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Can I offer discounts or promotions without violating pricing laws in Texas? What are the requirements?

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Discounts and Promotions in Texas

In Texas, discounts and promotions are allowed under certain conditions. The rules and regulations regarding discounts and promotions are outlined in various sections of the Texas Alcoholic Beverage Code and the Texas Insurance Code.

Discounts and Promotions for Alcoholic Beverages

Under Section 108.061 of the Texas Alcoholic Beverage Code, a brewer or nonresident brewer may offer a prize to a consumer of legal drinking age if the offer is part of a promotional sweepstakes activity. A purchase or entry fee may not be required of any person to enter in a sweepstakes authorized under this section. A person affiliated with the alcoholic beverage industry may not receive a prize from a sweepstakes authorized under this section. A prize awarded under this section may include food, beverages, entertainment, recreation, gifts, or attendance at a private event at a permitted or licensed premises for the winners of the sweepstakes and other guests of the sponsor of the event. The name or location of the premises where a private event described by this subsection is held may not be mentioned in any advertising related to the sweepstakes [1.1].

Discounts and Promotions for Discount Health Care Programs

Under Section 562.103 of the Texas Insurance Code, a program operator of a discount health care program shall issue at least one set of disclosure materials describing the terms and conditions of the discount health care program to each household in which a person is a member, including a statement that the discount health care program is not insurance, with the word “not” capitalized. The member is required to pay the entire amount of the discounted rate. The discount health care program does not guarantee the quality of the services or products offered by individual providers. If the member remains dissatisfied after completing the discount health care program’s complaint system, the member may contact the member’s state insurance department [2.5].

Packaging of Promotional Items

Under Section 108.035 of the Texas Alcoholic Beverage Code, a person who holds a brewer’s license or nonresident brewer’s license, or the person’s agent or employee, may package alcoholic beverages in combination with other items if the package is designed to be delivered intact to the distributor and the additional items are branded and have no value or benefit to the retailer other than that of having the potential of attracting purchases and promoting sales [1.3].

Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Prohibited

Under Section 562.101 of the Texas Insurance Code, a person may not engage in this state in a trade practice that is defined in this chapter as or determined under this chapter to be an unfair method of competition or an unfair or deceptive act or practice in the business of discount health care programs [2.4].

Administrative Discretion

Under Section 108.04 of the Texas Alcoholic Beverage Code, the commission may promulgate rules which shall set definite limitations consistent with the general provisions of this code, relaxing the restrictions of Sections 102.07, 102.14, 102.15, and 108.06, with respect to acts of a purely courtesy nature [1.6].

Requirements for Discounts and Promotions

The requirements for discounts and promotions in Texas vary depending on the type of product or service being offered. For alcoholic beverages, discounts and promotions must be part of a promotional sweepstakes activity and a purchase or entry fee may not be required. For discount health care programs, program operators must issue disclosure materials describing the terms and conditions of the program, including a statement that the program is not insurance. For packaging of promotional items, the package must be designed to be delivered intact to the distributor and the additional items must be branded and have no value or benefit to the retailer other than that of having the potential of attracting purchases and promoting sales. It is prohibited to engage in unfair methods of competition or unfair or deceptive acts or practices in the business of discount health care programs. The commission may promulgate rules which shall set definite limitations consistent with the general provisions of the Texas Alcoholic Beverage Code, relaxing the restrictions of Sections 102.07, 102.14, 102.15, and 108.06, with respect to acts of a purely courtesy nature [1.1][2.4][2.5][1.3][1.6].

Additionally, it is important to note that the Texas Insurance Code prohibits certain methods of promotions for discount health care programs. For example, it is an unfair method of competition or an unfair or deceptive act or practice for a discount health care program operator to pay any consideration to a health care services provider or employee of a health care services provider to encourage an individual to claim a discount for prescription drugs under a discount health care program or to include discount health care program information on a prescription for a drug or in materials accompanying the prescription [2.1]. It is also unlawful for a program operator or marketer to advertise, solicit, or market a discount health care program containing the words “approved by the Texas Department of Insurance” or words with a similar meaning [2.2]. Misrepresenting the price range of discounts offered by the discount health care program, the size or location of the program’s network of providers, or the participation of a provider in the program’s network is also prohibited [2.3].

Conclusion

In summary, discounts and promotions are allowed in Texas under certain conditions. For alcoholic beverages, discounts and promotions must be part of a promotional sweepstakes activity and a purchase or entry fee may not be required. For discount health care programs, program operators must issue disclosure materials describing the terms and conditions of the program, including a statement that the program is not insurance. The packaging of promotional items must be designed to be delivered intact to the distributor and the additional items must be branded and have no value or benefit to the retailer other than that of having the potential of attracting purchases and promoting sales. It is prohibited to engage in unfair methods of competition or unfair or deceptive acts or practices in the business of discount health care programs. Additionally, certain methods of promotions for discount health care programs are prohibited by the Texas Insurance Code.

Source(s):
Jurisdiction

Texas