Amended in Assembly January 4, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 1395


Introduced by Assembly Member Salas

February 27, 2015


An act to amend Sectionbegin delete 17539.1 of the Government Code, relating to business.end deletebegin insert 186.9 of the Penal Code, relating to money laundering.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1395, as amended, Salas. begin deleteUnfair business practices: contests and sweepstakes. end deletebegin insertMoney laundering: criminal activity: lotteries and gaming.end insert

begin insert

Existing law makes it a felony or a misdemeanor to engage in money laundering, defined as conducting a transaction involving a monetary instrument of specified value through a financial institution with the specific intent to promote or facilitate criminal activity. Existing law defines criminal activity for these purposes as any criminal offense punishable as a felony.

end insert
begin insert

This bill would expand the definition of criminal activity for purposes of money laundering to include various offenses punishable as infractions and misdemeanors related to illegal lotteries and gaming. By expanding the definition of a crime, this bill would impose a state-mandated local program.

end insert
begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert
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Existing law generally regulates false advertising and specifically prohibits certain unfair acts or practices undertaken by, or omissions of, a person in the operation of a contest or sweepstakes, including, among others, misrepresenting the number of participants in a contest or sweepstakes or representing, directly or by implication, that any tie breaker puzzle may be entered upon the payment of money qualifying the contestant for an extra cash or any other type prize or prizes except as specified.

end delete
begin delete

This bill would make nonsubstantive changes to these provisions.

end delete

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 186.9 of the end insertbegin insertPenal Codeend insertbegin insert is amended to
2read:end insert

3

186.9.  

As used in this chapter:

4(a) “Conducts” includes, but is not limited to, initiating,
5concluding, or participating in conducting, initiating, or concluding
6a transaction.

7(b) “Financial institution” means, when located or doing
8business in this state, any national bank or banking association,
9state bank or banking association, commercial bank or trust
10company organized under the laws of the United States or any
11state, any private bank, industrial savings bank, savings bank or
12thrift institution, savings and loan association, or building and loan
13association organized under the laws of the United States or any
14state, any insured institution as defined in Section 401 of the
15National Housing Actbegin delete (12end deletebegin insert (former 12end insert U.S.C. Sec. 1724(a)), any
16credit union organized under the laws of the United States or any
17state, any national banking association or corporation acting under
18Chapter 6 (commencing with Section 601) of Title 12 of the United
19States Code, any agency, agent or branch of a foreign bank, any
20currency dealer or exchange, any person or business engaged
21primarily in the cashing of checks, any person or business who
22regularly engages in the issuing, selling, or redeeming of traveler’s
23checks, money orders, or similar instruments, any broker or dealer
24in securities registered or required to be registered with the
25Securities and Exchange Commission under the Securities
26Exchange Act of 1934 or with the Commissioner of Corporations
P3    1under Part 3 (commencing with Section 25200) of Division 1 of
2Title 4 of the Corporations Code, any licensed transmitter of funds
3or other person or business regularly engaged in transmitting funds
4to a foreign nation for others, any investment banker or investment
5company, any insurer, any dealer in gold, silver, or platinum bullion
6or coins, diamonds, emeralds, rubies, or sapphires, any pawnbroker,
7any telegraph company, any person or business regularly engaged
8in the delivery, transmittal, or holding of mail or packages, any
9person or business that conducts a transaction involving the transfer
10of title to any real property, vehicle, vessel, or aircraft, any personal
11property broker, any person or business acting as a real property
12securities dealer within the meaning of Section 10237 of the
13Business and Professions Code, whether licensed to do so or not,
14any person or business acting within the meaning and scope of
15subdivisions (d) and (e) of Section 10131 and Section 10131.1 of
16the Business and Professions Code, whether licensed to do so or
17not, any person or business regularly engaged in gaming within
18the meaning and scope of Section 330, any person or business
19regularly engaged in pool selling or bookmaking within the
20meaning and scope of Section 337a, any person or business
21regularly engaged in horse racing whether licensed to do so or not
22under the Business and Professions Code, any person or business
23engaged in the operation of a gambling ship within the meaning
24and scope of Section 11317, any person or business engaged in
25controlled gambling within the meaning and scope of subdivision
26begin delete (e)end deletebegin insert (f)end insert of Section 19805 of the Business and Professions Code,
27whether registered to do so or not, and any person or business
28defined as a “bank,” “financial agency,” or “financial institution”
29by Section 5312 of Title 31 of the United States Code or Section
30begin delete 103.11end deletebegin insert 1010.100end insert of Title 31 of the Code of Federal Regulations
31and any successor provisions thereto.

