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.