USA Law and Practice Contributed by: Katelyn Patton, Frankfurt Kurnit Klein & Selz
• the general class of participants must possess the skill; • the participants’ skills or efforts must sufficiently govern the result; and • the standard of skill must be known to the partici - pants and this standard must govern the result. 7.3 Registration and Approval Requirements A few states require that certain sweepstakes be reg - istered before they can be implemented in the state, as follows. • If the aggregate value of all prizes to be awarded exceeds USD5,000, New York and Florida both require that the sponsor register the sweepstakes. The sponsor must also file a surety bond with each state, equalling the aggregate value of all prizes in the sweepstakes. • Rhode Island also requires registration of sweep - stakes offered at in-state retail establishments and sets a lower registration threshold. Sweepstakes must be registered with the state if the aggregate value of all prizes to be awarded exceeds USD500. 7.4 Free and Reduced-Price Offers The FTC’s “Guides Against Deceptive Pricing” address various kinds of pricing representations, including rep - resentations by marketers that their current price is a discount from their former price (a “sale” or “dis - count”), comparisons to others’ prices and to manu - facturers’ suggested retail prices, and representations about special prices based on the purchase of other products (eg, gifts with purchase, and buy-one-get- one offers). The FTC also provides guidance on “free” offers in its “Guide Concerning Use of the Word ”Free” and Similar Representations”, which states that all such offers of “free” merchandise or services “must be made with extreme care so as to avoid any possibility that consumers will be misled or deceived”. The guide provides rules about the frequency of any such offers and the circumstances in which they can and cannot be made, as well as guidance concerning required disclosures, introductory offers, and negotiated sales.
Many states also have specific laws and regulations on pricing, free claims, and other promotional prac - tices. Moreover, a new wave of “all-in” price laws has recent - ly emerged, mandating transparent pricing practices to ensure consumers are fully aware of the total cost of goods and services upfront. The FTC’s Rule on Unfair and Deceptive Fees took effect in May 2025 and is applicable to any business that offers, displays or advertises live-event tickets or short-term lodging. At the heart of the rule is the requirement to disclose the total price upfront – meaning the advertised price must include all mandatory fees and charges the busi - ness knows about and can calculate when the offer is made. Taxes, government charges, shipping fees, and charges for optional services do not need to be included in the initial total price, but they must be dis - closed before the customer is asked to pay, and such disclosures must clearly explain the nature, purpose and amount of the excluded charges. Additionally, several state laws have recently passed (including in California, Colorado, Connecticut, Maine, Massachu - setts, Minnesota, Oregon, Rhode Island and Virginia), generally requiring all mandatory fees to be included in an advertised price. 7.5 Automatic Renewal/Continuous Service Offers Under federal law, the Restore Online Shoppers’ Con - fidence Act (ROSCA) governs automatic renewal pro - grammes. ROSCA sets forth certain baseline require - ments, including that marketers obtain unambiguous consent for the “negative option” feature of their sales. The FTC’s updated rule addressing recurring sub - scription programs (ie, the Negative Option or Click- to-Cancel Rule) was scheduled to take full effect in July 2025; however, the US Court of Appeals for the Eighth Circuit vacated the updated rule, finding that the FTC’s rule-making process contained “fatal” pro - cedural deficiencies (without directly addressing the rule’s substance). The FTC’s next steps remain to be seen – for example, whether it appeals this decision, renews rule-making, or issues an updated enforce - ment policy. Nonetheless, in the meantime, the FTC can and will still enforce (and is enforcing) under ROSCA and the FTC Act.
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