Articles Posted in Contests & Promotions

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others.  This month’s issue includes:

  • Texas Wholesaler Fined $22,000 for Using Signal Jamming Device
  • Florida Broadcaster Hit with $125,000 Penalty Over Allegations of Antenna Lighting and Contest Rule Violations
  • FCC Announces Pirate Radio Enforcement Will Target Property Owners and Managers

Texas Wholesale Company in a Jam: Illegal Signal Blocking Device Leads to $22,000 Fine

In a recent Memorandum Opinion and Order, the FCC upheld a $22,000 fine against a consumer goods wholesaler based in Dallas for operating a prohibited cellular signal blocking device, referred to as a signal jammer.

Signal blocking devices can significantly disrupt emergency calling capabilities, and consumer communications more generally, and are therefore banned under the Communications Act and FCC rules.  Section 301 of the Communications Act prohibits radio transmissions without prior FCC authorization, and Section 333 prohibits willful or malicious interference with any licensed or authorized radio communications.  Additionally, Section 302(b) prohibits the manufacture, import, sale, shipment, or use of devices capable of causing harmful interference to authorized radio communications.  Sections 2.805 and 15.1(c) of the FCC’s Rules, implementing Section 302(b), require radio frequency devices to be authorized by the FCC before operation.

In response to a complaint from a cellular company, FCC investigators made an on-site visit in April 2017 to examine interference issues reportedly caused by a signal jammer.  The cellular company claimed that the jammer was likely located on the premises of a Dallas-area wholesale business that, according to the company, had a history of causing interference from the use of signal jammers.  When the investigators arrived, however, they found no jamming device in use.  In discussions with the investigator, the wholesale business owner admitted to operating a signal jammer to prevent employees from using their mobile phones while at work, acknowledged that in February 2017 a representative of the cellular company had warned the wholesaler against using such devices, and claimed that the device had been discarded prior to the investigator’s arrival.  The owner refused to relinquish the device and instead offered to sell the signal jammer to the investigator.   After declining the offer, the investigator issued a Notice of Unlicensed Radio Operation, informing the wholesaler that the use of a signal jammer is illegal.

In July 2017, the Enforcement Bureau issued a Notice of Apparent Liability (NAL) and proposed a $22,000 fine against the wholesaler for use of a signal jamming device.  The wholesaler responded to the NAL, denying that the investigator asked the owner to retrieve the device from the trash, and arguing that the Bureau misapplied the law in calculating the proposed fine amount.  The Bureau considered and rejected the wholesaler’s arguments and imposed the $22,000 fine.

In May 2018, the wholesaler filed a Petition for Reconsideration challenging the fine, citing its history of compliance and offer to surrender the device, and denying that the owner offered to sell the jammer to the investigator.  In the recent Memorandum Opinion and Order, the Bureau again considered and rejected the wholesaler’s arguments.  Applying its procedural rules, the Bureau noted that the Petition raised new facts and arguments that could have been raised in response to the NAL, and therefore dismissed them as procedurally barred, denying the request for a reduction of the fine.  The Bureau also noted that, even if it were to consider the new facts and arguments presented, it would dismiss the arguments on the merits due to the lack of any compliance history with the FCC as a non-license/authorization holder, insufficient evidence regarding relinquishment of the jamming device, and conflicting statements regarding the offer to sell the jamming device to the investigator.  The wholesale company now has 30 days from the release of the Memorandum Opinion and Order to pay the full $22,000 fine.

Florida FM Broadcaster’s Tower Lighting and Contest Rule Troubles Lead to $125,000 Penalty

The Enforcement Bureau entered into a Consent Decree with the licensee of Panama City and Tallahassee-area FM stations to resolve two investigations into contest and tower lighting violations.

The Communications Act and FCC rules regulate on-air contests conducted by television and radio stations to protect the public against misleading and deceptive practices.  Section 73.1216 of the FCC’s Rules provides that a licensee must “fully and accurately disclose the material terms” of a contest it broadcasts, and conduct the contest “substantially as announced and advertised.”  Under Section 73.1208, broadcasters must disclose if program material was previously taped, filmed, or recorded where “time is of special significance,” or “an affirmative attempt is made to create the impression that it is occurring simultaneously with the broadcast.”

