Tanner v. Little
Headline: Court upholds Washington law taxing or licensing trading stamps and premium reward schemes, making it harder for merchants and stamp companies to run coupon-based promotions.
Holding: The Court upheld the State’s law regulating and effectively prohibiting trading stamps and premium reward schemes, rejected the discrimination claim, and allowed the State to protect public welfare.
- Allows states to restrict or ban trading-stamp reward programs.
- Makes it harder for merchants to offer stamp-based promotions.
- Permits heavy licensing or taxation of premium coupon systems.
Summary
Background
A group of merchants and companies that issue trading stamps challenged a Washington statute that imposed a heavy license or tax on the “premium system” of coupons and stamps. Under the state law the coupons had to be redeemable in cash or merchandise, and merchants often used separate trading-stamp companies to issue and redeem the coupons. The challengers said the statute singled out their reward promotions and unlawfully discriminated against that form of business.
Reasoning
The Court considered whether the coupon-and-stamp system was merely ordinary advertising or a distinct business practice the State could regulate more strictly. Relying on an earlier decision (Rast v. Van Deman & Lewis), the Court held the premium system has different features: separate trading-stamp companies, pooled funds, and arrangements that can affect prices and potentially mislead buyers. The Justices concluded those differences gave the legislature a reasonable basis to treat the premium system differently. The opinion said the State may act to prevent perceived evils, that a heavy license may be permitted even if it is effectively prohibitive, and it rejected the discrimination argument. The Court reversed the lower court’s decree and ordered the challengers’ bill dismissed.
Real world impact
The decision allows states to restrict or ban trading-stamp and similar reward schemes and to impose burdensome licenses or taxes on them. Merchants and stamp companies can expect stronger state regulation and fewer coupon-based promotions. The opinion did not address coupons used solely as simple discounts or rebates apart from the premium-system features.
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