Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1073
                                        H.D. 1
                                        S.D. 2

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Judiciary, to which was referred H.B. No.
1073, H.D. 1, S.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill is to create a new chapter in the
Hawaii Revised Statutes to regulate telemarketing activity in
Hawaii.  Specifically, this measure creates the Telemarketing
Fraud Prevention Act, which:

     (1)  Provides that a seller or telephone solicitor commits
          an unfair and deceptive act or practice by making false
          representations or by being abusive;

     (2)  Requires recordkeeping by persons who engage in
          telemarketing in Hawaii;

     (3)  Exempts certain persons and activities from being
          subject to the Act; and

     (4)  Makes contracts or agreements in violation of the Act
          voidable at the consumer's request.

     Your Committee finds that telemarketing fraud is a
widespread crime that is nonetheless hard to trace and prosecute.
Fraudulent telemarketers, working out of anonymous boiler-rooms,
prey on our society's most vulnerable members.  Fraudulent

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telemarketers offering legitimate products, use misleading or
high-pressure tactics to manipulate victims into giving the
perpetrators of the fraud, money in exchange for nonexistent or
low-value goods or services.  Further, unregulated telemarketers,
even when offering legitimate goods or services, often use highly
intrusive methods of reaching consumers without regard to the
annoyance such methods may cause.

     Your Committee notes that many businesses use telemarketing
as part of their legitimate and non-fraudulent marketing
practices.  Your Committee believes that such businesses should
comply with the requirements set forth in this measure; however,
it is not your Committee's intent to harshly punish legitimate
businesses that use telemarketing for minor technical violations
of the proposed Act.

     Testimony in support of this measure was submitted by the
Department of Commerce and Consumer Affairs, the Office of the
Public Defender, the Policy Advisory Board for Elder Affairs, and
the American Association of Retired Persons.  Testimony
commenting on this measure was submitted by the Hawaii Financial
Services Association, GTE, and Legislative Information Services
of Hawaii.

     Upon further consideration, your Committee has amended this
measure by:

     (1)  Inserting a definition of an "autodialer;"

     (2)  Raising the number of telephone rings qualifying as an
          abusive practice from five to seven;

     (3)  Adding the use of an autodialer with an abandonment
          rate of more than five percent to the list of abusive
          telemarketing practices;

     (4)  Specifying that the Attorney General and the Department
          of Commerce and Consumer Affairs are agencies
          authorized to review records kept by telemarketers;

     (5)  Deleting the requirement that telemarketers list their
          social security numbers and birthdates in the records
          required to be kept;

     (6)  Limiting the scripts required to be kept as part of the
          records to all substantially different scripts;

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     (7)  Amending terms used throughout the Act to conform to
          the definitions of terms in the first section of the

     (8)  Changing the effective date; and

     (9)  Making technical, non-substantive changes for the
          purposes of clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Judiciary that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
1073, H.D. 1, S.D. 1, as amended herein, and recommends that it
pass Third Reading in the form attached hereto as H.B. No. 1073,
H.D. 1, S.D. 2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Judiciary,

                                   AVERY B. CHUMBLEY, Co-Chair

                                   MATTHEW M. MATSUNAGA, Co-Chair