Senate Bill S1878

                                 BILL NUMBER:  S1878

 TITLE OF BILL :  An act to amend the general business law, in
relation to prize award scheme disclosures and to repeal paragraph (f)
of subdivision 3 of section 369-ee of such law relating to certain
exemptions from the prize award schemes statute

 PURPOSE OR GENERAL IDEA OF BILL :

Requires additional disclosures in connection with prize award schemes
and repeals a provision making exceptions for several forms of
offerings.

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1: Strengthens the written disclosure requirements for prize
awards scheme mailings to require a statement that the consumer has
either not automatically won any prize or if the consumer will receive
one of a list of prizes, the exact quantity, estimated retail value
and nature of all possible prizes. Mailings must also include a
statement that no purchase is required to win or to increase the
chance of winning, that individuals who do not purchase anything will
not be disqualified from receiving future mailings. Any enclosed
facsimile checks must contain a statement that such checks are not
negotiable instruments and have no cash value. The envelope containing
the prize award scheme materials must state, in type no smaller than
              

the name of the consumer to which it is addressed, the following
notice where applicable: "This is a game of chance or sweepstakes. You
have not automatically won anything."

Section 2: Repeals paragraph (f) of subdivision 3 of section 369-ee of
the general business law. This section currently exempts from all
prize award scheme disclosure requirements any solicitation or
representation offering a consumer a prize in connection with the sale
or purchase of items from a catalog seller, through a book, recording,
video or periodical club arrangement, under a contractual plan or
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 receipt of the
goods is given a reasonable opportunity to examine the goods and
receive a full refund upon return of the goods in undamaged condition.

Section 3: Provides an effective date of the first day of November
next succeeding the date on which this bill shall have become a law.

 JUSTIFICATION :

New Yorkers spend millions of dollars every year trying to hit the
sweepstakes jackpot despite the fact that every legitimate sweepstakes
must allow entry by those who choose not to purchase anything. One of
the main goals of sweepstakes promotions is to convince the buying
public that, while no purchase is technically necessary to win, an
individual's chances of winning will be greatly improved by making a
purchase. As a result, sweepstakes mailings currently contain a
confusing tangle of improper suggestion and innuendo that is
ultimately contradicted in the fine print.

Many New Yorkers, especially senior citizens, either do not see or do
not understand the fine print in these sweepstakes mailings, believing
instead the boldly printed assertions that "You're a Winner!"
Publisher's Clearinghouse recently admitted that over twenty people
arrived in person at their Tampa headquarters last year in response to
mailings that suggested that they had already been chosen to win a
grand prize.  Despite a recent Congressional hearing on the issue of
deceptive sweepstakes mailings, countless individuals continue to be
taken advantage of by major and minor sweepstakes operators, lured
into buying worthless trinkets and multiple subscriptions to magazines
they don't even read because they believe they must make a purchase
from every mailing in order to maintain their chances of winning.
Frequent sweepstakes purchasers often receive dozens of entry forms
per day, each one asserting that they are just one step away from
winning millions of dollars. Some of the more egregious mailings even
purport to give the intended victim "inside" information that he or
she is about to be chosen as a winner.

Many families report loved ones losing their entire life savings to
these unscrupulous sweepstakes promoters. Victims often refuse to come
forward out of embarrassment or because they believe it will hurt
their chances of eventually winning a prize big enough to recoup their
losses.  The current loophole in the law for subscription sales of
periodicals exempts almost every major sweepstakes company currently
operating in the United States from having to provide their consumers
with a fair and accurate disclosure of sweepstakes terms and an
individual's actual chances of winning.

 LEGISLATIVE HISTORY :

2000 - A8108 - referred to consumer affairs
2002 - A2092 - referred to consumer affairs
2004 - A4692 - referred to consumer affairs
2006 - S4439 - referred to consumer affairs
2006 - S2225 - referred to consumer affairs

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This act shall take effect on the first of November next succeeding
the date on which it shall have become a law.