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CVS Fined For Breaching Prior Sweepstakes Settlement

After previously obtaining a consent order with retail-drug store chain CVS regarding the availability of a free alternative method of entry in sweepstakes promotions, on October 16, 2006, the New York Attorney General announced that CVS had breached the order. In the breach challenge, CVS Corporation agreed to pay $152,000 in civil penalties.

After previously obtaining a consent order with retail-drug store chain CVS regarding the availability of a free alternative method of entry in sweepstakes promotions, on October 16, 2006, the New York Attorney General announced that CVS had breached the order. In the breach challenge, CVS Corporation agreed to pay $152,000 in civil penalties.

In 2004, CVS was challenged for offering of an-instore sweepstakes -- a "Trip of a Lifetime" sweepstakes with the grand prize trip to Oahu, Hawaii -- in which the purchasers using a store loyalty card were automatically entered into the sweepstakes, while non-purchasers were required to go on line to enter. The NY AG took the position that not everyone had access to the Internet and thus where purchasers had an off-line method of entry, the AMOE needed to be offered off-line as well. Specifically, in addition to paying $77,000 in civil penalties, CVS was required to:

  • Make entry forms readily available at participating CVS retail locations, regardless of whether the consumer has made a purchase;
  • Conspicuously post contest rules and regulations at participating CVS retail stores;
  •  Ensure that staff at participating retail locations are familiar with ongoing sweepstakes promotions and are capable of directing consumers to non-purchase methods of entry; and
  • Set forth with equal prominence an alternate non-purchase method of entry in any advertisement that promotes a sweepstakes which affords automatic entry to a consumer who makes an in-store purchase.

Fast forward to 2006. The NY Attorney General once again challenged CVS for offering a sweepstakes in which customers a chance to win a $1,000 CVS/pharmacy Gift Card every week during NASCAR racing season. Consumers who visited a CVS store and purchased Nicorette, NicoDerm or Commit, using their CVS loyalty card were automatically entered in the sweepstakes.

"Stop Smoking & YOU WIN!
Use your ExtraCare ® Card with your purchase of Commit, Nicoderm CQ, or Nicorette and you're automatically entered."

Each race during 2/19/06-6/26/06, 24 customers will win either a
_$1000 CVS/pharmacy Gift Card!_each week OR
_$1000 CVS/pharmacy Gift Card!_
when Jeff Gordon wins!

Gift card cannot be used for prepaid debit and other gift cards. No purchase necessary. Go to www.cvs.com for official rules and details. $1.00 donation also goes to the Jeff Gordon Foundation charity (up to $50,000). Winners will be notified within 6-8 weeks of qualifying purchase/entry.

The Attorney General alleged, however, that the notice did not direct consumers to the alternate method of entry without requiring them to go on line. Indeed, the Attorney General specifically alleged that "the CVS advertisements prominently feature the purchase method of entry into the sweepstakes and then in a footnote state that no purchase is necessary and direct the consumer to the CVS website to obtain information. In order to obtain information about any alternate non-purchase method of entry, the consumer must access a computer and view the official rules and regulations."

Moreover, the Attorney General alleged that CVS did not make entry forms available at all its stores for consumers who did not purchase these products. In particular, the Attorney General seemed focused on the fact that at the store locations, employees did not have sufficient knowledge to direct consumers to the no-purchase method of entry.

Under the 2006 settlement, CVS is required to make additional changes to the way it conducts sweepstakes. In addition to the reforms required by the 2004 settlement, including making entry forms available at participating retail locations, conspicuously posting sweepstakes rules, and ensuring staff knows how to direct consumers to non-purchase methods of entry, CVS is required to:

  • Institute an ongoing training and compliance program for management and other personnel regarding the placement of signs and entry forms in CVS stores during a sweepstakes promotion period;
  • •Adopt procedures to assure that signs and entry forms are properly displayed throughout the sweepstakes promotion period;
  • •Provide a copy of the settlement document to all sponsors when it engages in any game, contest, sweepstakes or promotion; and
  • •Provide a copy of the settlement document to all advertising staff to assure that all advertising used in connection with any game, contest, sweepstakes or promotion sets forth with equal prominence an alternate non-purchase method of entry.

The instant CVS settlement reiterates the critical importance of examining the alternative methods of entry to be sure that they are known and available to the same potential population as the paid entries. Moreover, the settlement highlights the importance of communicating the procedures to those involved in the marketing program and making sure that there is sufficient training, a challenging proposition in the retail store channel.