S 1246 Session 111 (1995-1996)
S 1246 General Bill, By Martin
A Bill to amend Section 37-15-20, Code of Laws of South Carolina, 1976,
relating to definitions for purposes of the Prizes and Gifts Act.-short title
03/13/96 Senate Introduced and read first time SJ-4
03/13/96 Senate Referred to Committee on Judiciary SJ-4
A BILL
TO AMEND SECTION 37-15-20, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO DEFINITIONS FOR
PURPOSES OF THE PRIZES AND GIFTS ACT, SO AS TO
DEFINE "SPONSOR" AS A CORPORATION,
PARTNERSHIP, LIMITED LIABILITY COMPANY, SOLE
PROPRIETORSHIP, OR NATURAL PERSON THAT OFFERS A
PRIZE TO A PERSON IN SOUTH CAROLINA IN
CONJUNCTION WITH THE SALE OR LEASE OF ANY
PRODUCT OR SERVICE, OR IN CONJUNCTION WITH ANY
REAL OR PURPORTED CONTEST, COMPETITION,
SWEEPSTAKES, PUZZLE, DRAWING, SCHEME, PLAN, OR
OTHER SELECTION PROCESS THAT REQUIRES, OR
CREATES THE REASONABLE IMPRESSION OF REQUIRING,
OR ALLOWS THE PERSON TO PAY ANY MONEY AS A
CONDITION OF RECEIVING, OR IN CONJUNCTION WITH
ALLOWING THE PERSON TO RECEIVE, USE, COMPETE
FOR, OR OBTAIN A PRIZE, OR INFORMATION ABOUT A
PRIZE; TO AMEND SECTION 37-15-30 OF THE 1976 CODE,
RELATING TO RESTRICTIONS ON REPRESENTATIONS
THAT A PERSON HAS WON A PRIZE OR CONTEST, SO AS
TO MAKE THIS SECTION APPLICABLE TO A SPONSOR
RATHER THAN TO ANY PERSON IN CONNECTION WITH
THE SALE, LEASE, OR SOLICITATION FOR THE SALE OR
LEASE OF GOODS, PROPERTY, OR SERVICE; TO AMEND
SECTION 37-15-40, RELATING TO THE FORM AND
CONTENT OF DISCLOSURES REQUIRED AS
PREREQUISITES TO REPRESENTATION THAT PERSON HAS
CHANCE TO WIN SOMETHING, SO AS TO REVISE THE
DISCLOSURES WHICH MUST BE MADE AND TO PROVIDE
AN EXEMPTION FOR SPONSORS OF PRIZE PROMOTIONS
THAT AWARD ALL PRIZES ABSOLUTELY FOR FREE AND
IN WHICH THERE IS NO OPPORTUNITY FOR THE
PAYMENT OF MONEY FROM THE PERSON TO THE
SPONSOR, OR ANY AGENT OF THE SPONSOR; TO AMEND
CHAPTER 15, TITLE 37 OF THE 1976 CODE, BY ADDING
SECTION 37-15-45 SO AS TO PROVIDE THAT A SPONSOR
WHO REPRESENTS TO A PERSON THAT THE PERSON HAS
BEEN AWARDED A PRIZE SHALL, NOT LATER THAN
THIRTY DAYS AFTER MAKING A REPRESENTATION,
PROVIDE THE PERSON WITH THE PRIZE, OR WITH A
VOUCHER, CERTIFICATE, OR OTHER DOCUMENT GIVING
THE PERSON THE UNCONDITIONAL RIGHT TO RECEIVE
THE PRIZE, OR SHALL PROVIDE THE PERSON WITH
OTHER CONSIDERATION; TO AMEND CHAPTER 15, TITLE
37 OF THE 1976 CODE, BY ADDING SECTION 37-15-55 SO
AS TO PROHIBIT CERTAIN ACTS; TO AMEND SECTION
37-15-80, RELATING TO CIVIL ACTIONS TO ENFORCE THE
PRIZES AND GIFTS ACT, SO AS TO PROVIDE THAT ANY
PERSON SUFFERING A PECUNIARY LOSS BECAUSE OF AN
INTENTIONAL VIOLATION OF THIS ACT MAY RECOVER
THE GREATER OF FIVE HUNDRED DOLLARS OR TWICE
THE AMOUNT OF THE PECUNIARY LOSS; TO AMEND
SECTION 37-15-100 OF THE CODE, RELATING TO
EXEMPTIONS FROM CERTAIN PROVISIONS OF THIS ACT,
SO AS TO PROVIDE THAT ANY WILLFUL FAILURE OF A
SELLER CLAIMING EXEMPTION UNDER THIS ACT TO
COMPLY WITH ALL OF THE TERMS OF THE EXEMPTION
SHALL RENDER A CLAIM OF EXEMPTION VOID; AND TO
AMEND SECTION 37-1-203 OF THE 1976 CODE, RELATING
TO JURISDICTION OVER CREDITORS, SO AS TO ALSO
MAKE THIS SECTION APPLICABLE TO PERSONS OTHER
THAN CREDITORS WHOSE CONDUCT IS GOVERNED BY
THE PROVISIONS OF TITLE 37.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. (A) The South Carolina General Assembly has
become aware of the avalanche of sweepstakes, contests, and prize
