Industry Insight

4 Bizarre, Weird, and Totally True Promo Product Laws

When it comes the law, things get complicated and a lot of us can get lost in all the legal jargon and amendments. Laws have been created since the start of the country, and have continued to be created throughout the years. Within the lines and paragraphs and pages of laws for each state and for the country, there are many old laws, new laws, and thanks to some interesting opinions and the changing times, some laws seem just plain ridiculous.

You may have heard some of these strange laws, like how it is illegal to go fishing with dynamite in Pennsylvania or that in California you are not allowed to ride a bicycle in a swimming pool. But here at QLP we were curious if there were any strange laws about promotional products. So we searched for strange restrictions, and no surprise, found some weird ones.

Check them out below!

1. Plastic Bag Ban

You may have heard about initiatives to ban plastic bags in California (and other states and cities), and though I still classify this as a weird law, it does make some degree of sense. The weirdest part of these laws is that they are not being enacted by states, but rather, by counties, cities, and townships.

bag ban

So far, several states have considered legislation to ban or tax plastic bags, but only California, Maine, and Colorado have passed state-wide legislation. However, many cities and counties across the nation have enacted legislation to ban or tax plastic bags. For example, Chicago passed a plastic bag ban for retailers of more than 10,000 square feet which will go into effect August 2015, and will affect smaller chain stores and franchises in August 2016. Even stricter than Chicago? The town of Telluride in Colorado bans all plastic and carry-out bags and requires a 10 cent fee on “permitted paper bags” for businesses of any size.

So what does this weird law mean for your brand?

Well, if you’re an online-only brand, this weird law may never affect you! But if you have a retail store, you’ll have to pay extra attention to specific laws for your area. You may not be able to order those logoed plastic shopping bags you’ve had your eye on, and you may even have to charge customers for each paper shopping bag you give out. If you’re worried laws in your area may be changing or you just want to get a head start on protecting the environment, you may want to offer re-usable bags to your customers as an addition or alternative to paper and plastic.

2. Gift Ban

gift ban-new

A few less well-known laws that also make a small degree of sense are the “Gift Ban” Laws adopted by Massachusetts, Minnesota, and Vermont. These laws ban “gifts”, including promotional products (unless used for educational purposes), given to doctors by pharmaceutical companies and manufacturers.

Massachusetts has the least specific law as far as promotional products are concerned. In their Gift Ban Law promotional products would probably fall under “the provision or payment of entertainment or recreational items of any value, including, but not limited to, tickets to the theater or sporting events, sporting equipment, or leisure or vacation trips” which is not allowed to be given “to any health care practitioner who is not a salaried employee of the company”.

Vermont has a more specific law, with their legislation saying “It is unlawful for any manufacturer of a prescribed product or any wholesale distributor of medical devices, or any agent thereof, to offer or give any gift to a health care provider” with the exceptions of: prescription samples, short-term loan of a medical device, medical journals and articles, FDA labels, rebates, and discounts which are part of a normal course of business, and scholarships for medical students. With no specific mention of promotional products in the exceptions, it might be assumed that they are completely banned, but it is best to talk to an attorney concerning the specifics of the law in your area.

Finally Minnesota has the most specific law in regards to promotional products, with their law stating “It is unlawful for any manufacturer or wholesale drug distributor, or any agent thereof, to offer or give any gift of value to a practitioner” unless the gifts are “items with a total combined retail value, in any calendar year, of not more than $50”. With this exception, it may be assumed that as long as the promotional products given in one year to a single practitioner are worth less than $50, they are not prohibited. Although again, an attorney would be able to provide specifics in your area.

Sunshine Law

The “Sunshine Law” requires all gifts, among other things, to be reported to the Secretary of the United States Department of Health and Human Services

Regardless of whether gifts to medical practitioners by pharmaceutical companies are banned in your area or not, a federal law called the “Sunshine Law” requires all gifts, among other things, to be reported to the Secretary of the United States Department of Health and Human Services unless they are, “payments under $10, unless the aggregate amount paid to a covered recipient exceeds $100 per year; product samples and educational materials for the benefit of patients; loan of a covered device for a trial period under 90 days; in-kind items provided for use in charity care; items or services provided under a warranty; discounts (including rebates); and expert witness fees.” This means that nearly every item must at least be recorded, even if it is not ultimately reported. Attorney Alyce Katayama, who specializes in the federal Sunshine Law among other things, explains the reporting process like this: “First, the transfer of any item valued at $10 or more to a physician must be tracked and is reportable.  Second, even items of lesser value must be tracked, if given to identifiable recipients, so that the pharmaceutical company will know and be able to report when the aggregate annual threshold of $100 has been exceeded, for example by making 11 transfers of an item valued at $9.50 over the course of a year.”

It may seem difficult to find a promotional item that will represent your brand well for under $10 (though it is easier with our Low Price Guarantee). Katayama reminds us that “The threshold amounts will be adjusted for CY [Calendar Year] 2014 and years after that by the change in the consumer price index for all urban consumers (all items; U.S. city average) for the 12-month period ending with June of the previous year.”

