Understanding California State Bill 1096
A new California state law takes effect on January 1st, 2025 that amends the Consumers Legal Remedies Act and regulates mailed solicitations about consumer financial products and services.
This law is specifically directed to anyone who sells a consumer financial product or service to a California resident.
The motivation behind this bill is consumer protection. The law seeks to address consumer concerns regarding privacy by imposing stricter regulations on the content and delivery of marketing materials. Its impact on advertisers who send marketing mail is potentially significant.
A primary element of the bill requires outer envelopes to include a disclosure statement to appear in bold type on the front of the envelope. This disclosure must state clearly that the content is an advertisement and that the recipient will “not [be] required to make any payment or take any other action in response to this offer.”
There are also several key provisions that businesses must adhere to when sending marketing mail:
- Clear Identification of Sender. Marketing mail must prominently display the name and contact information of the business or individual responsible for the content. This measure is intended to increase transparency and allow consumers to easily identify who is behind the marketing message.
- Opt-Out Mechanism. Marketing mail must include a straightforward and accessible opt-out mechanism. This can be achieved through various means, such as a dedicated opt-out link in digital communications or a pre-paid return envelope or postcard in physical mailings.
- Accurate and Non-Misleading Information. All marketing claims made in the mail must be accurate and non-misleading, and not contain false or exaggerated claims that could deceive consumers.
- Disclosure Statement Requirement. Solicitations for consumer financial products or services sent by physical mail include a disclosure statement in enlarged, bold type on the front of the envelope. This statement must clearly indicate that the contents are an advertisement and that the recipient is not required to make any payment or take any action in response to the offer.
- Environmental Considerations. Encourages businesses to use recyclable materials for physical mailings. Whether and how this provision will be enforced is not clear at this time.
The Act also specifies unfair or deceptive acts or practices:
- Misrepresenting the terms of a transaction.
- Inserting unconscionable provisions in contracts.
- Advertising prices for goods or services that do not include all mandatory fees or charges.
- Using deceptive representations regarding geographic origin designations.
- Making false claims about a product’s sponsorship or benefits.
Finally, the legislation also extends to mortgage brokers and lenders, prohibiting them from using a home improvement contractor to negotiate the terms of a loan secured by the home that would be used to finance a home improvement contract or any portion of such a contract.
Implications for marketers
The introduction of SB 1096 has significant implications for businesses engaged in marketing activities including provisions for penalties and fines for businesses that fail to adhere to the requirements.
SPC is ready to work with you to navigate these new regulations in your 2025 campaign planning. As always, just contact your SPC rep with questions or to engage our team.
