Governor Schwarzenegger has just signed off detailed restrictions on claims that can be made in respect of prize promotions run in the Sunshine State. Stephen Groom sweeps up the key points and draws parallels with practices closer to home that could also lead to local regulatory woe.
Topic: Promotion marketing
Who: Governor Arnold Schwarzenegger and the California Senate
When: September 2008
Law stated as at: 27 November 2008
On 30 September 2008, Governor Schwarzenegger signed into law California Senate Bill 1400. This amends Section 17539.15 of the California Business and Professions Code by adding a number of provisions aimed at prohibiting false and misleading sweepstakes promotions.
Following concerted lobbying on behalf of US promotion marketers such as that undertaken by the New York-based Promotion Marketing Association, the provisions of the final statute were considerably watered down. Even so, the measure still imposes considerable constraints on those looking to operate prize draws in the "Sunshine State".
The new provisions include specific requirements that:
- A clear and conspicuous "no purchase or payment necessary" message is set out in a separate paragraph in the official sweepstakes rules and printed in capital letters in contrasting typeface not smaller that the largest typeface used in the text of the rules; and
- The date when the final winners will be determined is stated in the official rules
Also included are specific prohibitions on:
- falsely representing that a person has received any special treatment or personal attention from the promoter;
- falsely representing that a person is being notified a second or final time of the opportunity to receive or compete for a prize;
- representing or implying that a prize notice is urgent unless there is a limited time period in which the recipient must take some action to claim or be eligible to receive a prize and the date by which that action is required is clearly and conspicuously disclosed in the body of the promotional materials.
Why this matters:
The recently in force in the UK Consumer Protection from Unfair Trading Regulations 2008 criminalised two specific practices in this area. These are contained in the list of "always unfair" outright prohibitions at Schedule 1.
- 19. Claiming in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent
- 31. Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either:
(a) there is no prize or other equivalent benefit, or
(b) taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.
The prohibitions in the California statute go beyond these, but the activities they circumscribe are likely to come within the more general prohibitions in the CPUT Regulations on "misleading actions" and "misleading omissions."
So one way of the other, California and UK prize promotion laws are converging in how they approach the advertising of prize promotions and this has to be applauded.