Did fine print saying a publisher received payments for beauty-product participants make the publisher only an advertiser rather than the retailer?

Plain-English summary

A publisher ran a beauty-product advertisement with a tear-out order card, mail address, and telephone number. Fine print said some products shipped directly from manufacturers and that the publisher received payments on behalf of featured beauty-sampler participants.

The Legal Division concluded that the fine print did not turn the publisher into only an advertiser. Customers made checks payable to the publisher, mailed orders to it, and called its telephone number. The order operation was handled by a wholly owned subsidiary or division that was not separately identified to customers.

Prospective buyers therefore had no reason to believe they were purchasing from or dealing with another entity. The publisher or subsidiary remained the retailer. The memorandum left open further research into the exact path of payments after receipt.

What this means for you

Publishers, marketplaces, mail-order sellers, and tax professionals

Retailer status follows the customer-facing transaction, not fine print alone. Review whose name appears on orders and checks, who controls phone and mail channels, whether another principal is clearly identified, and how payments flow.

Common questions

Q: Did the fine-print agency statement control?

A: No. The visible ordering and payment process made the publisher the apparent and actual retailer.

Q: Did use of a subsidiary change the answer?

A: No on the stated facts because the wholly owned subsidiary or division was not identified to customers as a separate seller.

Q: Was every payment-flow fact resolved?

A: No. The memorandum said further research was needed on where payments went after the publisher received them.

Citations and references

• The July 27, 1993 Legal Division memorandum's retailer analysis; no specific code section was cited

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 480.0210
• Original supporting opinion: 480.0210 PDF

Original ruling text

State of California

Board of Equalization
Legal Division

Memorandum

To

:

480.0210

Ms. Barbara Bolda
Out-of-State District
New York - OHB

From :

Donald L. Fillman
Tax Counsel

Subject:

Bazaar Beauty Collection

Date:

July 27, 1993

This will confirm our telephone conversation on July 13, 1993. You had faxed the missing page 5 from the H---'s B--- advertisement for beauty products, which contained some fine print not appearing on the first four pages. The relevant portions read as follows: "Supplies are limited and H---'s B--- will refund your money or credit your charge for products ordered should supplies be exhausted. Some beauty products are shipped directly by manufacturer and may arrive under separate cover. ... Some products are sample or promotional sizes and are so labeled. Prices are specified by manufacturers. Payments to H---'s B-- are received on behalf of the beauty sampler participants featured in this advertisement." The purchasing instructions were printed beside the tear-out card. The relevant portion was as follows: "Simply check your Beauty Collection choices on the attached card (or a separate piece of paper) and mail along with your remittance to H---'s B P.O. Box XXXX
---, Ohio
XXXXX-XXXX"
On the card itself, it also had an "800" number for telephone orders. You also indicated by telephone that you had discovered that the entity handling telephone and mail orders was a wholly-owned subsidiary or division of H---'s.

Ms. Barbara Bolda

-2-

July 27, 1993
480.0210

It is my opinion that the addition of the fine print matter quoted above does not remove H---'s (or their subsidiary) from being a retailer, and change it into only an advertiser. Prospective customers have no reason to believe that they are purchasing from or dealing with any entity but H---'s; in reality, they are not. Their check is to be made out to H---'s, and mailed to H---'s. The telephone number is H---'s, and the printed telephone extension goes to an unidentified subsidiary or division of H---'s. Further research would be needed to know what the fine print means when it says: "Payments to H---'s B--- are received on behalf of the beauty participants featured in this advertisement." Just what path do these payments take? If you have other questions, please contact me.

DLF:wk
cc:

Out-of-State District Administrator