promotions that have been and are being directed at South Carolina
consumers, and recognizes that consumers are often misled by these
sweepstakes, contests, and prize promotions. The General
Assembly also recognizes that South Carolina consumers have paid
hundreds of thousands of dollars to sweepstakes, contests, and prize
promoters based upon misrepresentations by those promoters to
South Carolina consumers. Many of the sweepstakes, contests, and
prize promotions are artfully crafted to lead South Carolina
consumers to believe that they have been selected to receive
valuable prizes, when such is not the case. The promotions often
mislead South Carolina consumers as to the value of the prizes.
The promotions often mislead South Carolina consumers as to their
chances to receive the prize. The promotions often mislead South
Carolina consumers to believe that they must purchase the
promoter's product, or otherwise pay to the promoter sums of
money in order to be eligible to receive the prize, or that the
likelihood that the prize to be awarded will be increased, or that the
consumer's application for the prize will receive special handling if
the consumer purchases the promoter's product. These
sweepstakes, contests and prize promoters prey particularly upon
elderly South Carolina consumers.
(B) It is the intent of the General Assembly through the
enactment of this act to require that South Carolina consumers be
provided with all relevant information necessary to make an
informed decision concerning sweepstakes, contests, and prize
promotions; it is also the intent of the General Assembly to prohibit
misleading and deceptive prize promotions. This act shall be
construed liberally in order to achieve this purpose.
SECTION 2. Chapter 15, Title 37 of the 1976 Code is amended
to read:
"Section 37-15-10. This chapter may be cited as the
Prizes and Gifts Act.
Section 37-15-20. As used in this chapter:
(1) `Anything of value', `item of value', or `item' means an
item or service with monetary value.
(2) `Handling charge' means a charge, fee, or sum of money
that is paid by a consumer to receive a prize, gift, or an item of
value including, but not limited to, promotional fees, redemption
fees, registration fees, or delivery costs.
(3) `Person' means an individual, corporation, trust, partnership,
association, and any other legal entity.
(4) `Retail value' means:
(a) the price at which substantial sales of the item were made
in the area in which the offer was received within the last one
hundred and eighty days; or
(b) If the sponsor is unable to satisfy the requirement in
clause (A), then no more than 1.5 times the amount the sponsor
paid for the prize in a bona fide purchase from an unaffiliated
seller.
(5) `Sponsor' means a corporation, partnership, limited liability
company, sole proprietorship, or natural person that offers a prize to
a person in South Carolina in conjunction with the sale or lease of
any product or service, or in conjunction with any real or purported
contest, competition, sweepstakes, puzzle, drawing, scheme, plan, or
other selection process that requires, or creates the reasonable
impression of requiring, or allows the person to pay any money as a
condition of receiving, or in conjunction with allowing the person
to receive, use, compete for, or obtain a prize, or information about
a prize.
