|
Return to Consumer
Information
The State of California - State and Consumer Services Agency
LEGAL AFFAIRS
400 R Street, Suite 3090
Sacramento, CA 95814-6200
Legal Guide U-4
RULES ON CONDITIONAL OFFER OF PRIZES OR GIFTS
(California Business and Professions Code section 17537.)
It is unlawful for any person to use the terms "prize,"
"gift," or any similar term in any untrue or misleading
manner, including as described below.
It is unlawful for any person, as part of an advertising program,
to notify another (the "recipient") that he or she has won
a prize, and that as a condition of receipt, the
recipient must pay any money or purchase or rent any goods or
services. For instance, it is unlawful for an advertiser to tell
a recipient that he or she has won a prize when this is not true,
or when the recipient must pay shipping charges or must purchase
something in order to obtain the prize.
The rules which apply to "gifts" are more complicated.
Restrictions apply when as part of an advertising program, a
person notifies a recipient that he or she will receive a
gift, and that as a condition of receipt, the recipient
must pay any money or purchase or rent any goods or services. In
particular, it is unlawful for a person offering a gift (the
"offeror") to tell a recipient that he or she has been
specially selected unless this representation is true, and unless
the recipient has made a purchase from the offeror within the
previous six months, or has a credit card or retail installment
account with the offeror. Other restrictions limit the amount of
shipping and handling charges that may be imposed, may limit the
amount which may be charged for the goods or services which must
be purchased or leased in order to obtain the gift, and may limit
the extent to which such goods or services may be sold or leased
in conjunction with the offer of the gift. See Business and
Professions Code sections 17537(c)(1)-(5) (on the reverse side)
for additional details on these restrictions.
Each violation of these provisions is a misdemeanor punishable by
six months in county jail, a fine up to $2,500, or both.
Enforcement
The misdemeanor provisions are enforceable by the Attorney
General or by any district attorney. Section 17537 also may be
enforced through civil court actions filed by private parties,
district attorneys, the Attorney General, and other agencies of
the State. Depending on the nature of the civil action, remedies
include civil penalties of $2,500 for each violation, injunction,
and restitution. A conditional offer which violates the
provisions described herein also may be subject to an additional
civil penalty of up to $2,500 for each violation as an unlawful
business practice. A court in a civil action brought by a
recipient may award him or her treble damages (three times actual
damages) against an offeror who has violated the provisions on
conditional offers of prizes and gifts.
The full texts of Business and Professions Cod sections 17537 and
17537.4 (which authorizes treble damages) are reproduced on the
reverse side.
NOTICE TO READER
The Department of Consumer Affairs strives to make its fact
sheets accurate in every respect. However, this fact sheet is
only a guideline and is not a definitive statement of the law.
Questions about the law's application to specific circumstances
should be directed to any attorney.
Prepared by:
John C. Lamb
Staff Counsel
January, 1990
Business & Professions Code § 17537 and § 17537.4
§ 17537. Unlawful Conditioning of Offer of Prizes or
Gifts--Exceptions
(a) It is unlawful for any person to use the term
"prize" or "gift" or other similar term in
any manner that would be untrue or misleading, including, but not
limited to, the manner made unlawful in subdivision (b) or (c).
(b) It is unlawful to notify any person by any means, as a part
of an advertising plan or program, that he or she has won a prize
and that as a condition of receiving such prize he or she must
pay any money or purchase or rent any goods or services.
(c) It is unlawful to notify any person by any means that he or
she will receive a gift and that as a condition of receiving the
gift he or she must pay any money, or purchase or lease
(including rent) any goods or services, if any one or more of the
following conditions exist:
(1) The shipping charge, depending on the method of shipping
used, exceeds (A) the average cost of postage or the average
charge of a delivery service in the business of delivering goods
of like size, weight, and kind for shippers other than the
offeror of the gift for the geographic area in which the gift is
being distributed, or (B) the exact amount for shipping paid to
an independent fulfillment house or an independent supplier,
either of which is in the business of shipping goods for shippers
other than the offeror of the gift.
(2) The handling charge (A) is not reasonable, or (B) exceeds the
actual cost of handling, or (C) exceeds the greater of three
dollars ($3) in any transaction or 80 percent of the actual cost
of the gift item to the offeror or its agent, or (D) in the case
of a general merchandise retailer, exceeds the actual amount for
handling paid to an independent fulfillment house or supplier,
either of which is in the business of handling goods for
businesses other than the offeror of the gift.
(3) Any goods or services which must be purchased or leased by
the offeree of the gift in order to obtain the gift could have
been purchased through the same marketing channel in which the
gift was offered for a lower price without the gift items at or
proximate to the time the gift was offered.
(4) The majority of the gift offeror's sales or leases within the
preceding year, through the marketing channel in which the gift
is offered or through in-person sales at retail outlets, of the
type of goods or services which must be purchased or leased in
order to obtain the gift item was made in conjunction with the
offer of a gift.
This paragraph does not apply to a gift offer made by a general
merchandise retailer in conjunction with the sale or lease
through mail order of goods or services (excluding catalog sales)
if (A) the goods or services are of a type unlike any other type
of goods or services sold or leased by the general merchandise
retailer at any time during the period beginning six months
before and continuing until six months after the gift offer, (B)
the gift offer does not extend for a period of more than two
months, and (C) the gift offer is not untrue or misleading in any
manner.
(5) The gift offeror represents that the offeree has been
specially selected in any manner unless (A) the representation is
true and (B) the offeree made a purchase from the gift offeror
within the six-month period before the gift offer was made or has
a credit card issued by, or a retail installment account with,
the gift offeror.
(d) The following definitions apply to this section:
(1) "Marketing channel" means a method of retail
distribution, including, but not limited to, catalog sales, mail
order, telephone sales, and in-person sales at retail outlets.
(2) "General merchandise retailer" means any person or
entity regardless of the form of organization that has
continuously offered for sale or lease more than 100 different
types of goods or services to the public in California throughout
a period exceeding five years
(e) Each violation of the provisions of this section is a
misdemeanor punishable by imprisonment in the county jail not
exceeding six months, or by a fine not exceeding two thousand
five hundred dollars ($2,500), or by both.
§ 17537.4. Civil Action by Recipient or Offer--Award of
Treble Damages, Attorneys' Fees
If the person making an offer subject to Section 17537 or to
subdivision (a) of Section 17537.1, or any employee, agent, or
independent contractor employed or authorized by that person,
violates any provision of Sections 17537, 17537.1, or 17537.2,
the recipient of the offer who is damaged by the violation may
bring a civil action against the person making the offer for, and
may be awarded, treble damages. The court may award reasonable
attorneys' fees to the prevailing party.
Return to Consumer Information
|