Part 17 of the FCC’s Rules, along with Federal Aviation Administration (FAA) regulations, set forth monitoring and notice obligations regarding tower lighting systems.  The rules require the owner of an antenna structure to immediately notify the FAA of any lighting outages or other lighting malfunctions.  Tower owners must also notify the FCC within 5 days of any change to the tower’s height or ownership. Continue reading →

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Settles with Six Major Radio Groups Over Political File Violations
  • Texas Radio Stations Face Proposed Fines for Contest Rule Violations
  • $15,000 Fine Proposed for LPFM Station Airing Commercial Ads

Continue reading →

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others.  This month’s issue includes:

Headlines:

  • Alabama FM Licensee Admits to On-Air Contest and Unauthorized Transfer of Control Violations
  • Silicon Valley Start-Up Agrees to Pay $900,000 Penalty for Unauthorized Satellite Launches
  • Michigan AM Licensee Faces Proposed $18,000 Fine and Reduced License Term for a Variety of Violations

No-Win Situation: FM Licensee Settles with FCC Over On-Air Contest and Unauthorized Transfer of Control Violations

The FCC’s Enforcement Bureau entered into a Consent Decree with the licensee of an Alabama FM radio station for violating the FCC’s rules governing on-air contests and transfers of control.

The FCC regulates licensee-conducted contests in order to protect the public against deceptive and misleading practices.  Section 508 of the Communications Act (“Act”) prohibits a licensee from knowingly deceiving the public by manipulating or predetermining the results of a contest.  Section 73.1216(a) of the FCC’s Rules requires a licensee to “fully and accurately disclose the material terms of the contest” and the contest must be conducted in accordance with those announced terms.

Section 310 of the Act and Section 73.3540 of the FCC’s Rules prohibit the transfer of control of a broadcast license without prior FCC approval.  A de facto transfer occurs when a licensee no longer retains ultimate control over vital aspects of a station’s operations, including its programming, personnel, and finances.

In August 2016, the FCC received a complaint alleging that the licensee “prematurely ended” an on-air contest and failed to award the advertised prizes. According to the complaint, the station instead kept the prizes and provided them to its own employee.

The Enforcement Bureau responded nearly a year later by issuing a Letter of Inquiry (“LOI”) to the licensee seeking information about the contest. In its response, the licensee denied any knowledge of the contest nor was it was able to find any records related to the contest.  According to the Consent Decree, the licensee’s professed lack of knowledge about the contest “raised questions about the Licensee’s control over the Station.”  As a result, in July 2018, the Enforcement Bureau issued a supplemental LOI to the licensee investigating the apparent de facto unauthorized transfer of control to the third party that conducted the contest, who had a time brokerage agreement with the station.  According to the FCC, it had not approved, nor had the licensee applied for, a transfer of control of the license.

To resolve the FCC’s investigation, the licensee entered into a Consent Decree with the Enforcement Bureau.  Under the terms of the Consent Decree, the licensee agreed to (1) admit liability for violations of the FCC’s contest and unauthorized transfer of control rules; (2) pay a $12,000 civil penalty; and (3) develop and implement a compliance plan to prevent further violations of the FCC’s Rules.

Space Oddity: Start-Up Agrees to Pay $900,000 to Settle Investigation into Unauthorized Satellite Operations

After a bizarre string of events involving unauthorized communications satellites, space launches from India, and experimental weather balloons over California, the FCC entered into a Consent Decree with a Silicon Valley satellite start-up.

