BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1154|
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UNFINISHED BUSINESS
Bill No: SB 1154
Author: Figueroa (D)
Amended: 6/24/04
Vote: 21
SENATE BUSINESS & PROFESSIONS COMMITTEE : 5-0, 4/19/04
AYES: Aanestad, Cedillo, Machado, Murray, Figueroa
NO VOTE RECORDED: Brulte, Vincent
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 24-13, 5/17/04
AYES: Aanestad, Alarcon, Alpert, Bowen, Burton, Cedillo,
Ducheny, Dunn, Escutia, Figueroa, Florez, Karnette,
Kuehl, Machado, Murray, Ortiz, Perata, Romero, Scott,
Sher, Soto, Speier, Torlakson, Vasconcellos
NOES: Ackerman, Ashburn, Battin, Brulte, Denham,
Hollingsworth, Johnson, Margett, McClintock, McPherson,
Morrow, Oller, Poochigian
NO VOTE RECORDED: Chesbro, Vincent, Vacancy
ASSEMBLY FLOOR :
SUBJECT : Consumer rebates
SOURCE : Consumers Union
DIGEST : This bill regulates the offering and fulfillment
of rebates for consumer products, including requirements
that consumers have a minimum of 30 days to submit a rebate
request and companies have a maximum of 60 days to deliver
CONTINUED
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the rebate, as well as restrictions on what evidence and
personal information a company may require the consumer to
provide.
Assembly Amendments made various changes, including the
following:
1. Requiring a company to allow a minimum of 30 rather than
60 days for a consumer to submit a rebate request.
2. Requiring the company to mail the rebate check or
otherwise fulfill the terms of the offer no later than
the same number of days provided to consumers to submit
their rebate request, and no later than 60 days in any
event after either receipt of a valid request or upon
completion by the consumer of the required minimum
service period and the receipt of a valid request. The
Senate version required to mail the rebate check no
later than 30 days from receipt of a valid rebate
request.
3. Specifying an operative date of July 1, 2005.
ANALYSIS : There are no state or federal laws that
specifically address consumer rebates. However, the
California Unfair Practices Act prohibits unfair
competition, which is defined in part as any unlawful,
unfair or fraudulent business act or practice and unfair,
deceptive, untrue or misleading advertising.
The Federal Trade Commission Act has been used by the
Federal Trade Commission (FTC) to take action against the
mail-in rebate industry. Title 15, United States Code,
Section 45, prohibits unfair methods of competition and
unfair or deceptive acts or practices in or affecting
commerce, and the FTC has used this law in the past, for
example, to take action against companies that failed to
deliver rebates within the time specified by the rebate
offer.
This bill:
1. Requires a company offering rebates to allow a minimum
of 30 days from the eligibility date for the consumer to
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submit the rebate request.
2. Requires a company to mail the rebate check or otherwise
fulfill the terms of the offer no later than the same
number of days provided to consumers to submit their
rebate request, and no later than 60 days in any event,
after either of the following:
A. Upon receipt of a valid request.
B. Upon completion by the customer of the required
minimum service period and the receipt of a valid
request.
3. Prohibits a company from requiring a consumer to provide
more than all of the following as a proof of purchase
for a consumer rebate: a receipt, any universal product
code or other packaging element, and the consumer's
name, address, telephone number, membership number, and
signature.
4. Permits a company to require an email address rather
than a telephone number if the product was purchased
over the Internet.
5. Requires a company to provide the rebate redemption form
directly with the product, and at the same time and
location as the purchase. Companies providing rebates
must provide retailers with sufficient quantities of
rebate forms or a means to create them. In the case of
Internet sales, a generally accessible web page may be
used to provide the form. In the case of telephone
sales, a generally accessible web page may be used to
comply, as can a form sent, upon request, via regular
mail, electronic mail, or telecopy.
6. Requires a company to accept a copy of a receipt as
sufficient unless the consumer is provided with a
duplicate original receipt.
