Advertising Law Alerts

September 16th, 2014

New Registration Rules for “Commercial Co-Venturers”

South Carolina recently revised its Solicitation of Charitable Funds Act. The Act now contains new requirements - effective October 4, 2014 - for advertisers whose commercial co-ventures are open to South Carolina residents. Here's a summary of what you need to know.

Registration. The Act requires "commercial co-venturers" to register with the South Carolina Secretary of State prior to the start of any cause marketing campaign. The Act defines "commercial co-venturer" as "a person that regularly and primarily engages in trade or commerce for profit that, for the benefit of a charitable organization, may raise funds by advertising that the purchase or use of goods, services, entertainment, or other thing of value benefits the charitable organization, if it is offered at a price comparable to similar goods or services in the market." The registration fee is $50.00. Prior to these revisions, a commercial co-venturer was only required to file its agreement with the charity accompanied by a Notice of Solicitation prior to the start of any cause marketing campaign.

This new registration must be renewed annually if the company continues to conduct cause marketing campaigns in which residents of South Carolina can participate. The revisions also require the commercial co-venturer to submit a joint financial report within 90 days following the end of each campaign. In addition, the Act now requires individuals employed by professional solicitors to register. Previously, only the professional solicitor (i.e., company or organization) was required to register.

Penalties. If a commercial co-venturer or professional solicitor fails to register or provide other required information, the South Carolina Secretary of State may assess an administrative fine of up to $2,000.00 for each separate violation. Penalties for intentional violations increase to up to $10,000.00 and may include imprisonment.

Companies that have previously filed a Notice of Solicitation this year are being asked to now register as a commercial co-venturer in order to comply.

Please note that different jurisdictions handle commercial co-venture registration differently. For example, the South Carolina revisions come less than a year after Maine repealed its own registration requirements for commercial co-venturers - and a few years after Washington State did the same. On the other hand, both Mississippi and Hawaii also recently revised their laws to require registration of commercial co-venturers. If you have any questions about the new South Carolina commercial co-venture rules, or about any other advertising law issues, please contact Terri Seligman at (212) 826 5580 or tseligman@fkks.com, Kelly O'Donnell at (212) 826 5544 or kodonnell@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group. To review the full text of the South Carolina law, click here.