BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1400|
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THIRD READING
Bill No: SB 1400
Author: Simitian (D)
Amended: 5/6/08
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE : 8-0, 4/7/08
AYES: Ridley-Thomas, Aanestad, Calderon, Corbett, Denham,
Harman, Simitian, Yee
NO VOTE RECORDED: Florez
SENATE JUDICIARY COMMITTEE : 5-0, 4/29/08
AYES: Corbett, Harman, Ackerman, Kuehl, Steinberg
SUBJECT : Business: sweepstakes
SOURCE : Author
DIGEST : This bill prohibits sweepstakes materials, as
defined, from making various misleading or false
representations and requires them to disclose the selection
date of the final winner.
ANALYSIS :
Existing Law
1.Defines sweepstakes" to mean any procedure for the
distribution of anything of value by lot or by chance
that is not unlawful.
CONTINUED
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2.Prohibits sweepstakes solicitation materials from
representing that a person is a prize winner unless that
person has, in fact, won a prize.
3.Requires solicitation materials containing sweepstakes
entry materials to include a prominent "no purchase is
necessary" message and a copy of the "official rules,"
as specified. For purposes of this section, defines "no
purchase necessary statement" and "official rules" as
follows:
A. "No purchase necessary statement" as a language
that states no purchase is necessary as a
condition of entering the promotion sweepstakes.
B. "Official rules" as the formal printed
statement of the rules for the promotional
sweepstakes appearing in the solicitation
materials.
4.Prohibits sweepstakes entries that do not include an
order for products or services from being disadvantaged
in the winner selection process for the sweepstakes
entered.
5.States that sweepstakes material shall not represent
that entries in the sweepstakes accompanied by an order
for products or services will be eligible for additional
prizes or will be more likely to win than entries from
individuals not purchasing a product or service.
This bill:
1.Recasts solicitation materials containing sweepstakes
entry materials as "sweepstakes materials" and defines
"sweepstakes materials" as the following:
A. Sweepstakes entry materials.
B. Solicitation materials connected to or
promoting sweepstakes.
C. Solicitation materials selling information
regarding sweepstakes.
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2.Specifies that sweepstakes materials may not represent
that a person is a winner of any particular prize unless
that person has in fact won that prize.
3.Prohibits sweepstakes materials from representing that a
person has been specially selected, as defined, when
more than 25 percent of persons receiving the
sweepstakes materials have the same chance of winning.
4.Requires, in instances where sweepstakes materials were
sent to less than 25 percent of persons who have been
specially selected, as defined, the sweepstakes
materials to include a statement of the number of
persons in the group that received the same sweepstakes
materials. Also requires the disclosure to be next to,
and be in the same, size, font and color of the
specially selected representation.
5.Defines "specially selected" as a representation that a
person is a winner, finalist, in first place or tied for
first place, or otherwise among a limited group of
persons with an enhanced likelihood of receiving a
prize.
6.Prohibits sweepstakes materials from representing that
the person receiving the solicitation has received any
special attention from the sweepstakes sponsor or
officer or that person's employee or agent.
7.Prohibits sweepstakes materials from representing that a
person is being notified for the second or final time of
the opportunity to receive or compete for a prize,
unless that representation is true.
8.Prohibits sweepstakes materials from representing that a
prize notice is urgent or conveying a sense of urgency
unless there is a time limit period in which the
recipient must take action to claim or be eligible to
receive a prize and requires the date by which action
must be taken to be next to and be in the same, size,
font and color of the urgency representation.
9.Prohibits sweepstakes materials from:
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A. Simulating or falsely representing that the
document is authorized, issued or approved by any
state or federal, official or agency or by any
lawyer, law firm or insurance or brokerage
company.
B. Creating a false impression as to its source,
authorization or approval.
10.Requires sweepstakes materials to disclose the date of
the final winner determination and to contain a copy of
the official rules.
11.Redefines "no-purchase-necessary message" as the
following statement: "No purchase or payment of any kind
is necessary to enter or win this sweepstakes."
12.Prohibits a sweepstakes sponsor, as defined, from
charging a fee as a condition of collection on a prize
and sharing or selling the names and information of
their customers and sponsors without their express prior
consent.
13.Defines "sweepstakes sponsor" as either a person or
entity that operates or administers a sweepstakes, as
defined, or a person or entity that offers a prize to
another person along with a real or purported
sweepstakes that either requires or allows, or creates
the impression of requiring or allowing, the person to
purchase goods or services or pay any money as a
condition of receiving, using or obtaining a prize or
information about a prize.
14.Requires the existing message on sweepstakes materials
that no purchase is necessary to be "clear and
conspicuous" rather than prominent.
Background
California sweepstakes law was written in 1998, and aside
from minor, technical cleanup legislation, has not been
updated since. In 2000, a multi-state investigation of the
sweepstakes solicitations and misleading business practices
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of the Publisher's Clearinghouse resulted in a 26-state $34
million settlement. In response to the scandal, other
states (Colorado, Oregon and Texas) have enacted more
stringent consumer protection measures, some of which have
been incorporated into this measure. Examples of their
protections are as follows:
Colorado : Defines "specially selected" as a representation
that a person is a winner, finalist, in first place or tied
for first place, or otherwise among a limited group of
persons with an enhanced likelihood of receiving a prize;
requires that if sweepstakes materials represent that a
person has been specially selected, the solicitation must
include a statement of the maximum number of persons in the
group, with the enhanced likelihood of receiving a prize
and prohibits sweepstakes sponsors from charging a fee as a
condition of collecting a prize.
Texas: Prohibits sweepstakes sponsors from charging a fee
as a condition of collecting a prize and sweepstakes
materials shall not represent that the person receiving the
solicitation has received any special treatment or personal
attention from sweepstakes sponsors or their agents.
Oregon : Prohibits sweepstakes materials from representing
that a person has been specially selected, when more than
25 percent of persons receiving the sweepstakes materials
have the same chance of winning, and requires the
sweepstakes materials to disclose the date the final winner
will be determined.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/6/08)
AARP
California Alliance for Consumer Protection
California Alliance for Retired Americans
California Senior Legislature
Congress of California Seniors
Consumer Action
Consumer Federation of California
Gray Panthers
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Older Women's League of California
Privacy Rights Clearing House
ARGUMENTS IN SUPPORT : According to the author's office,
this legislation is intended to update California's rules
and disclosure requirements for sweepstakes solicitations
to better protect consumers, particularly the elderly who
are disproportionately targeted and victimized, against
unfair or misleading advertising of sweepstakes.
JJA:do 5/6/08 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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