BILL ANALYSIS
SB 771
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Date of Hearing: August 21, 2001
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Lou Correa, Chair
SB 771 (Figueroa) - As Amended: August 20, 2001
(As Proposed to be Amended)
SENATE VOTE (vote not relevant)
SUBJECT : Unsolicited and unwanted telephone calls.
SUMMARY : Establishes a "do not call" list for residential and
wireless telephone subscribers who do not want to receive
unsolicited telephone solicitations, and prohibits telephone
solicitors from calling subscribers who are currently on the "do
not call" list. Specifically, this bill :
1)Requires the Department of Consumer Affairs (DCA) to
maintain a "do not call" list containing all of the
telephone numbers of residential and wireless telephone
subscribers (excluding their names and addresses) who do
not want to receive unsolicited telephone calls.
2)Requires DCA to update the "do not call" list on a
quarterly basis.
3)Defines "telephone solicitor" to mean any person or
entity who on his or her own behalf or through
salespersons, agents, or automatic dialing announcement
devices, makes any of the specified types of
solicitations (e.g., sales of consumer goods or services,
extensions of credit, etc.). This definition does not
include or apply to charitable or political calls.
4)Permits solicitors to obtain copies of the "do not call"
list by paying a fee to DCA in an amount not to exceed
the costs for preparation, production, and distribution
of the list. Also, creates a special Telephone
Solicitors Fund that will be subject to annual
appropriation in the Budget Act.
5)Prohibits solicitors from calling any telephone number on
the current "do not call" list to do any of the
following:
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a) Seek to rent, sell, exchange, promote, gift, or
lease goods or services or documents that can be used
to obtain goods or services.
a) Offer or solicit or seek to offer or solicit any
extension of credit for personal, family, or household
purposes.
a) Seek marketing information that will or may be used
for the direct solicitation of a sale of goods or
services to the subscriber.
a) Seek to sell or promote any investment, insurance,
or financial services.
1)Prohibits entities that rent, sell, exchange, promote,
gift, or lease telephone solicitation lists from
including telephone numbers that appear in the current
DCA "do not call" list, and prohibits solicitors from
making telephone solicitations to people on the list.
2)Allows subscribers who place their names on the "do not
call" list to exclude from its coverage any calls from
entities identified by the subscriber in the manner
prescribed by DCA.
3)Allows any business to make telephone solicitations
notwithstanding a subscriber's placement on the "do not
call" list, as long as the solicitor contacts the
subscriber by mail to obtain written permission allowing
the solicitor to make future calls. Also specifies that
in any dispute regarding the written permission by a
subscriber, the burden of proof will be on the solicitor
to produce the original document signed by the
subscriber.
4)Specifies that the solicitor has an affirmative defense
regarding any inadvertent calls. The solicitor must
prove that the call was accidental and that "do not call"
polices were in place at the time of the call, and prove
that the telemarketer received prior training and
instruction regarding "do not call" policies before the
inadvertent call occurred.
5)Explicitly exempts telephone solicitations that are made:
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a) In response to a subscriber's express request or in
response to a subscriber's advertisement.
a) In connection with the collection of a lawful debt
or the offer by a creditor of an extension of credit
to pay a delinquent obligation owed by the subscriber
to that creditor.
a) By a business that a subscriber has specifically
excluded from the coverage of the "do not call" list.
a) To nonprofit entities that have established a
relationship by means of previous donations,
participation or attendance at events held by the
nonprofit.
a) By a business that, under specified conditions, has
an "established business relationship" with the
subscriber.
1)Specifies that an "established business relationship" means a
relationship by a voluntary, two way communication between a
solicitor and a subscriber, with or without an exchange of
consideration, on the basis of an application, purchase,
rental, lease or transaction, where the relationship has not
been terminated by the subscriber or the business.
2)Specifies that when a subscriber purchases products or
services through a licensed agent or broker, an established
business relationship is created with the licensed agent or
broker individually, apart from and in addition to any
established business relationship that may have been created
by a licensed agent or broker acting on behalf of another
entity.
3)Subjects violations to possible legal action as an unfair
business practice, and gives subscribers who receive a
prohibited solicitation the right to bring a civil action to
obtain an injunction, civil penalties ($500 first offense,
$1000 for subsequent offenses), court costs, attorney's fees,
and any other relief a court deems appropriate.
EXISTING LAW :
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1)Provides for the regulation of advertising practices,
including false or misleading advertisements.