Section 301 of the Act and Section 25.102 of the FCC’s Rules prohibit the operation of any device for the transmission of energy, communications, or signals by space or earth stations unless in accordance with an FCC authorization.  Section 25.113 of the FCC’s Rules requires FCC authorization before deployment and operation of a space satellite. Continue reading →

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The FCC’s new Licensee-Conducted Contest Rule became effective this past Friday.  Under the new rule, a broadcast licensee conducting a contest still has the obligation to disclose the material terms of the contest “fully and accurately” and to conduct the contest substantially as announced.  However, as we wrote last September, the new rule allows broadcasters to meet these requirements by posting the contest terms on their websites rather than reading them on-air.  To take advantage of this new flexibility, broadcasters must:

  • Post the terms on the station’s or licensee’s website, or if neither the station nor the licensee has a website, on a free website that is available to the public 24/7, without registration;
  • Broadcast the website address with sufficient information for a consumer to find the terms easily, using simple instructions or natural language;
  • Broadcast the website address periodically throughout the term of the contest;
  • Establish a conspicuous link or tab on the home page of the website that takes consumers to the contest terms;
  • Maintain the terms on the website for at least 30 days after the contest has ended and conspicuously mark those that are expired, including the date a winner was selected;
  • On the rare occasions that a change in terms occurs during the contest, announce the changes on-air within 24 hours and periodically thereafter, and direct participants to the written terms on the website; and
  • Assure that the contest rules posted online conform to those announced on-air.

The effective date of the new rule has been eagerly anticipated by broadcasters as the change grants them more flexibility in announcing contest terms, avoids long and complicated contest announcements on-air, and permits participants to review the rules at their leisure.  However, in making the change, the FCC noted that “[a]s with all elements of contest-related announcements, the burden is on the broadcaster to inform the public, not on the public to discern the message.”

Indeed, the law views the rules of a contest or sweepstakes to be a contract between the sponsor (station) and anyone who enters the contest, or even anyone who tries to enter and fails to do so successfully.  If the sum total of your on-air contest rules are “be the 103rd caller after X song is played” and a vague “station policy” somewhere on the website that says you can only win once every 30 days, you have left a lot out of your “contract.”  For example, when a station ran a contest on-air like the one above and did not get many callers, the DJ simply awarded the prize to the last person to call in after hours of trying to attract more callers.  The station was fined by the FCC because it did not run the contest substantially as advertised.  Properly written contest rules should account for such situations, as well as other foreseeable developments, such as the phone lines going down after the trigger song has been played.  A station with contest rules that don’t address likely (or even unlikely) contest developments is inviting challenges from both contestants and regulators.

In that regard, as we noted in FCC Proposes to Clear Airwaves of Boring Contest Disclosures, But State Issues Remain, stations should remember that the FCC is not the only regulator watching out for contest and sweepstakes violations.  For example, some states’ contest laws require that all announced prizes be awarded in order to prevent “bait and switch” contests.  For stations giving away “time sensitive” prizes such as concert tickets that have to be used on a specific date, the rules should address the situation where a winner is chosen but then turns down the prize or simply does not claim it because they cannot attend on the date specified.  If the rules say that an alternate winner will be chosen after 10 days, there may not be enough time left before the concert to award the prize.  The station with poorly written contest rules must then choose between violating the law by failing to award a prize, or violating the law by failing to conduct the contest in accordance with the announced rules.  Badly-drafted contest rules are a liability for any business, but are worse for broadcasters, as in addition to all of the state and federal laws governing contests, broadcasters are uniquely subject to the FCC’s contest oversight as well.

Finally, while you might imagine that contest complaints come from those who lost the contest (and indeed they often do), many come from contest winners.  While professional contestants who enter every contest will complain about the valuation placed on a prize for tax purposes, first-time winners are more likely to complain about having to sign a release to claim the prize, or where the prize is large, having to provide the station with their Social Security Number, appear in person, or attend a further event, such as the day when all the winners of keys must try them out in the grand prize car.  These obligations need to be clear in the contest rules, not just to avoid liability, but to ensure the station is able to get the promotional value it anticipated from the contest.  Contestants who demand anonymity and refuse to sign releases greatly undercut the promotional value of a big contest.

The bottom line is, now that the FCC will let you post your rules online for contestants and regulators to scrutinize, you need to ensure you have rules that can withstand scrutiny.

