HOUSE BILL REPORT

SHB 1792

BYHouse Committee on Energy & Utilities (originally sponsored by Representatives Todd, Cooper, Phillips, Nelson, R. Meyers, Bowman, Pruitt and Sprenkle; by request of Attorney General)

Regulating telemarketing and telephone solicitation.

House Committe on Energy & Utilities

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass. (10)

      Signed by Representatives Nelson, Chair; Todd, Vice Chair; Hankins, Ranking Republican Member; Brooks, Cooper, Gallagher, Jacobsen, Jesernig, Miller and S. Wilson.

House Staff:Deborah Senn (786-7384)

AS PASSED HOUSE MARCH 7, 1989

BACKGROUND:

As the practice of commercial and charitable telephone solicitation has grown, there has been a greater response by the public sector.  In 1986, the Legislature passed a bill that regulated telephone solicitation.  The current law requires immediate identification by the solicitor, and the ability of the called party to have his or her name removed from the solicitor's list for up to one year.  The current law deals with commercial and charitable telephone solicitation with no specific provisions aimed at fraudulent activity.

The Office of the Attorney General has reported that fraudulent telephone solicitation has grown into a $1 billion industry.  These types of companies set up quick hit "boiler room" operations, which make large volumes of calls and are difficult to track.  The Attorney General's Office has reported that current law is difficult to enforce against fraudulent solicitation.  The proposed legislation is directed toward this type of telephone marketing activity.

SUMMARY:

Telephone solicitation is defined as "an unsolicited call to a person...for the purpose of inducing the person to purchase or invest in property; goods or services"; or an offer of a free gift or prize when a telephone response is invited in order to complete a sale; or, a misrepresentation about property, goods or services which leads to a call to a salesperson.

There are several exceptions to the definition of telephone solicitor.  These include: an isolated transaction; a business where less than 60 percent of total sales are by telephone solicitation; calls for religious, charitable or political purposes; a call to someone who has made a previous purchase from the business soliciting; calls where the intent is not to make a major sales presentation; a call during which arrangements for a major sales presentation are made; a person selling securities registered by the State; persons licensed under the real estate licensing statute:  registered contractors; licensed insurance agents; registered franchisors; magazine or newspaper salespeople regulated by the Federal Trade Commission; supervised financial institutions (e.g. banks), prearranged funeral contracts; prearranged cemetery contracts; franchised cable TV operators; any publicly regulated utility; the sellers of agricultural products; commodities dealers; and certain types of business to business sales.

Telephone solicitors cannot engage in unfair or deceptive telephone solicitation.  Calls may not be placed before 8 a.m. or after 9 p.m.  In order to do business, maintain or defend a lawsuit, telephone solicitors must be registered with the Department of Licensing.  The Department may require certain kinds of information for registration.  There are penalties for failing to register.

Telephone solicitors cannot require payment by credit card or state that form of payment as a preference.  A purchase resulting from a telephone solicitation must be followed by written confirmation.  Notice of cancellation can be given by certified mail within three business days. Items purchased must be deliverable within 42 days.  Purchaser's rights cannot be waived by contract.  Penalties and damages are proscribed.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Paula Selis and Mike Grant, Office of Attorney General; John Paul Jones, Direct Marketing Association; Keith Weaver, Department of Licensing

House Committee - Testified Against:      Gary Smith, Independent Business Association.

House Committee - Testimony For:    This legislation will enable the Consumer Division of the Office of the Attorney General to identify and prosecute fraudulent credit card boiler room operations.  It also expands consumers' rights when commercial telephone solicitation occurs.

House Committee - Testimony Against:      The legislation is too broad.