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E*Trade, AT&T Sweepstakes Raises Eyebrows

A new promotion sponsored by telecom giant AT&T and online brokerage E*Trade is raising eyebrows for its unusual tactics and wording, and concerns for what it bodes for the online promotions industry.

The two companies Thursday announced their Dream Account Sweepstakes, which offers a grand prize of $20,000 deposited in an E*Trade brokerage account.

Entrants must fill out an online form giving their name, address, e-mail address, and phone number.

At issue is a pre-checked box at the bottom of the form, which says that entrants may receive marketing messages from AT&T.

Removing the check from the "opt-in" box disqualifies an entry.

"From my perspective as an Internet business lawyer, it's odd," said Jonathan Ezor, director of legal affairs for online printing services company Mimeo.com, and the author of a recent book on Internet promotions.

With the E*Trade-AT&T sweepstakes, "either you're opting in, or you wasted your time filling out the form to begin with," Ezor said.

That alleged waste of time, experts say, could potentially open a promoter to legal risk on several fronts.

Some states might frown upon the practice of asking entrants to fill out lengthy entrance forms, or to provide extensive user data, said John Feldman, a partner at D.C.-based law firm Arent Fox who specializes in promotional law.

These states, which include California and Illinois, forbid a contest-entrance requirement of excessive time and effort.

But AT&T spokesperson Burke Stinson defended the E*Trade-AT&T sweepstakes.

"Since there's no insistence that a participant read the material or act in a certain manner, it seems a stretch to consider such activity as lost 'billable' time," he said. "However, we are always open to suggestions and will consider their criticism."

Sweepstakes also run afoul of the law when they require "consideration," a payment required for eligibility -- which, in the eyes of the law, blurs the distinction between sweepstakes and gambling.

Feldman said while an online sweepstakes might not explicitly demand payment for entry, regulators could perceive required opt-in marketing messages as monetarily benefiting the promoters -- a "no-no" in many states.

"The money's not immediately flowing out of the pockets of consumers, but there's value in ad dollars, in marketing dollars, that are flowing into pocket of the sponsor," Feldman said.

"Since, to a great extent, the online marketing and promotions world is based on third-party compensation for advertisements, for views, and for contact with consumers, it may not be money coming out of pocket of a customer, but money is flowing into pocket of sponsor," he said.

The E*Trade-AT&T sweepstakes is "a little aggressive for my tastes," he added, "because what they're doing is saying outright that unless we get value, we're not going to give you anything."

Industry practitioners said the promotion's requirements for entry make it unusual, but not unheard-of.

"There's no hard and fast definitions, so in the end we do what the client wants, and that's the way they wanted it," said Gavin Skillman, a spokesperson for Promotions.com, the firm handling the sweepstakes.

"We don't normally do sweepstakes like that, but that's the way they wanted it done," Skillman said.

Brian Heathman, president of online promotions company iPromotions concurred that required opt-in is not standard practice.

"Only one of our clients, a Fortune 25 client, requested that we implement a campaign in that manner," Heathman