Dollar General, Dollar Tree and Family Dollar will pay $1.2 million in fines and restitution to the New York Attorney General to resolve allegations that they routinely sold expired medicines and failed to comply with New York’s bottle deposit law. The bulk of the penalty – $1.1 million – will be paid by Dollar General, which is accused of selling two types of motor oil that have been obsolete for almost 30 and 90 years, respectively.

Investigators began secretly shopping at the discount chains in March 2016, inspecting shelves for expired products. At stores throughout the state of New York, they found over-the-counter medicines for sale months past their expiration dates. At Dollar General stores, they also found at least two types of store-brand motor oil that is not suitable for most modern car engines. One type of motor oil has been obsolete since 1988, and the other since 1930. These motor oils were placed on store shelves next to, and used packaging with the same or similar descriptors as, brand-name motor oils that are suitable for modern engines. There were no signs or other indicators to warn customers that they should be used only on antique vehicles.


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Venable clients that engage in selling goods and/or services over the internet should evaluate whether the recent Supreme Court decision in South Dakota v. Wayfair will now require them to begin collecting sales and use taxes in states where they have not previously done so. In the Wayfair Case the Court held that a state can require a remote vendor to collect its sales/use tax based merely on “economic nexus” with the state. The prior law standard requiring a remote vendor to have physical presence in a state has been overturned. Under the South Dakota law at issue in Wayfair, an internet retailer is required to collect South Dakota sales tax if it has more than $100,000 of sales into the state or more than 200 sales transactions in the state over the course of a year.

Our chart below lists the states that currently have authorized an economic nexus standard similar to that approved in Wayfair and lists the threshold requirements for each state. This list can be expected to grow as states without economic nexus laws for sales tax purposes rush to alter their existing standards to take advantage of Wayfair’s liberalization of the sales tax nexus rules.


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States can now require internet retailers to collect sales taxes even if the retailer has no physical presence in the state.

In South Dakota v. Wayfair, the Supreme Court overturned its 1992 decision in Quill Corporation v. North Dakota, which limited a state’s ability to impose its sales tax on an out-of-state retailer. In Quill the Court ruled that only a retailer that had a physical presence in a state by means of employees, stores, warehouses, or the like was required to collect such state’s sales tax. The Quill decision is one of the main reasons why many e-commerce retailers did not have to collect sales tax for sales to out-of-state residents.


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comicbook scareScrolling online through the California Business and Professions Code the other day, I was struck by a frightening sight. My pulse raced. My jaw dropped. I called out to an associate for help. I wanted to make sure that what I was seeing was real, i.e., that I wasn’t out of my mind. Many lawyers have read California Business and Professions Code Section 16600 by which California outlaws covenants not to compete. But click a few code sections over and you’ll be shocked!

Section 16603 has to be one of the strangest (and most seasonally appropriate) laws ever. It targets the two-for-one sale of comic books, stating: “Every person who, as a condition to a sale or consignment of any magazine, book, or other publication requires that the purchaser or consignee purchase or receive for sale any horror comic book, is guilty of a misdemeanor” punishable by jail time up to six months or a fine up to $1000. The section goes on to define a horror comic book with specificity:


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e-commerceAs states continue their quest to compel online vendors to collect sales and use tax on sales to customers located in the state and to subject such vendors to state income tax, a current trend has been targeting vendors selling via online marketplaces. Some states assert that the presence of inventory held for a vendor or the presence of the marketplace provider/facilitator in a state acting on behalf of a vendor is sufficient nexus or connection of the vendor with the state to subject the vendor to the state’s taxing jurisdiction. 

The Multistate Tax Commission (MTC), an intergovernmental state tax agency that works on behalf of the states and taxpayers to facilitate the administration of state tax laws, is coordinating a Voluntary Disclosure Settlement program (VDA program) to enable retailers that sell their products online using a third-party marketplace provider/facilitator (such as Rakuten) to register with a state for current and prospective tax compliance and at the same time settle tax obligations for prior years.


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For Medical Use OnlyThe New York State Department of Health recently proposed a new set of regulations that would loosen marketing and advertising laws affecting New York’s medical cannabis program. The proposed regulations were published in the New York Register on August 23, 2017, and are open for a 30-day public comment period before the new regulations are to take effect.

The proposed regulations ease restrictions for registered organizations and dispensing facilities’ exterior signage by eliminating the previous requirement that all registered cannabis dispensaries display no more than one exterior black-and-white sign. The new regulations also removes the previous restriction that banned dispensaries from illuminating, “at any time, a sign advertising a marihuana product located on any physical structure.”


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Risk-free trialIt’s no secret that automatic renewal (or continuity or negative option programs) are on many regulators hit lists. Regulators argue that consumers are often unaware that they have signed up for services or products for which they will be billed on a monthly basis unless and until they cancel, particularly when it involves a free trial period. In some cases cancellation may not always be easy and the billing descriptor that appears on the consumer’s credit card statement may differ significantly from the branded product or service name. Finally, otherwise busy consumers may simply forget about the upcoming renewal, particularly if the subscription term is lengthy.

Regulators have responded by bringing numerous law enforcement actions, many of which seek to heighten disclosure requirements. At the federal level many of these enforcement actions are based in part upon ROSCA, the Restore Online Shoppers Confidence Act. (See our previous posts on ROSCA here.) The Unsubscribe Act, introduced in the House of Representatives earlier this year, seeks to tighten legal requirements for such programs even further.


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We wanted to alert retail readers to these developments in price advertising laws in the United Kingdom from our friends at Lewis Silkin.

Late last year new U.K. Pricing Practices Guidelines were published by the Chartered Trading Standards Institute, replacing the long standing guidelines which retailers and advertisers had been following for many years.

The new Guidelines are not just an edit of the old ones. They are a root and branch reform, taking a “principles-based” approach to the advertising of prices, consistent with the same principles based approach enshrined in the Consumer Protection Regulations 2008.


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package deliveryThe plaintiffs’ bar is at it again, this time with a new target—the shipping and handling fees that retailers charge consumers in the course of delivering a product.

We may think in the day of Amazon Prime that when we shop on the web the product should arrive at our door for free. But there are obviously costs associated with mailing the items we buy online, costs that don’t exist when we pick up in store. E-Sellers have always understood the need to make these shipping and handling costs—as well as other terms and conditions of sale—clear and conspicuous to the customer before he buys the product. Similarly, e-Sellers understand when they advertise a product as “free” or as a “free trial” that charging additional fees such as shipping and handling, unless very clearly communicated, can pique the interest of state enforcers. The current class action attack on retailers focuses not on how clearly such charges are communicated but instead on the amounts charged and whether it is somehow unfair to charge more than the actual out-of-pocket shipping and handling cost, even if the charges are adequately disclosed.


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While we love our male colleagues, I am delighted that the women partners and associates in our adlaw group easily outnumber them.  It seemed appropriate to close out Women’s History Month by taking a look at issues involving women in advertising (for the FTC’s take on Women’s History Month click here).

Gender equality was clearly absent from early advertising.  One ad from 1912 encouraged men to light a cigarette in front of a suffragette and watch her say “I wish I were a man.” 
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