Misleading Contests and Giveaways

The New Jersey Consumer Fraud Act covers many transactions and attempted transactions. One of the areas specifically covered by the New Jersey Consumer Fraud Act is contests. There are numerous limitations and restrictions on providing contests.

If you establish a contest you are not permitted to charge the consumer or contest winner a fee in order that they collect the price. The following is a good example.

A cake shop runs an Internet email campaign sending an email to thousands of potential customers. As part of this campaign they offer to give away 10 free cakes if a specific email is chosen at random. However, one of the terms and conditions is that a fee must be paid by the winning consumer to collect their prize. As an example there might be a surcharge where shipping and handling fee or some other fee associated with obtaining the winning prize. You must be able to enter the price for free. You must be able to read receive your prize for free.
The reasoning behind this law is relatively simple. You cannot advertise a free contest and then make the winner pay some sort of fee or surcharge. Then the free contest becomes nothing more than a potential profit center for the business of providing contests. As an example of the business gave away 10,000 cookies but charged shipping and handling of $9.99 on each of those cookies the contest becomes a money making operation from its outset.

This is basically misleading and deceptive advertisement of a free contest or a free prize to the winner. Free must mean free not a charge to collect a free gift. There are many other ways a business can potentially process a deceptive consumer contest. Each individual contest must be specifically look at to determine whether or not the promotional material was misleading and/or the terms and conditions were misleading.

Each term and condition must be compared to the New Jersey Consumer Fraud Act to determine if it is misleading. Each requirement must be specifically looked at in a contest to see it if it is misleading or has the capacity to mislead. Only then can we make a determination whether or not a specific contest misleading.

In the same fashion that New Jersey law prohibits deceptive acts or practices New Jersey law prohibits a deceptive contests and giveaways. The same underlying theories protect consumers from those illegal or deceptive contests and giveaways as the New Jersey law protects those who either purchase or attempted purchase goods.

As previously set forth there are specific regulations prohibiting certain deceptive practices including but not limited to requiring consumers to purchase something to obtain and otherwise free item. This is not a contest but a sale. New Jersey law prohibits this type of contest where you are required to pay for a free item. This takes the contest from one which is a giveaway to one which is a disguised sale.

When the analysis of the contest or giveaway is carefully reviewed the basic analytical framework as established by New Jersey law is relatively simple in that the contest must be fair, understandable and without deceiving the plaintiff or the public. In this way the consumer who has been agreed and has sustained an ascertainable loss might pursue the individual or business running the giveaway or contest and recover triple damages and attorney’s fees and costs