A sweepstakes operator is permanently banned from direct mail marketing and is liable for a $9.5 million judgment under a settlement with the Federal Trade Commission, which charged her with violating a previous court order by running a sweepstakes scam.
Crystal Ewing and other defendants were banned from prize promotions in April 2007 upon settling FTC charges that they deceptively enticed consumers in the U.S., Canada and the United Kingdom to send money to collect large cash prizes that, in fact, did not exist.
Ewing now admits to violating the 2007 court order through her work with another FTC defendant, Glen Burke, and a prize promotions company, Puzzles Unlimited LLC, that duped consumers with the illusory promise of sweepstakes winnings in exchange for processing fees.
Using direct mail ads, Puzzles Unlimited enticed consumers to enter promotions by using terms like "Notice of Grand Prize Payout" and "Grand Prize Guaranteed," which led consumers to believe they had already won thousands of dollars and just needed to fill out a form containing a simple puzzle and submit a processing fee of $10 to $15.
Along with the $9.5 million judgment, which represents the amount of consumer harm attributable to Ewings work with Puzzles Unlimited, and the ban on any direct mail marketing imposed against her, she is prohibited from making material misrepresentations about goods and services, and from profiting from, and failing to properly dispose of, customers personal information.
"Theres a price to pay to violating a court order in an FTC case," said Jessica Rich, director of the FTCs Bureau of Consumer Protection. "In this case, thats $9.5 million and a permanent ban on direct mail marketing."
The vast majority of consumers received no grand prize payout or any other payout. Instead, the consumers who submitted processing fees continued to receive additional rounds of puzzles that they were told they must complete correctly in order to claim the prize money. With each round of mailers, consumers were misled with promises of bonus winnings in exchange for additional fees. At each step of the way, consumers were told they were tied for first place in the promotion regardless of whether or not this was true.