Legislature(2003 - 2004)

03/31/2004 01:20 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 339 - TRADE PRACTICES                                                                                                      
                                                                                                                                
Number 0618                                                                                                                     
                                                                                                                                
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."                                                                                                                     
                                                                                                                                
Number 0662                                                                                                                     
                                                                                                                                
SUZANNE CUNNINGHAM,  Staff to Representative Kevin  Meyer, Alaska                                                               
State Legislature,  testified on behalf of  Representative Meyer,                                                               
sponsor  of HB  339.    She explained  that  on  March 26,  2004,                                                               
committee members received the latest  version of HB 339, Version                                                               
23-LS1265\U,  Bannister, 3/26/04,  as  well  as memorandums  from                                                               
Legislative  Legal  and   Research  Services  and  Representative                                                               
Meyer.  She  explained that Version U  encompasses the amendments                                                               
discussed at the bill's last hearing.                                                                                           
                                                                                                                                
Number 0767                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS moved  to  adopt  the proposed  committee                                                               
substitute  (CS)  for  HB 339,  Version  23-LS1265\U,  Bannister,                                                               
3/26/04,  as the  working document.   There  being no  objection,                                                               
Version U was before the committee.                                                                                             
                                                                                                                                
MS. CUNNINGHAM  relayed that [Representative  Meyer's] memorandum                                                               
accompanying Version  U outlines the changes  encompassed in that                                                               
version.     In   response  to   Representative  Gruenberg,   Ms.                                                               
Cunningham pointed  out that Version U  incorporates a definition                                                               
of "seller."                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG surmised,  "I gather  that's not  quite                                                               
the same  as the UCC  [Uniform Commercial Code] because  it deals                                                               
with services also."                                                                                                            
                                                                                                                                
MS. CUNNINGHAM answered in the affirmative.                                                                                     
                                                                                                                                
REPRESENTATIVE GARA turned attention to  subsection (e) on page 2                                                               
of Version  U, and noted  his appreciation for  incorporating the                                                               
change he  had requested.   He explained  that if  someone offers                                                               
something for a  free trial period, then that  [person or entity]                                                               
will have  to send out  an invoice before charging  the consumer.                                                               
The   invoice  would   provide   instructions   with  regard   to                                                               
cancellations.   However, Version  U specifies that  this invoice                                                               
has  to  be  provided  at  least  15  days  before  charging  the                                                               
consumer's  account rather  than the  30 days  he requested.   He                                                               
opined  that 15  days  aren't  enough.   He  likened [the  15-day                                                               
requirement]  to  how  credit  card  bills  arrive  and  are  due                                                               
relatively soon  after arrival, which  results in  people missing                                                               
the  due  date.    Representative  Gara  requested  changing  the                                                               
timeframe to 21 days.                                                                                                           
                                                                                                                                
MS.  CUNNINGHAM offered  her belief  that the  Department of  Law                                                               
changed the  timeframe from  30 days  to 15 days  in order  to be                                                               
more  in  line  with  the   requirements  of  the  Federal  Trade                                                               
Commission, which requires  10 days.  She viewed the  matter as a                                                               
policy decision for the committee.                                                                                              
                                                                                                                                
Number 0943                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG highlighted  that  [Version U]  changes                                                               
"express written  consent" to  "express verifiable  consent", and                                                               
inquired as to the reasoning behind that change.                                                                                
                                                                                                                                
MS.  CUNNINGHAM answered  that the  Department of  Law made  that                                                               
decision.  She  recalled that there was  conversation with regard                                                               
to mandating that the entire  conversation of telephonic sales be                                                               
recorded.     There   was  also   conversation  with   regard  to                                                               
Representative Gara's amendment requiring  [the seller] to send a                                                               
form on which  the consumer checks a box  that he/she understands                                                               
and will  meet all the  obligations specified for the  free trial                                                               
period.   The  Department  of Law's  perspective  with regard  to                                                               
"express  verifiable consent"  was  that the  seller will  always                                                               
have the  burden of  proving that consent  was obtained  from the                                                               
buyer.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  GRUENBERG  remarked  that the  law  often  favors                                                               
written documents because  of the ease of  proof, particularly in                                                               
consumer matters.   He inquired as to how the  consent that isn't                                                               
in writing will be verified.                                                                                                    
                                                                                                                                
Number 1062                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KEVIN MEYER,  Alaska State  Legislature, sponsor,                                                               
said that he'd  had the same question.  He  noted that Clyde (Ed)                                                               
Sniffen,   Jr.,  Assistant   Attorney  General,   Commercial/Fair                                                               
Businesses  Section, Civil  Division  (Anchorage), Department  of                                                               
Law, had  wanted the "express  verifiable consent" language.   He                                                               
offered  his belief  that the  Department of  Law is  comfortable                                                               
with  the "express  verifiable consent"  language, which  is used                                                               
elsewhere in statute.                                                                                                           
                                                                                                                                
MS.  CUNNINGHAM informed  the committee  that  under the  federal                                                               
telemarketing  sales  rules,  there   are  requirements  for  the                                                               
express oral  authorization for telephonic sales  to be recorded.                                                               
Therefore,  she characterized  [the "express  verifiable consent"                                                               
language] as a compromise.                                                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  that   he  didn't  know  whether                                                               
"express verifiable consent" is a legally defined term.                                                                         
                                                                                                                                
CHAIR  McGUIRE announced  her desire  to report  this legislation                                                               
from committee  today.   She pointed  out that  there will  be an                                                               
opportunity to speak  with Mr. Sniffen before HB  339 reaches the                                                               
House  floor.    She  mentioned  that  she  trusted  Mr.  Sniffen                                                               
immensely.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG pointed  out that  "seller" is  defined                                                               
twice [in  Version U].   The  definition of  "seller" on  page 3,                                                               
[lines 2-4], includes "... a  person who engages in ... arranging                                                               
for a  free trial period for  goods and services."   However, the                                                               
definition of "seller" [on page 3,  line 31, through page 4, line                                                               
1] doesn't include  the aforementioned language.   He inquired as                                                               
to why that is.                                                                                                                 
                                                                                                                                
MS. CUNNINGHAM  explained that the definition  under AS 45.45.920                                                               
pertains to  the "seller" in  the free trial period,  whereas the                                                               
"seller"  definition under  AS 45.45.930  refers  to the  opt-out                                                               
marketing  plans.   The [definition  of "seller"  is included  in                                                               
both] in order to be clear.                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  returned to  his earlier  question with                                                               
regard  to  the  "express  verifiable   consent"  language.    He                                                               
informed  the  committee  that Black's  Law  Dictionary  has  two                                                               
definitions of "verify", one of which  is a verification as is in                                                               
AS  09.63.   However,  the  other definition  of  "verify" is  as                                                               
follows:   "To  prove to  be true;  to confirm  or establish  the                                                               
truth  or truthfulness  of;  to  check or  test  the accuracy  or                                                               
exactness of;  to confirm  or establish  the authenticity  of; to                                                               
authenticate; to maintain;  to affirm; to support".   He surmised                                                               
that the language "verifiable" means provable.                                                                                  
                                                                                                                                
Number 1221                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HOLM  moved  to  report  CSHB  339,  23-LS1265\U,                                                               
Bannister,   3/26/04,   out    of   committee   with   individual                                                               
recommendations and  the accompanying  zero fiscal notes.   There                                                               
being no  objection, CSHB  339(JUD) was  reported from  the House                                                               
Judiciary Standing Committee.                                                                                                   
                                                                                                                                

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