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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  
    Laws of Minnesota 1993 

                        CHAPTER 178-S.F.No. 1032 
           An act relating to commerce; regulating prize notices; 
          requiring certain disclosures by solicitors; providing 
          for reimbursement in certain cases; providing 
          penalties and remedies; proposing coding for new law 
          in Minnesota Statutes, chapter 325F. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  [325F.755] [PRIZE NOTICES AND SOLICITATIONS.] 
    Subdivision 1.  [DEFINITIONS.] For purposes of this 
section, the following terms in this subdivision have the 
meanings given them. 
    (a) "Prize" means a gift, award, or other item or service 
of value 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: 
    (1) a price at which the sponsor can substantiate that a 
substantial number of the prizes have been sold to the public in 
Minnesota in the preceding year; or 
    (2) if the sponsor is unable to satisfy the requirement in 
clause (1), then no more than 1.5 times the amount the sponsor 
paid for the prize in a bona fide purchase from an unaffiliated 
seller. 
    (c) "Sponsor" means a corporation, partnership, limited 
liability company, sole proprietorship, or natural person that 
requires a person in Minnesota to pay the sponsor money as a 
condition of awarding the person a prize, or as a condition of 
allowing the person to receive, use, compete for, or obtain 
information about a prize, or that creates the reasonable 
impression that such a payment is required. 
    Subd. 2.  [DISCLOSURES REQUIRED.] (a) No sponsor shall 
require a person in Minnesota to pay the sponsor money as a 
condition of awarding the person a prize, or as a condition of 
allowing the person to receive, use, compete for, or obtain 
information about a prize, nor shall a sponsor use any 
solicitation that creates the reasonable impression that a 
payment is required, unless the person has first received a 
written prize notice containing the information required in 
paragraphs (b) and (c). 
    (b) A written prize notice must contain each of the 
following: 
    (1) the true name or names of the sponsor and the address 
of the sponsor's actual principal place of business; 
    (2) the retail value of each prize the person receiving the 
notice has been selected to receive or may be eligible to 
receive; 
    (3) a statement of the person's odds of receiving each 
prize identified in the notice; 
    (4) any requirement that the person pay shipping or 
handling fees or any other charges to obtain or use a prize, 
including the nature and amount of the charges; 
    (5) if receipt of the prize is subject to a restriction, a 
statement that a restriction applies, and a description of the 
restriction; 
    (6) any limitations on eligibility; and 
    (7) 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. 
    (c) The information required by paragraph (b) must be 
presented in the following form: 
    (1) the retail value and the statement of odds required 
under paragraph (b), clauses (2) and (3), 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 prize notices 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."; 
    (3) if a person is required to pay shipping or handling 
fees or any other charges to obtain a prize, to be eligible to 
obtain a prize, or participate in a 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 boldface type:  "YOU MUST PAY $....... TO RECEIVE THIS 
ITEM" or "YOU MUST PAY $....... TO COMPETE FOR THIS ITEM," 
whichever is applicable; and 
    (4) a statement required under paragraph (b), clause (7), 
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. 
    Subd. 3.  [PRIZE AWARD REQUIRED.] A sponsor who represents 
to a person that the person has been awarded a prize shall, not 
later than 30 days after making the 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.
    Subd. 4.  [ADVERTISING MEDIA EXEMPT.] Nothing in this 
section creates liability for acts 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 a solicitation, notice, or promotion governed 
by this section, unless the publisher, owner, agent, or employee 
had knowledge that the solicitation, notice, or promotion 
violated the requirements of this section, or had a financial 
interest in the solicitation, notice, or promotion. 
    Subd. 5.  [EXEMPTIONS.] This section does not apply to 
solicitations or representations, in connection with (1) the 
sale or purchase of books, recordings, videocassettes, 
periodicals, and similar goods through a membership group or 
club which is regulated by the Federal Trade Commission pursuant 
to Code of Federal Regulations, title 16, part 425.1, concerning 
use of negative option plans by sellers in commerce; (2) the 
sale or purchase of goods ordered through a contractual plan or 
arrangement such as a continuity plan, subscription management, 
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 the receipt of the goods is given 
the opportunity to examine the goods and to receive a full 
refund of charges for the goods upon return of the goods 
undamaged; or (3) sales by a catalog seller.  For purposes of 
this section "catalog seller" shall mean any entity (and its 
subsidiaries) or person at least 50 percent of whose annual 
revenues are derived from the sale of products sold in 
connection with the distribution of catalogs of at least 24 
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 250,000. 
    Subd. 6.  [EXEMPTIONS FOR REGULATED ACTIVITIES.] This 
section does not apply to advertising permitted and regulated 
under chapter 82A, concerning membership camping practices; 
advertising permitted and regulated under chapter 83, concerning 
subdivided lands and interests in subdivided lands; pari-mutuel 
betting on horse racing permitted and regulated under chapter 
240; lawful gambling permitted and regulated under chapter 349; 
or the state lottery created and regulated under chapter 349A. 
    Subd. 7.  [VIOLATIONS.] (a) Nothing in this section shall 
be construed to permit an activity otherwise prohibited by law. 
    (b) A violation of this section is also a violation of 
sections 325F.68 to 325F.71 and is subject to section 8.31. 
    (c) Whoever intentionally violates this section may be 
fined not more than $10,000 or imprisoned for not more than two 
years, or both.  It is evidence of intent if the violation 
occurs after the office of the attorney general has notified a 
person by certified mail that the person is in violation of this 
section.  
    (d) A person suffering pecuniary loss because of an 
intentional violation of this section may bring an action in any 
court of competent jurisdiction and shall recover costs, 
reasonable attorney fees, and the greater of:  (1) $500; or (2) 
twice the amount of the pecuniary loss. 
    (e) The relief provided in this section is in addition to 
remedies or penalties otherwise available against the same 
conduct under common law or other statutes of this state. 
     Sec. 2.  [EFFECTIVE DATE.] 
    This act is effective July 1, 1993, and applies to crimes 
committed on or after that date. 
    Presented to the governor May 12, 1993 
    Signed by the governor May 14, 1993, 3:45 p.m.