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New Illinois law regulates prizes and gifts

November 24, 2010

Businesses that disseminate written promotional offers, invite people to claim a prize or attend a sales meeting, or invite people to contact a sponsor in Illinois are subject to a new Prizes and Gifts Act that took effect Jan. 1.

The act prohibits any requirement that a person pay money as a condition of participating in a contest or receiving a prize. It also puts a number of affirmative obligations on sponsors when disseminating a written promotional offer. The restrictions might affect dealers who use direct mail pieces. In particular, each written offer or prize notice must include in a clear and conspicuous statement the true name of the sponsor and its address; the retail value of each prize; disclosures that no purchase is necessary to enter the contest and that a purchase will not increase the person's odds of winning; a statement of the person's odds of receiving each prize; any fees the winner must pay to receive the prize (shipping and handling); any restrictions on receiving a prize; and any limitations on eligibility.

If the contest offers states that a person is a "finalist" or has been "specially selected," the prize notice also must reveal the maximum numbers of persons in the group with that enhanced likelihood of winning. Dennis O'Keefe, the CATA's legal counsel, said a consumer who suffers a loss by any intentional violation of the new Illinois law can sue. Damages can be the greater of $500 or twice the amount of the pecuniary loss, and the consumer can recover reasonable attorney fees and court costs.

The new law exempts advertising media that publish or disseminate a solicitation, notice or promotion unless the media had knowledge that the solicitation, notice or promotion violated the law's requirements, O'Keefe said. "Inasmuch as this is a new statute, there is no evidence yet of any class action being contemplated or filed," he said. "However, that possibility exists and, accordingly, dealers are urged to assure that their advertising is not in violation of this law." The attorney general and the state's attorney are authorized to enforce the new law.