HB 393-SALES OF BUSINESS OPPORTUNITIES  CHAIRMAN STEVENS announced HB 393 to be up for consideration. REPRESENTATIVE GARY STEVENS, sponsor, said that this is not intended to hurt legitimate businesses at all and Avon ladies are exempted. MR. GENE DAU, AARP, supported HB 393. He said a lot of senior citizens are trying to supplement their income and adds in a paper could be scams catch their eyes real fast. Passing HB 393 would help seniors be less vulnerable to this type of scam. MS. CINDY DRINKWATER, Assistant Attorney General, said this is a good consumer protection piece of legislation. From an enforcement perspective this bill is important because it requires registration similar to how other states deal with business opportunities and allows the department to find something out about these businesses ahead of time. They anticipate that there would be a lot of sellers of business opportunities who would not register. She said that this is important legislation. SENATOR AUSTERMAN said there was an indeterminate fiscal note with the bill and he raised the question about what the actual cost would be. He asked if the legislature was going to find out how much it was going to cost next year when the department requests new employees. MS. DRINKWATER replied that it is possible that they will be asking for additional funds, but at this point they don't have a sense of how many enforcement actions they would have to take and how many registrations there might be. At this point, they are anticipating they will be able to afford this because it is the kind of work they do. SENATOR AUSTERMAN said he appreciated the fact that they are anticipating absorbing all the cost on this. CHAIRMAN STEVENS said he anticipated the discussion about the $250 - $500 threshold would continue because Senator Leman still has concerns about it. He suspected it would be raised again and asked her to reiterate why they chose $250 instead of $500. MS. DRINKWATER replied that initially the department proposed a $200 threshold because they wanted to protect as many consumers as possible. Other states use a range of $200 - $500. They know there are a number of fraudulent "busops" out there that have payment requirements far less than even $200. When the House added "an aggregate of $10,000" there was the concern that there are scam artists bilking hundreds of people out of a relatively small amount of money hoping they would sneak through law enforcement radar and people wouldn't feel like they wouldn't have to vigorously protect their investment. They felt at some point that a line has to be drawn somewhere, so they drew one that other states had drawn. The department did an informal survey to find if other states found the $500 was reasonable or whether it should be lowered. The uniform response was that it's best to keep the threshold amount as low as possible for the reasons she already suggested. In state's where there is a $500 threshold busops will sell their product for $495 and that same package would be sold for $199 in a state with a $200 threshold. The purpose of keeping it at the lower amount is to throw the net as widely as they could to include as many fraudulent sellers as possible. It seems like the real objection to the $500 amount is from the direct callers association, but they would be exempt under our exemption #5. So, they wouldn't be affected by that provision anyway. SENATOR AUSTERMAN asked how many complaints do they get a year. MS. DRINKWATER replied that in 2001 there were six busop complaints. She said they average 6 - 8 complaints per year and they are aware of 8 - 12 additional complaints from Alaskan consumers that were filed with the Federal Trade Commission. That number might seem low, but it is viewed as only the tip of the iceberg. Also, people are often surprised to find that there is a consumer protection unit in state government again. There are a variety of reasons that people may not file complaints currently. SENAATOR AUTSERMAN moved to pass SCS HB 393(L&C) out of committee with individual recommendations. There were no objections and it was so ordered.