MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Judiciary

By: Senator(s) Little

AN ACT TO PROHIBIT MISLEADING AND DECEPTIVE PRIZE PROMOTIONS; TO DEFINE CERTAIN TERMS; TO PROHIBIT CERTAIN PRACTICES BY SPONSORS OF PRIZES; TO PROVIDE CERTAIN EXEMPTIONS FROM THE PROVISIONS OF THIS ACT; TO PROVIDE THAT NO SPONSOR SHALL OFFER A PRIZE UNLESS THE PERSON TO WHOM SUCH OFFER IS MADE HAS FIRST RECEIVED A WRITTEN PRIZE NOTICE CONTAINING CERTAIN DISCLOSURES; TO REQUIRE THE SPONSOR WHO REPRESENTS TO A PERSON THAT HE HAS BEEN AWARDED A PRIZE TO PRESENT THAT PERSON WITH THE PRIZE WITHIN A CERTAIN PERIOD OF TIME; TO PROVIDE THAT ALL PROVISIONS OF THIS ACT APPLY TO PRIZE OFFERS MADE BY WAY OF TELEPHONE COMMUNICATION; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. (1) The Legislature has become aware of the avalanche of sweepstakes, contests, and prize promotions that have been and are being directed at Mississippi consumers, and recognizes that consumers are often misled by these sweepstakes, contests, and prize promotions. The Legislature also recognizes that Mississippi consumers have paid hundreds of thousands of dollars to sweepstakes, contests, and prize promoters based upon misrepresentations by those promoters to consumers. These sweepstakes, contests, and prize promoters prey particularly upon elderly consumers.

(2) It is the intent of the Legislature through the enactment of this act to require that Mississippi 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 Legislature to prohibit misleading and deceptive prize promotions. This act shall be construed liberally in order to achieve this purpose.

SECTION 2. As used in this act, unless the context otherwise requires:

(a) "Prize" means a gift, award, or other item or service that is offered or awarded to a participant in a real or purported contest, competition, sweepstakes, puzzle, drawing, scheme, plan, or other selection process;

(b) "Retail value" of a prize means:

(i) A price at which the sponsor can substantiate that a substantial number of the prizes have been sold to the public in Mississippi in the preceding year; or

(ii) If the sponsor is unable to satisfy the requirement in subdivision (b)(i) of this section, then no more than one and one-half (1.5) times the amount the sponsor paid for the prize in a bona fide purchase from an unaffiliated seller; and

(c) "Sponsor" means a corporation, partnership, limited liability company, sole proprietorship, or natural person that offers a prize to a person in Mississippi 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 3. (1) Nothing in this act shall be construed to permit an activity otherwise prohibited by law.

(2) (a) Each prize offer made in violation of this act, as to each separate person to whom such offer is made, shall constitute a separate violation of this act.

(b) A violation of this act is also a violation of the Mississippi Consumer Protection Act, Section 75-24-1 et seq., and is subject to all of the enforcement provisions of that act.

(c) For the purposes of the assessment of penalties pursuant to the Mississippi Consumer Protection Act, Section 75-24-1 et seq., each separate violation of this act will constitute a separate violation of the Mississippi Consumer Protection Act, Section 75-24-1 et seq.

(3) (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:

(i) Costs;

(ii) Reasonable attorney's fees; and

(iii) The greater of Five Hundred Dollars ($500.00) or twice the amount of the pecuniary loss.

(b) It is evidence of intent if the violation occurs after the Office of the Attorney General has notified a sponsor that the sponsor is in violation of this act.

(4) The relief provided in this section is in addition to remedies or penalties otherwise available in regard to the same conduct under law or under other statutes of this state.

SECTION 4. (1) Advertising Media Exempt. Nothing in this act creates liability for the acts by the publisher, owner, agent, or employee of a newspaper, periodical, radio station, television station, cable television station system, or other advertising medium arising out of the publication or dissemination of a solicitation, notice, or promotion governed by this act, unless the publisher, owner, agent, or employee had knowledge that the solicitation, notice, or promotion violated the requirements of this act, or had a financial interest in the solicitation, notice, or promotion.

(2) Free Prize Promotions. (a) This act does not apply to sponsors of prize promotions where all prizes are awarded 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.

(b) 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 or 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 or information about a prize.

(c) 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.

(3) Loss of Exemption. Any willful failure of a seller claiming exemption under subsection (3) 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.

(4) Exemption for Gaming Activity. This act does not apply to gaming activities permitted and regulated by the Gaming Control Act, Section 75-76-199 et seq., and the Charitable Bingo Law, Section 97-33-50 et seq.

SECTION 5. A sponsor shall not do any of the following:

(a) Offer a prize to any person except in accordance with the requirements of this act;

(b) (i) 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;

(ii) 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;

(c) 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;

(d) 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;

(e) (i) 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 (1) time, unless the representation is true;

(ii) A sponsor is deemed to have made such representation if the sponsor delivers one (1) 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;

(f) 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;

(g) 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;

(h) (i) Knowingly sell, rent, exchange, transfer, or otherwise furnish to or purchase from other persons, financial data regarding Mississippi consumers disclosed in connection with a prize promotion not in compliance with this act;

(ii) For purposes of this act, 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; or

(i) Request an individual to disclose the individual's phone number, age, birthdate, credit card ownership, or financial data in connection with a prize promotion which is not in compliance with this act.

SECTION 6. (1) No sponsor shall offer a prize, nor shall a sponsor use any solicitation, whether written or oral, and however communicated, that offers a prize, unless the person to whom such offer is made has first received a written prize notice containing the information required in subsections (2) and (3) of this section.

(2) A written prize notice must contain each of the following:

(a) The true name or names of the sponsor and the address of the sponsor's actual principal place of business;

(b) The retail value of each prize the person receiving the notice has been selected to receive or may be eligible to receive;

(c) A statement of the person's odds of receiving each prize identified in the notice;

(d) Any requirement that the person pay shipping or handling fees or any other charges in order to obtain or use a prize, or any fees required to obtain information about a prize, including the nature and amount of such charges;

(e) If the receipt of the prize is subject to a restriction, a statement that a restriction applies, and a description of the restrictions;

(f) Any limitations on eligibility for the prize; and

(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.

(3) The information required by subsection (2) of this section must be presented in the following form:

(a) The retail value and statement of odds required under subdivisions (2)(b) and (c) of this section 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;

(b) 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;

(c) The number of prizes and written prize notices must be stated in arabic numerals;

(d) The statement of odds must be in the following form: "___ (number of prizes) out of ___ (notices distributed)";

(e) 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 (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

(f) A statement required under subdivision (2)(g) of this section 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.

SECTION 7. 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:

(a) Any other prize listed in the written prize notice that is available and that is of equal or greater value; or

(b) 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 8. (1) All provisions of this act apply to prize offers made by way of telephone communication.

(2) Sponsors of such offers shall not solicit or accept the payment of any money from any person unless that person has first received the written prize notice as required by this act.

(3) No sponsor shall solicit or utilize in any fashion any credit card or bank account information from any person unless that person has first received a written prize notice as required by this act.

(4) If a sponsor contacts a person by telephone after that person has first received a written prize notice as required by this act, the sponsor shall specifically identify the written prize notice and shall by oral disclosure communicate all disclosures required by Section 6 of this act prior to soliciting or accepting any money from any person and prior to soliciting or accepting any credit card or bank account information from any person.

SECTION 9. This act shall take effect and be in force from and after July 1, 2000.