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[UPDATE:  The FCC just released its Report and Order defining the requirements for stations wishing to meet their contest disclosure obligations by posting their contest rules online.  The revised FCC rule requires a licensee to (i) broadcast the relevant website address periodically with information making it easy for a consumer to find the material contest terms online; (ii) establish a link or tab to material contest terms on the website’s home page; (iii) maintain contest terms online for a minimum of thirty days after the contest ends; and (iv) where applicable, within 24 hours of a material change in contest rules (and periodically thereafter), announce that the material terms have changed and direct participants to the website to see the changes. 

The FCC also noted that the “relevant website” for posting rules should be the station’s or licensee’s website or, if there is no station or licensee website, then any other website that is “designed to be accessible to the public 24/7, for free, and without any registration requirement.”

In the Report and Order, the FCC agreed with commenters that a literal interpretation of the “complete and direct” website announcement requirement would be unduly burdensome for broadcasters and confusing to the public.  It therefore concluded that broadcasters could satisfy the requirement by identifying the relevant address “through simple instructions or natural language (e.g., ‘for contest rules go to kxyz.com and then click on the contest tab’).”

The Report and Order did not, however, shine any light on how frequently a broadcaster must announce the web address.  Instead, the FCC decided that “the public interest would be better served by providing licensees with flexibility to determine the frequency with which they broadcast the website address where contest terms are made available to the public.”  The FCC cautioned, however, that if it finds “that licensees are failing to broadcast the website address with adequate frequency,” the Commission will revisit the issue in the future.]

[EARLIER POST BELOW]

As we wrote last month, the agenda for the FCC’s September open meeting included consideration of its proposal to modernize the 40-year-old broadcast contest rule. Today, after more than three and a half years of (unopposed) anticipation, the FCC adopted rules that “allow broadcasters to disclose contest rules online as an alternative to broadcasting them over the air.”

As the FCC has not released the text of its decision yet, the precise form of disclosure that will be required is not fully known.  However, it appears the FCC did hear the suggestions made by numerous commenters regarding how often a station must air the web address for contest rules. The FCC’s original proposal would have required that the online location of the full contest rules be mentioned every time the contest itself is mentioned.  Numerous parties complained that such an approach would clutter the airwaves with repetitive mentions of the website address where the rules could be found, and would be of little use to a public well-attuned to finding information on the Internet.

Today’s Public Notice hints that less frequent website mentions will be adequate, stating that broadcasters will be required only to “periodically announce over the air the website address where their contest rules can be found.”  Once the text of the rules is released, broadcasters will learn if the FCC has provided any guidance as to how often a “periodic” announcement must run.

Also left open until the text of today’s decision arrives is the issue of whether the FCC will stick with its original proposal that “the complete and direct” website address (e.g., “http://www.WXYZ.com/contest123/rules”) be aired, or if broadcasters will instead be allowed to use a shorter web address, such as the station’s main website, where a link to the contest rules can be found.  In either case, we would expect the FCC will require that a link to the contest rules be featured prominently on a station’s website.

While today’s action still permits broadcast stations to comply with the rules by airing the material terms of a contest on-air, it opens up an additional option that many stations will prefer to use, if for no other reason than to put an end to debates at the FCC about whether what a station aired constituted the “material terms” of a contest’s rules.  That has been a major subject of FCC enforcement decisions related to station-conducted contests, and one that should go away if the station has posted the full contest rules online.  As a result, the main focus of any FCC investigation involving a station contest will likely be limited to whether the station followed its published rules in conducting its contest.  That is a far more objective question, and should eliminate some of the risk that has been inherent in running a station contest for the past 40 years.

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As we wrote last month, the agenda for the FCC’s September open meeting included consideration of its proposal to modernize the 40-year-old broadcast contest rule. Today, after more than three and a half years of (unopposed) anticipation, the FCC adopted rules that “allow broadcasters to disclose contest rules online as an alternative to broadcasting them over the air.”