This requirement to record and report may discourage pharmaceutical companies from giving out promotional products, despite the clear value in handing out branded items. If you or your boss is feeling this reluctance, you can rest assured that there are still ways you can use promotional products with minimal worry. Katayama explains, “in certain settings, there is still some ability to give away small items without tracking, as indicated in the commentary to the February 8, 2013 final rule (78 Fed. Reg. 9458-9528)

“in certain settings, there is still some ability to give away small items without tracking, as indicated in the commentary to the February 8, 2013 final rule” -Atty Alyce Katayama

…[S]mall incidental items that  are under $10 (such as pens and note pads) that are provided at large-scale conferences and similar large-scale events will be exempted from the reporting requirements, including the need to track them for aggregation purposes.  While these small payments are excluded by statute, the $100 aggregate payment requirement generally requires the tracking of small payments in order to determine whether covered recipients received more than $100 annually.  For these covered recipients, we believe it would be difficult for applicable manufacturers to track who receives these small items at conferences or similar events, due to the nature and disparate attendance at large-scale conferences or similar events.

But you should also note that CMS [Centers for Medicare & Medicaid Services] expects items valued at more than $10 to be tracked.”

So what do these weird laws mean for your brand?

Well, if your company is not a pharmaceutical manufacturer or sales company, this weird law may never affect you. But if you are in the pharmaceutical industry and planning a promotional giveaway, you may want to consult an attorney before making your promotional purchase.

3. Secondary Use: Ban on Bar Swag

bar ban

If you are looking for weird promotional laws that fall into the realm of amusingly confusing, take a look at a law recently amended in Michigan called the Secondary Use rule. This rule banned bars and restaurant owners from using promotional products with beer, wine, or liquor logos imprinted on them. However, the rule was changed to allow alcohol distributors to give retailers promotional goods such as calendars, matchbooks, buttons, napkin holders, and menu clip-ons. It also now allows manufacturers to SELL branded items defined as Barware, such as coasters, napkins, drinkware, and bottle openers.

Texas has a similar code, which states that beer and liquor manufacturers must sell, not give, promotional items to retailers, which may not be sold for less than the cost of the items. However, in Texas, manufacturers can give promotional items directly to consumers so long as they don’t exceed $1 per item in wholesale cost.

So what do these weird laws mean for your brand?

If you are not a manufacturer or retailer of alcoholic beverages, these weird laws may never affect you. But if you are a manufacturer looking to promote your brand, or a retailer trying to advertise the brands you sell, you may need to do a little research before ordering or accepting promotional products.

4. Executive Order: No Swag for the Government

no swag copy

Perhaps the strangest promotional products law is not technically a law at all, but an Executive Order. Federal agencies were ordered to “promote efficient spending” by “limit[ing] the purchase of promotional items (e.g., plaques, clothing, and commemorative items), in particular where they are not cost-effective.” This Executive Order given in 2011 was not the first time federal agencies were told to stop buying promo items with federal funds. In 2005 the Office of Management and Budget issued a Circular to federal agencies stating that “Costs of promotional items and memorabilia, including models, gifts, and souvenirs” were one of the “Unallowable advertising and public relations costs”. Though OMB Circulars are “expected to have a continuing effect of two years or more” it seems that not all federal agencies were mindful of the rule. In 2013, the Department of Justice Office of the Inspector General put out a report about the US Marshals’ Investigative Operations Division (IOD) that found “the IOD spent at least $793,118 on promotional items during fiscal years 2005 to 2010 and that these expenditures were excessive and, in some instances, in contravention of Department Policies and Government Accountability Office (GAO) decisions and guidance.”

So what does this weird law mean for your brand?

“If your State laws, regulations, and policies allow the purchase of promotional items, you may use State funds. But the items can’t count as a State match for the Federal program.”

If you are one of the many that send their tax dollars away, never to be seen again, this weird law may not affect you. However, if you are a federal agency, or receive tax payer funds for your organization, you may be left wondering what you can or cannot purchase in regards to promotional products. While the Circular and Executive order prohibit the use of Federal funds to purchase promotional items, there are still some ways you can order promotional products. One way is, as the Highway Administration says, “If your State laws, regulations, and policies allow the purchase of promotional items, you may use State funds. But the items can’t count as a State match for the Federal program.” The other way depends on how you intend to use your promotional products. The US Office of Personnel Management states that promotional products are allowed to be purchased and given out as “honorary or informal recognition award” as long as it meets certain criteria.

The requirements for honorary awards are: “The item must have a lasting trophy value, the item must clearly symbolize the employer-employee relationship in some fashion, the item must take an appropriate form to be used in the public sector and to be purchased with public funds, and the item must be something that the recipient could reasonably be expected to value, but not something that conveys a sense of monetary value.” Glass or stone awards your employees can display on their desk or in their office are perfect for recognizing high-achieving employees.

For informal awards to recognize achievements that may otherwise go unnoticed, “the item must be of nominal value and the item must take an appropriate form to be used in the public sector and to be purchased with public funds.”

Weird Laws-Bullets

Laws concerning promotional products may not be as weird as laws keeping you from tying your giraffe to a telephone pole or getting your pet, but for those of us in the promotional products industry it sure does seem silly to keep businesses from using tools that will help them get thousands of brand impressions and generally make people more likely to do business with them. Share these weird laws with anyone thinking about buying promotional products!

Please note: This post does not constitute legal advice and readers should not rely on it to solve individual problems.