STAND. COM. REP. NO. 2404

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2170
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 2170 entitled: 

     "A BILL FOR AN ACT RELATING TO TELEMARKETERS,"

begs leave to report as follows:

     The purpose of this measure is to require that telemarketers
be bonded and registered with the Department of Commerce and
Consumer Affairs (DCCA).

     Testimony on the measure was received from the Commissioner
of Securities, Executive Office on Aging, American Association of
Retired Persons, and Legislative Information Services of Hawaii.

     Last session, the Legislature enacted the Telemarketing
Fraud Prevention Act that establishes certain telemarketing
practices as unfair or deceptive practices, prohibits abusive
telemarketing practices, requires recordkeeping of telemarketers,
and makes the remedies and penalties for violations of section
480-2, Hawaii Revised Statutes, applicable to telemarketing fraud
violations.  This measure is intended to enhance and strengthen
the law by requiring telemarketers to register with DCCA and to
be bonded.  

     Your Committee finds that further regulation may not be the
most effective method of deterring or preventing telemarketing
fraud.  Unscrupulous telemarketers may continue to operate
without complying with the registration and bonding requirements,
and registration may be perceived by some consumers as an

 
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endorsement of the telemarketer by the State.  Further, the
duties imposed upon the DCCA under a registration scheme will
strain the resources of the Business Registration Division, and
this measure establishes no filing fee requirement to offset the
costs of regulation.

     Upon further consideration, your Committee finds that
establishing criminal penalties against telemarketing fraud will
provide a greater deterrent than additional regulation, and that
other states, such as Iowa, have successfully used criminal
penalties to curb telemarketing fraud.  Accordingly, your
Committee has amended this measure by replacing its contents with
language that creates the offense of telemarketing fraud and
establishes telemarketing fraud as a class B felony.  

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 2170, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 2170, S.D. 1, and be referred to the Committee on Ways and
Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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