Legislature(2003 - 2004)

03/16/2004 01:10 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 339 - TRADE PRACTICES                                                                                                      
                                                                                                                                
Number 1947                                                                                                                     
                                                                                                                                
CHAIR McGUIRE announced that the  next order of business would be                                                               
HOUSE BILL  NO. 339,  "An Act relating  to negative  option plans                                                               
for  sales,  to charges  for  goods  or  services after  a  trial                                                               
period,  and   to  acts  that   are  unlawful  as   unfair  trade                                                               
practices."  [Before the committee was CSHB 339(L&C).]                                                                          
                                                                                                                                
Number 1928                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  moved to  adopt the  proposed committee                                                               
substitute for  HB 339,  Version 23-LS1265\S,  Bannister, 3/5/04,                                                               
as  the work  draft.   There being  no objection,  Version S  was                                                               
before the committee.                                                                                                           
                                                                                                                                
Number 1893                                                                                                                     
                                                                                                                                
ROBERT B. FLINT,  Attorney at Law, Hartig Rhodes  Hoge & Lekisch,                                                               
relayed he  has been  retained by  a firm  in Virginia,  DeHart &                                                               
Darr,  to represent  Direct  Marketing  Association and  Magazine                                                               
Publishers of  America, which combined  constitute a  large group                                                               
of people who conduct business  via mail, Internet, and telephone                                                               
selling products.  He said:                                                                                                     
                                                                                                                                
     The industry here is  regulated in significant respects                                                                    
     by  the   Federal  Trade  Commission  [FTC],   both  on                                                                    
     telemarketing  and aspects  of  mail, and  also at  the                                                                    
     state level  in various ways.   Particularly in Alaska,                                                                    
     for  example, there's  an  unsolicited merchandise  Act                                                                    
     governing things you might receive  in the mail without                                                                    
     soliciting them  or without agreeing  to them  and it's                                                                    
     considered  a free  gift.   The industry  is large  and                                                                    
     diverse and  old; it's been  around a long  time, [and]                                                                    
     I'm  sure  you're all  familiar  with  it.   Its  basic                                                                    
     advantage,  obviously, ...  to  the  business, is  they                                                                    
     have that way to sell to  the public, to boost up their                                                                    
     subscription  rates,  and  for   the  consumer  it's  a                                                                    
     discounted value because  [they're] usually accompanied                                                                    
     by promotions  including the free-trial type,  which is                                                                    
     what I'm going to talk about right now.                                                                                    
                                                                                                                                
     House Bill 339  ... arises, as I understand  it, out of                                                                    
     certain   circumstances  from   last   year  and   also                                                                    
     complaints  [received by]  ...  the attorney  general's                                                                    
     office  ...   through  the   [Commercial/Fair  Business                                                                    
     Section].   We've been working with  ... Representative                                                                    
     Meyer's office  and the  attorney general's  office ...                                                                    
     diligently ...  to try  to come to  a draft  bill which                                                                    
     will work to protect  [consumers from] ... the problems                                                                    
     [that  are] perceived  and allow  the vast  majority of                                                                    
     the honest  and legitimate  business folks to  go about                                                                    
     doing this  type of promotion. ...  In fact, legitimate                                                                    
     [business]  people   always  want   to  go   after  the                                                                    
     problems, after all, because they're  the ones that get                                                                    
     splashed with  the mud even though  they're maybe doing                                                                    
     the correct thing.                                                                                                         
                                                                                                                                
Number 1767                                                                                                                     
                                                                                                                                
MR. FLINT continued:                                                                                                            
                                                                                                                                
