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!