Posted on January 20, 2012 by David Oxenford

$22,000 FCC Fine for Failure to Broadcast All Material Rules for a Station Online Contest

The FCC released a Notice of Apparent Liability proposing a $22,000 fine for a contest to win a car conducted by a cluster of five stations.  The contest (the award of a car to the entrant who produced the best commercial for the car, as voted on by website users) was conducted principally through the stations' websites.  But the stations did promote the fact that the contest was being conducted on the air.  A disappointed contestant accused the licensee of rigging the contest by awarding the prize to a friend of a station employee for a video that was entered after the official end of the contest.  The FCC totally rejected the basis of the complaint (finding no basis for the conclusion that favoritism had been shown - especially as voting for the winner was done by website visitors, not station employees).  Nevertheless, the FCC proposed the $22,000 fine for the failure to broadcast all of the material rules of the contest on the air.  This proposed fine reinforces two principles that we have written about in previous cases:

  1. You must provide all of the material rules of the contest in on-air announcements a sufficient number of times so that a listener could be expected to hear such announcements (see our article here about what are considered the "material terms" of a contest), and
  2. The rules for a contest that is primarily conducted through a station website must still be broadcast on the air if the fact that the contest is occurring on the website is promoted over the air (see our article on a previous case reaching the same conclusion).

Here, the licensee posted the rules of the contest online, which one might think would be sufficient, as all contestants entered online, and the winner was selected through online voting.  But the FCC felt that some of the information given on the air (and in the contest rules) about entry dates was somewhat ambiguous, and decided that, once a contest by a broadcaster is mentioned on the air, all the rules must be given on the air.  As the contest was conducted by multiple stations, the fine reflects a multiple of the FCC's standard $4000 fine for a contest rule violation. This decision seems to penalize a broadcaster for being a broadcaster, as a similar contest, had it been run by the car company instead of the station, could have been promoted and conducted in exactly the same way, and the FCC would not have penalized the station.  But according to the FCC's interpretation of Section 73.1216 of its rule regarding station contests, a station conducting a contest on its website, but promoted on the air, needs to be careful to publicize all of the material rules on the air avoid this FCC trap for the unwary. 

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Posted on August 25, 2010 by David Oxenford

A $4000 Fine After a Complaint About a Broadcast Contest - Make Sure that Contest Rules are Precise

In another sign of just how closely the FCC monitors contests conducted by broadcast stations, the FCC this week issued a Notice of Apparent Liability (a notice of a fine of $4000) to Nassau Broadcasting for being imprecise in the wording of the contest rules for a contest to be held at one of its stations.  In the rules of the contest, the station stated that entries would be accepted "through June 13, 2008."  In fact, the contest was conducted on the evening of June 12, and the station cut off entries to the contest on June 12.  When a listener went to enter the contest on June 13, and was told that she could not enter as the prize had already been awarded, the listener filed a complaint at the FCC.  The FCC, reading the language "through June 13" to mean that listeners could enter the contest up to and including that day, fined the licensee $4000 for misleading its listeners as to the proper rules for the contest it conducted.  This is another indication of just how seriously the FCC's Enforcement Bureau is taking the enforcement of Section 73.1216 of the Commission's rules, which requires licensees "to fully and accurately disclose the material terms" of any contests that it conducts, and to "conduct the contest substantially as announced or advertised."  Broadcasters need to be very precise in their wording of contest rules, and make sure that they carefully observe the details of the rules that they adopt.

In this case, it seems likely that the licensee was simply imprecise in its wording - stating that entries would be taken "through June 13" when it meant "before June 13."  This would have seemed evident from the fact that the rules said that the winner would be announced on the morning show on June 13.  Clearly, if the winner was going to be announced on the morning of June 13, it wouldn't do much good entering after that time.  But the ambiguity in the rules is construed by the FCC against the party who prepared the rules - as is evident from the finding in this case that these rules did not fully and accurately describe the rules of the contest (and actually holding the contest on the night of the 12th instead of the morning of the 13th probably didn't help much).  So what should a broadcaster do to make sure that this kind of ambiguity does not hit them in one of their contests?

Here are a couple of ideas:

  1. Carefully write the rules for the contest to state exactly what one needs to do to participate in the contest and to win the prize being given away (see our post here about another case where imprecise rules cost a station a fine).   Make sure to disclose any material benefits that will enhance anyone's chances to win a contest (like being a member of a loyal listener's club, who is told when a drawing will be held - see our post on that subject).
  2. Have several people read the rules as written to make sure that there are no ambiguities like the one that hit the licensee here.  Include an outsider in the review (a lawyer is always a good choice), as sometimes what seems evident in the rules to the people planning the contest is not so evident to someone looking at the rules from a fresh perspective.  But make sure to fully disclose to the reviewers exactly how you mean for the contest to work, so they can decide if what you explain to them is the same thing as what the rules say.
  3. Carefully conduct the contest in accordance with the rules.  Don't write the rules and forget them - as that can lead to trouble as is evident in this case, and has been the cause of other fines in past cases.
  4. Make sure that the contest rules are properly publicized.  As we have written before, the FCC requires that stations broadcast the material rules over-the-air enough that the station is confident that the average listener likely to participate in the contest will have had the opportunity to hear them.

