Definitions — Prizes Offered as Inducements — Unfair or Deceptive Practices

1. Law
2. Tennessee Code
3. Commercial Instruments and Transactions
4. Consumer Protection
5. Consumer Protection Act of 1977
6. Definitions — Prizes Offered as Inducements — Unfair or Deceptive Practices

1. As used in this section, unless the context otherwise requires:
   1. “Accepts,” “accepted,” or “acceptance” means the positive indication by a consumer or person, in response to an offer, that such person agrees to incur a monetary obligation or otherwise begins performance of the terms of the offer;
   2. “Initial offer” means the first contact with a consumer or person, whether verbally or in writing;
   3. “Prize” means prize, gift, award, incentive promotion or any thing of value. “Prize” includes, but is not limited to, any thing of value offered in a sweepstakes, contest, drawing, incentive offer, premium promotion or similar promotional offer by whatever name the company uses; and
   4. “Travel service” means travel-related or tourist-related services, whether for individuals or groups, through vacation or tour packages, or through lodging or travel certificates, vouchers or other devices.
2. This section applies to:
   1. Any person engaged in trade or commerce, directly or indirectly, by any means, including, but not limited to, by mail, by telephone, by advertisement, or in person, who offers to a consumer or other person, or represents or leads a consumer or person to believe, that the consumer or person will or may receive any prize as an inducement to purchase a good, service or other product or otherwise incur a monetary obligation, visit a business, attend or listen to a sales presentation or otherwise contact a salesperson; or
   2. Any person engaged in trade or commerce, directly or indirectly, by any means, who offers to sell travel services, at wholesale or retail, to a consumer or other person.
3. In addition to and without limiting the prohibitions contained in § 47-18-104, the following unfair or deceptive acts or practices are declared unlawful and in violation of this part:
   1. In an initial offer, the offeror is in violation of this part if the offeror:
      1. Fails to clearly and conspicuously state the name and street address of the person making the offer;
      2. Represents or leads a person to believe that, when, in fact, the offer is simply a promotional plan designed to make contact with prospective buyers, the person:
         1. Is or could be a winner, if those contacted have not won or are not eligible to win; or
         2. Has been “selected” or is otherwise part of a select or special group eligible to receive, claim, or otherwise obtain the prize or travel service, if that person has not been selected or is not part of a select or special group;
      3. Represents that a person has won or could win a prize or travel service, has been selected or is eligible to win a prize or travel service or will receive a prize or travel service, if the receipt of the prize or travel service is conditioned upon listening to or observing a sales promotional effort, making a purchase, or incurring any monetary obligation, unless it is clearly and conspicuously disclosed, at the time of the initial offer of the prize or travel service, that an attempt will be made to induce the consumer or person to incur a monetary obligation, including the amount of that monetary obligation;
      4. Fails to clearly and conspicuously disclose the approximate verifiable retail price of each prize or travel service or the price of any product offered for sale through the promotional program in a position immediately adjacent to the item when the initial offer is in writing. The approximate verifiable retail value is the price at which the person offering the item can substantiate that a substantial number of these items have been sold at retail by another person or, in the event such substantiation is unavailable, an amount equal to no more than three (3) times the amount actually paid by the sponsor or promoter for the item;
      5. Fails to clearly and conspicuously disclose each item's approximate verifiable retail value as defined in subdivision (c)(1)(D), when the initial offer is verbal;
      6. Fails to clearly and conspicuously disclose, immediately adjacent to each prize or travel service offered, a statement of the odds, if applicable, in arabic numerals, of receiving each item offered, when the initial offer is in writing. The offeror must also give the recipient a written statement, if applicable, that those offers are not exclusive to the recipient and must disclose to such recipient whether all prizes or travel services will be awarded;
      7. Fails to clearly and conspicuously disclose a statement of odds, if applicable, in arabic numerals, of receiving each item offered if the initial offer is verbal. The offeror must make a verbal statement, if applicable, that those offers are not exclusive to the recipient and must disclose to such recipient whether all prizes or travel services will be awarded;
      8. Fails to give a recipient a general description of the types and categories of restrictions, qualifications, or other conditions, that must be satisfied before the consumer or person is entitled to receive or use the prize or travel service, or product or service offered;
      9. Fails to give a recipient an approximate total of all costs, fees or other monetary obligations that must be satisfied before the consumer or person is entitled to receive or use the prize or travel service, or product or service offered; or
      10. Offers lottery winnings to a consumer in exchange for incurring a monetary obligation or making a purchase;
   2. Either in an initial offer or, at a minimum, before an offer can be accepted, the offeror is in violation of this part if the offeror fails to clearly and conspicuously state verbally, or in writing, and upon request, in writing:
