SENATE BILL REPORT

SB 5088

BYSenators Benitz, Stratton, Bluechel, Metcalf, Lee, Anderson and Johnson

Regulating telemarketing.

Senate Committee on Energy & Utilities

Senate Hearing Date(s):January 12, 1989; January 26, 1989; February 9, 1989

Majority Report:  That Substitute Senate Bill No. 5088 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Benitz, Chairman; Bluechel, Vice Chairman; Metcalf, Stratton, Sutherland.

Senate Staff:Phil Moeller (786-7455)

                  February 10, 1989

AS REPORTED BY COMMITTEE ON ENERGY & UTILITIES, FEBRUARY 9, 1989

BACKGROUND:

The practice of telephone solicitation has been increasing in recent years.  Out of concern for a telephone user's privacy and certain practices of telephone solicitors, in 1986 the Legislature responded by enacting legislation regulating telephone solicitation.  These statutes (RCW 80.36.390) include requirements for solicitor identification and for removing the name of the party called from any list that the solicitor is using.

The Attorney General's office claims the present statutes are too vague to provide adequate enforcement, and that fraudulent telephone solicitation has rapidly grown into a $1 billion industry nationwide requiring immediate attention so as to protect legitimate telephone solicitation.

SUMMARY:

In order to maintain or defend a lawsuit or conduct business in the state, a commercial telephone solicitor must be registered with the Department of Licensing.  Solicitors calling into Washington from outside the state must also be registered.  Failure to register may incur a civil penalty of up to $5000.  Telephone solicitation is defined to include telephone calls to induce purchases and other communication which offers a free prize and invites a telephone call response.  Exclusions are listed for:  isolated transactions; a solicitor whose prior year's telephone sales are less than 30 percent of total sales; calls in which the final sale is intended at a later time; calls for religious, charitable, political, or other noncommercial purposes; and acts which are regulated by state or federal agencies with the power to suspend registration or licensure.

Telephone solicitors may only call between 8:00 AM and 9:00 PM.  Guidelines are listed for telephone solicitors when making calls, and for removing from any list the name and number of a party who is called.  Telecommunications companies must inform customers of these provisions.

Purchases made as a result of telephone solicitation require written confirmation.  The purchaser has three days to cancel the transaction after receiving the written confirmation.  Telephone solicitors may not require or show preference towards the use of credit cards for payment.

Violations are made punishable under the Criminal Profiteering Act.  Those who purchase by telephone solicitation are granted the additional cancellation rights existing for sales under retail installment transactions.

EFFECT OF PROPOSED SUBSTITUTE:

The word "commercial" is added to the terms "telephone solicitor" and "telephone solicitation" throughout the bill.  Exemptions are added for:  businesses with less than 60 percent of prior year's sales resulting from commercial telephone solicitation; financial institutions; contractors; businesses regulated by the Utilities and Transportation Commission or the Federal Communications Commission; commodity broker-dealers; collection agencies; sales of securities, real estate, insurance, periodicals, funeral service contracts, cemetery contracts, cemetery prearrangement contracts, cable television services, franchises, agricultural products, food intended for immediate consumption, and business to business calls intended for resale or reuse.

The restriction on calling times is limited to calls placed to residences.  Misdemeanor violations may be aggregated to felony charges.  A notice of the provisions of the act is to be sent by the Department of Revenue to businesses in all industries known to engage in commercial telephone solicitation.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Effective Date:January 1, 1990

Senate Committee - Testified: Nancy Holley, Seattle Direct Marketing Association (pro); Chris Senske, Senske Lawn and Tree Care (con); Mike Grant, Attorney General's office (pro); Paula Selis, Attorney General's office (pro); Clifford Jones, United States Secret Service (pro); Roy D. Schroeder, US Bank Corporation (pro); J.P. Jones, Direct Marketing Association (pro); Jim Halstrom, Pacific Northwest Institute of Scrap Recycling Industries (pro); Jim King; Milton Cutler, Molin/Cutler Telemarketing (pro); David S. Sutton, Telemarketing Service Bureau Inc. (pro); Mark Kantor, American Express Tours (pro); Keith Hopper, US Bankers Association (pro); Randy Durham, Washington Retail Association; Ken Eikenberry, Attorney General (pro)