BILL NUMBER: AB 1231	CHAPTERED  10/10/99

	CHAPTER   907
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 10, 1999
	PASSED THE SENATE   SEPTEMBER 9, 1999
	AMENDED IN SENATE   SEPTEMBER 3, 1999
	AMENDED IN SENATE   JULY 1, 1999
	AMENDED IN ASSEMBLY   MAY 6, 1999

INTRODUCED BY   Assembly Member Machado

                        FEBRUARY 26, 1999

   An act to add Section 17537.11 to the Business and Professions
Code, relating to advertising.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1231, Machado.  Advertising:  coupons.
   Existing law governing advertising makes it unlawful to use the
term "prize" or "gift" in any manner that would be untrue or
misleading.
   Existing law, in particular, makes it unlawful to notify any
person by any means that he or she will receive a gift and that as a
condition of receiving that gift he or she must pay any money, or
purchase or lease, including rent, any goods or services, if one or
more of certain specified conditions exist.
   This bill would make it unlawful to offer a coupon, as defined,
that is untrue or misleading, and would make it unlawful to offer a
coupon described as "free" or as a "gift," "prize," or other similar
term if (1) as a condition of receiving or utilizing the coupon the
recipient is required to pay any money or purchase any goods or
services to obtain or use the coupon, and (2) the majority of the
sales made by the offeror or by any person who honors the coupon
during the preceding year were made in connection with the use of one
or more "free," "gift," or "prize," or similarly described coupons.

   Existing law makes it a crime to violate any of the provisions
governing advertising.  By adding this new prohibition to those
provisions, this bill would expand the scope of an existing crime,
thereby imposing a state-mandated local program.
  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.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   This bill would also state legislative intent.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  The Legislature finds and declares that consumers,
particularly senior citizens, have been harmed by the deceptive and
unfair use of coupons in misleading sales promotion schemes.  For
example, some merchants make most of their sales of goods and
services with so-called free, gift, or prize coupons.  In fact, the
coupon is not free, a gift, or a prize because the consumer must buy
something to receive the coupon's benefit and moreover, since most of
the sales are made in conjunction with the coupon, the coupon-based
price does not represent a real discount from the merchant's regular
selling price.  It is the intent of the Legislature that the unfair
and deceptive use of coupons be prohibited and that this act be
liberally construed so as to effectuate that purpose.
  SEC. 2.  Section 17537.11 is added to the Business and Professions
Code, to read:
   17537.11.  (a) It is unlawful for any person to offer a coupon
that is in any manner untrue or misleading.
   (b) It is unlawful for any person to offer a coupon described as
"free" or as a "gift," "prize," or other similar term if (1) the
recipient of the coupon has to pay money or buy any good or service
to obtain or use the coupon and (2) the person offering the coupon or
anyone honoring the coupon made the majority of his or her sales in
the preceding year in connection with one or more "free," "gift,"
"prize," or similarly described coupons.
   (c) For purposes of this section:
   (1) "Coupon" includes any coupon, certificate, document, discount,
or similar matter that purports to entitle the user of the coupon to
obtain goods or services for free or for a special or reduced price.

   (2) "Sale" includes lease or rent.
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.