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.