     Let me  just go to ...  one of the sections  we're hung                                                                    
     up with now  ....  What I'm speaking to  ... [are] some                                                                    
     suggested amendments [that] have  come from my clients,                                                                    
     in large  part, and have  been changed a little  bit by                                                                    
     the attorney general's office  which creates a problem.                                                                    
     ...  We're dealing  largely with  ...  the question  of                                                                    
     free trial offers  via the telephone.   The sections in                                                                    
     the  bill regulate  both  inbound  and outbound  calls.                                                                    
     Outbound calls are  the ones that we all  love to hate;                                                                    
     those  are  the  telemarketers  that  call  you  up  at                                                                    
     dinnertime  and offer  to sell  you  something.   These                                                                    
     calls are regulated by [FTC]  rules and also ... by the                                                                    
     "do not call"  list at the federal level  which now has                                                                    
     57 million names on it.                                                                                                    
                                                                                                                                
MR. FLINT said:                                                                                                                 
                                                                                                                                
     I  suspect  that  "cold   called"  sales  -  telephonic                                                                    
     marketing  -  is  probably  going  to  decline  rapidly                                                                    
     because that list is now  upgradeable every 90 days and                                                                    
     at Congress's insistence is going  to upgraded every 30                                                                    
     days,  and  I assume  that  57  million will  ...  rise                                                                    
     dramatically.  ... But  we're also  dealing [with]  the                                                                    
     inbound  calls; [this]  is where  ... the  customer ...                                                                    
     originates  the call  in response  to an  ad, or  [they                                                                    
     are]  calls  to existing  customers  -  people who  are                                                                    
     already  on  the  business's list  and  have  purchased                                                                    
     products or dealt with them before.                                                                                        
                                                                                                                                
Number 1592                                                                                                                     
                                                                                                                                
[The amendment Mr. Flint then discusses, with original                                                                          
punctuation provided but containing some formatting changes, is                                                                 
as follows:]                                                                                                                    
                                                                                                                                
     Page 2, line 3                                                                                                           
     Delete:  "(3) a  description  of  the seller's  refund,                                                                  
     cancellation, exchange, and repurchase policies; and"                                                                      
     Insert: "(3) the right to cancel; and"                                                                                   
                                                                                                                                
     Page 2, line 8:                                                                                                          
     After: "express"                                                                                                         
     Delete: "written"                                                                                                        
     Insert: "verifiable"                                                                                                     
                                                                                                                                
     Page 2, line 9-12                                                                                                        
     Delete: "The  seller shall  obtain the  written consent                                                                  
     on a  form prepared by  the seller.  The  form prepared                                                                    
     by the seller must  include the information required by                                                                    
     (b) of this section  and the consumer's acknowledgement                                                                    
     that  the consumer  has  received  and understands  the                                                                    
     information in the consent."                                                                                               
     Insert: A  seller who provides  goods or services  to a                                                                  
     consumer  for a  free trial  period has  the burden  of                                                                    
     proving  that  the   seller  provided  the  information                                                                    
     required by (b)  of this section and  that the consumer                                                                    
     gave  express  verifiable  consent to  the  free  trial                                                                    
     period.                                                                                                                    
                                                                                                                                
     Page 2, line 16                                                                                                          
     Insert new subsection (e)                                                                                                
          (e) If the consumer agrees to a free trial period                                                                     
     by  telephone,   the  seller  shall  comply   with  the                                                                    
     following:                                                                                                                 
               (1) the seller shall send the consumer an                                                                        
               invoice which the consumer may pay or write                                                                      
               "cancel" on the invoice and return to the                                                                        
               seller;                                                                                                          
               (2) the seller shall disclose by telephone                                                                       
               the consumer's right to cancel and how to                                                                        
               cancel;                                                                                                          
               (3) the seller shall record the disclosures                                                                      
               required in subsection (b) of this section                                                                       
          as well as the consumer's express verifiable                                                                          
               consent required by subsection (c) of this                                                                       
               section; and                                                                                                     
               (4) the seller shall send the consumer                                                                           
          written confirmation at least 10 days before                                                                          
               charging the consumer's account which will                                                                       
               include a telephone number the consumer may                                                                      
               use to cancel.  The telephone number                                                                             
               provided to the consumer to use to cancel                                                                        
               must be operative during the consumer's                                                                          
               normal business hours.                                                                                           
                                                                                                                                
