Legislature(1993 - 1994)
03/04/1993 03:00 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 113: CHARITABLE & TELEPHONIC SOLICITING/SALES Number 015 REP. RON LARSON, PRIME SPONSOR of HB 113, gave a brief history as outlined in his sponsor statement (Attachment 1). The bill, in short, would establish regulations on telephonic solicitation and charitable solicitation. Number 088 REP. SITTON asked what type of enforcement capability would the state have on outfits operating out-of-state. Number 096 REP. LARSON said this piece of legislation would cover the out-of-state solicitation, and he mentioned that Mr. Forbes from the attorney general's office could explain the technical aspects of how that could be done. REP. SITTON said there were a number of exemptions and inquired if Mr. Forbes would be able to answer questions about that as well. REP. LARSON responded that he would. Number 104 REP. PORTER commented on Rep. Sitton's inquiry. He said he had understood the bill to be an attempt to get at the fraudulent solicitors rather than those organizations that may just be bothersome. He asked Rep. Larson if that was a fair analysis of HB 113. REP. LARSON answered affirmatively. Number 127 JIM FORBES, ASSISTANT ATTORNEY GENERAL, GENERAL CIVIL SECTION, DEPARTMENT OF LAW, testified via teleconference, said he was the attorney general assigned to the fair business practices section in Anchorage. He informed the committee that this section of the attorney general's office covers statewide and anti-trust and consumer protection problems. MR. FORBES clarified the section in the bill regarding exemptions by explaining that this section was meant to help weed out the smaller organizations that have not been a problem. MR. FORBES went on to say that the problems this bill attempts to address deal with charitable solicitation fraud and telemarketing fraud. Often these solicitations involve the use of false information that cannot be readily verified over the telephone, which is why the telephonic nature of the fraud needs to be addressed. The bill helps the law enforcers on the charitable solicitation side by giving them the way to require registration of all entities engaged in charitable fundraising in the amount of over five thousand dollars a year. MR. FORBES provided examples of fraudulent operations in Alaska to illustrate how this requirement, as outlined in HB 113, would help the law enforcers catch fraudulent operators or deter misconduct. MR. FORBES stated that HB 113 would make engaging in fundraising without filing registration papers a misdemeanor. If an organization was found to be dealing in fraudulent operation, that would mean they had filed fraudulent registration. This amounts to unsworn falsification under existing law and would have the same criminal deterrent. MR. FORBES said he was optimistic that HB 113 would help address the two-fold problem in the charitable fundraising industry. He explained the first problem as being that the "phoney" charities are taking money from those that otherwise may give to legitimate charities. The second problem deals with consumer confidence. MR. FORBES pointed out that with an increased amount of fraud there is a decrease in consumer confidence; as a result, people are less likely to trust the legitimate organizations. He concluded that as a result of the regulations outlined in HB 113, consumers may have more confidence in charitable giving, thus giving more. MR. FORBES continued his testimony outlining the problems of the telemarketing industry. He referenced and elaborated on Rep. Larson's comments regarding the psychological angle used by the telemarketers. MR. FORBES explained that HB 113 would require telemarketers to register and have a contract with a prospective customer. This aspect of the bill was patterned after a Florida law. If a fraudulent telemarketer crossed state lines, they would be guilty of a Class B felony. Number 305 REP. GREEN asked Mr. Forbes if there was a proposal that would help assure people that they should sign a contract when dealing with these telemarketing organizations. Number 318 MR. FORBES said there was and stated that they planned to continue in a vigorous public education campaign with respect to the issues stated above. He further stated that the assistant attorney general's office has an excellent working relationship with the Better Business Bureau of Alaska and together they can monitor the situation and put out press releases, etc. Number 330 REP. MULDER asked how this would affect businesses, such as telephone companies, or other organization involved in telemarketing activities. Number 332 MR. FORBES pointed out that newspaper sales, sales of telephone answering services, cable television or any organization regulated by the Public Utilities Commission are exempt from HB 113. Number 342 REP. PORTER asked if an individual would be guilty of a crime if they were to place an ad in the paper to sell a car and in the same day make the same proposition to three people. Number 352 (Vice Chairman Green noted that Rep. Hudson had joined the committee at 3:30 p.m.) Number 363 REP. PORTER pointed out that it was most likely a technical matter. Referencing page 1, Section 1 (a), he noted that it does not distinguish the caller. He went on to say he assumed the intent of that section was for the initiator of the call to register. Number 374 MR. FORBES agreed with Rep. Porter's interpretation of the intent. He added that a he did not believe that "you can't sell that car to two or more people on the same terms because you've only got one car." Number 380 REP. PORTER asked for further clarification regarding the wording "attempt to sell" and "person" in Section 1 (a). Number 387 MR. FORBES said he felt that this concern could be dealt with by adding another exemption and added that he felt that would be appropriate. Number 392 REP. SITTON reiterated his concern about prosecuting out-of- state offenders and asked what kind of cooperation there would be in other states. MR. FORBES said that most states are cooperative right now and it is the best interest of all to find the offenders. Number 406 RICK GILMORE, PRESIDENT OF THE BETTER BUSINESS BUREAU, testified in favor of HB 113. He reported that the bureau office receives approximately three thousand calls a month and a minimum of fifty to sixty percent of those calls deal directly with sweepstakes and charities. He pointed out that Alaskans are especially susceptible to this type of telemarketing because people are used to ordering things by catalog. Number 419 REP. HUDSON asked for some examples of persons or businesses that would register. MR. GILMORE said that most telemarketing organizations operate out of Nevada. He pointed out that Nevada has laws similar to those outlined in HB 113. He said his hope would be that once this law was enacted, it would deter fly-by- night telemarketers from operating in Alaska. Number 442 MR. FORBES pointed to exemption number 16 in answer to Rep. Porter's earlier questions. Number 450 REP. GREEN asked if the penalties were severe enough. Number 455 MR. FORBES answered that the legislature could make the penalties more severe, but there are provisions in the law that carry heavier penalties for multiple offenses. Number 473 REP. PORTER moved HB 113 with a zero fiscal note and individual recommendations. No objections were heard; it was so ordered.
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