04/01/1993 08:35 AM House FIN

  HB 113    An    Act    regulating   the    solicitation   of                 
            contributions by charitable organizations and paid                 
            solicitors  and  the  solicitation  of  sales   by                 
            telephonic  means; and  amending  Alaska Rules  of                 
            Civil Procedure 79 and 82.                                         
                                                                               
            HB   113  was  held   in  Committee   for  further                 
            discussion.                                                        
  HOUSE BILL 113                                                               
                                                                               
       "An Act regulating the solicitation of contributions by                 
       charitable organizations  and paid  solicitors and  the                 
       solicitation of sales by telephonic means; and amending                 
       Alaska Rules of Civil Procedure 79 and 82."                             
                                                                               
  Co-Chair  Larson commented  that HB  113  was created  in an                 
  effort    to    regulate   telemarketers    and   charitable                 
  organizations who solicit donations by telephone.  There has                 
  been a dramatic  increase in fraudulent activity  in Alaska.                 
  With regulations adopted,  the public  would have a  renewed                 
  trust in  donating to  legitimate charitable  organizations.                 
  The immediate  distrust when  the telephone  rings would  be                 
  replaced with  a confidence  that a  person is  giving to  a                 
  regulated charity  and that their  money would  be going  to                 
  that organization and its charitable needs.                                  
                                                                               
  JAMES FORBES,  ASSISTANT  ATTORNEY  GENERAL,  FAIR  BUSINESS                 
  PRACTICES   SECTION,   JUNEAU,   ALASKA,   (teleconference),                 
  explained  that the  bill would  regulate solicitations  for                 
  telephonic sales  and charitable  fund raising.  These areas                 
  are  currently  unregulated.     State  consumer  protection                 
  investigators have noticed a dramatic increase in fraudulent                 
  activity in Alaska.   Most  states have adopted  legislation                 
  dealing with charitable solicitation fraud and telemarketing                 
  scams, although Alaska has  not.  As a result,  scam artists                 
  are avoiding  those regulated states, and  are concentrating                 
  their activities on unregulated states  which cause the loss                 
  of millions of dollars each year.                                            
                                                                               
  The legislation would provide:                                               
                                                                               
                                                                               
                                2                                              
                                                                               
                                                                               
       1.   Regulation of Telemarketers.                                       
       2.   Regulation of Charitable Solicitations.                            
       3.   Relation to Consumer Protection Law.                               
       4.   Full Costs and Attorney's Fees.                                    
                                                                               
  Co-Chair MacLean  stated that  many Native  people in  rural                 
  areas sell their  handiwork to others  over the phone.   She                 
  asked how  the legislation would  affect them.   Mr.  Forbes                 
  stated  that  if those  individuals  were not  selling their                 
  goods   telephonically,   they   would   be   excused   from                 
  registering.    He  added,  there is  no  fee  required  for                 
  registration.  If the  actual sale of the product  will take                 
  place after the telephonic meeting between the buyer and the                 
  seller, they again would be excused from registration.                       
                                                                               
  Co-Chair MacLean  asked  how the  small  cottage  industries                 
  would be  affected by the  legislation.   Mr. Forbes  stated                 
  that they would be  required to register if they  sell their                 
  handcrafts by telephone.                                                     
                                                                               
  Mr.  Forbes   commented  on  the   advertising  registration                 
  requirement for public  radio stations who do  fund raising,                 
  emphasizing that the filing system is not difficult.                         
                                                                               
  Representative  Foster  felt that the legislation  would not                 
  receive compliance  in the  small village  areas of  Western                 
  Alaska.  Representative   Brown  recommended placing HB  213                 
  into  Subcommittee  to  develop  an  amendment  which  would                 
  address the village  area people  who sell small  handicraft                 
  projects.  Co-Chair  MacLean suggested that the  language on                 
  Page 5,  Lines 22  -  26 currently  addresses that  concern.                 
  Representative  Brown  reminded the  Committee that many  of                 
  the small  village areas do not  make the sale with  face to                 
  face contact and consequently they would  be in violation of                 
  the legislation if they had not registered.                                  
                                                                               
  Mr.  Forbes acknowledged  that the  State would  need  to be                 
  cautious in  providing a  blanket exemption  to rural  areas                 
  within the State.  He reminded the Committee that the people                 
  who commit  the worst  fraud crimes  are soliciting  between                 
  $300 - $500 hundred  dollars.   Representative   Grussendorf                 
  asked if there  were any "resale loopholes"  for the smaller                 
  regions.  Mr.  Forbes stated that concept would be used as a                 
  disadvantage for the legislation.                                            
                                                                               
  Co-Chair Larson emphasized the need for consumer  protection                 
  and   urged   that   the  legislation   not   be   weakened.                 
  Representative  Hoffman  recommended an exclusion  clause be                 
  added for Alaska handicrafts.                                                
                                                                               
  Representative    Brown questioned  the  impact of  the zero                 
  fiscal note.  Mr. Forbes replied, currently a lot of time is                 
                                                                               
                                3                                              
                                                                               
                                                                               
  spent on chasing  people who  are difficult to  catch.   The                 
  legislation  will   make   that  time   spent   much   less.                 
  Representative  Foster  asked why  a person would  register.                 
  Mr. Forbes replied  that if a  person fails to register  and                 
  they are caught stealing money, they  will be charged with a                 
  Class C felony.                                                              
                                                                               
  HB 213 was HELD in Committee for further discussion.                         
                                                                               
  (Tape Charge, HFC 93-86, Side 1).