2)Provides for the regulation and registration of
"telemarketers" who make specified types of phone
solicitations, and provides exemptions to this
telemarketing law for certain types of businesses and
solicitations.
3)Requires solicitors to have standard procedures in place
for "do not call" requests from subscribers who have
indicated that they do not want to receive any additional
telephone solicitations (federal Telephone Consumer
Protection Act (TCPA) of 1991).
4)Prohibits the use of automatic telephone dialing systems
to initiate certain types of calls, including calls to
emergency numbers or residences, without the prior
written consent of the party being called.
FISCAL EFFECT : Unknown. The cost of establishing, maintaining,
and updating the "do not call" list at DCA should be offset by
revenue collected from telephone solicitors who must obtain the
list.
COMMENTS :
Purpose of the bill . According to the author, this bill is
intended to reduce unsolicited and unwanted telephone
solicitations and give a telephone subscriber the option to
request that a solicitor refrain from calling the
subscriber. The bill allows subscribers to request to have
their phone numbers placed on a "do not call" list.
According to the author, the bill is modeled on other "do
not call" programs existing in 24 other states. The states
that currently have "do not call" programs are Alabama,
Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida,
Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky,
Louisiana, Maine, Missouri, Nebraska, New York, North
Carolina, Oregon, Tennessee, Texas, Virginia and Wyoming.
According to the author, this "opt out" bill will provide
subscribers with greater privacy in their homes and on
their cell phones from unwanted telephone solicitations.
("Opt-out" refers to the fact that telemarketers make
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unsolicited telemarketing calls to consumers, and the
person being solicited must make an affirmative effort to
"opt-out" of that norm in order to be covered by the
proposed "do not call" prohibition against unsolicited
telemarketing calls.)
Support . Supporters argue that this bill will provide
subscribers with the ability to maintain privacy in their
homes. The California Constitution guarantees a right of
privacy for every Californian and, at a minimum,
subscribers should be able to control access to their home.
Supporters point out that people with dementia and other
incapacities are repeatedly solicited and lured into making
purchases they cannot afford. Additionally, people that
are handicapped or ill (e.g., people with arthritis or
people being treated for cancer) with significant pain and
difficulty must repeatedly answer their phones only to be
subjected to an unwanted telephone solicitation.
The author quotes letters describing the high number of
calls some individuals are experiencing. For example, a
subscriber being treated for cancer says she receives three
or more unsolicited calls per night. Another elderly
subscriber has phone records indicating that he has
received about 360 unsolicited calls in a five-month
period.
The author states that the expansion of telemarketing is a
result of increased sophistication in communication
technology and the increased amount of highly specific
profiled information that is available and easily
accessible. This has resulted in an escalating number of
consumer complaints regarding this type of marketing
practice.
Federal law gives subscribers, during a telephone
solicitation, the option to request that they be put on the
solicitor's "do not call" list, which every telemarketing
company is required to maintain. However, this option only
takes place after the privacy of the home or cell phone has
been invaded, and the law works only on an ad hoc,
company-by-company basis. The author also believes that
federal law is generally being ignored. An article in the
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industry's trade magazine, "Teleprofessional," describes a
three-month investigation regarding the level of compliance
with existing federal law that requires telemarketing
companies, upon request, to provide a subscriber with a
copy of their company's "do not call" policies. The
investigation revealed that only 35 percent of the
investigated companies were in compliance with federal
requirements. Additionally, despite protestations to the
contrary, some of the entities that were found to be out of
compliance with federal requirements include prominent
members of the American Telemarketing Association and the
Direct Marketing Association (DMA).
Likewise, the author states that while DMA has a "do not
call" list, participation is voluntary for all
telemarketers; hence, 24 other states have moved to enact
"do not call" programs.
According to Gryphon Networks, a company that implements
federal and state "do not call" technologies for
telemarketing companies, there is not one documented case
regarding "do not call" enforcement under the federal
Telephone Consumer Protection Act. However, the Federal
Trade Commission (FTC) reported in 2000 that the single
greatest volume of consumer complaints involved unwanted
telephone solicitations in their homes. According to
Gryphon Networks, telemarketing companies now are beginning
to implement stricter business practices in order to comply
with existing federal law, despite the fact that federal
laws designed to regulate this type of activity have been
in effect for more than ten years. They argue that fear of
state enforcement is influencing telemarketing companies to
comply with existing federal requirements.