     Page 2                                                                                                                   
     Insert new subsection (f)                                                                                                
          (f) In a free trial period, when a consumer                                                                           
     cancels goods or services to  be provided after the end                                                                    
     of  a free  trial period,  the seller  must cancel  the                                                                    
     billing  or credit  the  consumer's  account within  30                                                                    
     days for unused goods or services.                                                                                         
                                                                                                                                
     Page 2                                                                                                                   
     Re-letter the remaining subsections accordingly                                                                            
                                                                                                                                
MR. FLINT went on to say:                                                                                                       
                                                                                                                                
     We have  in the amendment  a [new] subsection  (e) ....                                                                    
     There are two stages  involved in the telemarketing for                                                                    
     free trial offers.  Stage 1  I believe ... we have come                                                                    
     to acceptable  language on,  and that  is the  call and                                                                    
     the  promotion itself.   And  in that  the requirements                                                                    
     there  are  that  the  seller  disclose  certain  items                                                                    
     including  the  charges,  cancellation policy,  and  so                                                                    
     forth; that the customer agrees  - express consent - to                                                                    
     the  promotion; and  that  in all  cases,  both on  the                                                                    
     disclosure and  in the agreement,  the burden  of proof                                                                    
     is on  the seller  to show  that those  ... disclosures                                                                    
     have  been  complied with  and  that  the agreement  is                                                                    
     there.  That does not appear to be a problem.                                                                              
                                                                                                                                
     But then  in stage 2,  what ...  follows on ...  in the                                                                    
     mail, the clients  proposed the list of  four items you                                                                    
     see here  as alternatives,  [but] the  attorney general                                                                    
     would prefer that  you do all of them.   The problem is                                                                    
     that  the  business  doesn't  do  all  of  them.    For                                                                    
     example, if  you look  on this list  of four  items, if                                                                    
     the customer  chooses to be  billed by credit  card ...                                                                    
     they  would obviously  not receive  an invoice  because                                                                    
     they have already  paid.  So the fact of  the matter is                                                                    
     ...  that flexibility  [via] the  alternatives is  what                                                                    
     the  business needs  at  this stage  2,  where we  feel                                                                    
     we've  complied the  disclosures,  certainly, and  also                                                                    
     that the  customer always has  the right to  ... cancel                                                                    
     it.                                                                                                                        
                                                                                                                                
     And  ... the  great majority  of free  trial promotions                                                                    
     are canceled.   It is  not an unusual  situations; most                                                                    
     of  them end  up being  canceled after  the free  trial                                                                    
     period  or during  the free  trial period.   So  that's                                                                    
     just a regular cost of  doing business.  So it's trying                                                                    
     to fit the legitimate  concerns, which we totally agree                                                                    
     with,  into business  practices that  occur nationwide.                                                                    
     It's a  complicated problem,  it's a  diverse industry,                                                                    
     there are  various methods  used to  use it,  there are                                                                    
     regulations at the [FTC] level,  so I'm not saying this                                                                    
     is  easy  to do.    We  are working  diligently;  we'll                                                                    
     continue  to  work diligently  to  help  get this  bill                                                                    
     through ... and I think  we can, but we're still trying                                                                    
     to fit a few things together.                                                                                              
                                                                                                                                
Number 1508                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA remarked  that  with a  lot  of free  offers                                                               
there are two  problems:  one is that consumers  forget the rules                                                               
for cancellation,  and the other  is that  sometimes cancellation                                                               
involves dialing a  phone number that only works  during the same                                                               
hours  that  consumers  are  at  work.   He  opined  that  to  be                                                               
perfectly fair,  it would  be best if  consumers receive  a paper                                                               
billing, before the billing is  actually due, that contains a box                                                               
that clearly  tells consumers how  to cancel and that  could then                                                               
be  used to  cancel before  actually owing  money.   He mentioned                                                               
that he  has a proposed  [handwritten] amendment to  this effect,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     Insert at P.2 line 24                                                                                                      
                                                                                                                                
