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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO TELEMARKETING FRAUD. 



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

 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5                TELEMARKETING FRAUD PREVENTION ACT
 
 6         -1  Definitions.  Whenever used in this chapter, unless
 
 7 the context requires otherwise:
 
 8      "Communication" means a written or oral notification or
 
 9 advertisement that meets any one of the following conditions:
 
10      (1)  The notification or advertisement is transmitted by or
 
11           on behalf of the seller and by any printed, audio,
 
12           video, cinematic, telephonic, or electronic means.
 
13      (2)  In the case of a notification or advertisement other
 
14           than by telephone, either of the following conditions
 
15           is met:
 
16           (A)  The notification or advertisement is followed by a
 
17                telephone call from a telephone solicitor or
 
18                salesperson.
 
19           (B)  The notification or advertisement invites a
 

 
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 1                response by telephone, and through that response,
 
 2                a telephone solicitor attempts to make a sale of
 
 3                goods or services.
 
 4      "Consumer" or "purchaser" means a person who is, or may be,
 
 5 required to pay for goods or services offered by a telephone
 
 6 solicitor through telemarketing and includes but is not limited
 
 7 to consumers defined in section 480-1.
 
 8      "Express verifiable authorization" means express written
 
 9 authorization by the consumer, including but not limited to the
 
10 consumer's signature on a negotiable instrument, which
 
11 specifically authorizes the telephone solicitor to obtain payment
 
12 from a person's checking, savings, or bankcard account.
 
13      "Goods or services" means any real property or any tangible
 
14 or intangible personal property or services of any kind provided
 
15 or offered to a person.
 
16      "Investment opportunity" means anything tangible or
 
17 intangible, that is offered for sale, sold, or traded based
 
18 wholly or in part on representations, either express or implied,
 
19 about past, present, or future income, profit, or appreciation.
 
20      "Material" means any factor likely to affect a person's
 
21 choice of, or conduct regarding, goods or services.
 
22      "Outbound telephone call" means a telephone call initiated
 
23 by a telemarketer to induce the purchase of goods or services.
 

 
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 1      "Premium" means anything offered or given, independent of
 
 2 chance, to consumers as an incentive to purchase goods or
 
 3 services offered through telemarketing.
 
 4      "Prize" means anything offered or purportedly offered and
 
 5 given or purportedly given to a person by chance.
 
 6      "Prize promotion" means a sweepstakes or other game of
 
 7 chance or an oral or written representation that a person has
 
 8 won, has been selected to receive, or is eligible to receive a
 
 9 prize or purported prize.
 
10      "Recovery service" means any business or other practice in
 
11 which a person represents or implies that, for a fee, any amount
 
12 a consumer has paid out to a telemarketing solicitor may be
 
13 recovered.
 
14      "Seller" means any person, who, in connection with a
 
15 telemarketing transaction, solicits funds or contributions, or
 
16 provides, offers to provide, or arranges for others to provide
 
17 goods or services to the consumer in exchange for consideration.
 
18      "Telemarketing" means a plan, program, or campaign which is
 
19 conducted to induce the purchase of goods or services or to
 
20 solicit funds or contributions by use of one or more telephones
 
21 and which involves more than one telephone call.
 
22      "Telephone solicitor" means any person who in connection
 
23 with telemarketing, initiates or receives telephone calls to or
 

 
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 1 from a consumer, where either or both parties to the telephone
 
 2 call are located in this State.
 
 3         -2  Unfair or deceptive acts or practices prohibited.
 
 4 (a)  It is an unfair or deceptive act or practice and a violation
 
 5 of this chapter for any seller or telephone solicitor to:
 
 6      (1)  Fail to state, within the first minute of the call,
 
 7           before payment is requested and prior to any
 
 8           telemarketer pitch:
 
 9           (A)  The true purpose of the telephone call;
 
10           (B)  The telephone solicitor's true name and the
 
11                company or entity on whose behalf the solicitation
 
12                is being made; and
 
13           (C)  The goods or services being offered;
 
14      (2)  Misrepresent or fail to disclose, in a clear,
 
15           conspicuous, and intelligible manner, the following
 
16           information:
 
17           (A)  Total purchase costs to the consumer of the goods
 
18                to be received;
 
19           (B)  Any restrictions, limitations, or conditions to
 
20                purchase or to use the goods that are the subject
 
21                of any offer;
 
22           (C)  Any material term or condition of the seller's
 
23                refund, cancellation, or exchange policy,
 

 
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 1                including, if applicable, that no such policies
 
 2                exist;
 
 3           (D)  All material costs or conditions related to
 
 4                receiving a prize including the odds of winning
 
 5                the prize, the nature and value of a prize, no
 
 6                purchase is necessary to win the prize, and the
 
 7                "no purchase" method of entering the contest;
 
