REPORT TITLE:
Telemarketers; Registration


DESCRIPTION:
Requires that telemarketers and solicitors be bonded and
registered with the Department of Commerce and Consumer Affairs. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2170
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TELEMARKETERS. 


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

 1      SECTION 1.  Chapter 481P, Hawaii Revised Statutes, is
 
 2 amended by adding two new sections to be appropriately designated
 
 3 and to read as follows:
 
 4      "§481P-    Registration.  No person may act as a seller in
 
 5 this State without first having obtained a certificate of
 
 6 registration from the department.  The certificate of
 
 7 registration shall be renewed annually.  The registration and
 
 8 renewal of registration shall be submitted on forms specified by
 
 9 the department and shall include the following information:
 
10      (1)  Name, address, telephone number, and location of the
 
11           seller, whether a person or entity, including each name
 
12           under which the seller intends to engage in
 
13           telemarketing;
 
14      (2)  If the person is an entity, the names and addresses of
 
15           the officers, directors, partners, members, or
 
16           managers, as appropriate, and a copy of the articles of
 
17           incorporation or partnership agreement, as appropriate;
 
18      (3)  Each occupation or business that the seller's principal
 
19           owner has engaged in for the two years immediately
 

 
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 1           preceding the date of application;
 
 2      (4)  Whether any principal or manager has been convicted of,
 
 3           plead guilty to, or is being prosecuted by indictment
 
 4           for racketeering, violations of state or federal
 
 5           securities laws, or a theft offense;
 
 6      (5)  Whether there has been entered against any principal or
 
 7           manager an injunction, temporary restraining order, or
 
 8           a final judgment in any civil or administrative action,
 
 9           involving fraud, theft, racketeering, embezzlement,
 
10           fraudulent conversion or misappropriation of property,
 
11           including any pending litigation against the principal
 
12           or manager;
 
13      (6)  Whether the seller, at any time during the previous
 
14           seven years, has filed for bankruptcy, been adjudged
 
15           bankrupt, or been reorganized because of insolvency;
 
16      (7)  The true name, current home address, date of birth,
 
17           social security number, and all other names of the
 
18           following:
 
19           (A)  Each telephone solicitor or other person to be
 
20                employed by the seller;
 
21           (B)  Each person participating in or responsible for
 
22                the management of the seller's business; and
 
23           (C)  Each person, office manager, or supervisor
 

 
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 1                principally responsible for the management of the
 
 2                seller's business;
 
 3      (8)  The name, address, and account number of every
 
 4           institution where banking or any other monetary
 
 5           transactions are conducted by the seller; and
 
 6      (9)  A copy of all scripts, outlines, or presentation
 
 7           material that the seller will require a telephone
 
 8           solicitor to use when soliciting, as well as all sales
 
 9           information to be provided by the seller to a purchaser
 
10           in connection with any solicitation.
 
11      §481P-    Surety bond as a condition of registration.  (a)
 
12 The application for registration or renewal shall be accompanied
 
13 by a surety bond in the amount of $50,000.  The bond shall
 
14 provide for indemnification to the State for any person suffering
 
15 a loss as the result of a violation of this chapter.  The surety
 
16 bond shall remain in effect for one year from the date the seller
 
17 ceases to operate in this State.
 
18      (b)  The surety for any cause may cancel the bond upon
 
19 giving sixty-days written notice by certified mail to the
 
20 applicant and the department.  Unless the bond is replaced by
 
21 that of any surety before the end of the sixty-days notice of
 
22 cancellation, the registration of the seller shall be treated as
 
23 lapsed.
 

 
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 1      (c)  Any business required under this chapter to file a bond
 
 2 with a registration application may file, in lieu of the bond, a
 
 3 certificate of deposit, cash, or a government bond in the amount
 
 4 of $50,000.  The department shall hold the cash, certificate of
 
 5 deposit, or government bond for one year from the date the seller
 
 6 ceases to operate in this State or registration lapses in order
 
 7 to pay claims made against the seller for its activities during
 
 8 its period of operation in this State.
 
 9      (d)  The registration of a seller shall be treated as lapsed
 
10 if at any time the amount of the bond, cash, certificate of
 
11 deposit, or government bond falls below the amount required by
 
12 this section.
 
13      (e)  The aggregate liability of the surety company to the
 
14 State for all persons injured by a seller's actions in violation
 
15 of this chapter shall not exceed the amount of the bond."
 
16      SECTION 2.  Section 481P-1, Hawaii Revised Statutes, is
 
17 amended by adding two new definitions to be appropriately
 
18 inserted and to read as follows:
 
19      ""Department" means the department of commerce and consumer
 
20 affairs.
 