32(c) “Transaction” includes the deposit, withdrawal, transfer,
33bailment, loan, pledge, payment, or exchange of currency, or a
34monetary instrument, as defined by subdivision (d), or the
35electronic, wire, magnetic, or manual transfer of funds between
36accounts by, through, or to, a financial institution as defined by
37subdivision (b).

38(d) “Monetary instrument” means United States currency and
39coin; the currency, coin, and foreign bank drafts of any foreign
40country; payment warrants issued by the United States, this state,
P4    1or any city, county, or city and county of this state or any other
2political subdivision thereof; any bank check, cashier’s check,
3traveler’s check, or money order; any personal check, stock,
4investment security, or negotiable instrument in bearer form or
5otherwise in a form in which title thereto passes upon delivery;
6gold, silver, or platinum bullion or coins; and diamonds, emeralds,
7rubies, or sapphires. Except for foreign bank drafts and federal,
8state, county, or city warrants, “monetary instrument” does not
9include personal checks made payable to the order of a named
10party which have not been endorsed or which bear restrictive
11endorsements, and also does not include personal checks which
12have been endorsed by the named party and deposited by the named
13party into the named party’s account with a financial institution.

14(e) “Criminal activity” means a criminal offense punishable
15under the laws of this state by death, imprisonment in the state
16prison, or imprisonment pursuant to subdivision (h) of Section
171170 orbegin delete fromend delete a criminal offense committed in another jurisdiction
18punishable under the laws of that jurisdiction by death or
19imprisonment for a term exceeding one year.begin insert “Criminal activity”
20also means a criminal offense specified in Chapter 9 (commencing
21with Section 319) or Chapter 10 (commencing with Section 330)
22of Title 9.end insert

23(f) “Foreign bank draft” means a bank draft or check issued or
24made out by a foreign bank, savings and loan, casa de cambio,
25credit union, currency dealer or exchanger, check cashing business,
26money transmitter, insurance company, investment or private bank,
27or any other foreign financial institution that provides similar
28financial services, on an account in the name of the foreign bank
29or foreign financial institution held at a bank or other financial
30institution located in the United States or a territory of the United
31States.

32begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
33Section 6 of Article XIII B of the California Constitution because
34the only costs that may be incurred by a local agency or school
35district will be incurred because this act creates a new crime or
36infraction, eliminates a crime or infraction, or changes the penalty
37for a crime or infraction, within the meaning of Section 17556 of
38the Government Code, or changes the definition of a crime within
39the meaning of Section 6 of Article XIII B of the California
40Constitution.

end insert
begin delete
P5    1

SECTION 1.  

Section 17539.1 of the Business and Professions
2Code
is amended to read:

3

17539.1.  

(a) The following unfair acts or practices undertaken
4by, or omissions of, any person in the operation of any contest or
5sweepstakes are prohibited:

6(1) Failing to clearly and conspicuously disclose, at the time of
7the initial contest solicitation, at the time of each precontest
8promotional solicitation and each time the payment of money is
9required to become or to remain a contestant, the total number of
10contestants anticipated based on prior experience and the
11percentages of contestants correctly solving each puzzle used in
12the three most recently completed contests conducted by the person.
13If the person has not operated or promoted three contests he or she
14shall disclose for each prior contest if any, the information required
15by this section.

16(2) Failing to promptly send to each member of the public upon
17his or her request, the actual number and percentage of contestants
18correctly solving each puzzle or game in the contest most recently
19completed.

20(3) Misrepresenting in any manner the odds of winning any
21prize.

22(4) Misrepresenting in any manner, the rules, terms, or
23conditions of participation in a contest.

24(5) Failing to clearly and conspicuously disclose with all contest
25puzzles and games and with all promotional puzzles and games
26all of the following:

27(A) The maximum number of puzzles or games that may be
28necessary to complete the contest and determine winners.

29(B) The maximum amount of money, including the maximum
30cost of any postage and handling fees, that a participant may be
31asked to pay to win each of the contest prizes then offered.

32(C) That future puzzles or games, if any, or tie breakers, if any,
33will be significantly more difficult than the initial puzzle.

34(D) The date or dates on or before which the contest will
35terminate and upon which all prizes will be awarded.

