Miller's Office is investigating whether mailings mislead older Iowans to believe they have won or are close to winning, and that they must make a purchase.
The investigation is under way, according to the application, "because it appears that features of the course of solicitation conducted by American Family may be unfair, deceptive, misleading, or otherwise unlawful" under Iowa's Consumer Fraud Act.
The filing is not a suit alleging fraud or misrepresentation, but is an application asking the Court to enforce the Attorney General's "Demand for Information" that was issued March 18, 1998. The company has failed to produce substantial amounts of information requested by the Attorney General and has not produced information under oath.
The application, which was filed Friday in Polk County District Court argues that the company should provide additional investigative information regarding several concerns:
Chance of winning: The application says "it appears that American Family sweepstakes mailings are intentionally designed" to state or imply that the recipient has won a prize or is in a select group or is close to winning.
The application acknowledges that American Family mailings contain disclaimers indicating the recipient is a potential rather than an actual winner. "However," it says, "such disclaimers appear to be undermined and overborne by contrary messages conveyed by other parts of such mailings with clever presentation and greater emphasis, and by other mailings. Furthermore, the disclaimers were totally ineffective with many vulnerable consumers who truly believed that they had won a valuable prize or who believed that they were among a select group of individuals with a good chance of winning. From a review of the solicitations, American Family appears to have designed and targeted its solicitations and/or repeat solicitations to these vulnerable consumers to foster this belief."Need to make a purchase. By law, sweepstakes may not require a purchase for persons to enter, but the application argues that American Family Publishers "repeatedly makes representations that state or imply that, in fact, a purchase is required to win the sweepstakes."
Resolicitations and multiple billings. The application states: "With tens of millions of mailings per year, American Family is able to locate and target for resolicitation the most vulnerable consumers, either intentionally or with careless disregard for the actual effect of their solicitation scheme. After identification, America Family repeatedly resolicits vulnerable consumers for further orders and entries in sweepstakes they have already entered. It appears that American Family resolicits vulnerable consumers even after American Family or its agents know or should know that the consumer is being misled by the sweepstakes mailings."
On multiple billings, the application states: "Once a sweepstakes entry with an order is received by American Family, American Family promptly directs an invoice to the consumer. Within days of the first bill being mailed, a second invoice is mailed to the consumer. If the consumer mistakenly pays both invoices, American Family appears to simply treat the second payment as a separate order and/or renewal without notifying the consumer or attempting to determine why a second payment was made or why the consumer would renew a magazine they just subscribed to and had not yet received. This billing scheme can be confusing to vulnerable consumers, particularly the elderly."
The Demand for Information sought information such as identifying Iowans who had made frequent or high-value purchases from American Family, providing information about the company's billing practices, test mailings, complaints, and information the company has on persons who appear to have been misled or mistaken about sweepstakes operations.
The application cited examples of older Iowans who had placed orders for dozens of magazines and other products in 1997 and 1998 in the belief that they were close to winning sweepstakes and that they had to make purchases to enter.
The application asks the Court to order American Family to comply with the Attorney General's Demand for Information, and to prohibit the company from advertising and marketing in Iowa until it has complied.
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