Legislature(2003 - 2004)
04/06/2004 02:04 PM Senate 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
CSHB 15(FIN)am-SOLICITATIONS/CONSUMER PROTECTION
CHAIR CON BUNDE announced HB 15 to be up for consideration. He
noted that Mr. Robert Flint expressed concerns from magazine
publishers.
MR. JIM POUND, staff to Representative Hugh Fate, sponsor,
responded that the Department of Law said a lot of the
complaints it receives come from those types of businesses. Mr.
Flint admitted there are about 2,300 of them in the country.
MR. ROBERT FLINT, Hartig Rhodes Hoge & Lekisch, said he
represents the Direct Marketing Association and the Magazine
Publishers of America on the portion of HB 15, which relates to
the proposed amendments to the Telemarketing Act. He listed his
points as follows:
As I mentioned before, this statute, which is common
to about two dozen states, was aimed at fly-by-night
operators and, therefore, was deliberately made very
burdensome. As an example, the application for
registration is 20 questions long and you have to list
all your sales people. The regulations also require if
the sales people change within 90 days - either they
leave or you add on sales people - you're going to
have to file the new sales people, which includes
listing their home address.
Moreover, every mistake you make is a class C felony,
which is a $50,000 fine; for your first offense - one
year in jail all the way up to five years.
To put the magazine publishers and book people under
this is a radical change from the original purpose and
the scope. Right now there are eight companies
registered under the Alaska Telemarketing Act. This
business is a huge national business. The 2,300
magazine and newsletters are that only - I don't know
the number of CDs, videos and booksellers.
The fiscal note here estimates that maybe 30 instead
of eight will register under the Telemarketing Act if
these amendments are passed. If anybody wants to do
business in Alaska among those 2,300 people for
magazines alone, it will be far higher than that. If
those don't register, then the enforcement problem is
going to be a mess. At a minimum, you're going to have
a constant stream of paperwork and bear in mind that
this business, which has millions of transactions a
day nationwide, these callers are from all over the
country and, indeed, outside the country. So, you're
going to get the list of people from Bangladesh and
India and South Dakota filling up the cabinets of the
Department of Law on a constant daily basis.
I think one of the elements here, if you go forward,
the committee is entitled to a fiscal note, which
addresses the reality. The administrative and
enforcement costs of this - trying to regulate a very
large national industry are going to be very high.
Now, the regulations in the statute are still going to
interfere with the business. One of the things that
the regulations do not cover is mail to an individual.
So, if you get a card or an ad from Time Magazine in
your mailbox and inviting you to subscribe to this
publication, and it says you can either do so by
returning this card or you can call an 800 number and
order it over the phone. Under this bill, you would
have to do mail only; you cannot call over the
phone....
It also excludes existing customers. That is, if a
company has an existing customer they have done
business with, they would also run into this act. We
have all agreed... that cold-call marketing - the guy
who calls you at your dinner table, is absolutely
dead. We have a vast number of people who signed up
for the Do Not Call list. According to all reports we
get from the Federal Trade Commission, it is working.
So, I think that problem is solved in another
direction, which my clients have no objection to at
all. We have had no evidence of need presented to us.
As I mentioned before, I filed a Freedom of
Information Act request with the Attorney General's
Office. You know, we hear anecdotes about problems in
an area, but we cannot get the statistics. It's over
three weeks and I've had no response to that Freedom
of Information request at all. There are, however,
national statistics....
The proposed regulators have never discussed in any
detail or any generality how this is supposed to work
with this industry, which I think, is sort of a base-
line before you want to go and create this
administrative cost....
So, I would summarize, the amendments don't work.
They're unworkable from the industry standpoint, from
an administrative standpoint and from an enforcement
standpoint. They are consumer prevention, not
consumer protection.... I do believe my principal, Ann
Darr, is on the phone, who has been involved with this
for 30 years... I believe she may have some valuable
information for the committee if she may be permitted
to make some comments.
MR. DAN SMITH said he works with the Direct Marketing
Association and that Ann Darr is on at the same time if that is
acceptable to the chair who indicated it was.
MS. ANN DARR, Magazine Publishers of America, said that
telephone fraud in the 80s was a terrible problem that extended
into the 90s. Industry, the Federal Trade Commission, the FBI
and the State Attorneys General all banded together to do what
they could about it. Telephone registration helped and was most
effective in the southern states - Florida, Arizona, Orange
County, California and Las Vegas.
Every state that enacted a telephone registration law
exempted identifiable substantial sellers that the
Attorney General knew how to locate should they have a
problem with their marketing. No other state includes
magazine or books or recordings in their telephone
registration requirements.
We think that telephone fraud has largely been taken
care of. The Federal Trade Commission does not list it
as one of its chief complaints. The Consumer
Federation of American - its last list of consumer
complaints did not, even in their 12 complaints, did
not include telephone marketing or magazines. I think
the Federal Trade Commission list included magazine
complaints as one percent. When you consider the
millions of transactions we do every year, there are,
of course, going to be complaints. The question is,
are they unfair, misleading and deceptive practices.
Even if it were an unfair, misleading and deceptive
practice, to require every publisher in the country to
go through this very extensive registration process
when you think of putting down the information for
each officer, director, trustee, general partner, etc.
etc. of a company such as Time Warner, a listing of
all telephone numbers used to call consumers when they
have a nationwide operation, this would be extremely
burdensome. We don't think it would be helpful to have
companies have to go through this process. It is true
that if they receive a mail solicitation, and this is
the common way that we solicit people, and invite them
to call a telephone number to subscribe, then we would
be required to register. This would be extremely
burdensome. Many companies couldn't afford to do it -
especially the smaller publications.
The general intent of HB 15 was to make Alaska
consistent with the Federal Trade Commission Do Not
Call list. The DMA certainly has its members adhere to
that; 52.8 million American consumers have signed up
for the list. The FTC says it's working and there were
a couple of industry groups, which included the DMA,
who were challenging the law in court; the DMA has
withdrawn its challenge....
So, we have no trouble with HB 15 as introduced. It's
what was amended into the bill to delete the exemption
from registration. Twenty-four states have telephone
registration laws similar to Alaska and none of them
require registration of magazine sellers or book or
recording companies. One state, Arizona, requires
companies to do a one-page on-line simple registration
statement.
CHAIR BUNDE noted that Ms. Darr had raised some interesting
questions and asked the sponsor to work with her, Mr. Flint and
Ms. Drinkwater to resolve them.
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