 8           (E)  Any material aspect of an investment opportunity
 
 9                being offered, including but not limited to risk,
 
10                liquidity, earnings potential, market value, and
 
11                profitability; and
 
12           (F)  The quantity of any goods or services offered;
 
13      (3)  Misrepresent any material aspect of the quality or
 
14           basic characteristics of the goods or services
 
15           purchased;
 
16      (4)  Advertise that any person is registered as a telephone
 
17           solicitor in the State or represent that any person has
 
18           in any way received an endorsement or approval by any
 
19           governmental agency of the State;
 
20      (5)  Make a false or misleading statement with the purpose
 
21           of inducing a consumer to pay for any goods or
 
22           services;
 
23      (6)  Request or accept payment from a consumer or make or
 

 
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 1           submit any charge to the consumer's credit or bank
 
 2           account until the telephone solicitor or seller
 
 3           receives from the consumer an express verifiable
 
 4           authorization;
 
 5      (7)  Fail to include on the express verifiable authorization
 
 6           in clear and conspicuous language:
 
 7           "YOU ARE NOT OBLIGATED TO PAY ANY MONEY UNLESS YOU SIGN
 
 8           THIS CONFIRMATION AND RETURN IT TO THE SELLER";
 
 9      (8)  Obtain or submit for payment a check, draft, or other
 
10           form of negotiable paper drawn on a person's checking,
 
11           savings, or bankcard account without that person's
 
12           express verifiable authorization;
 
13      (9)  Procure the services of any professional delivery,
 
14           courier, or other pick-up service to obtain immediate
 
15           receipt or possession of a consumer's payment;
 
16     (10)  Offer to consumers in the State any prize promotion,
 
17           lottery, or sweepstakes in which a purchase or payment
 
18           is necessary to obtain the prize offered; or
 
19     (11)  Fail to comply with the recordkeeping requirements of
 
20           this chapter.
 
21      (b)  It is a violation of this chapter for any person to
 
22 assist, support, or provide substantial assistance to any
 
23 telephone solicitor that person knows or should have known that
 

 
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 1 the telephone solicitor is engaged in any unlawful or deceptive
 
 2 practice defined within this chapter.
 
 3      (c)  Engaging in any other unfair or deceptive conduct which
 
 4 will create a likelihood of confusion or misunderstanding is a
 
 5 violation of this chapter.
 
 6         -3  Abusive telemarketing acts or practices.  It is an
 
 7 abusive telemarketing act or practice and a violation of this
 
 8 chapter for any seller or telephone solicitor to engage in the
 
 9 following conduct:
 
10      (1)  Threaten, intimidate, or use profane or obscene
 
11           language;
 
12      (2)  Request any fee to remove derogatory information from
 
13           or improve a person's credit history or credit record;
 
14      (3)  Request or receive payment from a person to recover or
 
15           otherwise aid in a return of money or any other item
 
16           lost by the consumer in a telemarketing transaction;
 
17      (4)  Request or actually receive payment of any fee in
 
18           advance of obtaining a loan or other extension of
 
19           credit when a high likelihood of success has been
 
20           represented by the telephone solicitor;
 
21      (5)  Cause the telephone to ring more than five times in an
 
22           intended telephone solicitation call;
 
23      (6)  Engage any person repeatedly or continuously with
 

 
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 1           behavior a reasonable person would deem to be annoying,
 
 2           abusive, or harassing;
 
 3      (7)  Initiate a telephone solicitation call to a person,
 
 4           when that person has stated previously that the person
 
 5           does not wish to receive solicitation calls from that
 
 6           seller or telephone solicitor;
 
 7      (8)  Engage in telephone solicitation to a person's
 
 8           residence at any time other than between 9:00 a.m. and
 
 9           9:00 p.m. local time, of the place of the person
 
10           called; or
 
11      (9)  Engage in any other conduct that would be considered
 
12           abusive to any reasonable consumer.
 
13         -4  Recordkeeping.  Every telephone solicitor shall keep
 
14 true and accurate records of all telemarketing activities in this
 
15 State or directed to consumers located in this State.  Upon
 
16 demand, these records shall be made available to any governmental
 
17 entity with authority to enforce this chapter.  Such records
 
18 shall be retained for a period of five years after the date of
 
19 any telephone call from or into this State.  The records shall
 
20 include but are not limited to the following information:
 
21      (1)  The location of the telephone solicitor and the street
 
22           addresses of any locations from which telephone
 
23           solicitations originated;
 

 
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 1      (2)  Copies of any injunctions, temporary restraining
 
 2           orders, judgments, consent judgments, or assurances of
 
 3           voluntary compliance in any civil or administrative
 
 4           action, including any pending actions, involving
 
 5           violations or alleged violations of any state or
 
 6           federal telemarketing or sweepstakes law or rule, or
 
 7           fraud, theft, racketeering, embezzlement, fraudulent
 
 8           conversion, or misappropriation of property;
 
