Fraudulent Puzzles
for Prizes Sweepstakes Scams
Treasure Express and Puzzles N' Prizes sent out mailers with names
like Magic Money Maker, Count Your Cash, Take Home The Cash, Money
By Mail, and Stuff Your Pockets.
Each contest started with an extremely easy "puzzle" —such
as simply adding several numbers —that you would "solve" and
return along with an entry fee. Then, simple follow-up puzzles
were sent to you, each one assuring you that "you have
worked hard and qualified for this Official Playoff Puzzle," have "made
it to the big one," or were otherwise uniquely placed
to win the final contest —if you only enter and pay again.
The entry fees ranged from about $5 to $35, but collectively some
victims lost $4,000-$6,000 because they were deceived into entering
time, after time, after time.
The subsequent puzzle mailings often contain a "Publicity
Release" or "Authorization Certificate" asking you
to authorize publication of your name as winner, or to designate
your preferred form of payment to receive your award.
If you do not return additional entries you are sent "Emergency
Memos" warning you that the money will be given to somebody
else if you do not respond immediately.
You continue to return puzzles and additional entry fees until
the puzzles, at the final level, become unexpectedly and exceedingly
difficult, requiring government cryptographers and supercomputers
to solve.
People are manipulated into spending years of effort and money
on these contests, yet the only thing they win is a chance to enter
another one of the contests. Although these contests may be referred
to as sweepstakes, they are not. You must both pay and submit puzzle
solutions to enter. Some contests have no expiration date nor an
apparent end or winner.
Legal But Deceptive
In the Matter of the Complaint Against
R. JAMES ELLIS a/k/a RON ELLIS and J.R. PUBLISHING,
L.L.C.
248A North Higgins
Boxes 521, 522, 523, 524 and 525
Missoula, MT 59802-4459
P.S. Docket No. FR 98-286 March 26, 1999
INITIAL DECISION
The Complaint alleged that Ronald J. Ellis and J. R. Publishing
violated 39 U.S.C. §3005 by engaging in a scheme or device
for obtaining money or property through direct mail by means of
false representations and were using the mail to conduct a lottery
during 1997/98.
The Postal Service presented testimony from a Postal Inspector;
two consumer witnesses; and an expert witness, Dr. Terrell Williams
of Western Washington University, who specializes in the study
of consumer behavior.
Ronald Ellis of Las Vegas, testified on his own behalf, denied
making any false representations, or that they were conducting
a lottery. He also presented expert testimony from Dr. Ned
Silver, a psychology professor at the University of Nevada Las
Vegas; and Dr. Edwin Nagelhout, a professor of English at the University
of Nevada Las Vegas, who specializes in writing and linguistics.
FINDINGS OF FACT
They used several different names to identify the puzzle contests,
including "Winners Millions," "Money
Train," "Gateway to Riches," and "Cash
Express."
Contestants were directed to send entry forms, along with a fee – either
$5.00 or $20.00, depending on which contest one enters.
Each contest consisted of three stages. To win the grand prize,
a contestant must receive the highest score of all entries submitted
for a specific contest. Lesser prizes may be awarded for other
high scores. The puzzles for the first two stages are extremely
simple, requiring the barest minimum education and intelligence
to solve correctly.
The third stage puzzle is much more difficult. It has the appearance
of a crossword puzzle, but there may be several "correct" words
that could used in any particular space. Each letter of the alphabet
is given a numerical value, and a contestant’s score is determined
by the total value of all the words used in filling out the puzzle.
.
The stage-one puzzle was sent to prospective customers as part
of the initial solicitation. A stage-two puzzle was
purportedly sent to any contestant who successfully completed stage-one,
and likewise sent a stage-three puzzle to anyone who successfully
completed stage-two.
This was explained, although not at all clearly, in the "Official
Rules," printed on the reverse of the solicitation forms.
In actual practice, however, the orderly procedure described above
was not always followed. They often sent multiple copies of the
same original solicitation, or several of the stage-one puzzles
of the various different contests, to the same people.
They also offered contestants an opportunity to purchase a "bonus
option" after the stage-one entry is received,
and before the stage-two puzzle is sent. For an additional
$20.00 fee, you were told that the value of the grand prize would
be increased to $15,000.00.
Refunds were given upon request or complaint from consumers
who had believed they were entering a sweepstakes or who believed
they had already won a prize.
In the "Official Rules," found on the reverse side of
the solicitations, it stated, "This is not a sweepstakes,
lottery, or telemarketing promotion. It is a contest of skill involving
no luck or chance."
The Alleged Misrepresentations
The mailing suggested that you had won; were guaranteed to win;
had been selected to win; needed only to complete the word puzzle
and to mail it with a judging fee to win; were one of a very limited
number of persons who have been approved to be eligible for; a
cash prize.
There are many features that suggested to the more gullible reader
that he/she had won a large cash prize such as the dollar amount
of the prize, usually $10,000.00, printed in large red type, with
the words "Guaranteed," "100% Guaranteed," "Confirmed",
or "fully Guaranteed" used many times, and always highlighted
or underlined, nearby.
