BILL ANALYSIS
SB 771
Page 1
SENATE THIRD READING
SB 771 (Figueroa)
As Amended September 10, 2001
Majority vote
SENATE VOTE :Vote not relevant
BUSINESS AND PROFESSIONS 7-4 APPROPRIATIONS 16-4
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|Ayes:|Correa, John Campbell, |Ayes:|Midgen, Bates, Alquist, |
| |Cedillo, Chavez, Corbett, | |Aroner, Washington, |
| |Koretz, Wesson | |Corbett, Correa, Daucher, |
| | | |Goldberg, Papan, Pavley, |
| | | |Simitian, Thomson, |
| | | |Wesson, Wiggins, Zettel |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Bogh, Kelley, Matthews, |Nays:|Ashburn, Robert Pacheco, |
| |Nation | |Runner, Wright |
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SUMMARY : Establishes a "do not call" list for residential and
wireless telephone subscribers who do not want to receive
telephone solicitations, and prohibits telephone solicitors from
calling subscribers who are currently on the "do not call" list.
Specifically, this bill :
1)Requires the California Attorney General (AG), by January
1, 2003, to maintain and update quarterly a "do not call"
list containing all of the telephone numbers and ZIP
codes (but not the names and addresses) of residential
and wireless telephone subscribers who do not want to
receive unsolicited telephone calls.
2)Provides that a subscriber's placement on the "do not
call" list shall expire (and can be renewed) after three
years, and provides that the AG shall charge a subscriber
a fee of up to $1 per three-year period.
3)Defines "telephone solicitor" to mean any person or
entity who on his or her own behalf or through
salespersons, agents, or announcing devices, makes
specified types of solicitations, including sales of
goods or services, extensions of credit, and promotions
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of investments. (This definition does not include or
apply to charitable or political calls.)
4)Provides that solicitors shall obtain copies of the "do
not call" list by paying a fee to the AG in an amount not
to exceed the costs for preparation, maintenance,
production, and distribution of the list. Requires the
AG to establish a sliding fee schedule, charging a
solicitor with fewer than five full-time employees no
fee, and charging the maximum fee to a solicitor with
more than 1,000 employees.
5)Requires the AG to utilize the best available,
cost-effective technology to ensure that subscribers can
easily place their names on the "do not call" list
(including using the Internet or a toll-free telephone
number), and to ensure that solicitors can easily obtain
and manipulate the list. Permits the AG to contract with
a private vendor to establish, maintain and administer
the list, and requires any such contract to include
appropriate provisions to protect the confidentiality of
subscriber information. Provides that the AG may
promulgate regulations to implement these provisions.
6)Prohibits, with specified exceptions, solicitors from
calling any telephone number on the "do not call" list to
do any of the following:
a) Seek to offer a prize or 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 service; and,
b) Seek to make any solicitation as described in
current law governing the activities of "telephonic
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sellers."
1)Exempts from the prohibition on calling telephone numbers
on the "do not call" list those calls that are made:
a) In response to a subscriber's express request or
advertisement. However, a response shall be presumed
not to be made at a subscriber's express request if
the response is:
i) 30 business days after the last date on which
the subscriber contacted a business with an inquiry,
or after the subscriber consented or requested to be
contacted; and,
ii) After a request by the subscriber that no
further calls be made to him or her.
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) By an individual businessperson or a small business
if the businessperson or small business employs no
more than five employees or independent contractors,
and the businessperson or principal of the small
business makes the telephone calls himself or herself,
and the calls are made to subscribers within a 50-mile
radius of the location of the businessperson or small
business;
b) For the sole purpose of verifying that a
subscriber, and not an unauthorized third party, has
terminated an established business relationship;
a) By a tax exempt charitable organization; and,
a) By a business that, under specified conditions, has
an "established business relationship" with the
subscriber.
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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 or lease, if the relationship has not been terminated
by the subscriber or the solicitor. Also provides that an
"established business relationship" includes a relationship
with a nonprofit entity formed through previous donations and
other specified activities. Also provides that if a
subscriber uses a licensed agent or broker to purchase or
obtain a product or service, an "established business
relationship" is created with the licensed agent or broker as
well as potentially with the business the agent or broker
represents. Also provides that an "established business
relationship" does not exist between a subscriber and any
separate legal entity associated with a solicitor unless the
separate legal entity shares the same brand name as the
solicitor, and other specified conditions are met. And
further provides that if a separate legal entity with the same
brand name as a solicitor calls a subscriber and the
subscriber requests to be placed on a "do not call" list, that
instruction shall apply to all entities with the same brand
name.