Continue reading →

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The FCC today released a tentative meeting agenda for its September 17, 2015 Open Commission Meeting.  The agenda includes consideration of a Report and Order granting broadcasters greater flexibility in making rule disclosures required by the FCC for station-conducted contests.

As we posted here and here, the Commission previously adopted a Notice of Proposed Rulemaking looking to “modernize” its nearly 40-year-old station-conducted contest rule.  The current rule requires broadcasters conducting a contest to “fully and accurately disclose the material terms of the contest” by airing them a “reasonable” number of times.  As readers of our Enforcement Monitor know, differing opinions on what is “material” and “reasonable” have led to numerous FCC enforcement actions, typically resulting in $4,000 fines.

The NPRM proposed to alleviate some of that confusion by allowing broadcasters to post contest rules on any publicly accessible website and then announce the web address on-air in lieu of broadcasting the rules themselves.  In addition to easing the burden on broadcasters, who must often resort to speed reading contest rules on-air to cover all material terms while putting their audiences to sleep in the process, the proposed rule will give audience members the opportunity to review the contest rules at a more leisurely pace and at their convenience on the Internet.

The key question that remains is what the Commission’s Report and Order will say regarding how often a station must air the web address for the contest rules.  The NPRM originally proposed including the contest rule web address with every mention of the contest, which could clutter the airwaves even more than the current rule’s requirement to air all of the material terms a reasonable number of times.  Commenters in the proceeding pushed back, suggesting less frequent website mentions, and asking the FCC to modify its NPRM proposal that each mention include “the complete and direct website address” to instead allow use of a shorter web address (e.g., the station’s main website) where a link to the contest rules can be found.

The Report and Order under consideration has been a long time coming.  The original petition for rulemaking was filed in January of 2012 and encountered no opposition, with all parties seeing the benefit of maximizing the respective strengths of broadcasting and the Internet in conducting a contest.  With the ability to easily post the full contest rules online, station licensees will no longer need to stress over which contest rules are “material”, and audience members will no longer have to be speed readers (or speed listeners) to participate in a station-conducted contest.

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FCC Chairman Wheeler released a blog post today discussing a number of changes and proposed changes to rules impacting TV and radio broadcasters. While his blog contained good news for the radio industry, TV broadcasters are likely to be less pleased.

On the TV side there are two major initiatives. First, the Chairman is proposing to his fellow Commissioners that the FCC adopt an order eliminating what he termed “outdated exclusivity rules”–the FCC’s network non-duplication and syndicated exclusivity rules. These “non-dup” and “syndex” rules, as they are more commonly known, essentially provide a process by which TV broadcasters can efficiently implement the geographic exclusivity they negotiated in their programming agreements without the need for expensive court actions.  The purpose of these rules is to prevent multi-channel video program distributors (MVPDs) from violating that exclusivity by importing the exclusive programming from out-of-market TV stations.

These rules are of particular importance during retransmission negotiations, since without such rules, MVPDs could import, for example, a distant affiliate of the same network (one which obviously did a poor job of negotiating its own retransmission agreement) to violate the local station’s exclusivity.  With the rule change proposed by the Chairman, the local station could no longer quickly and efficiently resolve the problem by filing a complaint at the FCC. Instead, it would need to initiate a long and costly court battle that would inevitably pull in (1) the distant affiliate, and (2) the network whose contract the distant affiliate breached by entering into a retransmission agreement exceeding that affiliate’s geographic right to the network’s programming.

It’s not hard to understand why an MVPD would like blocking the importation of exclusive programming to be a complex, time-consuming, and expensive proposition for a local TV station, but it’s less clear why the federal government would want to create a less efficient process that further clogs up the courts with multi-party litigation.  The obvious answer is that it is not merely a procedural change, but one meant to alter the balance of substantive rights that existed when Congress created the retransmission consent process.