Section 37-15-30. (A) No person, in connection with the
sale, lease, or solicitation for the sale or lease of goods, property, or
service, sponsor may represent that another person has
won anything of value or is the winner of a contest, unless these
conditions are met:
(1) The recipient of the prize, gift, or item of value must be
given the prize, gift, or item of value without monetary obligation.
(2) The prize, gift, or item of value must be delivered to the
recipient at no expense to the recipient within ten days of the
representation.
(B) The use of language that may lead a reasonable person to
believe that the person has won a contest or anything of value
including, but not limited to, `Congratulations', or `You have won',
or `You are the winner of', is considered a representation of the
type governed by this section.
(C) This section does not apply to a promotion or contest
meeting the requirements or one of the stated exceptions to
applicability set forth in Section 37-15-40.
Section 37-15-40. (A) No person, in connection with the
sale, lease, or solicitation for sale or lease of goods, property, or
service, sponsor may represent that another person has
a chance to win or to receive a prize, gift, or item of value without
clearly and conspicuously disclosing on whose behalf the contest or
promotion is conducted and all material conditions that a participant
must satisfy. In an oral solicitation all material conditions must be
disclosed before requesting the consumer to enter into the sale or
lease. In written material, immediately adjacent to the first
identification of the prize, gift, or item of value to which it relates;
or in a separate section entitled `Award Rules' with the title printed
in no less than ten-point bold face type and the section containing a
description of the prize, gift, or item of value; and these disclosures
must be stated:
(a) the actual retail value of each item or prize, which for
purposes of this section are:
(i) the price at which substantial sales of the item were
made in the area in which the offer was received within the last one
hundred and eighty days; or
(ii) the actual cost of the item of value, gift, or prize to the
person on whose behalf the contest or promotion is conducted plus
no more than seven hundred percent, but in no case may the cost
exceed the person's good faith estimate of the appraised retail
value the retail value of each prize the person receiving the
notice has been selected to receive or may be eligible to
receive;
(b) the actual number of each item, gift, or prize to be
awarded; and
(c) the odds of receiving an item, gift, or prize;
(d) a limitation on eligibility of participation in the contest or
promotion;
(e) the true name or names of the sponsor and the address of
the sponsor's actual principal place of business;
(f) if the receipt of the prize is subject to a restriction, a
statement that a restriction applies, and a description of the
restrictions;
(g) if a sponsor represents that the person is a `winner', is a
`finalist', has been `specially selected', is in `first place', or is
otherwise among a limited group of persons with an enhanced
likelihood of receiving a prize, the written prize notice must contain
a statement of the maximum number of persons in the group or
purported group with this enhanced likelihood of receiving a prize.
.
(B) All disclosures required by this chapter to be in writing must
comply with the following:
(1) all dollar values must be stated in Arabic numerals and
be preceded by a dollar sign.
(2) the number of each item, gift, or prize to be awarded and
the odds of receiving an item, gift, or prize must be stated in Arabic
numerals and must be written in a manner that is clear and
understandable. the retail value and statement of odds
required under subsection (A), items (a) and (c), must be stated in
immediate proximity to each identification of a prize on the written
notice, and must be in the same size and boldness of type as the
reference to the prize;
(2) The statement of odds must include, for each prize, the
total number of prizes to be given away and the total number of
written prizes to be distributed. The number of prizes and written
prize notices must be stated in Arabic numerals. The statement of
odds must be in the following form:
`...(number of prizes) out of ...(notices distributed)';
if a person is required to pay shipping or handling fees or any other
charges in order to obtain a prize, to be eligible to obtain a prize, to
obtain information about a prize, or to otherwise participate in the
contest, the following statement must appear in immediate
proximity to each listing of the prize in the written prize notice, in
not less than 10 point bold face type: `YOU MUST PAY $ .....TO
RECEIVE THIS ITEM' or `YOU MUST PAY $ ......TO
COMPETE FOR THIS ITEM,' or `YOU MUST PAY $ .....TO
OBTAIN INFORMATION ABOUT THIS ITEM,' whichever is
applicable; and (3) a statement required under subsection (A),
item (g), must appear in immediate proximity to each representation
that the person is among a group of persons with an enhanced
likelihood of receiving a prize, and must be in the same size and
boldness of type as the representation.
