NS Class action proceedings Coinbase Global, Inc. (“Coinbase”) and Marden-Kane, Inc. (“MKI”) (collectively “plaintiffs”) was accused of being involved in false, deceptive and misleading sweepstakes. CoinbaseOne of the largest online cryptocurrency exchanges, has adopted MKI since June 3, 2021 to design, market and execute the $ 1.2 million Dogecoin Sweepstakes.
The complaint alleges that in order to participate in the sweepstakes, users had to buy and sell $ 100 in Dogecoin by June 10, 2021 to get a chance to win the prize. They offered an alternative free entry method, AMOE, but plaintiffs are also said to have specially designed email and website ads to prevent users from finding AMOE information. The class claims that it did not give Coinbase $ 100 or pay Coinbase a fee to acquire Dogecoins if the AMOE options were properly disclosed.
“Dogecoin Sweepstakes” Yet another example Sweepstakes advertising claims can lead to proceedings and damage reputation.
What are the sweepstakes that promote best practices?
The goal of sweepstakes is usually to create excitement among consumers and increase the company’s bottom line. Whether it’s the McDonald’s Exclusive Sweepstakes or the publisher Clearinghouse that provides lifelong cash, businesses must comply with state and federal laws, rules and regulations when sponsoring sweepstakes promotions.
In the immediate case, some consumers felt misunderstood about how Coinbase sold the sweepstakes promotion.
If you do not include certain required disclaimers and disclosures, the sweepstakes contest may be soaked in hot water. The specific disclosures that should be included in all sweepstakes promotions are:
- The language that describes it No purchase required For entry, and that such purchases do not increase the odds of the consumer winning the prize.
- Start date and end date.
- Qualification requirements such as minimum age and prohibited states.When
- Probability of winning a prize.
Placing the above disclaimer and disclosure in a prominent place in the sweepstakes ad is a necessary step in conducting a compliant sweepstakes promotion.
Depending on your jurisdiction, you may need to register and bond before you can start promoting your sweepstakes. For example, in Florida and New York, you need to register and combine sweepstakes with total prize pools in excess of $ 5,000. On Rhode Island, the registration prize threshold is $ 500, but there are no binding requirements and registration only applies to in-store contests related to retail stores.
After selecting a winner, the sweepstakes sponsor must notify the winner. Winners may need to complete the release of eligibility affidavits, applicable tax returns, and promotions. Winners should not be charged for claiming prizes, including shipping and handling. In addition, certain state agencies require that an official list of winners be submitted within a legally defined period after the award is awarded.
Talk to a sweepstakes lawyer
Sweepstakes advertising is a highly regulated area that may seem simple at first glance. Unfortunately, this is not the case, as many sweepstakes sponsors have learned over the years. As a result, companies need to look for lawyers to avoid the many regulatory and legal pitfalls that are waiting for them before they can carry out a sweepstakes promotion.
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The content of this article is intended to provide a general guide to the subject. Expert advice should be sought for certain situations.