Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred S.B. No. 97 entitled:

beg leave to report as follows:

The purpose of this bill is to create a criminal offense of telemarketing fraud. This offense, punishable as a Class B felony, involves theft through communications made at least in part through the telephone. These communications must involve direct or implied claims of receiving anything of value or of recovering losses in connection with a prize promotion. The measure also provides for forfeiture of property used in the commission of the crime.

The Department of Commerce and Consumer Affairs, the Executive Office of Aging, the Honolulu Police Department, the City and County of Honolulu Department of the Prosecuting Attorney, the Policy Advisory Board for Elder Affairs, the Hawaii Government Employees Association, and the American Association of Retired Persons submitted testimony in support of this bill. The Office of the Public Defender submitted comments.

Your Committees find that telemarketing fraud is one of the fastest growing forms of fraud in the United States. It is estimated that American consumers lose over $40,000,000 a year with the elderly as a frequent target. Telemarketers often target older citizens, knowing many of them have significant assets from a lifetime of saving. In Hawaii, a Maui senior citizen was recently victimized and lost his entire life savings of $40,000.

This measure is part of a larger effort to combat this serious crime. Federal and State agencies have employed an array of weapons, such as the Federal Trade Commission's Telemarketing Sales Rule and the State of Hawaii's Telemarketing Fraud Prevention Act. Additionally, consumer protection agencies nationwide, including Hawaii's Office of Consumer Protection, have engaged in broad-based educational efforts alerting citizens to the dangers posed by telemarketing fraud.

However, more needs to be done. This measure would allow Hawaii to increase its efforts and provide greater protection to its citizens from unscrupulous telemarketing practices.

Your Committees have amended this bill by making technical, nonsubstantive changes, for purposes of style, clarity and consistency, which include a definition for the term "telemarketing," and clarification that the measure is not intended to apply retrospectively.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 97, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 97, H.D. 1, and be placed on the calendar for Third Reading.