Given the emphasis that the FCC has put on contests in the past few years, broadcasters need to conduct their contests carefully.  Especially when giving away something big that listeners will care about enough to complain to the FCC if they think that their chances to win have been compromised (like a car or backstage passes to a concert, or a trip or a valuable watch, as in the recent case), don't rely on stock contest rules that may govern your more routine casual giveaway (a new CD or a free donut at the local bakery to the 5th caller).   But be careful with any contest or give-away - as it is clear that the Commission is watching!
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Posted on April 4, 2010 by David Oxenford

Ambiguous Contest Promotional Announcements and Slow Award of Prize Each Cost Radio Stations $4000 FCC Fine

In two decisions released in the last two weeks, the FCC fined two radio stations $4000 each for perceived violations of its contest rules.  The first decision was based on a perceived ambiguity in the contest rules that did not make clear in broadcasts and in written rules that there would be only one winner in a contest.  In the second, the FCC faulted the licensee for not giving the prize away within 30 days of the contest end.  Both cases demonstrate the seriousness with which the FCC seems to take contest rules, especially the need for disclosure of all material terms to listeners, both in over-the-air announcements (see our post here on the need to broadcast the material terms of a contest) and in the written rules governing the contest.  Seemingly, ambiguities will be construed against the licensee and any material parts of the contest, including when the prize will be delivered must be clear the contestants.

In the first case, The Commission found that the licensee had not made clear in its on-air announcements and in its written rules that there would be only one prize awarded in the contest.  When one closely reads the case, what seems to come through most clearly is that the Commission is expecting licensees to document carefully that they have clearly provided the material rules of the contest on the air, sufficiently so that a reasonable listener would be aware of those rules.  In this case, the licensee was unable to document how often its announcements providing the rules were broadcast, or to conclusively say if they had ever been broadcast at all.  The contest was to give away a garage full of prizes, so it would seem that the nature of the contest itself made clear that there was going to be only one winner.  But the Commission concluded that there were not enough unambiguous statements that there would be but a single winner - thus prompting the fine.

The FCC review in this case was prompted by a listener disappointed that he had not won a prize, accusing the station of not publicizing the rules of the contest, and of "fixing" the winner.  While the Commission found no evidence that the results of the contest were in any way improper, the complaint still seemed to trigger an extremely close review of the rules.  While the licensee could provide evidence that there were spots that implied that there would only be one winner, they could not say how often (or even if) these spots actually ran on the air.  In addition, while the rules of the contest said in one place that there would be one winner, in other places those rule implied that there would be more than one winner (seemingly, though, this language came from contest boilerplate, but was included in the rules for this contest causing the Commission to point to the ambiguity).

The second case, the licensee took about 7 months to give away a prize.  The FCC said that its policies require a prompt award of a prize and, as there was no disclosure before the contest that the prize would not be awarded quickly, the licensee violated FCC policy by the late delivery of the prize.  Beyond the caution for stations to remember to award prizes quickly, the case also had discussion of two terms contained in virtually every FCC case dealing with fines - "willful" and "repeated."  In the FCC's view, a violation is willful if the licensee knew what it was doing, even if it did not know that the conduct was illegal.  So here, even though the licensee did not know of the 30 day rule, the fact that it held the contest and delayed giving away the prize was enough to make the violation willful.  Similarly, the violation was repeated, as each day the violation continued is a new violation - making that conduct "repeated."  The FCC rejected arguments that these terms were not being used correctly by the licensee.

So what's it all mean?  Once again, these cases emphasize the need for licensees to exercise great care in conducting contest.  Make sure that the contest rules are well designed and specifically written with the contest that you are conducting in mind.  Boilerplate language in contest rules can get you in trouble.  And remember to cover all eventualities in the rules - including what would happen if the prize is unavailable or delayed.  Then publicize the principal rules on the air and follow them carefully. The FCC is obviously watching how  you conduct your contests - so do it right!
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Posted on April 19, 2009 by David Oxenford

Another FCC Fine For Not Following Contest Rules - Disclose Any Benefits that Loyal Listeners May Get

Last week, the FCC fined yet another broadcaster for violations of its contest rules, issuing a fine of $4,000 to a station that had not disclosed to its listeners all of the material terms of a contest that it conducted on the air. In this case, the station promised a give-away of three cars, but in reality it was only awarding to winners a two-year lease for the cars, not actual ownership of the vehicles.  This is another in a series of recent fines for contests, so stations should be aware of the attention that the FCC is giving these issues. And this case should again remind broadcasters that they must disclose any practices that may affect the odds of winning of potential contestants - including any benefits that certain listeners, like members of loyal listeners clubs, might get that would improve their chances of winning a contest (see our post here on the Commission's discussion of what are the material terms of a contest). 

I recently attended a seminar put on by a noted broadcast program consultant, who was running through a series of great ideas for broadcasters to better connect with and retain their audience. In giving suggestions about how to build up a database of loyal listeners with whom the station could be in regular contact, the consultant suggested that stations tell their loyal listeners that they will get advance notification of the time to call in for certain station contests and give-aways, i.e. they would be alerted in advance when the station was getting ready to do a contest that would award a prize to a caller at a certain time.  While that certainly may provide an enticement to join the listener club, if that advance notice is not revealed to all potential contestants – both in written rules and, more importantly, in those rules that are announced on the air – those contestants who are not members of the listener club may well complain about the conduct of the contest. Reveal all aspects of the contest that might affect the odds of winning or the ease of entry – or, in addition to the prize given to the contest winner, the FCC may be getting its own award – in the form of a fine.

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