MEMORANDUM

To: From:   Date: Re: File:

Lawyering Skills I students Professor Sorkin April 1, 1999 JL Music Service LS1-S99-3

      We represent JL Music Service (JLMS), a mail-order CD dealer.  JLMS uses a negative-option sales technique, in which customers enroll as members and agree to receive an automatic shipment each month, unless they send in a reply card indicating that they do not wish to receive a particular shipment.  JLMS entices customers to join by offering them seven CDs for free.  The customer is then obligated to purchase at least one CD at full price ($15 to $18) within a year, and after purchasing a full-price CD, the customer can request four more free CDs.  Shipping and handling charges are added to each shipment.  A member may resign from the service at any time after meeting the purchase obligation.

      JLMS advertises in magazines and by direct mail, but it also has a referral program to encourage current members to recruit other customers.  A member who refers a new customer to JLMS is rewarded with five free CDs, and the new customer gets the same introductory offer (seven free CDs, one at full price, and four more free CDs).

      The referral program currently is advertised only to current members of the service; it is not mentioned in JLMS's magazine advertisements or other solicitations aimed at new members.  However, JLMS believes that the referral program is an important feature of its service, and that many more people would join if they knew about the referral program.  JLMS wants to improve the effectiveness of its magazine advertisements by adding a description of the referral program.  JLMS's in-house attorney is concerned that this practice might violate § 505/2A of the Illinois Consumer Fraud Act.  Please write a memorandum in which you address that issue.