      1. A general description of the types and categories of restrictions, qualifications, or other conditions, that must be satisfied before the consumer or person is entitled to receive or use the prize or travel service, or product or service offered, including:
         1. Any deadline by which the recipient must visit the business, attend or listen to the sales presentation or otherwise respond in order to receive the prize or travel service, or product or service offered;
         2. The date or dates on or before which the prize or travel service, product or service offer will terminate or expire and, if applicable, when the prizes or travel services will be awarded;
         3. The approximate duration of any mandatory sales presentation or tour, if applicable;
         4. Any other conditions, such as minimum or maximum age qualifications, financial qualifications, or requirements that, if the recipient is married, both husband and wife must be present or respond in order to receive the prize or travel service, or product or service offered; and
         5. All other material rules, terms or restrictions governing an offer that is an inducement to purchase a good, service or other product or to otherwise incur a monetary obligation;
      2. The refund, exchange or return policies in regard to any offer that is an inducement to purchase a good, service or other product or otherwise incur a monetary obligation; and
      3. The approximate total of costs, fees or other monetary obligations that must be satisfied before the consumer or person is entitled to receive or use the prize or travel service, or product or service offered, including, but not limited to, handling, shipping, delivery, freight, postage or processing fees, charges or other additional costs for the receipt or use of the prize or travel service, or product or service offered. This subdivision (c)(2)(C) shall not be construed to require that foreign tax rates be included;
   3. The offeror is in violation of this part if at any time the offeror:
      1. Misrepresents in any manner the rules, terms, restrictions, monetary obligations or conditions of participation in the promotional plan or offer;
      2. Represents that the prize or travel service offered or any product offered for sale through the promotional plan possesses particular features or benefits if it does not, or is of a particular standard, quality, grade, or model, if it is of another;
      3. Makes the receipt of an offered prize or travel service contingent upon the consent of individual winners or recipients to allow their names to be used for promotional purposes, or failing to obtain the express written or oral consent of individual winners or recipients before their names are used for a promotional purpose in connection with a mailing to a third person;
      4. Refuses to disclose or make available, upon request, the names of the recipients of any prizes or travel services within the geographic area wherein the promotional offers were made; or
      5. Fails to award and distribute the prize or travel service, or product or service offered in accordance with the rules, terms and conditions of the offer or promotional program as stated or disclosed in accordance with the above subdivisions;
   4. 1. Either in an initial offer for a prize or travel service or, at a minimum, before an offer can be accepted, the offeror is in violation of this part if the offeror fails to clearly and conspicuously state verbally, or in writing, and upon request in writing, uses or makes a statement or representation in the main, primary or emphasized portion of the text of a solicitation, promotion, advertisement or other offering that is contradicted in a disclosure that is not easily read, readily noticeable or presented in small or fine print.
      2. If a motor vehicle dealer is in compliance with the advertising regulations of the Tennessee motor vehicle commission, as such regulations exist on July 1, 2003, and as amended from time to time thereafter, subdivision (c)(4)(A) shall not apply to such dealer.
4. In addition to, and without limiting, the foregoing provisions:
   1. It is unlawful to require the consumer or person to incur any monetary obligation, excluding nominal postage costs, in order to determine which, if any, prize or travel service the consumer or person is offered or will receive, or to continue to remain eligible to receive any prize or travel service; and
   2. Acceptance of an offer is not valid and binding on the consumer unless all of the disclosures required in subsection (c) have been made.
5. Subdivisions (c)(1)(D), (E), and (I), and (c)(2)(B) and (C) do not apply in a promotion for books, records, videos or magazines when the person has the right to review the merchandise without obligation for at least seven (7) days and the right to return without charge any undamaged merchandise.
6. This section does not apply to:
   1. Advertising and promotional plans of persons covered by the Tennessee Time-Share Act of 1981, compiled in title 66, chapter 32, part 1, and the Membership Camping Act, compiled in title 66, ch. 32, part 3; and
   2. Retail promotions which offer savings on consumer goods or services, including “one-cent sales,” “two-for-the-price-of-one sales,” or a manufacturer's “cents-off” coupons, when the consumer accepts the offer on-site.

      The burden of proving these exemptions is upon the person claiming the exemption.

7. Notwithstanding any other law, a violation of this section constitutes an unfair deceptive act or practice, and without limiting the scope of § 47-18-104 shall be punishable by a civil penalty of a minimum of one thousand dollars ($1,000) to a maximum of ten (10) times the amount collected or requested by the offeror for each violation.

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