Legislature(2003 - 2004)

04/20/2004 02:04 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
            HB  15-SOLICITATIONS/CONSUMER PROTECTION                                                                        
CHAIR CON  BUNDE announced HB 15  to be up for  consideration and                                                               
that  some  agreement  had been  reached  between  the  competing                                                               
interests that  resulted in  an amendment.  He moved  amendment 1                                                               
and objected for discussion purposes.                                                                                           
                      A M E N D M E N T  1                                                                                  
OFFERED IN THE HOUSE                     BY REPRESENTATIVE FATE                                                                 
     TO:  CSHB 15(FIN) am                                                                                                       
Page 8, lines 14 - 15:                                                                                                          
     Delete all material.                                                                                                       
     Insert "[MAGAZINE, PERIODICAL,] sound recording or [,] book                                                            
through [, OR MEMBERSHIP IN] a book or record club"                                                                         
Page 8, line 20, following "(11)":                                                                                              
     Insert "by a publisher, or a publisher's agent operating                                                               
under a written agreement between a publisher and the agent, who                                                            
is soliciting the sale of a publisher's magazine if                                                                         
                    (A)  the buyer has the right to review the                                                              
          magazine and  cancel the subscription for  the magazine                                                           
          within  seven days  after receipt  of  the magazine;  a                                                           
          cancellation  request  is  timely  if  the  request  is                                                           
          mailed,  properly  addressed  and  postmarked,  postage                                                           
          prepaid,  within  seven  days   after  receipt  of  the                                                           
          magazine; and                                                                                                     
                    (B)  the right of cancellation and refund is                                                            
          fully disclosed to the buyer before or at the time the                                                            
          initial invoice is received by the buyer;                                                                         
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MR. JIM POUND, staff to Representative Hugh Fate, sponsor,                                                                      
deferred comments to Cindy Drinkwater and Bob Flint.                                                                            
MS.  CINDY DRINKWATER,  Department of  Law (DOL),  explained that                                                               
Amendment 1 is  similar to language that about  five other states                                                               
have  in their  telemarketing  registration  laws. The  reasoning                                                               
behind it  is that  some of  the scams  that are  associated with                                                               
magazine  subscription sales  are believed  to be  perpetrated by                                                               
entities  that are  often  considered to  be  clearing houses  or                                                               
wholesalers   or   some   other    entity   that   doesn't   have                                                               
responsibility for the ultimate  product, but is mostly concerned                                                               
with making  a quick sale  over the telephone. Amendment  1 makes                                                               
an  exemption for  a publisher,  or  an agent  of his,  operating                                                               
under  a  written agreement  for  the  sale of  that  publisher's                                                               
magazine if  two conditions  apply. The  first condition  is that                                                               
the buyer  has the right  to review  the magazine and  cancel the                                                               
subscription for it within seven  days of receipt of the magazine                                                               
and that the right of  cancellation and refund is fully disclosed                                                               
to  the buyer  at the  time the  initial invoice  is received  or                                                               
before.  She felt  this  would  address some  of  the issues  the                                                               
Direct Marketing  Association has  raised. However,  the Consumer                                                               
Protection  Unit urged  an alteration,  which  would involve  two                                                               
small  words   on  line  15.   It  would  read,  "The   right  of                                                               
cancellation  and refund  is fully  disclosed in  writing to  the                                                               
buyer." She supported that, because  in reality the solicitations                                                               
happen and  a month or  two later,  the magazine arrives  and the                                                               
consumer  might not  remember  that  they were  told  in a  phone                                                               
conversation that they had a right to cancel their subscription.                                                                
CHAIR BUNDE asked if this notice would come with the invoice.                                                                   
MS. DRINKWATER replied that is correct.                                                                                         
SENATOR  SEEKINS moved  to amend  Amendment  1 on  line 15  after                                                               
"disclose" by adding "in writing". There were no objections.                                                                    
SENATOR GARY STEVENS  said you get the invoice  after getting the                                                               
magazine  and  thought that  was  kind  of  late to  receive  the                                                               
MS. DRINKWATER  replied that she  would like to see  the consumer                                                               
receive something  much closer in  time to the  solicitation, but                                                               
believed  that some  notice  in writing  with  an opportunity  to                                                               
cancel is the critical feature.                                                                                                 
SENATOR SEEKINS  moved to amend  Amendment 1 for the  second time                                                               
on line 12  after "receipt of the magazine" by  adding "or at the                                                               
time the initial  invoice is received by the  buyer, whichever is                                                               
