Is Ruff Running an Internet Currency Contest? | Verrill

Last month, a class action lawsuit was dismissed, in part, against plaintiffs who opted into Coinbase Global’s $1.2 Dogecoin contest. Dogecoin is an open source peer-to-peer digital currency (say it twice), with a cute Shiba Inu as its mascot. Although the raffles were about the ever-growing new world of virtual currency, the principles applied by the Court date back to the earliest lottery cases and demonstrate that there is no need to teach a dog new tricks. . See Suski v. Marden-Kane, Inc., 2022 WL 103541 (ND Cal. 2022).

According to the complaint, Coinbase’s advertisements for the contest stated:

Trade DOGE. Win DOGE. Starting today, you can trade, send, and receive Dogecoin or and with the Coinbase Android and iOS apps. To celebrate, we’re giving away $1.2 million in Dogecoin. Sign up, then buy or sell $100 in DOGE on Coinbase before 6/10/21 for a chance to win. Terms and conditions of application. [With a “See all rules and details” link in smaller font.]

Three important questions were decided by the Court:

Arbitration or Court? The Court first had to decide whether the case was properly brought before the courts or whether it should be referred to arbitration. Coinbase argued that the claims should be arbitrated based on the wording of the Coinbase User Agreement agreed to by the claimants when creating their Coinbase accounts. This User Agreement contained a broad arbitration clause requiring that any dispute be resolved by arbitration and without recourse to class action. However, the official contest rules provided that the California courts would have exclusive jurisdiction over any disputes regarding the promotion. With these contradictory arrangements, who wins? The Court has ruled that the following provision – in the Official Contest Rules – supersedes the former User Agreement on the Website.

Illegal lottery? The plaintiffs argued that the competition was an illegal lottery because participants had to exchange Dogecoins to participate. But the Court ruled in favor of the sponsor who provided an AMOE in allowing entries by mail, as stated in the official rules. We note that according to official rules, selected winners who used AMOE to enter were then required to create a new Coinbase account to receive their prize. This aspect – which could arguably be a form of consideration required to receive the award – was not addressed in the Court’s opinion.

False advertising ? While the Court was satisfied that an AMOE was available, the Court had serious questions about whether this AMOE was sufficiently disclosed. The Court said that the sponsor’s “advertising methods strongly induce people to complete a transaction in order to participate in this contest” and that its “representations regarding ‘no purchase necessary’ were ambiguous in light of other statements regarding the need to “buy or sell ‘Dogecoin’. Therefore, the Court did not reject the claim of misleading advertising.

The entire decision is now on appeal to the Ninth Circuit.

What we can learn.

The most important lesson of the review is to always go back to basics. While contests have become more complex and nuanced, they are still, at heart, contests. Every dog ​​should know Sit! To stay! Heel! before he can start jumping through hoops at the National Dog Show.

Also, make sure all of your terms work well together. Just like you don’t want a talkative little Bichonaran to mix with an Alaskan Malamute, conflicting terms in your rules, advertisements, and website terms and conditions can cause unnecessary injury.

Finally, an AMOE is only really good when people know it. People are like dogs. They pay attention to what is put in front of them. Does Spot care if there are “healthy” treats in the car truck? No, Spot wants the big soup bone he just saw you put on the counter. Don’t be afraid to disclose the AMOE (or at least the availability of an AMOE) by saying more than “see full terms here”. It’s likely that the consumer will always want that juicy bone.

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