The second major TV-related item is the Chairman’s circulation among his colleagues of a Notice of Proposed Rulemaking (NPRM) to review the process used to determine whether broadcasters and MVPDs are negotiating retransmission consent rights in “good faith”. The purpose of the good faith regulations is to determine whether a party is negotiating with an intent other than that of reaching a deal (e.g., stalling for time).  To implement this requirement, the FCC created a list of bad faith tactics that are prohibited (for example, refusing to show up for negotiations), as well as a “totality of the circumstances” test which seeks to determine whether a party’s conduct as a whole indicates that the party has not made “good faith” efforts to reach a deal.

While only cable systems have been found to have engaged in bad faith negotiations by the FCC, the MVPD industry has long sought to alter the traditional meaning of “good faith” in an effort to limit certain negotiating tactics that have nothing to do with whether a party is intent upon reaching a deal.  Indeed, the focus has been on limiting the negotiation options available to broadcasters, even where, perversely, the result would be longer MVPD program blackouts.

The NPRM proposed by Chairman Wheeler, responding to a congressional directive to examine the matter, will apparently seek to alter the FCC’s approach to determining whether parties are engaging in good faith retransmission consent negotiations. Networks, local TV stations, and MVPDs all will no doubt eagerly await release of this NPRM to determine how the FCC’s proposals are likely to affect negotiating leverage and fees in the retransmission consent world–an odd result given that Chairman Wheeler’s blog post said the reason for eliminating the network non-dup and syndex rules is to “take [the FCC’s] thumb off the scales” in retransmission negotiations.

Call us cynics, but we’ll be surprised if “importing a station into a market where that station has no program rights” joins the list of bad faith negotiating tactics, even though it is the epitome of seeking a way around entering into an agreement with the local broadcaster.

From the broadcast industry’s “glass is half full” perspective, the Chairman’s blog post also indicated that the FCC will soon conclude a nearly four-year effort to update the FCC’s station contest rule.  That rule requires broadcasters to regularly describe the material terms of station contests on-air.  After long consideration, it appears the FCC will allow contest rules to be posted online as an alternative to speed-reading contest rules on-air. We earlier wrote about this proceeding at various stages in FCC Proposes to Clear Airwaves of Boring Contest Rules, But State Law Issues Remain and Bringing the FCC’s Contest Rule Up to Date. This rule change has had broad support, and while applicable to both TV and radio, is of greater practical importance to the radio industry, which tends to run more station contests and doesn’t have the option of airing written rules onscreen.

Finally, following up on his promise before the NAB Show in April, Chairman Wheeler indicated that he will also recommend to his colleagues that the FCC move forward with adopting several proposals in the 2013 AM Revitalization NPRM. This was a hot topic at the NAB Show in Las Vegas earlier this year when the Chairman signaled that the establishment of a window specifically for AM stations to apply for FM translators was essentially off the table, as Scott Flick wrote last April. Most considered an AM-only filing window to be the most practical and effective path to AM revitalization, particularly for AM daytime-only stations.  In fact, the outcry in response to the Chairman’s dismissal of that option appeared to have stalled the AM Revitalization proceeding. While it looks like AM radio broadcasters can expect some relief from the FCC soon, most will be watching to see if an FM translator window for AM stations is part of that relief.  Regardless, today is one of those days where you’d rather be a radio station than a TV station.

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It is an unusual occasion indeed when the FCC offers to revise its rules to provide regulatory relief to both television and radio stations. Yet that is precisely what the FCC proposed in a Notice of Proposed Rulemaking (NPRM) to update its station-conducted contest rule to allow broadcasters to post contest rules online rather than broadcast them. As the proposal now stands, stations would no longer need to broadcast the contest rules if they instead announce the full website address where the rules can be found each time they discuss the contest on-air.

The FCC’s current contest rule was adopted back in 1976 when broadcasters could only provide contest information via printed copies of the rules available at the station or by announcing the rules over the air. The FCC’s existing rule states that broadcasters sponsoring a contest must “fully and accurately disclose the material terms of the contest” on-air, and subsequently conduct the contest substantially as announced. (For a refresher on the contest rule, you can take a look at the Pillsbury Advisory drafted by Scott Flick covering a number of on-air rules, including the contest rule, here). A note to the rule explains that “[t]he material terms should be disclosed periodically by announcements broadcast on the station conducting the contest, but need not be enumerated each time an announcement promoting the contest is broadcast. Disclosure of material terms in a reasonable number of announcements is sufficient.” The challenge for broadcasters has been airing the material terms of each station contest on-air a “reasonable number” of times without driving audiences away.