TAPE 04-34, SIDE B                                                                                                            
SENATOR  FRENCH objected  to understand  the  amendment and  then                                                               
withdrew his objection.                                                                                                         
CHAIR BUNDE  announced that there  were no further  objections to                                                               
the second amendment to Amendment 1.                                                                                            
CHAIR BUNDE asked if there  was further discussion on Amendment 1                                                               
as  amended.  There  were  no  objections  and  Amendment  1  was                                                               
MR. ROBERT FLINT, Hartig &  Rhodes, Direct Marketing Association,                                                               
said he thought he had an  agreement, but not after the committee                                                               
adopted  Amendment 1.  Adding "in  writing", which  has been  the                                                               
consistent position  of the Department  of Law,  isn't consistent                                                               
with industry practices and forbids  people to charge the product                                                               
on their credit card at the time of the call.                                                                                   
     I think  we're back to  square one. That's not  the way                                                                    
     the  business works.  We  do have  in  your packets,  I                                                                    
     hope,  our  Freedom  of Information  Act  request  that                                                                    
     suggests that there  is such a low  level of complaints                                                                    
     from  2000  and  1999  that  there  is  no  discernible                                                                    
     practice of abuse regarding this.                                                                                          
MS. ANN DARR, Magazine Publishers of America, said:                                                                             
     We're selling  a magazine subscription!  Every American                                                                    
     knows what  a magazine  is. There's  nothing mysterious                                                                    
     or  questionable about  it. We  have  the best  review,                                                                    
     return or  cancel guarantee in  the world.  If somebody                                                                    
     doesn't  want  it,  we'll credit  them  or  cancel  the                                                                    
     billing. If  they decide they  don't like it  after two                                                                    
     months or three months or  six months, we'll cancel all                                                                    
     unmailed  issues. It's  making  it  too complicated  to                                                                    
     sell  a simple  magazine  subscription.  We offer  many                                                                    
     wonderful  things to  Americans  through magazines.  We                                                                    
     offer information  about retirement,  financial issues,                                                                    
     information  for  elderly  persons,  entertainment  for                                                                    
     children,   educational    articles,   articles   about                                                                    
     history....  So,  we  don't   feel  there  is  anything                                                                    
     mysterious about selling  a magazine subscription, that                                                                    
     there is  anything the consumer  is confused  about. If                                                                    
     they say they want it, we  believe we should be able to                                                                    
     consider it sold with their ability to cancel and not                                                                      
     have to confirm it in writing.                                                                                             
CHAIR  BUNDE asked,  "Even if  that confirmation  comes with  the                                                               
MS. DARR  answered, "They  don't always get  an invoice.  If they                                                               
have given us  their credit card and that's how  they want to pay                                                               
for it, they're not going to get an invoice."                                                                                   
CHAIR BUNDE  asked Mr. Pound if  he cared to comment  on the deal                                                               
that was broken.                                                                                                                
MR. POUND  replied that the  "in writing"  issue is the  one that                                                               
Ms.  Drinkwater   and  Mr.   Flint  were   consistently  arguing,                                                               
primarily because according to  the Direct Marketing Association,                                                               
most  of  these  deals  are  done  with  credit  cards  over  the                                                               
telephone.  Requiring "in  writing" would  make it  impossible to                                                               
make credit card sales over the phone.                                                                                          
CHAIR  BUNDE  asked  Ms.  Drinkwater   how  many  complaints  are                                                               
registered yearly about magazine scams.                                                                                         
MS. DRINKWATER answered there were  five complaints in 2003 about                                                               
magazine scams,  which may not seem  like a huge number,  but the                                                               
quality  of  the complaint  is  what  she considers.  These  were                                                               
complaints from senior  citizens who are on a  limited income who                                                               
had  gone  to great  lengths  to  try  to cancel  their  magazine                                                               
subscriptions and were simply unable  to cancel or were unable to                                                               
get through to  a live person at the 800  number they were given.                                                               
She did  not want to change  any of the other  17 exemptions that                                                               
exist in the current statute.                                                                                                   
SENATOR SEEKINS moved  to pass SCS CSHB  15(L&C)am from committee                                                               
with  the attached  fiscal note  and individual  recommendations.                                                               
Senators  Hollis  French,  Gary Stevens,  Ralph  Seekins,  Bettye                                                               
Davis  and Chair  Con Bunde  voted  yea; and  SCS CSHB  15(L&C)am                                                               
moved from committee.                                                                                                           

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