     (g) within 30  days of the first  billing, the consumer                                                                    
     must be  provided a  form that  clearly states  how the                                                                    
     consumer can discontinue service  without payment.  The                                                                    
     form shall  provide a box  or other space  allowing the                                                                    
     consumer to indicate they  wish to discontinue service,                                                                    
     and must be accompanied by a return envelope.                                                                              
                                                                                                                                
MR.  FLINT said,  however,  that  it does  not  appear, from  the                                                               
volume  of  people who  cancel  "these  things," that  there's  a                                                               
persistent  problem out  there.   He remarked  that the  attorney                                                               
general's  office  has   statistical  information  regarding  the                                                               
complaints received,  and suggested  that such  information could                                                               
help quantify  the perceived problem.   The problem  with putting                                                               
on extra  obligations is  that although such  may be  alright for                                                               
the  bigger companies,  it is  not going  to be  alright for  the                                                               
smaller companies  and will ultimately  result in  increase costs                                                               
to consumers, he  remarked, and noted that one  of the advantages                                                               
of "this type of system" is that products are discounted.                                                                       
                                                                                                                                
Number 1283                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KEVIN MEYER,  Alaska State  Legislature, sponsor,                                                               
characterized HB 339 as a  consumer protection bill that pertains                                                               
to two  business practices:   one practice  pertains to  the free                                                               
trial  period, and  the other  practice pertains  to the  opt-out                                                               
marketing plan.   The bill requires businesses  to fully disclose                                                               
to consumers what is involved  in their offers, for example, what                                                               
the consumer's  obligations are and what  any forthcoming charges                                                               
will  be.   He relayed  that the  concept of  HB 339  was brought                                                               
forth by a constituent, and stemmed  from the fact that last year                                                               
one  of the  telephone companies  offered a  new feature  on cell                                                               
phones that  was automatically provided  unless people  opted out                                                               
of  receiving  it, and  so  folks  wound  up getting  billed  for                                                               
something they didn't ask for.                                                                                                  
                                                                                                                                
REPRESENTATIVE  MEYER offered  a  personal example  of a  company                                                               
that was  billing his credit card  for a service that  he had not                                                               
asked for but that was part  of a free-trial program with an opt-                                                               
out provision that he'd not been aware  of.  He noted that it was                                                               
very  hard to  cancel this  unsolicited service  and that  he was                                                               
unable to  get reimbursed  for the  months he  was charged  for a                                                               
service  he didn't  know he  had and  that he'd  unknowingly paid                                                               
for.  He  said that HB 339 will prohibit  opt-out marketing plans                                                               
unless  all  of  its  provisions   are  fully  disclosed  to  the                                                               
consumer,  and will  place more  responsibility on  businesses to                                                               
disclose  such provisions  before engaging  in opt-out  marketing                                                               
plans.   He  suggested that  the Department  of Law  has received                                                               
numerous  complaints about  "these type  of business  practices,"                                                               
and relayed  that he is  willing to  be flexible in  working with                                                               
the industry  to come up  with compromise legislation as  long as                                                               
it fully protects consumers.                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLM  said  that  a   simple  fix  could  be  for                                                               
companies to  just include  on the  billing a  box that  could be                                                               
checked if the consumer wants to opt out.                                                                                       
                                                                                                                                
REPRESENTATIVE   MEYER   surmised  that   Representative   Gara's                                                               
suggested  amendment  followed a  similar  line  of thought,  but                                                               
remarked  that  there could  be  certain  limitations on  such  a                                                               
concept because of federal law dealing with interstate commerce.                                                                
                                                                                                                                