21      "Government bond" means any United States bond, treasury
 
22 note, or other public debt obligation of the United States that
 
23 is unconditionally guaranteed as to both interest and principal
 

 
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 1 of the United States."
 
 2      SECTION 3.  Section 481P-2, Hawaii Revised Statutes, is
 
 3 amended by amending subsection (a) to read as follows:
 
 4      "(a)  It is an unfair or deceptive act or practice and a
 
 5 violation of this chapter for any seller or telephone solicitor
 
 6 to:
 
 7      (1)  Failure to obtain or maintain a valid certificate of
 
 8           registration, if required;
 
 9      (2)  Include any false or misleading information on a
 
10           registration application or renewal;
 
11      (3)  Misrepresent that a seller or telephone solicitor is
 
12           registered;
 
13      (4)  Advertise or represent that registration as a seller
 
14           equals an endorsement or approval by the State or any
 
15           political subdivision of the State;
 
16     [(1)] (5)  Fail to commence, within the first minute of an
 
17           outbound telephone call, and complete within the first
 
18           three minutes of the outbound call, and before payment
 
19           is requested and prior to any solicitation, disclosure
 
20           of the following:
 
21           (A)  The true purpose of the telephone call;
 
22           (B)  The telephone solicitor's name and the company or
 
23                entity on whose behalf the solicitation is being
 

 
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 1                made; and
 
 2           (C)  The goods or services being offered;
 
 3     [(2)] (6)  Misrepresent or fail to disclose, in a clear,
 
 4           conspicuous, and intelligible manner and before payment
 
 5           is received from the consumer, the following
 
 6           information:
 
 7           (A)  Total purchase costs to the consumer of the goods
 
 8                or services to be received;
 
 9           (B)  Any restrictions, limitations, or conditions to
 
10                purchase or to use the goods or services that are
 
11                the subject of any offer;
 
12           (C)  Any material term or condition of the seller's
 
13                refund, cancellation, or exchange policy,
 
14                including, if applicable, that no such policies
 
15                exist;
 
16           (D)  All material costs or conditions related to
 
17                receiving a prize, including the odds of winning
 
18                the prize, and if the odds are not calculable in
 
19                advance, the factors used in calculating the odds,
 
20                the nature and value of a prize, that no purchase
 
21                is necessary to win the prize, and the "no
 
22                purchase" method of entering the contest;
 
23           (E)  Any material aspect of an investment opportunity
 

 
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 1                being offered, including but not limited to risk,
 
 2                liquidity, earnings potential, market value, and
 
 3                profitability; and
 
 4           (F)  The quantity, and any material aspect of the
 
 5                quality or basic characteristics of any goods or
 
 6                services offered;
 
 7     [(3)] (7)  Misrepresent any material aspect of the quality or
 
 8           basic characteristics of any goods or services offered;
 
 9     [(4)] (8)  Represent that the telephone solicitor or seller
 
10           is registered as a telephone solicitor in the State or
 
11           has in any way received an endorsement or approval by
 
12           any governmental agency of the State;
 
13     [(5)] (9)  Make a false or misleading statement with the
 
14           purpose of inducing a consumer to pay for any goods or
 
15           services;
 
16     [(6)] (10)  Request or accept payment from a consumer or make
 
17           or submit any charge to the consumer's credit or bank
 
18           account before the telephone solicitor or seller
 
19           receives from the consumer an express verifiable
 
20           authorization; provided that no express verifiable
 
21           authorization is required if the seller adopts and
 
22           complies with a policy that:
 
23           (A)  Affords the consumer at least seven days after the
 

 
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 1                receipt of goods or services to review goods or
 
 2                services and return undamaged or unused goods or
 
 3                submit a cancellation of services notice;
 
 4           (B)  Requires the seller to process the full refund
 
 5                within thirty days after receipt of returned
 
 6                merchandise or the cancellation of services notice
 
 7                from the consumer; and
 
 8           (C)  Requires the disclosure of the seller's return and
 
 9                refund policy to the consumer, orally by
 
10                telephone, and in writing with any advertising or
 
11                promotional material, and with delivery of the
 
12                goods or services; 
 
13     [(7)] (11)  Fail to include on the express verifiable
 
14           authorization in a clear and conspicuous manner, the
 
15           following language:
 
16                "YOU ARE NOT OBLIGATED TO MAKE ANY PAYMENT UNLESS
 
17                YOU SIGN THIS CONFIRMATION AND RETURN IT TO THE
 
18                SELLER";
 
19     [(8)] (12)  Procure the services of any professional
 
20           delivery, courier, or other pick-up service to obtain
 
21           immediate receipt or possession of a consumer's
 
22           payment;
 
23     [(9)] (13)  Offer to consumers in the State any prize
 

 
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 1           promotion, in which a purchase or payment is necessary
 
 2           to obtain the prize; or
 
 3     (10)] (14)  Fail to comply with the recordkeeping
 
 4           requirements of this chapter."
 
