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CAUSE-RELATED MARKETING – 9 V.S.A. § 2481a

Prepared by the Vermont Attorney General’s Office – July 16, 2012

In 2012, the Legislature passed a law regulating cause-related marketing.  “Cause-related marketing” essentially means any sales campaign in which some portion of the money paid by a consumer for a good or service is donated to a charitable cause.

An example: You walk into your neighborhood supermarket and see a display that reads, “Help save Fido! We will donate $1.00 to the Orange County Animal Rescue League for every purchase of $50.00 in groceries.

This page is meant to inform the business community about the new law and its requirements.  The purpose of the law is to help consumers better understand how their purchase of a good or service directly supports a charitable cause.  The examples (given in italics) are purely fictitious and are meant only for illustration. They do not suggest support for a given cause or promotion.

Overview of the Law

The central requirement of the new law, 9 V.S.A. § 2481a, is that any for-profit business undertaking a charitable sales promotion must clearly and conspicuously disclose to consumers:
  • The name of the charitable organization (The Bennington Farm Preservation Fund) or charitable purpose (To help the Tetreaults rebuild their house after the fire).
  • The actual amount per unit of goods or services purchased that will be donated or an estimated amount.
  • The amount of the donation can be listed as a percentage (“Seventy-five percent of the purchase price”) or as a dollar figure per item (“Five dollars for every hat sold”)
  • If the amount to be donated is based on aggregate purchases, the business must list the total amount to be donated and how that amount is to be calculated (“We’ll donate $1000 when we sell 300 tickets!”)
  • Any maximum amount of the donation (“We’ll donate up to $15,000”)
Any business undertaking a charitable sales promotion must keep sufficient records of the promotion to show it complied with the disclosure requirements and followed through on its commitment to donate under the disclosed terms.

Failure to comply with the disclosure and record-keeping requirements of the law is a violation of Vermont’s Consumer Protection Act and could result in a fine of up to $10,000 per violation and restitution to injured consumers and charities.

Frequently Asked Questions:

Who has to follow this law?

The law applies only to for-profit entities that are “regularly and primarily engaged in trade or commerce” – these are called “commercial co-venturers.”  
The law does not apply to:
  • Nonprofits or religious or fraternal organizations
  • Professional charitable fundraisers
  • Individuals who normally work in one industry but, on a limited basis unrelated to their normal activities, are undertaking a charitable sales promotion.  

Rebecca is an energy consultant, but every fall she sells pies at the local famers’ market.  This year, she is raising money for building schools in Haiti.  She can say a portion of her profit from the pies will go to building schools, but she does not have to follow all of the disclosure and record-keeping requirements because this is not her regular and primary job.

Are there any promotions where I don’t need to give full disclosure or keep records?

A commercial co-venturer does not have to provide full disclosure and keep records  if:
  • One-hundred percent of the amount a consumer pays for the good or service goes to the charity.
  • The co-venturer does not generate a net profit from the promotion. (Allen’s Market is raising money for veterans.  It buys and prints t-shirts for Memorial Day.  After recouping the cost of the shirts and printing, Allen’s donates the remaining money to a veterans’ cause.)
  • The co-venturer does not advertise that any amount of the purchase price of a good or service will go to a charitable cause.  (Newport Sporting Goods always donates to the annual Lake Swim, but does not advertise that the purchase of any particular product or service will increase or affect the amount of the donation.)
  • The promotion does not involve the sale or lease of goods or services.  (“Mt. Ascutney Autobody supports Clean-up the Connecticut.”)

If a promotion requires the disclosures, when do I need to provide them?

Anytime – and every time – a co-venturer makes a representation that it will donate to a charitable cause based on the sale of goods or services, it must follow the disclosure requirements of the law.  A “representation” includes any “advertisement, commercial or other communication to the public in any medium.”

Where do I need to put the required disclosures?

The disclosures need to be placed “in close proximity” to any promotional materials suggesting a charitable sales promotion.  This means, for example, on the same sign as the promotion itself, attached to the sales display-rack, included nearby on the same webpage, or listed in the same print or on-air advertisement.

What does the disclosure need to look like?

There is no requirement for the format of the disclosure, but the information must be “clear and conspicuous,” meaning a similarly sized type-face as the promotion, or a separate sign attached to the promotion.  In short, the disclosure must be presented in such a way that it will be readily noticed and understood by consumers.

What qualifies as a charitable organization or charitable purpose?

These terms are defined under Vermont’s charitable solicitations law, 9 V.S.A. § 2471.  A “charitable purpose” means “any benevolent, educational, philanthropic, humane, patriotic, social welfare, advocacy, public health, environmental conservation or civic objective or any objective of law enforcement officers, firefighters or other persons who protect the public safety.”  A “charitable organization” works to further any charitable purpose.

Last modified April 06 2017 01:56 PM

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