In the NPRM, the FCC acknowledged that things have changed since 1976, and that the Internet is now “an effective tool for distributing information to broadcast audiences.” More than three years ago, Entercom Communications filed a Petition for Rulemaking advancing the notion, among others, that the FCC should let broadcasters use their websites to post contest rules instead of having to announce them over the air. Not surprisingly, the Entercom proposal received a great deal of support and it remains unclear why the FCC waited so long to act on it.

The proposed rule would allow stations to satisfy their disclosure obligations by posting contest terms on the station’s Internet website, the licensee’s website, or if neither the individual station nor the licensee has its own website, any Internet website that is publicly accessible. Material contest terms disclosed online would have to conform with any mentioned on-air, and any changes to the material terms during the course of the contest would have to be fully disclosed on-air and in the rules as posted on the website.

Comments on the FCC’s proposals were due this week and it seems most parties are on the same page as the the FCC; namely, that it is the 21st century and the contest rule should be modernized to keep up with the times. In fact, Entercom in its comments asks the Commission to permit stations to announce contest website information an average of three times per day during a contest as an effective way to announce contest information to to public.

While this is generally good news for broadcasters, there is a catch or two. Under the new rule, stations that choose to disclose their contest rules online would be required to announce on-air that the rules are accessible online, and would also be required to announce the “complete, direct website address where the terms are posted … each time the station mentions or advertises the contest.” For stations that promote (or even mention) their contests frequently, this could become a pain really quickly, for both the station and their audience. Listening to a complete and lengthy URL “each time” anything regarding the contest is uttered on the air will grow old fast. There is a reason you rarely hear an ad that contains more than just the advertiser’s domain name, as opposed to the full address for a particular link from that domain. Advertisers know that people will remember a home page domain name much better than a full URL address, and that the full URL address will only cause the audience to tune out, both literally and figuratively.

In light of these concerns, Pillsbury submitted comments this week on behalf of all fifty State Broadcasters Associations urging the Commission to simplify matters by exempting passing on-air references to a contest from any requirement to announce the contest rules’ web address. Additionally, rather than require the broadcast of a “complete and direct website address,” which is typically a lengthy and easily forgettable string of letters and punctuation, the State Broadcasters Associations’ comments urged that the rule only require stations to announce the address of the website’s home page, where a link to the contest rules can be found. Those on the Internet understand quite well how to navigate a website, and will have little difficulty locating contest rules, either through a direct link or by using a site’s search function.

As Lauren Lynch Flick, the head of Pillsbury’s Contests & Sweepstakes practice, noted in a November 2014 post, station contests also must abide by applicable state law requirements. In that vein, the State Broadcasters Associations reminded the Commission that any FCC micro-management of the manner or format of a station’s online contest rule disclosures could subject stations to dueling federal and state requirements with no countervailing benefit. As pointed out in her post, an improperly conducted contest can subject a station to far greater liability under consumer protection laws and state and federal gambling laws than the typical $4,000 fine issued by the FCC for a contest violation. As a result, broadcasters need no further incentives to make sure their contests are fairly run and their rules fully disclosed to potential entrants.

In short, the FCC has an opportunity to ease the burden on both broadcasters and their audiences by allowing stations the flexibility to elect to make their contest rule disclosures online. The FCC shouldn’t diminish the benefit to be gained by reflexively imposing unnecessary restrictions on that flexibility.

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At its Open Meeting this morning, the FCC adopted a Notice of Proposed Rulemaking to “modernize” its station-conducted contest rule, which was originally adopted in 1976. The proposal would allow broadcasters to post the rules of a contest on any publicly accessible website. Stations would no longer have to broadcast the contest rules if they instead announce the full website address where the rules can be found each time they promote or advertise the contest on-air.

