BILL ANALYSIS
SB 1400
Page 1
SENATE THIRD READING
SB 1400 (Simitian)
As Amended August 15, 2008
Majority vote
SENATE VOTE :31-1
BUSINESS & PROFESSIONS 7-1 JUDICIARY
7-3
-----------------------------------------------------------------
|Ayes:|Eng, Carter, Hayashi, |Ayes:|Jones, Evans, Feuer, |
| |Hernandez, Price, | |Krekorian, Laird, Levine, |
| |Torrico, Lieu | |Lieber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Horton |Nays:|Tran, Adams, Keene |
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 11-3
-----------------------------------------------------------------
|Ayes:|Leno, Davis, DeSaulnier, | | |
| |Furutani, Huffman, | | |
| |Karnette, Krekorian, | | |
| |Lieu, Ma, Nava, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Walters, La Malfa, | | |
| |Nakanishi | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Recasts California's sweepstakes law by requiring
additional disclosures and consumer protections. Specifically,
this bill :
1)Adds solicitation materials selling information regarding
sweepstakes to the provisions of law concerning solicitation
materials containing sweepstakes entry materials.
2)Prohibits solicitation materials containing sweepstakes entry
materials or solicitation materials selling information
regarding sweepstakes from representing the following:
SB 1400
Page 2
a) That a person has been specially selected in connection
with a sweepstakes unless it is true;
b) That the person receiving the solicitation has received
any special treatment or personal attention from the
sweepstakes sponsor or any officer, employee, or agent of
the sweepstakes sponsor unless the representation of
special treatment or personal attention is true;
c) That a person is being notified a second or final time
of the opportunity to receive or compete for a prize,
unless that representation is true; and,
d) That a prize notice is urgent or otherwise convey an
impression of urgency by use of description, phrasing on a
mailing envelope, or similar method, 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 clearly and conspicuously
disclosed in the body of the solicitation materials.
3)Prohibits solicitation materials containing sweepstakes entry
materials or solicitation materials selling information
regarding sweepstakes from either of the following:
a) Simulating or falsely representing that it is a document
authorized, issued, or approved by any court, official, or
agency of the United States or any state, or by any lawyer,
law firm, or insurance or brokerage company; and,
b) Creating a false impression as to its source,
authorization, or approval.
4)Requires the official rules to disclose the date or dates the
final winner or winners will be determined.
5)Prohibits a sweepstakes sponsor from charging a fee as a
condition of receiving a monetary distribution, or obtaining
information about a prize or sweepstakes.
6)Defines the following terms:
a) "No-purchase-or payment-necessary message" to mean
either the following statement or a statement substantially
similar to the following statement: "No purchase or
SB 1400
Page 3
payment of any kind is necessary to enter or win this
sweepstakes;"
b) "Specially selected" to mean a representation that a
person is a winner, a 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; and,
c) "Sweepstakes sponsor" to mean either of the following:
i) A person or entity that operates or administers a
sweepstakes, as specified; or,
ii) A person or entity that offers, by means of a
notice, a prize to another person in conjunction with any
real or purported sweepstakes that requires or allows, or
creates the impression of requiring or allowing, the
person to purchase any goods or services, or pay any
money, as a condition of receiving, or in conjunction
with allowing the person to receive, use, or obtain a
prize or information about a prize.
7)Specifies that a person or entity that merely furnishes a
prize in connection with a sweepstakes that is operated or
administrated by another person or entity shall not be deemed
a sweepstakes sponsor.
8)Makes technical, clarifying changes.
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.
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:
SB 1400
Page 4
a) "No purchase necessary statement" as a language that
states no purchase is necessary as a condition of entering
the promotion sweepstakes; and,
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 materials 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, potential costs to the Attorney General and
non-reimbursable costs to local prosecutors for enforcement.
(The bill amends provisions of current law, the violation of
which are subject to a civil penalty of $2,500 for each
violation.)
COMMENTS : According to the author's office, "In response to
growing complaints about deceptive sweepstakes mailers,
California was among the first states to pass sweepstakes laws
in 1998. However, aside from minor technical clean-up
legislation, California's sweepstakes laws have not been updated
since. In addition, new deceptive sweepstakes solicitation
practices have surfaced that prey on Californians' particularly
senior citizens. Current law does not expressly forbid third
parties from selling information regarding sweepstakes
opportunities, nor are they bound by sweepstakes laws and
disclosures."
This bill seeks to strengthen consumer protections against
deceptive sweepstakes practices through improved disclosures and
representation restrictions.
In 2000, a multi-state investigation of the sweepstakes
solicitations and misleading business practices of the
Publisher's Clearinghouse resulted in a 26-state $34 million
settlement and specific injunctions. In response to the
SB 1400
Page 5
scandal, other states have since enacted more comprehensive
consumer protections regarding sweepstakes, similar to what is
being proposed in this bill. Examples of the protections in
Colorado, Texas and Oregon follow.
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 from
representing 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 if more than 25% 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.
Analysis Prepared by : Rebecca May / B. & P. / (916) 319-3301
FN: 0007066