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House bills curbing sweepstakes called unconstitutional

Just two days after the Senate passed legislation to crackdown on deceptive sweepstakes mailings, industry supporters testified Wednesday that two similar House bills would likely infringe on the promoters' First Amendment rights.

The Senate-passed bill, which had industry support, would require sweepstakes companies to publish the odds of winning their contests, clearly state that no purchase is necessary to win and print all the rules in their mailings. It also would prohibit "government lookalike" mailings that use envelopes and insignia resembling federal documents.

The House bills, introduced by Reps. Frank A. LoBiondo, R-N.J., and James E. Rogan, R-Calif., would further restrict sweepstakes companies.

Unlike the Senate bill, which spells out general governing mailings, the House bills would dictate actual wording and placement of contest rules and odds. The sweepstakes companies also would have to use larger typeface to avoid complaints that the rules were hidden in the fine print.

Michael Pashby, a vice president of the Magazine Publishers of America, whose members benefit from sales made through sweepstakes offers, told a House subcommittee on government reform that the proposed House regulations would "unduly burden commercial speech" and take up an "unreasonable" amount of the space available for the companies' own words.

Put simply, he said, these requirements could violate the First Amendment.

The bills sponsors say the strict requirements are necessary to avoid what LoBiondo described as misleading language in sweepstakes mailings. Mandating the exact wording, they argue, would leave sweepstakes unable to find loopholes.

LoBiondo pointed to a 1998 Publishers Clearing House mailing that said the Prize Patrol "would feel a lot better giving the prize to a customer."

While not technically illegal, he said, this kind of language could make sweepstakes entrants feel they will have a better chance of winning if they purchase an item. It is illegal for the companies to require a purchase to enter the contest.

Pashby said that requiring exact language limits the sweepstakes companies' ability to write pitches that appeal to their customers.

Legislation similar to the House bills was introduced last year but never made it to the floor for consideration. This year, industry groups worked with Senate members to draft the legislation passed Monday and have publicly supported the Senate reforms.

LoBiondo's bill also would change the practice of sweepstakes companies using false checks to advertise their prizes. In past congressional hearings, witnesses testified that many recipients attempted to cash them.

LoBiondo's bill would require the check be labeled with large print that says the check has no cash value.

Both Rogan and LoBiondo asked the House to consider the legislation quickly, hoping to capitalize on publicity the sweepstakes issue has received in recent months.

Television newsmagazines have aired exposes of sweepstakes companies and four congressional hearings have been held on sweepstakes practices since March. At these hearings, sweepstakes entries and their families have told stories of losing thousands of dollars or refusing to leave their homes for fear of missing the Prize Patrol.

In addition to the two sweepstakes bills introduced in the House, Rep. Robert Weygand, R-R.I., also has introduced a bill that would authorize $10-million for the Administration on Aging to provide education and outreach programs to senior citizens on telemarketing fraud, which often takes the form of sweepstakes offers.

According to the AARP, sweepstakes constituted the majority of telemarketing fraud complaints to the National Consumers League's fraud information center from 1995 to 1997.