorporates the items below can help ensure that a promotion is legal, properly structured, and contains appropriate protections for the brand.
In 2017, California-based clothing company, Sunny Co. Clothing, posted a photo to its Instagram account displaying a model wearing Sunny Co. Clothing’s “Pamela” red, full-piece bathing suit. The caption stated that every person who reposts the image tagging Sunny Co. Clothing “will receive a FREE Pamela Sunny Suit.” Sunny Co. Clothing failed to set a maximum on the number of swimsuits available for the promotion. The post quickly went viral and Sunny Co. Clothing found itself in the undesirable position of not being able to fulfil its promotional obligations as it simply did not have enough swimsuits to meet the demand. Sunny Co. Clothing publicly learned the importance of having complete and conspicuously disclosed contest rules for social media giveaways. Reese Witherspoon’s fashion label, Draper James, is now learning the same lesson several years later.
An advertising agency that promoted sales events on behalf of numerous Indiana motor vehicle dealerships is the subject of an Indiana Attorney General lawsuit focusing on allegedly false sweepstakes promotions. The lawsuit highlights the governments’ continued focus on direct mail sweepstakes promotions.
The sufficiency of the advertisements should be evaluated by analyzing whether they pass the four P’s test.