Vermont has become the most recent state to regulate so-called cause marketing, a promotion where the advertiser promises a benefit to a charity based on sales. Regulators seeking to prevent fraud and consumer deception have been increasingly scrutinizing these campaigns, and several states have enacted specific regulatory requirements. Vermont’s new legislation continues the trend. The regulations place both disclosure and record keeping responsibilities on the “Commercial Coventurers.” As in most states, Commercial Coventurers are the for-profit entities engaged in trade or commerce, other than in connection with raising funds for charitable purposes, and who advertise that a portion of sales will benefit a charitable organization or purpose. For example, a merchant that advertises that a portion of the proceeds from a sale will benefit a charitable organization will be considered a commercial coventurer because the merchant is not ordinarily in the business of raising funds for charity.
The Vermont legislation was part of a broader state consumer protection bill. Under the new cause marketing regulations, Commercial Coventurers must:
- Disclose in advertisements: the name of the charitable organization or purpose which is to benefit from the charitable sales promotion; the amount of the price of the good/service that will benefit the specified charitable organization or purpose (i.e., how much will the charity receive); and any maximum amount that will benefit the charitable organization or purpose (i.e., any limit to the amount that will be donated to the charity); and
- Retain records of advertisements and charitable activities in order to demonstrate compliance with the regulations.
Charitable sales promotion regulations vary from state to state. Although the new requirements under Vermont law are not as onerous as some states, such as Maine, Alabama and Massachusetts, which require commercial coventurers, to, among other requirements, become bonded, Vermont’s disclosure requirements mimic requirements by other states, including, Connecticut, Louisiana, Maine, New Hampshire, New Jersey, Ohio and Utah. The Vermont recordkeeping responsibilities parallel state requirements in Alabama, Maine, Massachusetts, South Carolina and Utah.