 5      SECTION 4.  Section 481P-4, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "[[]§481P-4[]]  Recordkeeping.  Every telephone solicitor
 
 8 shall keep true and accurate records of all telemarketing
 
 9 activities initiated in this State or directed to consumers
 
10 located in this State.  Upon demand, the records shall be made
 
11 available to the department [of commerce and consumer affairs],
 
12 the attorney general, and any other governmental entity with
 
13 authority to enforce this chapter.  These records shall be
 
14 retained for a period of two years after the date of any outbound
 
15 telephone call initiated from, directed into, or within this
 
16 State.  The records shall include but are not limited to the
 
17 following information:
 
18      (1)  The location of the telephone solicitor and seller and
 
19           the street addresses of any locations from which the
 
20           outbound telephone calls originated;
 
21      (2)  Copies of any injunction, temporary restraining order,
 
22           judgment, consent judgment, or assurance of voluntary
 
23           compliance in any civil or administrative action,
 

 
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 1           including any pending action, involving a violation or
 
 2           alleged violation by [[]the[]] telephone solicitor or
 
 3           the seller of any state or federal telemarketing law;
 
 4      (3)  The name, any fictitious name used, last known home
 
 5           address, telephone number, and job title of all
 
 6           telephone solicitors, who place or placed calls on
 
 7           behalf of a seller or who participate in or are
 
 8           responsible for the management of the business of the
 
 9           telephone solicitor; however, if the seller or
 
10           telephone solicitor permits fictitious names to be used
 
11           by employees or agents, each fictitious name shall be
 
12           traceable to only one specific telephone solicitor,
 
13           employee or agent.  Where one or more telephone
 
14           solicitors is employed by or otherwise acting on behalf
 
15           of a seller, the reporting requirements of this chapter
 
16           may be met by the seller on behalf of itself and its
 
17           telephone solicitors, but only to the extent the
 
18           records comply with the requirements of this chapter;
 
19     [(4)  Copies of all substantially different scripts,
 
20           outlines, or presentation materials the seller requires
 
21           a telephone solicitor to use when soliciting, as well
 
22           as of all information to be provided by a telephone
 
23           solicitor to a consumer in connection with any
 

 
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 1           telemarketing;
 
 2      (5)] (4)  All written consents to utilize a name or names of
 
 3           any person, as defined in section 1-19, in any
 
 4           endorsement;
 
 5     [(6)] (5)  Materials that substantiate any claims about the
 
 6           performance, efficacy, nature, or characteristics of
 
 7           health, nutrition, or diet related goods or services
 
 8           that are the subject of telemarketing;
 
 9     [(7)] (6)  A copy of the refund, cancellation, exchange, or
 
10           repurchase policies for any goods or services offered
 
11           by a seller or telephone solicitor, unless the seller
 
12           or telephone solicitor offers and provides an
 
13           unconditional satisfaction guaranteed policy and
 
14           provides a full refund for returned goods or cancelled
 
15           services;
 
16     [(8)] (7)  Copies of all written confirmations of
 
17           telemarketing transactions;
 
18     [(9)] (8)  Copies of all express verifiable authorizations
 
19           and signed order confirmations;
 
20    [(10)] (9)  Copies of any training instructions, handbooks, or
 
21           other guidelines distributed by telephone solicitors to
 
22           their staff or by sellers to their telephone
 
23           solicitors, employees, or agents;
 

 
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 1    [(11)] (10)  Procedures for maintaining a list of persons who
 
 2           do not wish to receive outbound telephone calls made by
 
 3           or on behalf of the seller or telephone solicitor,
 
 4           which procedures shall meet the minimum standards set
 
 5           forth in 47 C.F.R. section 64.1200(e)(2), as well as
 
 6           the do not call lists maintained pursuant to those
 
 7           procedures; and
 
 8    [(12)] (11)  Copies of written contracts and agreements
 
 9           between the telephone solicitor and the seller."
 
10      SECTION 5.  Statutory material to be repealed is bracketed.
 
11 New statutory material is underscored.
 
12      SECTION 6.  This Act shall take effect on July 1, 2001.
 
13 
 
14                           INTRODUCED BY:  _______________________