Sweepstakes' Seamier Side
The big magazine sweepstakes have been in the news a lot lately, amid charges that people are tricked into thinking they are winners or that they should buy something to better their chances.
Last week, a Senate committee focused in on the smaller sweepstakes operators, the little guys who take in millions by mail. CBS News Consumer Correspondent Herb Weisbaum reports.
"It is shameful to me what you are doing," said Sen. Carl Levin, D-Mich. "You are taking advantage of vulnerable people, gullible people, over and over and over again."
Two members of the sweepstakes industry found themselves in the Senate's hot seat this week. It's an industry accused of bilking Americans out of millions of dollars.
The committee focused not on the big name, multimillion dollar sweepstakes like those of Reader's Digest and Publisher's Clearinghouse, but on smaller players offering prizes of $5,000 or $10,000.
Instead of buying magazines, you are asked to send $10 or $20 for something called a redemption packet or a cash savings folio.
What you get for your money is a book of coupons, if you get anything at all.
"Clearly the intent, the design of these mailings is to deceive people into buying items that they don't really want, thinking that it will enhance their chances of winning a cash prize," said Sen. Susan Collins, R-Maine.
These mailings frequently appear to be from people with important-sounding names - people, who, as sweepstakes consultant Anthony Kasday admitted, don't really exist.
David Dobin sends out 5 million contest mailings a year. He pleaded guilty to federal charges involving a previous sweepstakes business but told the committee he's changed his ways.
Collins didn't buy it. "He's continuing to send out sweepstakes that are clearly highly deceptive and would mislead the average consumer. In fact they would mislead a very cautious consumer," she said.
Senators also objected to another tactic of the contest promoters: hiding behind multiple company names.
The nation's top postal inspector said that makes them hard to prosecute."Under the current laws, it is very easy for these operators once they are discovered in a particular location to shut down there, change the name of the operation, and move to another location," said Chief Postal Inspector Ken Hunter.
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The committee is looking at legislation that would restrict what sweepstakes mailings can say and make it easier for postal inspectors to crack down on deceptive sweepstakes companes.
Elderly people are often thought of as targets of these mailings. While many victims are older, two sweepstakes industry representatives said at the hearing that they don't target people by age; they target people who have fallen for similar mailings in the past.
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