The author notes that business groups historically have
advocated "opt-out" programs as the preferred means of
addressing privacy concerns. Additionally, the author
points out that people who subscribe to "do not call"
programs are those who are most annoyed by such calls, and
are the least likely to respond favorably to an unwanted
telephone solicitation. Likewise, calls to people who are
likely to sign up for the "do not call" list are the most
likely to damage that caller's goodwill, both with that
consumer and in his or her community.
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Finally, the author cites the public popularity of doing
something to address what the author refers to as another
form of "home invasion." The Attorney General was quoted
last year as saying that the problem of unwanted telephone
solicitations was the number one privacy concern of
Californians. A recent San Diego Union Tribune article
quotes a Pac Bell poll indicating that telemarketing calls
are more unpopular than traffic jams and paying taxes. And
in the February edition of the "AARP Bulletin," a Florida
official states that "do not call" lists are one of the
most popular consumer protection programs.
Opposition . Various organizations have expressed concerns
with specific provisions in the bill. In response, the
author of the bill has made several amendments, including:
adding an exemption for existing business relationships
based on the language in other states' "do not call"
programs; specifying that businesses have thirty-one days
to implement the latest "do not call" list issued by DCA;
providing for an affirmative defense for accidental
violations of the law; permitting businesses to write to
subscribers asking that they be allowed to call them again;
permitting subscribers to exempt businesses when the
subscriber signs up to be place on the "do not call" list.
These amendments have eliminated or mitigated much of the
opposition, but opposition continues to exist.
Opponents generally argue that this bill:
a) Unreasonably limits an important sales channel for
businesses.
a) Applies too broadly to businesses that are not
responsible for the types of abuses being complained
about and/or businesses that are already subject to
state licensing regulation.
a) Unreasonably penalizes a business for an
inadvertent call.
a) Lacks clarity regarding when names will be added to
the "do not call" list.
a) Creates confusion by establishing yet another state
law that is different from that enacted in other
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states with which a marketer must comply, and adds
another set of state fees to marketers' costs.
Opponents further argue that the provisions in the bill are
unnecessary because currently subscribers are able to
restrict unwanted telemarketing calls by utilizing one of
two existing methods. One method is that subscribers can
have their name placed on the Direct Marketing
Association's nationwide Telephone Preference List ("do not
call" list) which is honored by DMA members as well as
other businesses who subscribe to receive that list.
Additionally, DMA does not charge the consumer to be placed
on the list, and the list is updated on a quarterly basis.
The second method, pursuant to federal law, requires a
telemarketing company to maintain a "do not call" list, and
at the request of a subscriber, the telemarketing company
must place the subscriber's name on its "do not call" list.
Once a subscriber's name is placed in the "do not call"
list, the telemarketing company must refrain from calling
the subscriber's telephone number unless the subscriber
gives the solicitor written permission allowing future
telephone calls.
The California Association of Realtors (CAR) opposes the
bill as being overly broad and inflexible because it would
treat the occasional "cold call" by a licensed realtor the
same as an unwanted solicitation from telemarketing boiler
rooms. CAR argues that realtors are licensed and regulated
by the state and should have their telemarketing practices
regulated through their licensing law by the Department of
Real Estate.
The Association of California Insurance Companies (ACIC)
reiterates CAR's arguments and asserts that licensed
brokers, agents, and insurers should be exempt.
REGISTERED SUPPORT / OPPOSITION :
Support
AARP
AFL-CIO
California Advocates for Nursing Home Reform (CANHR)
California Attorney General
California Conference Board of the Amalgamated Transit
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Union
California Conference of Machinists
California Teamsters
Californians Against Telephone Solicitation (CATS)
Congress of California Seniors
Consumers Union
Engineers & Scientists of California, Local 20 IFPTE,
AFL-CIO
Hotel Employees, Restaurant Employees International Union,
AFL-CIO
Older Women's League of California
Pacific Bell
Privacy Rights Clearinghouse
Region 8 States Council of the United Food & Commercial
Workers (UFCW)
Opposition
Alliance of American Insurers
Association of California Insurance Companies (ACIC)
California Association of Realtors (CAR)
California Newspaper Publishers Association (CNPA)
MCI WorldCom
Pacific West Association of Realtors
Personal Insurance Federation of California
Analysis Prepared by : Chris L. Gallardo / B. & P. / (916)
319-3301