Some of the return envelopes also implied that the recipient has
already won. E.g., One was stamped "APPROVED" over the
words, "Cash Access Documents for Immediate Processing." and
stated "Let me repeat that, Helen. You are guaranteed
$10,000.00 Cash as our sole Grand Prize Winner!"
While the fact that they were actually inviting recipients to
participate in a puzzle contest was spelled out on the reverse
on each solicitation, this essential information was likely to
be missed by the less-than-careful reader.
It was determined that an individual might send in as many as
six completed stage-one and stage-two entries but receive only
one stage-three puzzle.
With the many exhortations to hurry and mail the entry fee before
a specified deadline, gullible readers are likely to believe that
all they need do is to complete the elementary stage-one word puzzle
and send the money. People are more likely to pay the required "fee" if
they believe they have won, or are certain to win, a large cash
prize.
In some cases, the solicitation quite strongly implied that obtaining
$10,000.00 was that simple. E.g., "By following the
instructions below and enclosing your one-time $20 judging fee,
your $10,000.00 Cash eligibility determination will be finalized
Helen. This will begin your immediate processing for the payment
of the $10,000.00 Grand Prize, . . .."
They argued that most people understood that the use of the words "eligible," and "nominee" informed
them that they had not yet won a prize.
It was felt however that the less careful, more naïve reader,
even if they understand those words, may overlook their meaning
in this context, or may simply ignore those words, having already
focused on the message that they were going to win a prize.
The law protects such people by judging a solicitation on the
overall impression it makes on them. As is evidenced by the many
letters of complaint, these solicitations were very capable of
giving a false impression.
The tone of familiarity in the solicitations, including the repeated
use of the addressee’s first name; the use of personal "identification
numbers;" references to "our records," concerning
the addressee’s name and address; references to the addressee
as a "target candidate," and efforts in "locating
you;" the terms, "private," and "confidential" on
the envelope; statements that "I have been instructed to inform
you;" reference to the addressee as the "sole validated
claimant;" and reference to a "specially prepared envelope;" all
are demonstrative of an attempt to lead the recipient to believe
that he/she has been specially identified and selected.
Far from being a part of a select group the names and addresses
were obtained by purchasing mailing lists from a New York company
and the likelihood of your winning a contest or receiving a large
amount of cash was far greater than was the fact.
Many statements indicated how easy it was to receive the large
amounts of cash. E.g, "By simply following the
instructions," "It is as easy as 1-2-3;" "This
is not a fluke and there is no luck involved!"
While the gullible reader was led to believe that all he/she need
do to collect the prize was fill out the form, write the $20 check,
and mail it in the actual chance of winning the $10,000 or $15,000
was very small.
The rules, if accurate, suggested that they would collect approximately
$900,000 and pay out only $20,050. The figures in some of
the other solicitations are even more outrageous. One says that while
approximately $2,250,000 would be collected, only $20,050 would
be paid out while another says that approximately $1,375,000
would be collected, and only $13,750 paid out.
CONCLUSIONS OF LAW
The Lottery Allegation
1. The elements of a lottery are prize, chance and consideration.
2. The elements of prize and consideration are clearly present
here, but it was not proved that prizes were awarded based on chance.
The fact that some of the consumers who complained may have believed
they were participating in a lottery, or sweepstakes, does not
make it one. The same evidence that proves the false representation
allegations tends to disprove the lottery allegation.
False Representation Allegations
3.Respondents’ solicitations must be considered as a whole
and their meaningdetermined in light of the probable impact on
the mind of the ordinary recipients to whom they are directed.
4. The statute (39 U.S.C. §3005) is intended to protect the
gullible, less critical reader, as well as the sophisticated and
the wary. Representations may be false, within the meaning
of §3005, even if many of the statements in a solicitation
are literally true. "This section forbids representations
that are false or artfully designed to mislead." It
is the net impression likely to be made by the solicitation that
determines whether false representations are made.
In this case, a careful reader may well realize that they were
promoting a puzzle contest, but the overall impression created
was that the recipient had been selected to win a cash prize. Though
it was argued that the "ordinary consumer" would read
and understand the solicitations, they were found likely to mislead
a gullible reader of which evidence demonstrates that there are
many such people.
While there is nothing to prohibit them from marketing puzzle
contests, the law requires them to adequately identify their product.
5. Solicitations themselves are the best evidence as to what representations
are made, the use of lay or expert testimony is not required, and
the receipt of consumer complaints is not necessary to prove a
violation of 39 U.S.C. §3005.
6. Solicitations that are ambiguous or capable of more than one
meaning are misleading if one of those meanings is false. It
is not difficult to select words that will not deceive.
7. The recipient of a direct mail solicitation is not required
to carefully scrutinize every sentence to determine what is being
offered.
8. A solicitation may be deceptive because it makes statements
that are untrue, or because it omits information that should be
disclosed. It is the total impression on the reader, or recipient,
that must be judged.
9. An inconspicuous disclaimer is not sufficient to overcome the
overall impression made by an advertisement. An offer to
pay refunds to dissatisfied customers does not dispel the effect
of false advertisements.
The USPS established its false representation case by a preponderance
of the reliable and probative evidence of record.Respondents
are not engaged in conducting a lottery.
A False Representation Order and Cease and Desist Order was issued. |
