Legislature(2003 - 2004)
04/20/2004 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
HB 15-SOLICITATIONS/CONSUMER PROTECTION
CHAIR CON BUNDE announced HB 15 to be up for consideration and
that some agreement had been reached between the competing
interests that resulted in an amendment. He moved amendment 1
and objected for discussion purposes.
23-LS0058\VA.1
Craver
A M E N D M E N T 1
OFFERED IN THE HOUSE BY REPRESENTATIVE FATE
TO: CSHB 15(FIN) am
Page 8, lines 14 - 15:
Delete all material.
Insert "[MAGAZINE, PERIODICAL,] sound recording or [,] book
through [, OR MEMBERSHIP IN] a book or record club"
Page 8, line 20, following "(11)":
Insert "by a publisher, or a publisher's agent operating
under a written agreement between a publisher and the agent, who
is soliciting the sale of a publisher's magazine if
(A) the buyer has the right to review the
magazine and cancel the subscription for the magazine
within seven days after receipt of the magazine; a
cancellation request is timely if the request is
mailed, properly addressed and postmarked, postage
prepaid, within seven days after receipt of the
magazine; and
(B) the right of cancellation and refund is
fully disclosed to the buyer before or at the time the
initial invoice is received by the buyer;
(12)"
Page 8, line 22:
Delete "(12)"
Insert "(13) [(12)]"
Page 8, line 24:
Delete "(13)"
Insert "(14) [(13)]"
Page 8, line 26:
Delete "(14)"
Insert "(15) [(14)]"
Page 8, line 29:
Delete "(15)"
Insert "(16) [(15)]"
Page 9, line 5:
Delete "(16)"
Insert "(17) [(16)]"
Page 9, line 6:
Delete "(17)"
Insert "(18) [(17)]"
Page 9, line 11:
Delete "(18)"
Insert "(19) [(18)]"
MR. JIM POUND, staff to Representative Hugh Fate, sponsor,
deferred comments to Cindy Drinkwater and Bob Flint.
MS. CINDY DRINKWATER, Department of Law (DOL), explained that
Amendment 1 is similar to language that about five other states
have in their telemarketing registration laws. The reasoning
behind it is that some of the scams that are associated with
magazine subscription sales are believed to be perpetrated by
entities that are often considered to be clearing houses or
wholesalers or some other entity that doesn't have
responsibility for the ultimate product, but is mostly concerned
with making a quick sale over the telephone. Amendment 1 makes
an exemption for a publisher, or an agent of his, operating
under a written agreement for the sale of that publisher's
magazine if two conditions apply. The first condition is that
the buyer has the right to review the magazine and cancel the
subscription for it within seven days of receipt of the magazine
and that the right of cancellation and refund is fully disclosed
to the buyer at the time the initial invoice is received or
before. She felt this would address some of the issues the
Direct Marketing Association has raised. However, the Consumer
Protection Unit urged an alteration, which would involve two
small words on line 15. It would read, "The right of
cancellation and refund is fully disclosed in writing to the
buyer." She supported that, because in reality the solicitations
happen and a month or two later, the magazine arrives and the
consumer might not remember that they were told in a phone
conversation that they had a right to cancel their subscription.
CHAIR BUNDE asked if this notice would come with the invoice.
MS. DRINKWATER replied that is correct.
SENATOR SEEKINS moved to amend Amendment 1 on line 15 after
"disclose" by adding "in writing". There were no objections.
SENATOR GARY STEVENS said you get the invoice after getting the
magazine and thought that was kind of late to receive the
notice.
MS. DRINKWATER replied that she would like to see the consumer
receive something much closer in time to the solicitation, but
believed that some notice in writing with an opportunity to
cancel is the critical feature.
SENATOR SEEKINS moved to amend Amendment 1 for the second time
on line 12 after "receipt of the magazine" by adding "or at the
time the initial invoice is received by the buyer, whichever is
later".
TAPE 04-34, SIDE B
SENATOR FRENCH objected to understand the amendment and then
withdrew his objection.
CHAIR BUNDE announced that there were no further objections to
the second amendment to Amendment 1.
CHAIR BUNDE asked if there was further discussion on Amendment 1
as amended. There were no objections and Amendment 1 was
adopted.
MR. ROBERT FLINT, Hartig & Rhodes, Direct Marketing Association,
said he thought he had an agreement, but not after the committee
adopted Amendment 1. Adding "in writing", which has been the
consistent position of the Department of Law, isn't consistent
with industry practices and forbids people to charge the product
on their credit card at the time of the call.
I think we're back to square one. That's not the way
the business works. We do have in your packets, I
hope, our Freedom of Information Act request that
suggests that there is such a low level of complaints
from 2000 and 1999 that there is no discernible
practice of abuse regarding this.
MS. ANN DARR, Magazine Publishers of America, said:
We're selling a magazine subscription! Every American
knows what a magazine is. There's nothing mysterious
or questionable about it. We have the best review,
return or cancel guarantee in the world. If somebody
doesn't want it, we'll credit them or cancel the
billing. If they decide they don't like it after two
months or three months or six months, we'll cancel all
unmailed issues. It's making it too complicated to
sell a simple magazine subscription. We offer many
wonderful things to Americans through magazines. We
offer information about retirement, financial issues,
information for elderly persons, entertainment for
children, educational articles, articles about
history.... So, we don't feel there is anything
mysterious about selling a magazine subscription, that
there is anything the consumer is confused about. If
they say they want it, we believe we should be able to
consider it sold with their ability to cancel and not
have to confirm it in writing.
CHAIR BUNDE asked, "Even if that confirmation comes with the
invoice?"
MS. DARR answered, "They don't always get an invoice. If they
have given us their credit card and that's how they want to pay
for it, they're not going to get an invoice."
CHAIR BUNDE asked Mr. Pound if he cared to comment on the deal
that was broken.
MR. POUND replied that the "in writing" issue is the one that
Ms. Drinkwater and Mr. Flint were consistently arguing,
primarily because according to the Direct Marketing Association,
most of these deals are done with credit cards over the
telephone. Requiring "in writing" would make it impossible to
make credit card sales over the phone.
CHAIR BUNDE asked Ms. Drinkwater how many complaints are
registered yearly about magazine scams.
MS. DRINKWATER answered there were five complaints in 2003 about
magazine scams, which may not seem like a huge number, but the
quality of the complaint is what she considers. These were
complaints from senior citizens who are on a limited income who
had gone to great lengths to try to cancel their magazine
subscriptions and were simply unable to cancel or were unable to
get through to a live person at the 800 number they were given.
She did not want to change any of the other 17 exemptions that
exist in the current statute.
SENATOR SEEKINS moved to pass SCS CSHB 15(L&C)am from committee
with the attached fiscal note and individual recommendations.
Senators Hollis French, Gary Stevens, Ralph Seekins, Bettye
Davis and Chair Con Bunde voted yea; and SCS CSHB 15(L&C)am
moved from committee.
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