Arguing that the defendant was clearly the “sponsor” of a scratch-card promotion, an Illinois resident moved for partial summary judgment in her class action alleging violations of state law.
Sabra Rench accused A-1 Allergy Relief and HMI Industries of violating the Illinois Prizes and Gifts Act (IPGA) as well as the Illinois Consumer Fraud and Deceptive Business Practices Act by using a scratch-card promotion to get their salespeople’s feet in the door in order to sell FilterQueen vacuums and air filters.
The defendants sent the scratch cards to consumers, who were instructed to call a number to claim their prize. When Rench called, she was told someone would come to her home to deliver her prize and conduct a product demonstration. After two three-hour demonstrations, Rench agreed to purchase a vacuum, air filter and warranty for $2,798, at an interest rate of 28.99 percent.
When Rench’s attempts to rescind her purchase failed, she sued. In her motion for partial summary judgment, she told the court that the defendants used the scratch cards—which did not identify the sponsor of the promotion—as a means to get salespeople into houses to sell their products. Despite the scratch card’s claim that it offered a “$10,000 GRAND PRIZE,” the defendants never awarded a prize for any of the cards, the plaintiff added.
One distributor estimated that 70 percent of his sales were generated from the scratch-card promotions, the plaintiff said, while one executive testified that the scratch cards were key to get “entry approval” into a potential customer’s home, as “you can’t make a sale if you’re not there.”
Rench argued that the promotion violated the IPGA, which requires that a written promotional prize offer contain certain disclosures made “in a clear and conspicuous statement at the onset of the offer,” including “the true name or names of the sponsor and the address of the sponsor’s actual place of business.”
Under the plain language of the statute, the defendants—who developed and directly participated in the scratch-card promotion in Illinois, relied on the scratch cards as the main source of leads for its distributors and trained the distributors on how to leverage the promotion—were clearly the sponsors of the scratch-card promotion, the plaintiff told the court. The defendants even purchased insurance for the $10,000 prize and wrote in the insurance application: “We have been doing scratch off promotions since 2006.”
In addition to requesting summary judgment as to liability under the IPGA, Rench requested damages pursuant to the state statute of the greater of $500 or two times actual damages, plus interest, costs and attorneys’ fees.
She also asked for summary judgment on her state consumer protection law claim.
“Here, the scratch cards do not clearly and conspicuously disclose all material terms at the outset of the offer, including that [the defendants are] a sponsor or that HMI products and services may be offered for sale during an hours-long in-home presentation,” the plaintiff argued. “Without the ‘entry approval’ provided by the scratch card, there would be no sale. Moreover, HMI knew that adding truthful disclosures on the scratch cards would decrease the numbers of ‘entry approval,’ and thus, decrease the number of sales. Accordingly, the illegal scratch cards are the first link in the chain of Plaintiff and the Class members’ pecuniary loss.”
To read the plaintiff’s motion for partial summary judgment in Rench v. A-1 Allergy Relief, Inc., click here.
Why it matters: The plaintiff attempted to score a victory in the case with her summary judgment motion, arguing that the defendant was clearly the sponsor of the scratch-card promotion, as it created the cards, heavily promoted them and relied on them as the primary source of leads for Illinois sales. The court has yet to rule on the motion.