BILL ANALYSIS
AB 1958
Page 1
Date of Hearing: May 9, 2006
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Gloria Negrete McLeod, Chair
AB 1958 (Leslie) - As Amended: May 1, 2006
SUBJECT : Internet: free gift offers.
SUMMARY : Requires any advertisement or email for an Internet
free gift offer to clearly disclose to a consumer the steps he
or she must take in order to receive the free gift.
Specifically, this bill :
1)Requires any advertisement or commercial email advertisement
promoting or soliciting an Internet free gift offer to provide
a disclosure statement.
2)Requires the disclosure statement to appear as soon as the
consumer opens the link associated with the advertisement or
as soon as the consumer opens the link contained within a
commercial email advertisement.
3)Requires the disclosure statement to contain an electronic
check-off box that must be clicked in order to proceed with
the offer and confirms that a consumer has read and agreed to
the terms, conditions, and obligations of the Internet free
gift offer.
4)Requires the disclosure to provide, at a minimum, the
following information:
a) The number of products that must be purchased before
receiving the free gift;
b) An approximation of the combined dollar amount of the
purchases that must be made in order to receive the free
gift;
c) The telephone number and email address of the company
offering the free gift;
d) An estimated length of time before the consumer will
receive the free gift; and,
e) The number of referrals to other separate unique
households necessary to redeem the free gift.
AB 1958
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5)Prohibits the disclosure statement from being set forth in a
footnote of an advertisement or commercial email
advertisement, even if the footnote has an asterisk or other
symbol referencing it.
6)Defines "Internet free gift offer" as any advertisement or
commercial email advertisement that offers a free gift or
gifts to a consumer in exchange for the consumer taking
certain actions, including, but not limited to, the purchasing
of a product or products or the referral of the gift offer to
others, in order for the consumer to redeem the free gift
offer.
7)Defines "advertisement," "California electronic email
advertisement," "Commercial email advertisement," "consumer,"
"disclosure statement," and "Internet" for the purposes of
this bill.
8)Provides that the provisions of this bill are severable.
EXISTING LAW makes it unlawful for any person to use the term
"gift" in any manner that would be untrue or misleading. The
offering, as a part of an advertising plan or program, of any
prize, gift, money, or other item of value as an inducement to
visit a location, attend a sales presentation, or contact a
sales agent, is prohibited unless specified disclosures are
made.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
Purpose of this bill . According to the author, "currently,
companies offering free gifts via a pop-up ad or other form of
advertisement (banner, etc.) on the Internet do not have to
disclose the steps a consumer must take to complete the
transaction and redeem the free prize. Often, in order to
redeem the prize, consumers are first required to purchase up to
six different products. Usually, it is not entirely clear when
the first product is purchased that additional products are
going to have to be purchased to complete the transaction. In
order to ensure that consumers receive appropriate information
before proceeding with the transaction, [this bill] requires
that a disclosure statement highlighting what is expected of the
consumer be acknowledged by the consumer before proceeding with
the transaction."
AB 1958
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The author has provided various examples of offers for a free
laptop computer or entertainment system. These offers are
accompanied by disclosure statements, but in the examples
provided a consumer would not be required to read the
disclosures prior to proceeding with the offers and the
disclosures do not provide all of the information that this bill
requires to be disclosed.
Opposition . The American Electronics Association (AeA) opposes
this bill and argues that since this bill will only apply to
businesses in California, it will put California businesses at a
competitive disadvantage. In addition, AeA notes that federal
regulations enforced by the Federal Trade Commission already
regulate marketing offers and their use of the word "free."
Finally, AeA contends that "it is impossible to regulate only
the sites Californians are viewing when the Internet crosses
borders without concern to the physical location of the
advertiser or viewer."
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
American Electronics Association (AeA)
California Chamber of Commerce
Direct Marketing Association
Sonet Technologies
Analysis Prepared by : Pablo Garza / B. & P. / (916) 319-3301