Penalties for non-compliance
What are the penalties for non-compliance?
Penalties vary by state and under Federal law. An improperly structured sweepstakes or skill competition arguably could constitute an illegal lottery or gambling, which are criminal offenses under state and Federal law. However, it is more common for regulators and consumers to seek civil remedies, such as injunctions, restitution, and civil penalties.
The FTC can bring enforcement actions for unfair and deceptive trade practices under Section 5 of the FTC Act. Remedies can include injunctions, civil penalties, and audits.
Under the DMA, the US Postal Inspection Service can obtain temporary restraining orders and injunctions, as well as assess civil penalties up to US$2 million dollars.
The FCC can assess fines starting at US$4,000 for each violation of its contest rules.
Arizona – Violation would be considered gambling and likely a class 1 misdemeanor. R.S. §§ 13-3303, 13-3304.
Arkansas – Consumers can file a lawsuit for violations of the prize promotion laws or consumer protection laws. AR Code § 4-102-103.
California – Violations of Cal. Bus. & Prof. Code § 17539.1 constitute unfair business practices and are likely enforceable in a civil action under Cal. Bus. & Prof. Code § 17200. That law also provides for injunctions and civil penalties not to exceed US$2,500 per violation. The penalties for engaging in illegal gambling, such as the operation of an illegal lottery, are a fine between US$100 and US$1000 and imprisonment in county jail not exceeding 6 months, or both. Cal. Pen. Code § 330.
Colorado – Can be up to US$10,000 per violation if the violation committed against an elderly person. Colorado Consumer Protection Act § 6-1-112(c).
Florida – Any person, firm, corporation, association, agent, or employee who violates any provision of this section or any of the rules and regulations made pursuant to this section shall be liable for a civil penalty of not more than US$1,000 for each such violation, which shall accrue to the state and may be recovered in a civil action brought by the Department of Agriculture and Consumer Services or the Department of Legal Affairs. Fl. Stat. §849.094(9)(b).
Georgia – Consumers can file a lawsuit for violations of the prize promotion laws or consumer protection laws. See e.g. O.C.G.A. §§ 10-1-390 et seq.
Illinois – Violations are generally considered an unfair practice under the Consumer Fraud and Deceptive Business Practices Act, which may subject the promoter to penalties and injunctions. Consumer can also bring class actions for intentional violations of the law and recover the greater of US$500 or twice the amount of pecuniary loss. 815 ILCS 525/40.
Massachusetts – An illegal lottery can result in fines of not more than US$2,000 or imprisonment up to 1 year. General Laws of Massachusetts 271, § 15.
New York – Every person, firm or corporation who coerces a retail dealer to participate in any promotion or advertising scheme or plan of the type set forth in subdivision one of this section shall be guilty of a Class B Misdemeanor. N.Y. Gen. Laws § 396-e(7).
Rhode Island – Violations can constitute a misdemeanor. R.I. Gen. Laws § 11-50-6.
Texas – Violations of sweepstakes law can give rise to a civil penalty of not less than US$5,000 or more than US$50,000 for each violation found. Actions can only be brought by the state Attorney General. Violations of gift offer law is a Class B misdemeanor for first offense, a Class A misdemeanor for a second offense committed within 5 years of the first conviction and a third degree felony for a third offense committed within five years of the first two convictions. They are also subject to deceptive trade practice action. Tex. Bus. & Com. Code §§ 621.251, 621.252.
Utah – The state Attorney General can seek a permanent restraining order or bring criminal charges for violations of the lottery laws. Utah Code Ann. § 13-28-8; Ga. Code Ann. §§ 16-12-21, 10-1-393(b)(16)(N).