36(E) The method of determining prizewinners if a tie remains
37after the last tie breaker puzzle is completed.

38(F) All rules, regulations, terms, and conditions of the contest.

39(6) Failing to clearly and conspicuously disclose the exact nature
40and approximate value of the prizes when offered.

P6    1(7) Failing to award and distribute all prizes of the value and
2type represented.

3(8) Representing directly or by implication that the number of
4participants has been significantly limited, or that any particular
5person has been selected to win a prize unless that is the fact.

6(9) Representing directly or by implication that any particular
7person has won any money, prize, thing, or other value in a contest
8unless there has been a real contest in which a meaningful
9percentage, which shall be at least a majority, of the participants
10in those contests have failed to win a prize, money, thing, or other
11value.

12(10) Representing directly or by implication that any particular
13person has won any money, prize, thing, or other value without
14disclosing the exact nature and approximate value thereof.

15(11) Using the word “lucky” to describe any number, ticket,
16coupon, symbol, or other entry, or representing in any other manner
17directly or by implication that any number, ticket, coupon, symbol,
18or other entry confers or will confer an advantage upon the recipient
19that other recipients will not have, that the recipient is more likely
20to win a prize than are others, or that the number, ticket, coupon,
21symbol, or other entry has some value that other entries do not
22have.

23(12) Using or offering for use any method intended to be used
24by a person interacting with an electronic video monitor to simulate
25gambling or play gambling-themed games in a business
26establishment that (A) directly or indirectly implements the
27predetermination of sweepstakes cash, cash-equivalent prizes, or
28other prizes of value, or (B) otherwise connects a sweepstakes
29player or participant with sweepstakes cash, cash-equivalent prizes,
30or other prizes of value. For the purposes of this paragraph,
31“business establishment” means a business that has any financial
32interest in the conduct of the sweepstakes or the sale of the products
33or services being promoted by the sweepstakes at its physical
34location. This paragraph does not make unlawful game promotions
35or sweepstakes conducted by for-profit commercial entities on a
36limited and occasional basis as an advertising and marketing tool
37that are incidental to substantial bona fide sales of consumer
38products or services and that are not intended to provide a vehicle
39for the establishment of places of ongoing gambling or gaming.

P7    1(13) Failing to obtain the express written or oral consent of
2individuals before their names are used for a promotional purpose
3in connection with a mailing to a third person.

4(14) Using or distributing simulated checks, currency, or any
5simulated item of value unless there is clearly and conspicuously
6printed thereon the words: SPECIMEN--NONNEGOTIABLE.

7(15) Representing, directly or by implication, orally or in
8writing, that any tie breaker puzzle may be entered upon the
9payment of money qualifying the contestant for an extra cash or
10any other type prize or prizes unless:

11(A) It is clearly and conspicuously disclosed that the payments
12are optional and that contestants are not required to pay money,
13except for reasonable postage and handling fees, to play for an
14extra cash or any other type of prize or prizes; and

15(B) Contestants are clearly and conspicuously given the
16opportunity to indicate they wish to enter that phase of the contest
17for free, except for reasonable postage and handling fees the
18amount of which shall not exceed one dollar and fifty cents ($1.50)
19plus the actual cost of postage and which shall be clearly and
20conspicuously disclosed at the time of the initial contest solicitation
21and each time thereafter that the payment of the fees is required.
22The contestants’ opportunity to indicate they wish to enter for free
23shall be in immediate conjunction with and in a like manner as the
24contestants’ opportunity to indicate they wish to play for an extra
25prize.

26(b) For the purposes of this section, “sweepstakes” means a
27procedure, activity, or event, for the distribution, donation, or sale
28of anything of value by lot, chance, predetermined selection, or
29random selection that is not unlawful under other provisions of
30law, including, but not limited to, Chapter 9 (commencing with
31Section 319) and Chapter 10 (commencing with Section 330) of
32Title 9 of Part 1 of the Penal Code.

33(c) This section does not apply to an advertising plan or program
34that is regulated by, and complies with, the requirements of Section
3517537.1.

36(d) Nothing in this section shall be deemed to render lawful any
37activity that is unlawful pursuant to other law, including, but not
38limited to, Section 320, 330a, 330b, 330.1, or 337j of the Penal
39Code.

P8    1(e) Nothing in this section shall be deemed to render unlawful
2or restrict otherwise lawful games and methods used by a gambling
3enterprise licensed under the Gambling Control Act or operations
4of the California State Lottery.

end delete


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