Posted on December 12, 2010 by David Oxenford

FCC Fines Another Broadcaster For Not Announcing All Rules of a Contest - While One Broadcaster Protests

In recent years, the FCC has been to aggressively enforcing a policy requiring broadcasters to announce all material rules of a contest on the air enough times for a reasonable listener to hear the announcements.  This past week, there was yet another case where this policy was enforced, resulting in a $4000 fine to a broadcaster.  While the FCC continues to enforce this policy, at least one broadcaster has reportedly decided that a fine for not having broadcast of the material rules of a contest is not justified, and is apparently ready to take the FCC on in Court in a case where the FCC tries to enforce a fine issued several years ago.

The newest fine involved a station in Cleveland, which ran a contest called "Who Said That" where a clip of the voice of a sports figure was played on the air.  The first person to be able to identify the speaker won a prize.  Apparently, if no prize was awarded, a new prize was added each week until the voice was identified, when the winner would get all of the accumulated prizes.  In this case, the station ran an announcement about the rules regularly until the station aired a clip that was not identified for some time.   As the clip remained unidentified over the course of many weeks, and then many months, the station apparently became less rigorous about announcing the rules.  But, more importantly to the FCC, the station did not announce on the air all of the prizes that had accumulated, nor did it announce that some of the prizes had become unavailable and had been replaced over time by prizes of what the station considered to be of an equivalent value.  As the station had not announced the "extent, nature and value of the prizes," the FCC found the station to be in violation - even though the right to substitute prizes of equal value was contained in the written rules published by the station.

Given that the station had announced many of the terms of the contest, and had written rules that appeared to cover the situation at hand, some may view this fine as being unnecessarily strict.  The FCC rule dealing with broadcast contests, Section  73.1216, requires broadcast of the "material terms" of a contest "periodically" on the station.  Material terms include those terms "which define the operation of the contest and which affect participation therein."  According to the rule, these factors include, but are not limited to:

  • How to enter or participate
  • Eligibility restrictions
  • Entry deadline dates
  • When prizes can be won
  • The extent, nature and value of the prizes
  • The basis for the valuation of the prizes
  • Time and means of selection of the winner(s)
  • Tie-breaking procedures

Summaries of some of the other cases where the FCC enforced this policy, fining stations for ambiguities in contest rules or the failure to broadcast the material rules, can be found here, here and here. 

Apparently, at least one broadcaster, Entercom Communications, has decided to challenge this interpretation of the rules.  Entercom was fined by the FCC for not announcing all material rules for a contest on the air, but it did not pay the fine.  If a party does not voluntarily pay an FCC fine, the FCC cannot itself collect the fine or otherwise penalize the station for nonpayment, unless the Department of Justice brings a lawsuit and secures a judgment to collect the fine.  Here, DOJ brought that suit, and the licensee has, according to trade press reports, continued to appeal the ruling and to contest the collection action arguing that the FCC should not fine a station simply for not announcing all the rules on the air.  While we will see where that challenge goes, the FCC seems intent on enforcing the rule.  So make sure that the appropriate announcements are run on air for any contest that your station conducts. 
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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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