Currently, the FCC’s rule requires that broadcasters sponsoring a contest must “fully and accurately disclose the material terms of the contest” and subsequently conduct the contest substantially as announced. A note to the rule explains that “[t]he material terms should be disclosed periodically by announcements broadcast on the station conducting the contest, but need not be enumerated each time an announcement promoting the contest is broadcast. Disclosure of material terms in a reasonable number of announcements is sufficient.”

Of course what terms are “material” and what number of announcements is “reasonable” have been open to interpretation. A review of many past issues of Pillsbury’s Enforcement Monitor reveals numerous cases where a station was accused of having failed to disclose on-air a material term of a contest, or of deviating from the announced rules in conducting a contest. Even where a station’s efforts are ultimately deemed sufficient, the licensee has been put in the delicate position of defending its disclosure practices as “reasonable,” which has the effect of accusing a disappointed listener or viewer of being “unreasonable” in having not understood the disclosures made.

Adopting the rule change proposed by the FCC today would simplify a broadcaster’s defense of its actions because a written record of what was posted online will be available for the FCC to review. Accordingly, questions about whether the station aired the rules, or aired them enough times for the listener/viewer to understand all the material terms of the contest would be less important from an FCC standpoint. Instead, the listener/viewer will be expected to access the web version of the rules and benefit from the opportunity to review those rules at a more leisurely pace, no longer subjected to a fast-talker recitation of the rules on radio, or squinting at a mouseprint crawl at the bottom of a television screen. While the FCC’s willingness to accept online disclosures is certainly welcome, the question of what disclosures must be made in the first instance remains. In fact, the FCC asks in the NPRM whether its rules should dictate a set of “material” terms to be disclosed online.

In our Advertising and Sweepstakes practice, we frequently advise sponsors of contests and sweepstakes on how to conduct legal contests, including the drafting of contest rules and the sufficiency of the sponsor’s disclosure of those rules in advertisements. In addition to the FCC’s rule requiring disclosure of “material” terms, the consumer protection laws of nearly every state prohibit advertising the availability of a prize in a false or misleading manner. What terms will be “material” and essential to making a disclosure not false or misleading is a very fact-specific issue, and will vary significantly depending on the exact nature of the contest involved. As a result, regardless of whether the FCC dictates a prescribed set of “material” terms to be disclosed, the terms will still have to satisfy state disclosure requirements.

The FCC (with regard to station-conducted contests) and state Attorney Generals (with regard to all contests and sweepstakes) investigate whether contests and sweepstakes have been conducted fairly and in accordance with the advertised rules. These investigations usually arise in response to a consumer complaint that the contest was not conducted in the manner the consumer expected. Many of these investigations can be avoided by: (1) having well-drafted contest rules that anticipate common issues which often arise in administering a contest or sweepstakes, and (2) assuring that statements promoting the contest are consistent with those rules.

While, as Commissioner Pai noted, the public does not generally find contest disclosure statements to be “compelling” listening or viewing, and may well change channels to avoid them, the individual states are going to continue to require adequate public disclosure of contest rules, even if that means continued on-air disclosures. If the FCC’s on-air contest disclosure requirements do go away, stations will need to focus on how state law contest requirements affect them before deciding whether they can actually scale back their on-air disclosures.

In fact, while a violation of the FCC’s contest disclosure requirements often results in the imposition of a $4,000 fine, an improperly conducted contest can subject the sponsor, whether it be a station or an advertiser, to far more liability under consumer protection laws and state and federal gambling laws. In addition, state laws may impose record retention obligations, require registration and bonding before a contest can commence, or impose a number of other obligations. As promotional contests and sweepstakes continue to proliferate, knowing the ground rules for conducting them is critically important. If the FCC proceeds with its elimination of mandatory on-air contest disclosures for station-conducted contests, it will make broadcasters’ lives a little easier, but not by as much as some might anticipate.