McDonald's Monopoly scandal
The McDonald's Monopoly scandal resulted from the revelation in 2001 that an employee of a promotion company that had been responsible for administering McDonald's contests had actually been using proxies who were given the winning contest tickets and claiming the prizes instead of insuring that the pieces were distributed to the general public. The fraud was perpetrated without McDonald's knowledge, but McDonald's voluntarily offered to pay out new contest prizes to its customers to compensate for the prizes misappropriated by the promotion company. It also appears that only one key employee of the promotion company, and not its management, perpetrated the fraud. Despite the name, the fraud was perpetrated with all of McDonald's contests, and not just the popular one based on the game of Monopoly. In total, it is believed that about $13 million (U.S.) was embezzeled in this manner from 1995 to 2001.
McDonald's promotional contests
Like many merchants, McDonald's offered prize money contests to draw customers into its restaurants. State lottery rules generally forbid a company from administering its own contests, in order to prevent fraud and to insure that all the offered prize money is paid out. McDonald's had a long standing relationship with Simon Worldwide Inc., which was responsible for the distribution of the contest pieces and the payment of major prizes. McDonald's contests were almost all based on a "collection" basis, in which more than one contest piece had to be collected to win a prize (although some contest pieces were "instant winners"). Contests of this sort generally make one or more contest pieces rare, so that it is difficult to find. The remaining contest pieces are essentially of no consequence and may be printed in unlimited quantities, although in practice for production purposes they are printed in indentical quantities. However, the rare or "key" pieces have to be printed in very small quantities under secure conditions, and then mixed with the more common pieces to insure that, in effect, they are randomly distributed to the customers.
The fraud
It appears that once Simon had the key pieces printed, only a portion of them were released into regular distribution channels. As these key pieces represented the only way to actually win a prize, possession of them virtually assured a prize. However, as employees of Simon were forbidden by law to win prizes (as were employees of McDonald's), a series of proxies (generally friends and family members of the Simon employee involved) were engaged who would be given the piece, claim the prize, and split it with the Simon employee involved. It appears the employee most directly involved with the security arrangements for the key pieces was the mastermind behind the fraud. Although McDonald's was not involved in the fraud, it came under a great deal of criticism for what appeared to be lax oversight of the promotion company. The fraud was eventually uncovered when one of the participants informed on its ringleaders to the FBI.
External LinksFBI Press releaseUSA Today article
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