7. Permits a company to require a consumer to write the
model number or other identifying information on the
rebate form only if the receipt does not provide that
information.
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8. Requires a rebate offer to conspicuously disclose a
telephone number on the rebate form so that a consumer
can check on the status of his/her rebate request.
9. Permits companies to use a web site or other electronic
means to provide consumers with a means to check the
status of his/her rebate if the product was purchased
over a web site operated by the company.
10.Exempts from the provisions of this bill certain rebates
offered by gas or electric corporations, or local
publicly-owned electric utilities.
11.Declares that this bill shall become operative on July
1, 2005.
12.Declares that this bill shall not impose any obligation
to recall any product or service shipped prior to the
operative date. Any rebate offer in effect prior to the
operative date shall be deemed in compliance.
13.Defines the term "consumer rebate."
Comments
Purpose of this bill . This bill is intended to regulate
the use of rebates for consumer products so that consumers
can send rebate requests and receive their checks within a
reasonable amount time and without unnecessary requirements
for documentation or personal information. This bill is
sponsored by Consumers Union.
In general, this bill enacts a number of protections for
consumers requesting a product rebate, including (1) a
minimum of 30 days for a consumer to request a rebate and
an equal amount of time (not to exceed 60 days) for the
company to send it, (2) restrictions on the evidence and
personal information a company can require a consumer to
submit, (3) a requirement for the disclosure of a contact
point (telephone or electronic) to check the status of a
rebate, and (4) a requirement that rebate forms be provided
with the product at the time of purchase. In order to make
these new requirements practicable for the companies,
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rebate offers and products shipped before the operative
date of July 1, 2005 are exempted.
Rebate programs and consumer complaints . According to the
author, "the use of rebates as a marketing tool has
exploded over the past few years, and with it, the number
of complaints from consumers regarding rebates has
increased. Problems with rebates range from very short
deadlines to submit the rebate form (as little as two weeks
is a common deadline) to a maze of specific instructions
buried in the fine print on the exact way to submit a
rebate request. Even if you follow the exact instructions
and get the rebate form in the mail before the deadline, it
often takes several months to receive a check.
"Mail-in rebates have grown increasingly common, especially
for consumer electronics. Manufacturers use rebates to
lower prices temporarily, to increase market share, and
sometimes to gain demographic information about customers.
Sellers frequently outsource their programs, thereby
shifting their rebate responsibility to a third party.
Although redemption rates vary widely depending on the
value of the rebate, according to the Aberdeen Group, a
Boston-based market research firm, only about
40 percent of qualifying buyers actually redeem a rebate
check. Another 40 percent of rebate offers are never even
submitted, and the remaining 20 percent are disqualified."
Consumers Union notes that, "[t]here are various reasons
for denial including consumers not following the directions
exactly or not providing all of the specified information.
It is unfortunate that while promising good value, rebates
often result in significant consumer frustration."
Furthermore, the FTC expected to receive 1,700 complaints
last year on rebates, which is up 70 percent from the three
previous years. In California, the State Department of
Consumer Affairs reports that they have received 384
rebate-related complaints over the past three years
(2001-2003).
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/22/04)
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Consumers Union (source)
American Federation of State, County and Municipal
Employees, AFL-CIO
Consumer Alliance for Consumer Protection
Consumer Federation of California
OPPOSITION : (Verified 6/22/04)
American Electronics Association
California Manufacturers & Technology Association
Cricket Communications
Global Fulfillment Services
Promotional Marketing Association
Young America Corporation
ARGUMENTS IN SUPPORT : According to the author's office,
this bill sets reasonable timelines for consumers to submit
rebate requests and for companies to make good on their
offers. This bill also standardizes and simplifies the
process by limiting the information that a company can
require on a rebate form.
Consumers Union argues that, "[w]hen a consumer purchases a
product that includes a rebate offer, the consumer expects
to receive the rebate in a timely manner without an
unreasonable amount of hassle. This bill attempts to
ensure that these consumer expectations are met.
CP:mel 6/29/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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