H 4698 General Bill, By Stuart, Battle, Cave, J.L.M. Cromer, Davenport, Gamble, 
Harvin, Haskins, J. Hines, Inabinett, Kirsh, McCraw, Miller, Moody-Lawrence, 
Neilson, Phillips, Rodgers, Seithel and Simrill
 A BILL TO AMEND CHAPTER 15 OF TITLE 37, CODE OF LAWS OF SOUTH CAROLINA, 1976,
 RELATING TO THE PRIZES AND GIFTS ACT, SO AS TO DEFINE "RETAIL VALUE" AND
 "SPONSOR"; TO FURTHER PROVIDE FOR THE MANNER IN WHICH AND REQUIREMENTS FOR
 WHICH PRIZES AND CONTESTS MAY BE REPRESENTED, PROMOTED, AND AWARDED; TO
 PROHIBIT CERTAIN ACTS IN CONNECTION WITH THE AWARDING OR REPRESENTATION OF
 PRIZES; 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 FURTHER PROVIDE FOR THE
 TERMS AND CONDITIONS OF THE EXEMPTION OF CERTAIN SELLERS, INCLUDING CATALOG
 SELLERS, FROM SPECIFIED PROVISIONS OF THIS ACT; AND TO PROVIDE THAT ANY WILFUL
 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, RELATING TO JURISDICTION OVER CREDITORS AND SERVICE OF
 PROCESS, SO AS TO ALSO MAKE THIS SECTION APPLICABLE TO PERSONS OTHER THAN
 CREDITORS WHOSE CONDUCT IS GOVERNED BY THE PROVISIONS OF TITLE 37.

   02/25/98  House  Introduced and read first time HJ-22
   02/25/98  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-22

A BILL

TO AMEND CHAPTER 15 OF TITLE 37, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE PRIZES AND GIFTS ACT, SO AS TO DEFINE "RETAIL VALUE" AND "SPONSOR"; TO FURTHER PROVIDE FOR THE MANNER IN WHICH AND REQUIREMENTS FOR WHICH PRIZES AND CONTESTS MAY BE REPRESENTED, PROMOTED, AND AWARDED; TO PROHIBIT CERTAIN ACTS IN CONNECTION WITH THE AWARDING OR REPRESENTATION OF PRIZES; 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 FURTHER PROVIDE FOR THE TERMS AND CONDITIONS OF THE EXEMPTION OF CERTAIN SELLERS, INCLUDING CATALOG SELLERS, FROM SPECIFIED PROVISIONS OF THIS ACT; AND TO PROVIDE THAT ANY WILFUL 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, RELATING TO JURISDICTION OVER CREDITORS AND SERVICE OF PROCESS, 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 item (a), then no more than one and one-half 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 items (a) and (c) of subsection (A) 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 ten-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 item (g) of subsection (A) 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 may 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, not later than thirty days after making a representation, shall 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's 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 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 disclosed clearly and conspicuously 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 persons.

(D) Any wilful 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 the 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.