(C) It is unlawful to notify a person that the person will receive
a gift, prize, or item of value that has as a condition of receiving
the gift, prize, or item of value the requirement that the person pay
for or purchase, lease, or rent any goods or services, unless the
nature of the charges to be incurred including, but not limited to, a
shipping charge or handling charge, have been clearly and
conspicuously disclosed. The disclosure must be given:
(1) on the face of written materials; or
(2) before requesting or inviting the person to enter into the
sale or lease in an oral notification.
(D) This section does not apply if:
(1) a participant is asked only to complete and mail, or deposit
at a local retail commercial establishment, an entry blank obtainable
locally or by mail, or to call in the entry by telephone; or
(2) a participant at no time is required to listen to a sales
presentation in order to receive the prize or gift or at no time is
required to pay for any merchandise, service, or item of value other
than as disclosed in the Award Rules; or
(3) the sponsors of prize promotions award all prizes
absolutely for free and there is no opportunity for the payment of
money from the person to the sponsor, or any agent of the sponsor.
The fact that a prize promotion makes provision for entry into the
contest, or eligibility for the prize, without any payment does not
exempt the prize promotion, nor its sponsor, from the provisions of
this act where the prize promotion requires, or creates the
reasonable impression of requiring, or allows the person to pay any
money as a condition of receiving, or in conjunction with allowing
the person to receive, use, compete for, or obtain a prize of
information about a prize. If the prize promotion provides any
opportunity for any payment by the person to the sponsor for any
reason, regardless of whether such payment is required, and
regardless of how such payment is denominated, this exemption
shall not apply.
(E) Nothing in this section creates liability for an act by the
publisher, owner, agent, or employee of a newspaper, periodical,
radio station, television station, cable-television system, or other
advertising medium arising out of the publication or dissemination
of an advertisement or promotion governed by this section,
when unless the publisher, owner, agent, or
employee did not know knew that the advertisement
or promotion violated this section or had a financial interest in
the solicitation, notice, or promotion. A publisher, owner, agent, or
employee will not be deemed to have a financial interest in the
solicitation, notice or promotion by accepting a fee for the
advertisement or promotion that does not exceed fees usually and
customarily charged for similar advertisements or promotions.
Section 37-15-45. A sponsor who represents to a person that
the person has been awarded a prize shall, not later than thirty (30)
days after making a representation, provide the person with the
prize, or with a voucher, certificate, or other document giving the
person the unconditional right to receive the prize, or shall provide
the person with either of the following items selected by the person:
(1) Any other prize listed in the written prize notice that is
available and that is of equal or greater value; or
(2) The retail value of the prize, as stated in the written notice,
in the form of cash, a money order, or a certified check.
Section 37-15-50. (A) No person may represent that another
person has been specially selected in connection with the sale, lease,
or solicitation for sale or lease of goods, property, or service, unless
the selection process is designed to reach particular persons.
(B) The use of any language that may lead a reasonable person
to believe that the person has been specially selected including, but
not limited to, `Carefully selected', or `You have been selected to
receive', or `You have been chosen', is considered a representation
of the type governed by this section.
Section 37-15-55. A sponsor shall not do any of the
following:
(1) Offer a prize to any person except in accordance with the
requirements of this act.