Number 0895                                                                                                                     
                                                                                                                                
CLYDE   (ED)   SNIFFEN,    JR.,   Assistant   Attorney   General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
Department   of   Law  (DOL),   said   that   the  DOL   supports                                                               
Representative Meyer's  efforts to  deal with the  issues related                                                               
to free trial periods and  opt-out marketing situations.  He went                                                               
on to say:                                                                                                                      
                                                                                                                                
     There  are  a  number  of  reasons  why  this  kind  of                                                                    
     legislation   ...  would   help  consumers   understand                                                                    
     obligations that  they undertake  when they  respond to                                                                    
     these  kinds of  offers.   And these  are the  kinds of                                                                    
     offers  that are  the most  enticing to  consumers, and                                                                    
     you'll note the legislation  is really only directed at                                                                    
     the free  trial offer or  the opt-out plan.  ... Direct                                                                    
     sales aren't  a problem  ...:   I call  you up,  I have                                                                    
     this product,  do you want to  buy it, yes or  no - no,                                                                    
     okay, see  you later. ... This  legislation is directed                                                                    
     at ... the kind of  offer that people just simply don't                                                                    
     refuse or don't  want to refuse.   This creates fertile                                                                    
     ground for  all [kinds] of potential  deception because                                                                    
     it easy  to say,  on the phone,  to someone,  "Oh sure,                                                                    
     I'm going to get it for  free and no obligation for me;                                                                    
     yeah, I'll  take this  thing, and then  ... if  I don't                                                                    
     want it later  I can cancel," and  everyone thinks it's                                                                    
     easy to cancel.                                                                                                            
                                                                                                                                
MR. SNIFFEN continued:                                                                                                          
                                                                                                                                
     Well,  as Representative  Gara pointed  out,  a lot  of                                                                    
     telemarketers have phone lines  that really only go one                                                                    
     way; they make  outgoing calls but ...  they can't take                                                                    
     incoming  calls,   so  the  ability  to   cancel  these                                                                    
     services in the  same manner in which they  are sold is                                                                    
     unavailable  in  a  lot  of   circumstances.    So  the                                                                    
     singular  intent  of  the bill,  I  believe,  from  our                                                                    
     perspective,  was to  require  some kind  of a  written                                                                    
     confirmation from the consumer  that they in fact agree                                                                    
     to this  deal, whatever the  deal is.   And ...  we had                                                                    
     suggested  that that  written confirmation  be obtained                                                                    
     from  the consumer  before the  product or  service was                                                                    
     provided or at  least billed for.  And  the response we                                                                    
     got from  the Direct Marketing  Association essentially                                                                    
     was that  [that] would create  an economic  burden that                                                                    
     would really  be unfair and  that there might  be other                                                                    
     ways  to   address  this   problem  [for   example]  by                                                                    
     requiring some disclosures over  the phone or [sending]                                                                    
     out  a  written  confirmation  of  the  sale  that  the                                                                    
     consumer can review and then  send back in the event it                                                                    
     didn't comport with their understanding ....                                                                               
                                                                                                                                
Number 0761                                                                                                                     
                                                                                                                                
     I couldn't agree more ...  [that] people tend to forget                                                                    
     what   they  say   on  the   phone,  and   these  phone                                                                    
     transactions  are very  interesting to  say the  least,                                                                    
     but  they're targeted  at elderly  folks who  a lot  of                                                                    
     times don't  remember what  they said,  or even  not so                                                                    
     elderly   folks,  like   myself,  who   don't  remember                                                                    
     sometimes  what  we  say.   And  to  get  something  in                                                                    
     writing to at least confirm  what you've agreed to, and                                                                    
     if  it's  not  what  you've agreed  to,  give  you  the                                                                    
     ability to say,  "No, I don't want  this deal anymore,"                                                                    
     is ... what we'd like to see in this legislation. ...                                                                      
                                                                                                                                
