California Sweepstakes Bill Modified to Reduce Industry Concerns

The California State Assembly and Senate recently passed a bill that would amend existing state law by adding numerous disclosure requirements for sweepstakes materials. California Senate Bill 1400, which could have been construed to prevent alternate methods of entry from satisfying the requirement of no consideration, and which by its terms required opt-in consent before selling or sharing information about sweepstakes participants, was substantially modified before it was put into final form. The form approved by both the Assembly and Senate would significantly impact how sweepstakes are advertised and conducted. The passed version of the bill has the following disclosure requirements / restrictions:

  • A no purchase message included in the official rules must be set out in a separate paragraph in the official rules and be printed in capital letters in contrasting typeface not smaller than the larges typeface used in the text of the rules.
  • Shall not represent that a person has been specially selected in connection with a sweepstakes unless it is true.
  • Shall not represent 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.
  • Shall not represent 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 required is clearly and conspicuously disclosed in the body of the solicitation materials.
  • Shall not do either of the following: (1) Simulate or falsely represent 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. (2) Create a false impression as to its source, authorization, or approval.

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