by John Garziglia
We just ran a contest to give away a car. Contest boxes were dropped off to 6 advertisers where listeners registered to win. The day after the name was pulled and announced on the air, an account executive walks into your office with a box. Only 5 boxes were picked up. What are you legally required to do now?
The first thing to do is to check the detailed written rules that your station prepared and disseminated for this contest (you do have contest rules for this contest as required by the FCC, right?), and see if your contest rules somehow cover this situation.
Section 73.1212 of the FCC's rules states that a licensee "shall conduct the contest substantially as announced or advertised." Since the station announced six locations where contestants could enter, but entries from only five locations were actually part of the contest, there is a potential FCC issue here.
Hopefully your contest rules try to anticipate this situation. For instance, possibly your contest rules contain a provision stating that the radio station is not responsible for theft, destruction, or failure of delivery of, or unauthorized access or alterations to, contest entries, and the radio station reserves the right at its sole discretion to cancel, terminate, modify or suspend the contest for any such occurrences.
At this point, however, no matter what your rules say, because a car was given away which is not a small prize, and because of the potential legal ramifications of failing to conduct a contest as advertised, it is time to call your lawyer. Your radio station has potential issues with both the FCC and possibly state and federal laws regarding the conduct of this contest.
Stuff happens, of course, and there is no way to guard completely against a botched or mishandled contest. That is the nature of contests and promotions. But there are a number of things a radio station can do to minimize issues.
First, although not the situation here, be certain to have the prize in hand. I have heard general managers state that "if the prize is not at the station, it does not exist". A common contest malady is the prize promised by an advertiser or otherwise expected from a third-party, but never delivered. The FCC has brought enforcement actions with stiff fines against a number of stations for a failure to deliver a prize as advertised.
Second, comprehensive well-written contest rules, possibly prepared in conjunction with your FCC counsel and local counsel, are a must. While it is impossible to write rules that cover every situation, and a rule that simply states that the station can do whatever it wants whenever it wants for whatever reason will not pass muster with the FCC, detailed well-thought-out contest rules can guard against contest mishaps.
While it would be nice to observe that no set of contest rules can be too long, keep in mind that the material terms of the contest must be periodically broadcast over the air. The FCC defines material terms as generally including (1) how to enter or participate; (2) eligibility restrictions; (3) entry deadline dates; (4) whether prizes can be won; (5) when prizes can be won; (6) the extent, nature, and value of the prizes; (7) the basis for valuation of prizes; (8) time and means of selection of winners; and/or (9) tie-breaking procedures.
Third, and perhaps timely in view of the April 1st national observance of juvenile prank day, the FCC states that "no contest description shall be false, misleading or deceptive with respect to any material term." Thus, contests to give away the "keys" to a luxury car, a five night cruise (where the daylight hours must be paid for), or dinner with Garth Brooks (a local dude who just happens to have the same name as the country music star), are all very bad ideas of the type that have backfired on any number of radio personalities who thought they were having a bright idea moment.
Fourth, while water drinking contests and treasure hunts are a sadder part of radio legend, keep in mind that even benign contests and promotions can have a potential for injuries or damage. Contests can create a host of liabilities for radio stations. Be sure that the radio station's insurance covers the contest and any liabilities. Scrub the contest completely beforehand asking "what can go wrong?"
Fifth, keep in mind that tickets for sporting events and concerts are "licenses" that often prohibit them being used as prizes without permission. Latching onto a sporting event or concert by giving away tickets without permission to do so can not only run the risk of the tickets failing to be honored by the venue, but can also subject the station to legal liability for trademark and service mark infringement, and perhaps a variety of other legal claims, depending upon the state involved.
Finally, have station personnel who are responsible for contests read the FCC's webpage at http://www.fcc.gov/eb/broadcast/contests.html which contains links to many contest violation cases. While some of the fines and penalties assessed many not seem too large, in addition to the assessed fine, the station likely spent many hours, and tens of thousands of dollars of legal fees, in responding to the FCC. It is not fun, nor does it help to get ratings or meet sales goals, to answer an FCC contest rule violation inquiry.
John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or mailto:email@example.com
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