     The  way  the  bill  was originally  drafted,  which  I                                                                    
     played a  significant role  in drafting  ..., contained                                                                    
     some  fairly  strict  requirements for  obtaining  that                                                                    
     kind of consent up front.   And we have worked with Mr.                                                                    
     Flint  and  his  clients  ...  to  come  up  with  some                                                                    
     compromise language  that would still achieve  the goal                                                                    
     of  making  sure  that   the  telemarketers  or  direct                                                                    
     marketers  -- and  it's not  just limited  to telephone                                                                    
     sales,  it's ads  on late-night  TV and  mail that  you                                                                    
     get, and it's ... a  barrage of consumer media that you                                                                    
     might respond to.                                                                                                          
                                                                                                                                
MR. SNIFFEN relayed:                                                                                                            
                                                                                                                                
     We  had  a consumer  file  a  complaint this  year  who                                                                    
     responded  to a  Focus Factor  (ph)  ad on  TV ...  for                                                                    
     these vitamins - and it was  free for 30 days, just pay                                                                    
     $4.95  shipping [and]  handling  - and  she called  ...                                                                    
     this number  up ... and  they said, "Oh, sure,  give us                                                                    
     your credit card for the  $4.95," and she does and they                                                                    
     say,  "Okay, we're  going to  put you  on auto-shipment                                                                    
     for  this product."    And she  didn't  know what  that                                                                    
     meant, and  they said, "You're under  no obligation and                                                                    
     [if] you don't want anything  we send you, you can just                                                                    
     send it back  or you don't have to pay  for it."  Well,                                                                    
     cut  to  the chase,  ...  they  kept sending  her  this                                                                    
     product month after  month after month at  $60 a bottle                                                                    
     and she didn't  want it.  She tried to  call the number                                                                    
     to cancel  and she couldn't  cancel, and she  tried ...                                                                    
     sending them letters and ...  they wouldn't get them or                                                                    
     she got no response.                                                                                                       
                                                                                                                                
Number 0623                                                                                                                     
                                                                                                                                
     And finally  she reached someone and  they said, "Well,                                                                    
     we're  not going  to charge  you for  future shipments,                                                                    
     but ...  since you've already gotten  this past product                                                                    
     and  you've used  it,  we can't  give  you the  refund;                                                                    
     we're going  to bill you  $120 and then we're  going to                                                                    
     cancel the  rest of  your order."   So the  consumer is                                                                    
     out  $120, not  something she's  going to  fight about,                                                                    
     she just kind of soaks it up and goes on.                                                                                  
                                                                                                                                
     But it's that  kind of thing that happens,  and we were                                                                    
     involved  in a  multistate  case  involving a  try-and-                                                                    
     discount (ph)  buying club out of  Florida that up-sold                                                                    
     a  lot  of products  to  consumers,  and ...  that's  a                                                                    
     national  case that  received some  attention that  all                                                                    
     the states  participated in where  telemarketers [were]                                                                    
     doing  very similar  things.   So ...  we do  see these                                                                    
     abuses and  we're hoping  this legislation  will target                                                                    
     that at  a minimum -  at least require  these marketers                                                                    
     ...   to  make   consumers   aware   of  what   they're                                                                    
     obligations  are in  some fashion  that  we can  easily                                                                    
     verify.   And  if  it's not  written  consent from  the                                                                    
     consumer,  at  least  have  it   be  in  some  form  of                                                                    
     verifiable  consent,  either   over  the  telephone  or                                                                    
     through  a confirmation  mailing or  something of  that                                                                    
     sort.   And  we're certainly  happy to  work with  [the                                                                    
     sponsor] and Mr. Flint and  his clients to come up with                                                                    
     language that works for everyone.                                                                                          
                                                                                                                                
Number 0549                                                                                                                     
                                                                                                                                
MR. SNIFFEN concluded:                                                                                                          
                                                                                                                                
