12.2.2.8

Statement of basis:

1. A. The consumer protection division of the attorney general has received a substantial number of complaints on game promotions, which led that office to consider the extent to which such promotions pose a problem to consumers in New Mexico. As a result of an investigation conducted by that office, it was determined that much promotional material was potentially deceptive with respect to not only what was stated in the literature, but what was omitted. Confusion and misleading information was especially prevalent in the areas of the consideration required to enter a game promotion, odds of winning and the nature of prizes to be awarded. Solicitation of consumer comment on an Albuquerque television program also resulted in a large response, and a strong expression of opinion by New Mexico consumers that the game promotion industry should be strictly regulated.
2. B. Proposed game promotion regulations were issued in draft form on June 1, 1977, in accordance with procedures filed with the state records center by the attorney general pertaining to issuance of regulations under the New Mexico Unfair Practices Act, False Advertising Act and Pyramid Sales Act (see 1 NMAC 2.3) [now 12.2.3 NMAC]. Notice was published in 12 newspapers across the state, pursuant to the procedures mentioned above, announcing the fact that regulations had been proposed, describing the regulations briefly and stating that a public hearing would be held on July 1, 1977 at the Bataan Memorial Building in Santa Fe. The testimony submitted at the hearing was that the regulations were ambiguous, and, unless clarified, might result in enforcement which was too restrictive and prohibitive. Testimony was received that a more effective regulatory approach would be to require a wide range of disclosures, with written substantiation of the disclosed information.
3. C. The game promotion regulations were re-drafted in accordance with the approach suggested at the hearing. The basic features of the revised regulations are the disclosure and substantiation requirements. In addition, a game promotion designed solely to sell a product or service at a discount was found to be an unfair and deceptive trade practice. The revised regulations were disseminated to interested parties, and all comments received were incorporated into the final draft, which is promulgated herewith pursuant of the Unfair Practices Act and of the False Advertising Act.

4. D. It is not the intention of these regulations to authorize any lottery prohibited by the New Mexico statute relating to gambling, Section 44-5-1 NMSA 1978 et seq., or to prohibit any otherwise lawful game promotion except to the extent that it may be false or misleading.

   [5/1/98; Recompiled 10/15/01]