California’s AB 488: You Can Check Out Any Time You Like But You Can Never Leave
The State of California is getting a firm grip on regulating charitable sales promotions with its new law AB 488 which passed in October 2021 and will become effective January 1, 2023 (in order to allow the Attorney General’s office to promulgate regulations to implement the new law).
What You Need to Know (So Far)
Charitable Sales Promotions (CCVs):
Currently:
A company does not need to register a CCV in California as long as (i) it has a written contract with the charity with certain 90-day payment terms; (ii) it delivers the funds to the charity on a rolling 90-day basis and (iii) it provides an accounting with each payment.
Under AB 488:
- Online Promotions: A company must register in California as a “charitable fundraising platform” for CCVs conducted online, in whole or in part, when they benefit more than 6 charities in any calendar year.
- In-Store Only Promotions: Existing CCV laws apply. No registration is necessary if a company complies with the contract/payment/accounting requirements above.
Donation at Check-out:
Currently:
Round-up programs (that is, round up your bill to the next dollar to donate to charity at checkout), donation boxes at checkout, and the like are generally not regulated so long as the merchant isn’t compensated for its efforts, doesn’t retain any of the donations, and promptly delivers the donations to the charity.
Under AB 488:
- Online: A merchant must register as a “charitable fundraising platform.”
- In Store Only: CA has indicated that it may treat retailers as charitable “trustees” under Cal. Gov. Code 12582(b) and require registration.
More to follow.
Please contact Robert Laplaca to answer any questions or provide additional information about this post.