     And  I  would  like  to   respond  just  briefly  to  a                                                                    
     [suggestion]  earlier about  why you  couldn't send  an                                                                    
     invoice [and]  have box  on there  that you  just check                                                                    
     that  says, "No,  I  don't want  this,  thank you  very                                                                    
     much,"  and  send  it  back.   Those  kinds  of  things                                                                    
     actually  look deceptively  like  bills; sometimes  you                                                                    
     don't know that  it's not an invoice ...  that you have                                                                    
     to pay, and  some consumers will get  those things, not                                                                    
     see  that little  box,  not see  the  fine print,  [and                                                                    
     think], "Now I've got an  invoice; I've got to pay it."                                                                    
     Heck,  there's  a  huge scam  going  on  now  involving                                                                    
     yellow pages  ... - you've probably  all received these                                                                    
     things  -  they  come  in  the  mail,  they  look  like                                                                    
     invoices ...,  [but] it's  really an  advertisement and                                                                    
     they're  asking you  if you  want that  service but  it                                                                    
     looks like  an invoice, and  a lot of  businesses don't                                                                    
     rally  read  it   -  they  send  a   check  (indisc.  -                                                                    
     coughing).   And we're concerned that  just ... putting                                                                    
     a box on an invoice that  lets the consumer out of this                                                                    
     transaction ... might  not alert consumers sufficiently                                                                    
     that  that's the  way  that you  need  to cancel  these                                                                    
     things.  So, I hope that answers that question.                                                                            
                                                                                                                                
REPRESENTATIVE GARA said Mr. Sniffen's  examples were useful, and                                                               
relayed  that he  would like  to keep  the protections  currently                                                               
proposed in  the bill as  they are and on  top of those  also add                                                               
language to  the effect that  a form  will be required  to remind                                                               
consumers,  30 days  before being  billed, of  how to  cancel the                                                               
transaction.  This  proposed form would be one  that the consumer                                                               
could fill out and send back.   He referred to his aforementioned                                                               
amendment, and asked Mr. Sniffen to comment.                                                                                    
                                                                                                                                
MR. SNIFFEN responded:                                                                                                          
                                                                                                                                
     I think  that's a  terrific idea and  I didn't  mean to                                                                    
     suggest  in  my testimony  that  wouldn't  work. ...  I                                                                    
     think if it's a  separate confirmation that is separate                                                                    
     from  an invoice,  that works  very  well because  then                                                                    
     consumers  [are] getting  a  form  [that] doesn't  look                                                                    
     like  an  invoice, it  doesn't  tell  them to  pay  any                                                                    
     money, [it] just says, "You've  agreed to this, ... and                                                                    
     we're going  to send  you an  invoice for  this product                                                                    
     and this  is how much  it's going  to cost you,  and if                                                                    
     you don't  want this,  or if  you don't  remember doing                                                                    
     this deal, you need to call  this number or you need to                                                                    
     check this box and send it back to us."                                                                                    
                                                                                                                                
     Something that  doesn't confuse  the consumer  with the                                                                    
     fact that  this may be an  invoice they have to  pay, I                                                                    
     think  would be  preferable; ...  30 days  is good,  15                                                                    
     days would be  good.  I know in  the amendment proposed                                                                    
     by   Mr.   Flint's   client,   the   Direct   Marketing                                                                    
     Association,  they  had  an alternative  requiring  the                                                                    
     seller to  send the consumer a  written confirmation at                                                                    
     least  10  days  before   charging  the  consumer  that                                                                    
     included  a telephone  number that  the consumer  could                                                                    
     use  to cancel.   I  think it  is also  a way  that you                                                                    
     could  do it  in writing  for the  reasons you  suggest                                                                    
     Representative Gara, and that would be good as well.                                                                       
                                                                                                                                
Number 0288                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA remarked  that  he didn't  want  to put  the                                                               
companies through an undue burden of  cost.  He surmised that the                                                               
two options  are to have a  separate form and either  having that                                                               
as part of  an invoice or not  part of an invoice.   He said that                                                               
he didn't mind  [the separate form] being part of  the invoice so                                                               
long as it clearly states how the consumer can opt out.                                                                         
                                                                                                                                