(2) Deliver a written prize notice, or an envelope containing a
written prize notice, that contains language, or is designed in a
manner, that would have the tendency or capacity to mislead
intended recipients as to the source of the written prize notice. This
prohibition includes, but is not limited to, a written prize notice or
envelope which indicates that the notice or envelope originates from
a government agency, public utility, insurance company, consumer
reporting agency, debt collector, or law firm, unless the written
prize notice or envelope originates from such source.
(3) Represent directly or by implication that the number of
persons eligible for the prize is limited or that a person has been
selected to receive a particular prize, unless the representation is
true.
(4) Represent that a person is a winner or finalist, has been
specially selected, is in first place, or is otherwise among a limited
group of persons with an enhanced likelihood of receiving a prize,
or that a person is entering a contest, sweepstakes, drawing, or other
competitive enterprise, from which a single winner or select group
of winners will receive a prize, when in fact the enterprise is a
promotional scheme designed to make contact with prospective
customers and all or a substantial number of those receiving the
notice are awarded the same prize.
(5) Represent directly or by implication that a person will have
an increased chance of receiving a prize by making multiple or
duplicate purchases, payments or donations, or by entering a game,
drawing, sweepstakes, or other contest more than one time, unless
the representation is true. A sponsor is deemed to have made such
representation if the sponsor delivers one or more prize notices to a
person after the person has already made a purchase, payment, or
donation to the sponsor for the same promotion, or has already
entered the same game, drawing, sweepstakes, or other contest,
unless the sponsor can demonstrate a bona fide error even though
the sponsor has implemented procedures reasonably designed to
prevent such duplication.
(6) Represent directly or by implication that a person is being
notified a second or final time of the opportunity to receive or
compete for a prize, unless the representation is true.
(7) Represent directly or by implication that a prize notice is
urgent, or otherwise convey an impression of the urgency by use of
description, narrative copy, phrasing on an 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 such action is required appears in immediate
proximity to each representation of urgency and in the same type
size and boldness as each representation of urgency.
(8) Knowingly sell, rent, exchange, transfer, or otherwise
furnish to or purchase from other persons, financial data regarding
South Carolina disclosed in connection with a prize promotion not
in compliance with this act. For purposes of this chapter, `financial
data' includes credit card numbers, bank account numbers, other
payment device numbers, and dollars spent on prize promotions
which are not in compliance with this act.
(9) Request an individual to disclose the individual's phone
number, age, birth date, credit card ownership, or financial data in
connection with a prize promotion which is not in compliance with
this act.
Section 37-15-60. In connection with a consumer transaction,
no person may issue any writing that simulates or resembles:
(1) a check, unless the writing clearly and conspicuously
discloses its true value and purpose, and the writing would not
mislead a reasonable person; or
(2) an invoice, unless the intended recipient of the invoice has
contracted for goods, property, or services for which the issuer
seeks proper payment.
Section 37-15-70. (A) It is unlawful to notify a person that the
person will receive a gift, prize, or item of value and that as a
condition of receiving the gift, prize, or item of value the person
will be required to pay for or purchase or lease, including rent, any
goods or services, if:
(1) the shipping charges exceed:
(a) the cost of postage or the charge of a delivery service,
in the business of delivering goods of like size, weight, and kind,
for shipping the gift, prize, or item of value from the geographic
area in which the gift, prize, or item of value is being distributed;
or
(b) the exact amount for shipping the gift, prize, or item of
value paid to an independent fulfillment house or an independent
supplier, either of which is in the business of shipping goods for
shippers other than the offeror of the gift, prize, or item of value; or
(2) the handling charge exceeds the lesser of five dollars or
the actual cost of handling.
(B) This section applies to all offers of prizes, gifts, or items of
value covered by this chapter.
Section 37-15-80. A consumer who suffers loss by reason of
a violation of this chapter may bring a civil action to enforce the
provisions and, if successful in the action, shall recover reasonable
attorney's fees and court costs incurred by bringing the action.
