Advertising Law Tool Kit - Ninth Edition | 2021

Venable / 23 22 / Venable Commercial Co-Ventures If a marketer conducts a promotion involving a donation based on the sale or use of a product or service (e.g., $1 for every shoe purchase benefits XYZ charity), the promotion will be subject to a number of state laws regulating commercial co-ventures (CCVs). If the commercial co-venture laws are triggered, the for-profit entity will be required to register as a commercial co-venturer (including, in some cases, obtaining a bond) in up to four states; additional states require submission of a written agreement with the charity. Some state laws mandate that certain provisions be included in the written agreement between the parties to the CCV. Also, all advertising for the CCV promotion must include certain material disclosures; there have been significant attorney general actions in this area that were brought against marketers that made misleading disclosures or omitted key information. Keep in mind that some popular types of charitable promotions may not be CCVs, for example, one-time donations to a charity, or promises that if consumers tweet a certain hashtag, the brand will make a donation to the charity. It may be desirable to explore such structures in planning a charitable promotion. Nonetheless, state CCV and promotional fundraising laws vary, so it is important to plan such promotions carefully, and it is always important to ensure that the disclosures for any charitable promotion are clear, conspicuous, and accurate. Melissa Landau Steinman mlsteinman@Venable.com +1 202.344.4972 When running a CCV promotion, here are some things to keep in mind: • Start as early as possible. Registrations and/or approvals in some states can take several months under normal circumstances. • Enter into a written agreement with the charity and include state-required contractual provisions, as well as licenses for use of the charity’s trademarks. • Include the specific percentage or dollar amount going to charity in each advertisement for the CCV. Merely describing the donation generally as “a percentage of proceeds” may be considered deceptive. • Ensure consumers are aware of the start and end dates of the promotion. Take care not to flood the marketplace with more product than could reasonably be sold during the promotion dates. • Clearly indicate any maximum or minimum donation amounts that have been promised to charity. • Disclose the names of the sponsor(s) of the CCV.