A new crop of retail promotions offering refunds based on the outcome of sporting events or weather conditions may be illegal gambling, according to law experts.
In Massachusetts, for example, Jordan Furniture is offering a full rebate on any purchase made between March 7 and April 23 if the Boston Red Sox win the World Series.
Michael Barkow, of the law firm Manatt, Phelps & Phillips, told The Boston Globe that these types of promotions fit the three defining elements of a lottery: offering a prize, an element of chance, and consideration, usually a payment of money.
"It seems to me fairly clear-cut," said Mr. Barkow, who advises firms on how to conduct legal retail promotions "It strikes me as a substantial risk to run a game like this."
Eliot Tatelman, who runs Jordan's Furniture, a division of Berkshire Hathaway, told the newspaper his attorneys concluded the Monster Deal was legal.
"We all feel comfortable with it," Mr. Tatelman said. "It's been a great promotion."
These deals appear to be gaining in popularity, particularly among retailers of higher-priced items.
Similar to Jordan's, Cowboy Maloney's Electric City in Mississippi last August offered full refunds to anybody who bought an HDTV if the New Orleans Saints won the 2007 Super Bowl. Park Avenue Home Furnishings in Illinois is currently offering refunds if the Chicago Cubs win the World Series. At Alpha Omega Jewelers in Massachusetts, customers get a $500 refund if the Red Sox win on the day an engagement ring is bought and a Red Sox player hits a homerun. The refund rises to $1,000 if a Red Sox player hits a grand slam; and to a full refund if a Red Sox pitcher pitches a no-hitter.
At Elyse Jewelers in Massachusetts, the cost of wedding and engagement rings is refunded if more than a half-inch of rain or snow falls over a six-hour period on the couple's wedding day.
Traditionally, retail promotions are adapted to comply with laws prohibiting lotteries. The element of chance can be eliminated by creating a game where skill is required, like writing an essay, drawing a picture or shooting baskets. The consideration can be eliminated by allowing people to play without paying. That's why the ubiquitous "no purchase necessary" accompanies many cereal promotions.
A spokeswoman for Massachusetts Attorney General Martha Coakley said the office is monitoring these new promotions but hasn't taken any action because the law is murky and consumers aren't being harmed.
"We've seen no consumer complaints and seen no evidence of consumer harm," said the spokeswoman, Amie Breton.
But Edgar Dworsky, a former Massachusetts assistant attorney general and the current editor of Consumerworld.org, believes the promotions are illegal and even unhealthy for consumers.
"The final prices we pay for goods will be determined not by smart comparison shopping but by the bets we make on sporting events, the amount of snow that falls, or what the high temperature will be. How crazy is that?," he asked.
Discussion Questions: Are these new prize-based retail promotions violating gambling laws and even unhealthy for consumers? Or are they harmless and fun and do they even stand out as examples of innovative promotions? Should they stay or should they go?