SWEEPSTAKES ENTRY DOES NOT CREATE AN EBR: Court Answers One of the Few Undecided Questions in TCPAWorld–And its Not Good News For Callers

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Everyone wants to attract new customers. And one really fun way to do so is with a sweepstakes.

While a sweepstakes is a nice way to get folks to recognize your brand–and may generate new leads for you–it is important to keep in mind that a consumer’s entry in your sweepstakes may NOT constitute the creation of a business relationship with you for purposes of return phone calls.

That was the holding in Trim v. Mayvenn, Inc., Case No. 20-cv-03917-MMC, 2022 U.S. Dist. LEXIS 63222 (N.D. Cal. April 5, 2022).

There the Plaintiff had entered a sweepstakes for a chance to win free products and services. The Defendant argued that because the plaintiff had entered the sweepstakes she had become a customer and an established business relationship permitted it to call the plaintiff even though her number was on the national DNC list.

Not so found the court.

Relying on a letter from the FTC to Congress interpreting a different statute (the TSR) the court found sweepstakes entries do not create an EBR:

Federal Trade Commission’s (“FTC”) interpretation of an identical EBR exemption contained in the Telemarketing Sales Rule (“TSR”) (see Opp. at 8:3-16); see also 16 C.F.R. § 310.2(q), specifically, the FTC’s statement in a report to Congress that the submission of a “sweepstakes entry form does not create an [EBR] for purposes of the TSR,” see 2016 2017 FTC Biennial Rep. to Congress 7 (hereinafter, “FTC Biennial Rep.”) (noting businesses may not “circumvent the [NDNC] Registry by utilizing sweepstakes entry forms as a way to exploit the [EBR] exemption”). 

Notably the FTC’s report to Congress is not formal guidance and is not the sort of thing that many courts would afford deference too. And while the Trim court is correct that FCC rulings under the TCPA and FTC rulings under the TSR ought to be harmonized where possible, neither Commission has directly addressed this issue in any form of a formal declaratory proceeding.

So, in my opinion, the jury is still out on whether sweepstakes entries qualify as EBR. But here is a data point that says NOPE.

Happy weekend TCPAWorld!

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Published by Eric J. Troutman

The Czar of TCPAWorld Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems. Eric has built a national litigation practice based upon deep experience, rigorous analysis and extraordinary responsiveness. Eric and his team feel equally at home litigating multibillion dollar telecommunications class actions in federal court as they do developing and executing national litigation strategies for institutions facing an onslaught of individual TCPA matters. They thrive in each of these roles – delivering consistently excellent results – while never losing sight of the client experience. While many firms now tout TCPA expertise, Eric has been there from the beginning. He built one of the country’s first TCPA-only defense teams and began serving as national TCPA counsel for his clients nearly a decade ago. This perspective allows him to swiftly develop the right litigation strategies for dealing with recurring problems, without wasting time on tactics that are bound to fail. Eric’s rich historical perspective and encyclopedic knowledge of the TCPA landscape also make him an invaluable resource to institutional compliance teams struggling to comply with the shifting regulatory landscape. No task is too small – or too big. Indeed, Eric and his team have helped build TCPA-compliant systems and processes for some of the largest and most complex corporate entities in the country. He commonly works with in-house compliance counsel to build and implement enterprise and business-line specific TCPA solutions, performs TCPA audits and drafts and reviews proposed TCPA policies and procedures. He and his team also have the technical expertise necessary to assist call centers seeking to develop TCPA-resistant call path architecture or to modify existing telephony and software integration to better insulate from potential TCPA exposure. Eric has built a reputation for thought leadership. An avid blogger and speaker, he has been at the forefront of the industry’s effort to push for clarity and a return to sanity for the TCPA for years. He was selected to advocate for the financial services industry on important TCPA issues before the Federal Communications Commission and co-authored the nation’s only comprehensive practice guide on TCPA defense. In his spare time, Eric leads defense teams representing banks and other financial services companies in consumer finance litigation matters. He has experience representing clients in UCC, TILA, RESPA FCRA, CCRA, CLRA, FDCPA, RFDCPA and FCCPA claims, as well as in fraud and bank operations issues.

2 Comments

  1. OK maybe I missed something here, but I pulled the ‘Trim v. Mayvenn, Inc. Case 3:20-cv-03917-MMC’ you’re referring to in this post, and it doesn’t seem mention anything about Sweepstakes…please double check (you referenced Trim in the precious post – correctly). Or was this a clever test to see who really dives into your (usually impeccable) referencing of cases…psst I do 😉

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  2. Well he said…removing foot from mouth…I owe you an apology Eric. Completely and unequivocally! Lesson learned – read all available content BEFORE posting an UN-editable/UN-deleteable comment – DUH

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