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
, 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

“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

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

“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

said. “We did some
investigation into legalities of it, but didn’t find any precedent to
lead us to believe it was illegal. But it was something that raised my

No landmark ruling exists on this aspect of Internet promotions, nor
is there any explicit state attorney general opinion on whether online
promotions requiring opt-in information are equivalent to asking for an
entry fee.

“But it’s not out of the realm of realistic possibility that someone
could consider that as a lottery,” Feldman said.

The issue raises concerns for one of the most common, and most
inexpensive, ways for companies to gather user data.

“Usually the main reason they run these types of promotions [is] to
be able to understand who is coming to their site and be able to use
that info — if the user gives them permission — to build additional
long-term relationships with them,” said Tony Laxa, vice president of marketing and
strategic alliances for online promotions company ePrize.

“Sweepstakes continue to be a highly effective means to gather
information from site visitors and driving opt-in to newsletters,”
Heathman said. “The primary goal of a sweepstakes event is acquisition
of consumer data, and it is the single most cost-effective method of
doing that — more so than couponing, voluntary survey registration,
incentive marketing, or loyalty programs.”

Regardless of its implications for law or for future industry
practice, the AT&T-E*Trade contest is likely to be viewed as offensive
by many consumers — and could hurt the companies’ efforts to increase
their user base.

“Good marketers know that the way they should be doing is to have
something that people really want to get,” said Jason Catlett, president
of anti-spam organization JunkBusters. “And this kind of
playing with consent is really just to fill the meaningless numbers of
the campaign, rather than building an actual, important relationship
with the consumer.”

“Marketers often try to pretend that you’re opting in, where in fact,
the permission given was extorted or coerced,” Catlett added. “And
that’s no way to run a good marketing campaign.”

In June, AT&T appointed Michael Lamb to be the company’s first chief
privacy officer, to oversee AT&T’s corporate-wide privacy policy and
practices, work with government and industry leaders on initiatives to
preserve consumer privacy, and help increase public awareness of the
company’s efforts in these areas.

“AT&T has a strong record of safeguarding the personal information of
our customers, but new technologies require new solutions to meet
privacy needs,” Lamb said at the time. “We are developing those
solutions and empowering our customers to control how their private
information will be used.”

Lamb was not available for comment.

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