MR. SNIFFEN  agreed that would be  okay, but noted that  it would                                                               
need to  be carefully reviewed.   He  indicated the need  for the                                                               
[cancellation language] to be done clearly and conspicuously.                                                                   
                                                                                                                                
REPRESENTATIVE GARA said he might go that route.                                                                                
                                                                                                                                
REPRESENTATIVE GRUENBERG  turned attention  to page 3,  lines 24-                                                               
25, where  "seller" is defined.   He  pointed out that  under the                                                               
Uniform  Commercial Code  (UCC),  AS 45.02.103,  it  says:   "(4)                                                               
'seller' means  a person who  sells or contracts to  sell goods."                                                               
The  UCC   defines  "goods"  in   AS  45.02.105,  and   the  term                                                               
"contracts"  is  also  defined  in   the  UCC  in  AS  45.02.106.                                                               
Representative  Gruenberg   explained  that  the   UCC  generally                                                               
governs the laws of  the sale of goods.  The  Act is well drafted                                                               
because things  are defined somewhere  in the Act,  and therefore                                                               
one doesn't have  to look so much to common  law.  Representative                                                               
Gruenberg noted  that he liked  the definition of "seller"  in AS                                                               
45.02.103(4) because one  could enter into a  contract before the                                                               
sale is actually made and  the individual would still be covered.                                                               
However, he  acknowledged that the  definition of "seller"  in AS                                                               
45.02.103(4)  only covers  goods  while  this legislation  covers                                                               
goods and services.                                                                                                             
                                                                                                                                
CHAIR McGUIRE  informed the committee  that the  legislation will                                                               
be set  aside shortly.   She suggested that  Representatives Gara                                                               
and Gruenberg  work with the sponsor  between now and the  end of                                                               
the week in  order to come to an agreement  on the aforementioned                                                               
issues.                                                                                                                         
                                                                                                                                
TAPE 04-37, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG inquired  as  to  why this  legislation                                                               
pertains  to AS  45.45 rather  than  the UCC.   He  asked if  the                                                               
reason was that  the legislation covers services [as  well as the                                                               
sale of goods].                                                                                                                 
                                                                                                                                
MR.  SNIFFEN  replied  yes, pointing  out  that  the  legislation                                                               
begins  with   the  following   language:     "Notwithstanding  a                                                               
provision in  AS 45.02 to the  contrary ...."  He  explained that                                                               
the desire was  to use these definitions to ensure  that not only                                                               
the sale of  goods was included but also services.   However, Mr.                                                               
Sniffen noted  that he  liked the idea  of including  "selling or                                                               
contracting" as well.                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG  mentioned that Mr. Sniffen  may want to                                                               
review the  definition of "contracting"  and "goods" in  the UCC.                                                               
He   indicated  the   need  to   define   the  term   "services."                                                               
Representative Gruenberg  questioned whether  there would  be any                                                               
benefit to  placing these  statutes in  the UCC  while indicating                                                               
that the  two statutes  [specified in  the legislation]  apply to                                                               
the sale of services.  He asked if Mr. Sniffen could comment.                                                                   
                                                                                                                                
MR. SNIFFEN noted  his willingness to review that,  but he wasn't                                                               
sure about complicating the legislation  any more than necessary.                                                               
Mr. Sniffen said:  "I think  the intent defining "seller" in this                                                               
bill was  ... just to include  the types of direct  marketers who                                                               
would be  engaging in the  kind of  conduct that we're  trying to                                                               
regulate and  we didn't mean  any more  ... than that,  but we'll                                                               
certainly take a look at that."                                                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  pointed out  that under the  UCC, there                                                               
are  provisions  that  might  provide   the  consumer  with  some                                                               
protections.   At  the  very least,  he  suggested reviewing  the                                                               
definitions [found in the UCC].                                                                                                 
                                                                                                                                
CHAIR McGUIRE announced that HB 339 would set aside.                                                                            
                                                                                                                                

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