Indiana Attorney General Curtis Hill has sued a Texas-based promotions company, alleging that Hopkins and Raines, Inc., deceptively advertised promotions on behalf of motor vehicle dealerships in violation of state law.
As part of 56 different promotions for about a dozen Indiana car dealerships, H&R sent mailings to 2,141,185 state residents between March 2016 and March 2018, Hill said. Sponsoring dealerships each paid an upfront fee, averaging $16,000, with a purpose “to lure consumers to the sponsoring dealership under the guise that the recipient had won a significant prize,” the AG alleged.
The mailings informed recipients they could be the winner of a significant prize, such as $1,000 in cash, a TV or a motor vehicle, if their game piece had winning numbers or symbols.
However, since the “winning” numbers or symbols were identical on every game piece sent by H&R, all recipients were informed they were “winners,” the AG said. When recipients went to claim their prizes, they were subjected to sales pitches soliciting the purchase of a car before being informed they had not won the prize represented on the mailing, Hill alleged.
“The recipients were then given an item of nominal value as their ‘prize,’ such as a $5 gift card or mail-in rebate coupon for a discount on the purchase of a turkey,” according to the complaint. “H&R did not award a prize valued at more than $12 to any Indiana recipient, despite sending 2,141,185 prize mailings, each representing the recipient was the winner of a prize of significant value.”
The defendant also failed to provide the required disclosures. H&R did not include the promoter’s name and address, a statement in proper type size of the odds of winning each prize in immediate proximity to each listing of a prize in each place it appeared in the mailings, or a statement in required type size of the verifiable retail value of each prize in immediate proximity to each listing of a prize in each place it appeared on each of the prize mailings, as required under Indiana law.
H&R violated Indiana’s Deceptive Consumer Sales Act as well as the state’s Promotional Gifts and Contests Act, the AG said. He requested injunctive relief, consumer restitution and civil penalties, as well as costs.
To read the complaint in State of Indiana v. Hopkins and Raines, Inc., click here.
Why it matters: Noting that the promotions company was paid a total of $563,087.50 by the various dealers to send the prize mailings, the Indiana AG said the game pieces were sent only to “generate excitement and deceive recipients” into believing they won a significant prize, and to drive attendance at the dealerships that would provide the dealers with opportunities to sell cars.