Report Title:

Telemarketing Fraud Prevention; Penalties

 

Description:

Imposes criminal penalties for violation of the telemarketing fraud prevention law.

 

THE SENATE

S.B. NO.

1613

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO TELEMARKETING.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Section 481P-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) It is an unfair or deceptive act or practice and a violation of this chapter for any seller or telephone solicitor to:

(1) Fail to commence, within the first minute of an outbound telephone call, and complete within the first three minutes of the outbound call, and before payment is requested and prior to any solicitation, disclosure of the following:

(A) The true purpose of the telephone call;

(B) The telephone solicitor's name and the company or entity on whose behalf the solicitation is being made; and

(C) The goods or services being offered;

(2) Misrepresent or fail to disclose, in a clear, conspicuous, and intelligible manner and before payment is received from the consumer, the following information:

(A) Total purchase costs to the consumer of the goods or services to be received;

(B) Any restrictions, limitations, or conditions to purchase or to use the goods or services that are the subject of any offer;

(C) Any material term or condition of the seller's refund, cancellation, or exchange policy, including, if applicable, that no such policies exist;

(D) All material costs or conditions related to receiving a prize, including the odds of winning the prize, and if the odds are not calculable in advance, the factors used in calculating the odds, the nature and value of a prize, that no purchase is necessary to win the prize, and the "no purchase" method of entering the contest;

(E) Any material aspect of an investment opportunity being offered, including but not limited to risk, liquidity, earnings potential, market value, and profitability; and

(F) The quantity, and any material aspect of the quality or basic characteristics of any goods or services offered;

(3) Misrepresent any material aspect of the quality or basic characteristics of any goods or services offered;

(4) [Represent] Falsely represent that the telephone solicitor or seller is registered as a telephone solicitor in the State or has in any way received an endorsement or approval by any governmental agency of the State;

(5) Make a false or misleading statement with the purpose of inducing a consumer to pay for any goods or services;

(6) Request or accept payment from a consumer or make or submit any charge to the consumer's credit or bank account before the telephone solicitor or seller receives from the consumer an express verifiable authorization; provided that no express verifiable authorization is required if the seller adopts and complies with a policy that:

(A) Affords the consumer at least seven days after the receipt of goods or services to review goods or services and return undamaged or unused goods or submit a cancellation of services notice;

(B) Requires the seller to process the full refund within thirty days after receipt of returned merchandise or the cancellation of services notice from the consumer; and

(C) Requires the disclosure of the seller's return and refund policy to the consumer, orally by telephone, and in writing with any advertising or promotional material, and with delivery of the goods or services;

(7) Fail to include on the express verifiable authorization in a clear and conspicuous manner, the following language:

"YOU ARE NOT OBLIGATED TO MAKE ANY PAYMENT UNLESS YOU SIGN THIS CONFIRMATION AND RETURN IT TO THE SELLER.";

(8) Procure the services of any professional delivery, courier, or other pick-up service to obtain immediate receipt or possession of a consumer's payment;

(9) Offer to consumers in the State any prize promotion, in which a purchase or payment is necessary to obtain the prize; or

(10) Fail to comply with the recordkeeping requirements of this chapter."

SECTION 2. Section 481P-4, Hawaii Revised Statutes, is amended to read as follows:

"[[]§481P-4[]] Recordkeeping. Every telephone solicitor shall keep true and accurate records of all telemarketing activities initiated in this State or directed to consumers located in this State. Upon demand, the records shall be made available to the department of commerce and consumer affairs, the attorney general, and any other governmental entity with authority to enforce this chapter. These records shall be retained for a period of [two] four years after the date of any outbound telephone call initiated from, directed into, or within this State. The records shall include but are not limited to the following information:

(1) The location of the telephone solicitor and seller and the street addresses of any locations from which the outbound telephone calls originated;

(2) Copies of any injunction, temporary restraining order, judgment, consent judgment, or assurance of voluntary compliance in any civil or administrative action, including any pending action, involving a violation or alleged violation by [[]the[]] telephone solicitor or the seller of any state or federal telemarketing law;

(3) The name, any fictitious name used, last known home address, telephone number, and job title of all telephone solicitors, who place or placed calls on behalf of a seller or who participate in or are responsible for the management of the business of the telephone solicitor; however, if the seller or telephone solicitor permits fictitious names to be used by employees or agents, each fictitious name shall be traceable to only one specific telephone solicitor, employee or agent. Where one or more telephone solicitors is employed by or otherwise acting on behalf of a seller, the reporting requirements of this chapter may be met by the seller on behalf of itself and its telephone solicitors, but only to the extent the records comply with the requirements of this chapter;

(4) Copies of all substantially different scripts, outlines, or presentation materials the seller requires a telephone solicitor to use when soliciting, as well as of all information to be provided by a telephone solicitor to a consumer in connection with any telemarketing;

(5) All written consents to utilize a name or names of any person, as defined in section 1-19, in any endorsement;

(6) Materials that substantiate any claims about the performance, efficacy, nature, or characteristics of health, nutrition, or diet related goods or services that are the subject of telemarketing;

(7) A copy of the refund, cancellation, exchange, or repurchase policies for any goods or services offered by a seller or telephone solicitor, unless the seller or telephone solicitor offers and provides an unconditional satisfaction guaranteed policy and provides a full refund for returned goods or cancelled services;

(8) Copies of all written confirmations of telemarketing transactions;

(9) Copies of all express verifiable authorizations and signed order confirmations;

(10) Copies of any training instructions, handbooks, or other guidelines distributed by telephone solicitors to their staff or by sellers to their telephone solicitors, employees, or agents;

(11) Procedures for maintaining a list of persons who do not wish to receive outbound telephone calls made by or on behalf of the seller or telephone solicitor, which procedures shall meet the minimum standards set forth in 47 C.F.R. section 64.1200(e)(2), as well as the do not call lists maintained pursuant to those procedures; and

(12) Copies of written contracts and agreements between the telephone solicitor and the seller."

SECTION 3. Section 481P-6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§481P-6[] Unfair] Penalties; unfair or deceptive act or practice. [Any person who violates this chapter shall be deemed to have engaged in an unfair method of competition or unfair and deceptive act or practice in the conduct [of] any trade or commerce within the meaning of section 480-2.] Any person who violates section 481P-2(a)(2)(A), (a)(2)(B), (a)(2)(F), (a)(3), (a)(4), or (a)(5) shall be guilty of a class B felony. Any person who violates any other section in this chapter shall be deemed to have engaged in an unfair method of competition or unfair deceptive act or practice in the conduct of any trade or commerce within the meaning of section 480-2."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:

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