WASHINGTON (2/16/09)—During these tough economic times, credit unions are trying to reach out to as many people as possible to provide reliable financial services, the Credit Union National Association’s (CUNA’s) Compliance Challenge
points out. But in the world of compliance issues, even such good intentions carry with them some potential pitfalls. For instance, the Challenge
says, take a look at what the compliance officer of ABC Community FCU found recently. ABC Community wants to run a series of promotions to increase both membership and the credit union’s visibility in the community. One idea is to send postcards to non-member households announcing a prize drawing for anyone who joins the credit union in the month of March. The credit union’s compliance officer reviews the state’s gaming law, but wonders whether there are any federal laws that might impact the contest mailings. After all, the credit union will be sending the postcards via the United States Postal Service. CUNA’s compliance crew says that the compliance officer has good instincts. ABC Community and those like it need to take a look at a federal law that went into effect in 2000: the Deceptive Mail Prevention and Enforcement Act (DMPEA). The law is intended to prevent deceptive practices in sweepstakes and contest mailings sent through the U.S. mail. The DMPEA covers sweepstakes mailings, skill contests, facsimile checks, and mailings made to resemble government documents. For example, the law prohibits:
* Claims that someone is a winner unless he’s actually won a prize; * Requirements that a person buy something to enter the contest or to receive future sweepstakes mailings. (Could this affect ABC’s contest mailer which requires contestants to sign-up for membership in order to enter the contest?); * Mailing fake checks that don’t clearly state that they are non-negotiable and have no cash value; and * Seals, names or terms that imply an affiliation with or endorsement by the federal government.
For skill contests, in which outcome depends on contestant’s skill rather than a game of chance, the law requires the contest’s sponsor to disclose in a clear and conspicuous way the terms, rules and conditions of the contest and an address where the consumer can reach the sponsor to request that his name be removed from the mailing list. But the law is far denser than that, CUNA warns. Credit unions that are contemplating conducting a sweepstakes or other types of contests should consult with an attorney familiar with both state gaming laws and the federal DMPEA.