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).