(A) Any person suffering a pecuniary loss because of an
intentional violation of this act may bring an action in any court of
competent jurisdiction and shall recover costs, reasonable attorney
fees, and the greater of five hundred dollars or twice the amount of
the pecuniary loss. It is evidence of intent if the violation occurs
after the South Carolina Department of Consumer Affairs has
notified a sponsor that the sponsor is in violation of this act.
(B) The relief provided in this section is in addition to remedies
or penalties otherwise available in regards to the same conduct
under law or under other statutes of this State.
Section 37-15-90. A violation of this chapter constitutes a
prohibited practice under the provisions of the Unfair Trade
Practices Act and is subject to any of the enforcement provisions of
that act.
Section 37-15-100. (A) Sections 37-15-40 through
37-15-70 do not apply to the sale, purchase, or solicitation or
representation in connection therewith of goods from a catalog or of
books, recordings, videocassettes, periodicals, and similar goods
through a membership group or club that is regulated by the Federal
Trade Commission concerning the use of negative option plans by
sellers in commerce or through a contractual plan or arrangement,
such as a continuity plan, subscription arrangement, or a single sale
or purchase series arrangement, under which the seller ships goods
to a consumer who has consented in advance to receive the goods,
and after examination of the goods, the recipient of the goods is
given the opportunity to receive a full refund of charges for the
goods or a proportionate refund for an unused portion of the
goods, upon return of the goods or the unused portion, undamaged.
(B) The return and refund privilege provided in subsection
(A) shall be clearly and conspicuously disclosed to the consumer in
the original contact with the consumer, whether oral or written. If
the consumer elects to return the product for a refund, the seller
shall process the refund within thirty days after the receipt of the
returned merchandise by the consumer; in addition to the return and
refund privilege, the consumer may cancel the plan, arrangement,
subscription, or purchase series at any time by notifying the seller.
After the seller receives the cancellation notice, any further
products, not already in transit, sent to the consumer shall be
considered a gift to the consumer which the consumer may keep
without further obligation, and for which gift the seller shall not bill
the consumer.
(C) For purposes of this section `catalog seller' shall mean any
entity (and its subsidiaries) or person at least fifty percent of whose
annual revenues are derived from the sale of products sold in
connection with the distribution of catalogs of at least twenty-four
pages, which contain written descriptions or illustrations and sale
prices for each item of merchandise and which are distributed in
more than one state with a total annual distribution of at least two
hundred fifty thousand.
(D) Any willful failure of a seller claiming exemption under
subsection (A) of this section to comply with all of the terms of the
exemption shall render a claim of exemption void, and such seller
shall be bound to fully comply with the provisions of this
act."
SECTION 3. Section 37-1-203 of the 1976 Code is amended to
read:
"Section 37-1-203. (1) Subject to constitutional and
statutory jurisdictional limitations the courts of this State may
exercise jurisdiction over any creditor or other person with
respect to any conduct in this State governed by this title or with
respect to any claim arising from a transaction subject to this title.
In addition to any other method provided by statute, personal
jurisdiction over a creditor may be acquired in a civil action or
proceeding instituted in a court by the service of process in the
manner provided by this section.
(2) If a creditor or other person whose conduct is governed
by this title is not a resident of this State or is a corporation
not authorized to do business in this State and engages in any
conduct in this State governed by this title, or engages in a
transaction subject to this title, he may designate an agent upon
whom service of process may be made in this State. The agent
shall be a resident of this State or a corporation authorized to do
business in this State. The designation shall be in writing and filed
with the Secretary of State. If no designation is made and filed or if
process cannot be served in this State upon the designated agent,
process may be served upon the Secretary of State, but service upon
him is not effective unless the plaintiff or petitioner forthwith mails
a copy of the process and pleading by registered or certified mail to
the defendant or respondent at his last reasonably ascertainable
address. An affidavit of compliance with this section shall be filed
with the clerk of the court on or before the return day of the
process, if any, or within any further time the court allows."
SECTION 4. This act takes effect upon approval by the
Governor.
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