CSHB 182(JUD)-OFFERING PROMOTIONAL CHECKS    2:03:03 PM CHAIR ELLIS announced CSHB 182(JUD) to be up for consideration. REPRESENTATIVE BOB LYNN, sponsor of HB 182, explained that this bill is about small dollar checks that can cause big headaches for Alaska consumers. The checks may be for only $3 or $4 and according to the Department of Law, they are sent to thousands of businesses and individuals throughout Alaska. The good news is that the checks are legitimate, but the bad news is that in actually cashing one of them can amount to an unintended contract and hundreds of Alaskans cash these little checks only to find they are bound by contract for products and services they don't want and or need. He explained that last year the Alaska Department of Law (DOL) announced the settlement of a case with the California based company that sent Alaskans what appeared to be rebates from local yellow page companies. But it wasn't so. Endorsement of a check for $3.49 amounted to an unintended contract for $179 in advertising services. Consumers did not see the very tiny fine print on the back of the check and they ended up getting billed and hounded by collection agencies. The Consumer Protection Division of the DOL considers these checks to be a classic example of deceptive acts and practices and said that prohibiting these checks is the only effective method of preventing these charges from occurring. Under this bill, companies that violate this law are subject to a civil penalty of a minimum $1,000 per violation and a maximum of $25,000 per violation. This bill makes this an automatic violation under consumer protection laws. 2:05:46 PM CHAIR ELLIS asked if this bill has anything to do with the blank checks contained in credit card bills that can be used for several purposes. REPRESENTATIVE LYNN replied no; this is a very focused bill. 2:06:56 PM SENATOR STEVENS said he has received these checks himself and asked if Alaskans had actually been stuck paying the $180. REPRESENTATIVE LYNN replied that it depends on the sophistication of the check, which is a contract. He said a lot of times one doesn't know when it happens. 2:09:20 PM JULIA COSTER, Assistant Attorney General, Commercial Practices Section, Department of Law (DOL), said that Representative Lynn is absolutely correct. Sometimes the consumers don't know about the charges until some incident happens that brings it to their attention. Investigations have resulted in prosecutions and settlements. The most recent case involved 34 state attorneys general and resulted in a settlement. Rather than addressing the issue piecemeal, HB 182 makes this issue an automatic violation. 2:13:35 PM SENATOR STEVENS asked if "Yellow Pages, Inc." is a real company. MS. COSTER answered that it does sound confusing, but it is the settlement that Representative Lynn referred to. Yellow Pages, Inc. is a company based in Anaheim, California, but it is not the real yellow pages that put out the telephone book. It has an on-line Internet directory. It sent out promotional checks to consumers in Alaskans and all over the country who were billed $179. The checks along with the marketing materials looked like they were from the local yellow page companies and indicated they were either a refund or a rebate. Collection agencies went after them and many people paid just to save their credit even though they didn't sign up for anything. SENATOR STEVENS asked if the Attorney General's Office notifies the public with an announcement to watch out for Yellow Pages, Inc. when the company came to their attention. MS. COSTER replied yes; press releases have been issued relating to the settlement. MARIE DARLIN, Coordinator, Capital City Task Force, supported HB 182. She has been told that half of all the telemarketing fraud complaints that are received are from victims over 50 years of age. MIKE SICA, staff to Representative Lynn, testified that Dale Layman from Alaska Pacific University who teaches students about warranties and other things was embarrassed to say that he signed one of those checks, but thought it was a good lesson he could pass on to his students. MR. SICA said that thousands of Alaskans have gotten these promotional checks; hundreds have signed them. A lot of people are embarrassed and others are intimidated into paying. Ms. Coster had the best example of why this law is needed. Other than a class action suit, the best way to deal with it is to put an enumerated unfair practice in the law and give the Department of Law a big hammer to whack them with. 2:18:57 PM SENATOR DAVIS said she wanted to move the bill today. CHAIR ELLIS said a committee member asked for more information. 2:20:10 PM at ease 2:20:53 PM SENATOR DAVIS informed them that the committee member received the information that he had asked for. SENATOR STEVENS explained that he had asked for some real examples of the problem, but he heard those during the course of the testimony from the Department of Law. He moved to pass CSHB 182(JUD) from committee with individual recommendations and attached fiscal notes. There were no objections and it was so ordered.