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New York Stops H&R Block's Deceptive Sweepstakes Ads

Company will pay $245,000 penalty for not playing by the rules

June 30, 2008

As part of the agreement, Block must pay $245,000 in penalties and costs for failing to post rules and regulations of its promotions at its offices and using false and deceptive advertising material to promote two sweepstakes games. The company also must disclose that the purchase of H&R Block products is not necessary to enter any promotional contest.

"H&R Block has agreed to implement the necessary changes so that all future promotions are in full compliance with New York state law," said Cuomo. "This settlement, while directed at H&R Block, serves as a warning to companies to make sure that all sweepstake rules and regulations are clearly spelled out with absolutely no ambiguity."

The Kansas City, Mo.-based company conducted two sweepstakes games: "Double Your Refund Instant Win Game" from January through April 2006 and "Toss Out Your Bills Instant Win Game" from January through April 2007. In both games, consumers could win by means of a scratch-off card, which was given to customers who purchased H&R Block tax preparation services.

New York state law requires companies conducting sweepstakes to give consumers an opportunity to enter and win without purchasing a product. H&R Block did not provide this opportunity for non-paying consumers.

The company's television, radio and print ads announced the ability to play if consumers had their taxes done by the company, and then directed consumers to H&R Block offices or hrblock.com for official rules on how to enter without a purchase.

However, the "no purchase necessary" qualification was either: flashed on screen briefly with no verbal announcement in television ads; announced with rapid-fire language at the end of radio ads; or buried in a small footnote in print ads. Cuomo's investigation found that no such information about entering the contest without purchasing a product was available at H&R block tax offices.

In addition to paying $245,000, H&R Block also must:

• Cleary post contest rules and regulations at participating H&R Block retail offices to enable non-purchasers to obtain the information for entry in contests

• Conduct training to ensure that sales employees are able to direct consumers to the information regarding non-purchase methods of entry

• Comply with all rules and regulations of promotions

• Clearly disclose the availability of alternative methods of entry in all advertising that refers to the purchase of an H&R Block product or service as one of the means to enter the contest.

Consumers are urged to consider the following guidelines before entering a sweepstakes:

• No purchase necessary: It is illegal for a sweepstakes to require you buy a product or make a donation.

• Be wary of claims of huge cash awards and prizes: If it looks to good too be true, it probably is too good to be true

• Don't be swayed by celebrities: They are paid to appear and they don't guarantee a sweepstakes is reputable.

• Be cautious: By participating in a sweepstakes, your name, address, and phone number might be sold to other solicitors

• Never give away your credit card, bank account or social security numbers on entry forms.

• Completely avoid any prize award that requires you first send money to cover taxes and other costs before the prize can be shipped to you.

• Be skeptical of letters and post cards claiming to be "official" or "urgent." If the envelope is sent "bulk rate" or costs less than 33 cents to send, you can certainly bet that thousands of people are receiving the same notice.

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