2)Prohibits entities that rent, lease, or sell telephone
solicitation lists from including telephone numbers that
appear on the current AG "do not call" list.
3)Prohibits entities that obtain a "do not call" list from
using the list for any purpose other than to comply with
the provisions of this bill. Specified prohibited
purposes include a solicitor, directly or indirectly,
persuading a subscriber, with whom the solicitor has an
"established business relationship," to place the
subscriber's telephone number on the "do not call" list
if the solicitation has the effect of preventing
competitors from contacting that solicitor's customers.
4)Allows any business to make telephone solicitations
notwithstanding a subscriber's placement on the "do not
call" list, as long as the solicitor first 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 shall be on the solicitor
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to produce the original or facsimile document signed by
the subscriber.
5)Provides that the AG, a district attorney, or a city attorney
may bring a civil action against a solicitor to enforce the
provisions of this bill and obtain specified remedies,
including a fine of $500 for the first violation and a fine of
$1,000 for subsequent violations.
6)Provides that any person who has received a solicitation in
violation of the provisions of this bill may bring a civil
action in small claims court for an injunction. If the
injunction is violated, the person may obtain up to $1,000 in
small claims court.
7)Provides that a solicitor has an affirmative defense
regarding any alleged violation of the provisions of this
bill and must show that such violation was accidental and
in violation of the solicitor's policies, procedures,
instruction, and training.
8)Provides that information submitted by subscribers for
the purposes of having their telephone numbers placed on
the "do not call" list shall not be disclosed pursuant to
the Public Records Act.
EXISTING LAW :
1)Provides for the regulation of advertising practices,
including false or misleading advertisements.
2)Provides for the regulation and registration of
"telephonic sellers" 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
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emergency numbers or residences, without the prior
written consent of the party being called.
FISCAL EFFECT :
1)General Fund loan of about $2.2 million for startup costs, to
be repaid over five years from fees charged to telephone
solicitors in order to obtain the "do not call" lists.
2)Ongoing costs should be significantly less than the startup
costs. The experience in other states is that a large portion
of those electing to be on the list do so at the outset.
3)Unknown revenues from the $1 fee charged to subscribers for
getting on the list. To the extent the state's collection
costs exceed $1, the difference will be paid by solicitors as
part of their cost to purchase the lists.
COMMENTS :
1)Purpose of the bill. According to the author, this bill
is intended to significantly reduce unwanted telephone
solicitations. This bill allows subscribers to request
to have their phone numbers placed on a "do not call"
list. According to the author, this bill is modeled on
other "do not call" programs in a number of other states,
including: Alabama, Alaska, Arizona, Arkansas, Colorado,
Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky,
Louisiana, Missouri, Nebraska, New York, North Carolina,
Oregon, Tennessee, Texas, and Virginia.
2)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) must
repeatedly answer their phones only to be subjected to an
unwanted telephone solicitation. The author quotes
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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 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).
Finally, the author cites the public popularity of doing
something to address what the author refers to as another
form of "home invasion." The AG 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
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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.
3)Numerous amendments to this bill have removed much of the
original opposition. Nevertheless, some opposition
remains.
One opposition argument is that this bill is
anti-competitive because it would provide an advantage
for one telecommunication company compared to some
others. Specifically, it is argued that Pac Bell is
advantaged because, compared to MCI for example, Pac Bell
has a larger number of "established business
relationships" that result in exemptions from any "do not
call" list. However, it must be noted that this
contention is based on having greater access to
individuals who have made the effort and paid a fee to
place themselves on a "do not call" list. It is safe to
assume that these individuals really, really do not want
to be called, with a good potential that calls to these
individuals will backfire on solicitors. Consequently,
it is unclear that a theoretical advantage resulting from
greater access to individuals on a "do not call" list
will, in fact, translate into a noteworthy advantage in
the real world.
Another argument against this bill is that it fails to
contain a "win back" provision that would provide
businesses with a grace period to call customers that
have terminated their relationship with the business so
the business can attempt to "win back" the customer.
Opponents further argue that the provisions in this 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 phone numbers 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 that 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
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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 phone
number on its "do not call" list. Once a subscriber's
phone number is placed in the "do not call" list, the
telemarketing company must refrain from calling the
subscriber unless the subscriber gives the solicitor
written permission allowing future telephone calls.
Analysis Prepared by : Jay Greenwood / B. & P. / (916) 319-3301
FN: 0003141