 9      (3)  The true name, home address, date of birth, and social
 
10           security number of all persons who place or placed
 
11           calls on behalf of a telephone solicitor or who
 
12           participate in or are responsible for the management of
 
13           the business of the telephone solicitor.  Where one or
 
14           more telephone solicitors is employed by or otherwise
 
15           acting on behalf of a telemarketing company, the
 
16           reporting requirements of this chapter may be assumed
 
17           by the telemarketing company on behalf of itself and
 
18           its staff, but only to the extent such records comply
 
19           with the requirements of this chapter;
 
20      (4)  Copies of all scripts, outlines, or presentation
 
21           materials the applicant requires a telephone solicitor
 
22           to use when soliciting as well as all information to be
 
23           provided by a telephone solicitor to a consumer in
 

 
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 1           connection with any telemarketing;
 
 2      (5)  All written consents to utilize a name or names in any
 
 3           endorsements or to utilize the names of any charitable
 
 4           organizations;
 
 5      (6)  Materials that substantiate any claims about the
 
 6           performance, efficacy, nature, or characteristics of
 
 7           goods or services that are the subject of a telephone
 
 8           solicitation;
 
 9      (7)  A copy of the refund, cancellation, exchange, or
 
10           repurchase policies or any good or product offered by a
 
11           telephone solicitor;
 
12      (8)  Copies of all written confirmations of telemarketing
 
13           transactions;
 
14      (9)  Copies of all express verifiable authorizations and
 
15           signed order confirmations;
 
16     (10)  Copies of any training instructions, handbooks, or
 
17           other guidelines distributed by telephone solicitors to
 
18           their staff;
 
19     (11)  The full name and telephone number of every person who
 
20           has notified a telephone solicitor that the person does
 
21           not wish to receive solicitation calls and the date or
 
22           dates the notification was made; and
 
23     (l2)  Copies of written contracts and agreements between the
 

 
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 1           telephone solicitor and the seller.
 
 2         -5  Exemptions.  The recordkeeping requirements of this
 
 3 chapter do not apply to the following:
 
 4      (1)  A person making telephone calls to a residential
 
 5           customer for the sole purpose of polling or soliciting
 
 6           the expression of ideas, opinions, or votes, or a
 
 7           person soliciting solely for a political or religious
 
 8           cause or purpose;
 
 9      (2)  A securities broker-dealer, salesperson, investment
 
10           advisor, or investment advisor representative who is
 
11           registered with this State to sell securities or who is
 
12           authorized to sell securities in this State pursuant to
 
13           federal securities laws, when soliciting over the
 
14           telephone within the scope of the person's
 
15           registration;
 
16      (3)  A financial institution that is authorized to accept
 
17           deposits under its chartering or licensing authority
 
18           and such deposits are insured by the Federal Deposit
 
19           Insurance Corporation or the National Credit Union
 
20           Administration, such as a bank, savings bank, savings
 
21           and loan association, depository financial services
 
22           loan company, or credit union;
 
23      (4)  An insurance company or other organization that is
 

 
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 1           licensed or authorized to conduct business in this
 
 2           State by the commissioner of insurance;
 
 3      (5)  A college or university accredited by an accrediting
 
 4           organization recognized by the United States Department
 
 5           of Education;
 
 6      (6)  A person who publishes a catalog of at least fifteen
 
 7           pages, four times a year with a circulation of at least
 
 8           100,000, where the catalog includes clear disclosure of
 
 9           sale prices, shipping, handling, and other charges;
 
10      (7)  A political subdivision or instrumentality of the
 
11           United States, or any state of the United States;
 
12      (8)  A public utility that is subject to regulation by the
 
13           public utilities commission of this State;
 
14      (9)  A real estate broker or salesperson who is licensed by
 
15           this State to sell real estate, when soliciting within
 
16           the scope of the license; or
 
17     (10)  A travel agency that is registered with this State,
 
18           when engaging in the business of selling or advertising
 
19           to sell travel services.
 
20         -6  Unfair or deceptive act or practice.  Any person who
 
21 violates this chapter shall be deemed to have engaged in an
 
22 unfair method of competition or unfair and deceptive act or
 
23 practice in the conduct or any trade or commerce within the
 

 
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 1 meaning of section 480-2.
 
 2         -7  Other relief available.  The relief provided in this
 
 3 chapter is in addition to remedies otherwise available against
 
 4 the same conduct under the common law or other state or federal
 
 5 statutes or rules.
 
 6         -8  Contracts voidable.  A contract or agreement made as
 
 7 a result of telemarketing activity that violates this chapter is
 
 8 voidable by the consumer for any reason at any time and shall not
 
 9 be enforced against the consumer and any debt arising therefrom
 
10 shall not be reported to a credit reporting agency."
 
11      SECTION 2.  This Act shall take effect upon its approval. 
 
12 
 
13                           INTRODUCED BY:  _______________________
 

 
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