Both California and federal law require retailers who advertise discounts or product specials to have the products available at the advertised price. They are required to have sufficient product quantity on hand to meet expected consumer demand or to provide a substitute product of comparable value at the advertised price. If only limited quantities of advertised specials are available or if the advertised product will not be available at all store locations, the retailer must disclose that information in his advertising. California law does not generally require Rain Checks for unavailable advertised products as the thrust of our regulation is to assure that an advertiser has the product on hand and is prepared to sell it at the advertised price.
In some situations consumer demand is greater than a retail advertiser could have reasonably anticipated and the company runs out of the advertised product and cannot substitute a product of comparable value. Although not required by state law, some retailers will issue rain checks as a matter of customer relations. These are, in essence, a private contractual obligation between the advertiser and the consumer to provide the goods at the advertised price at a later date.
Under the Federal Trade Commission's (FTC) Retail Food Store Advertising and Marketing Rule as amended in 1989, grocers may offer rain checks to customers if they run out of advertised items. However, rain checks are not required if the ad discloses that quantities are limited or items are only available at certain stores. Further, the grocer must have made a good faith effort to have sufficient advertised items on hand to meet expected consumer demand in order to avoid violating the FTC's "unavailability rule" when offering alternatives to advertised items such as rain checks, comparable value substitutes, or compensation equal in value to the advertised items. Click
here to find out more about the FTC Rule.
Finally, California law does provide for the use of rain checks in conjunction with the use of incentives or gifts as a consumer inducement to attend a sales presentation only when the initial solicitation makes the required disclosures and the advertiser makes a good faith effort to have sufficient incentive prizes on hand to meet expected demand. The incentive must then be delivered to the recipient's address at no extra charge within a reasonable period of time but no later than 80 days. ( Business and Professions Code § 17537.1)