New York Attorney General Settles with H&R Block Regarding Deceptive Advertising Tactics in Sweepstakes Programs

New York Attorney General has settled with the tax preparation company H&R Block regarding two sweepstakes promoted by the company to induce consumers to utilize its tax preparation services. H&R conducted two sweepstakes games: "Double Your Refund Instant Win Game" from January through April 2006 and "Toss Out Your Bills Instant Win Game" from January through April 2007. In both games, consumers could win by means of a scratch-off card, which was given to customers who purchased H&R Block tax preparation services.

For a game of a chance promotion to avoid being considered an illegal lottery, companies conducting sweepstakes must give consumers an opportunity to enter and win without purchasing a product. (For a greater explanation on sweepstakes basics, please see our primer here).

The Attorney General maintained that H&R Block did not provide sufficient disclosure of the no-purchase method of entry both in advertising and in its offices. The state alleged the company's television, radio and print ads announced the ability to play if consumers had their taxes done by the company, and then directed consumers to H&R Block offices or for official rules on how to enter without a purchase. However, the "no purchase necessary" qualification was either: flashed on screen briefly with no verbal announcement in television ads; announced with rapid-fire language at the end of radio ads; or buried in a small footnote in print ads. The Attorney General's investigation found that no such information about entering the contest without purchasing a product was available at H&R block tax offices.

In settling the matter, H&R Block must pay $245,000 in penalties and costs for failing to post rules and regulations of its promotions at its offices and using false and deceptive advertising material to promote two sweepstakes games. H&R Block also must disclose that the purchase of H&R Block products is not necessary to enter any promotional contest.

In addition to paying $245,000, H&R Block must also:

  • Clearly post contest rules and regulations at participating H&R Block retail offices to enable non-purchasers to obtain the information for entry in contests
  • Conduct training to ensure that sales employees are able to direct consumers to the information regarding non-purchase methods of entry
  • Comply with all rules and regulations of promotions
  • Clearly disclose the availability of alternative methods of entry in all advertising that refers to the purchase of an H&R Block product or service as one of the means to enter the contest.

This case is an important reminder that advertising which promotes a sweepstakes needs to be carefully reviewed and employees must be properly trained regarding the mechanics of the sweepstakes, including but not limited to, the alternative method of entry. This is not the first time the New York Attorney General settled a case against companies regarding these issues. As previously reported, CVS and A&P settled separated actions with the NY Attorney General relating to advertising and sufficiently offering an alternative non-purchase method of entry.

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