The rise of social media has helped popularize cause marketing programs where a sponsor donates to a charity each time a consumer takes a totally free action –such as “liking” the sponsor’s Facebook page– without making any purchase. Such programs pose interesting legal compliance questions.

Is it a charitable sales promotion?
A traditional charitable sales promotion offers goods or services based on a representation that their purchase will benefit a charitable organization or purpose. In most states, the standard definition of a charitable sales promotion contemplates a sale as the trigger for regulating the offer. While it is theoretically possible that some states could seek to stretch their charitable sales promotion laws to cover the “like” situation, that has not been the pattern of interpretation or enforcement to date. Nor is there a strong policy reason for such interpretation or enforcement where consumers don’t purchase anything, donate any money, or otherwise incur any cost whatsoever. Continue Reading →

A charity sometimes finds itself the unexpected beneficiary of a charitable sales promotion it knew nothing about — that is, a commercial party independently offers  goods or services based on a representation that a purchase will benefit the charity without ever telling the charity in advance about the promotion, or seeking permission to use the charity’s name, or entering into a contract with the charity.

The Good News
The good news is that an unexpected donor is at the doorstep with a windfall check.

The Bad News
The bad news is that the promotion was conducted without the written contract required in many states, and without registration by the sponsor in the smaller group of states with such requirements. Continue Reading →