BILL ANALYSIS Ó
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|Hearing Date:April 15, 2013 |Bill No:SB |
| |272 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 272Author:Corbett
As Amended:April 8, 2013 Fiscal: Yes
SUBJECT: Advertising: military endorsements.
SUMMARY: Prohibits implying any military veteran or military veteran
service organization connection, approval or endorsement of any
financial product, goods or services unless there is a direct
connection to that military veteran entity.
Existing law:
1)Federal law prohibits the use of any seal, insignia, trade or brand
name that could reasonably be interpreted or construed as implying
any federal government connection, approval, or endorsement unless
the mailing has a notification on its face, cover or wrapper that it
is not affiliated with any federal government agency.
2)Prohibits any person, firm, corporation or association that is a
nongovernmental entity to solicit information, or solicit the
purchase of or payment for a product or service or to solicit the
contribution of funds or membership fees, by means of a mailing,
electronic message or Internet website that contains a seal,
insignia, trade or brand name or any other term or symbol that
reasonably could be interpreted or construed as implying any
federal, state or local government connection, approval or
endorsement, unless :
(Business and Professions Code (BPC) § 17533.6)
a) The nongovernmental entity has an expressed connection with,
or the approval or endorsement of, a state or local government
entity, if permitted by law.
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b) The solicitation meets the following requirements:
i) The solicitation conspicuously displays the following
notice: "THIS PRODUCT OR SERVICE HAS NOT BEEN APPROVED OR
ENDORSED BY ANY GOVERNMENT AGENCY, AND THIS OFFER IS NOT BEING
MADE BY AN AGENCY OF THE GOVERNMENT."
ii) In the case of a mail solicitation, the envelope or
outside cover or wrapper in which the matter is mailed
conspicuously displays the following notice: "THIS IS NOT A
GOVERNMENT DOCUMENT."
iii) The disclosures in i) and ii) above are not preceded,
followed or surrounded by symbols, terms or other content that
make them inconspicuous.
iv) The solicitation does not use a title or trade or
brand name that could be interpreted as implying any federal,
state or local government connection.
v) The solicitation does not specify a date or time period
when payment is due.
vi) The solicitation does not state that payment is
mandatory.
1)Provides that a violation of these solicitation requirements is a
misdemeanor punishable by up to six months in jail or a fine of up
to $2500 or both. (BPC Id.)
2)Provides a private right of action with damages to any person harmed
as a result of a violation of these solicitation requirements. (BPC
Id.)
3)Defines "conspicuous" disclosure or "conspicuously" displayed as not
less than 12-point boldface font type in capital letters that is at
least 2-point boldface font type sizes larger than the next largest
print on the envelope, outside cover or wrapper and in contrasting
type, layout, font or color in a manner that clearly calls attention
to the language. (BPC Id.)
4) Prohibits the following unfair methods of competition and unfair or
deceptive acts or practices undertaken by any person in a
transaction intended to result or which results in the sale or
lease of goods or services to any consumer:
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a) Representing that goods or services have sponsorship,
approval, characteristics, ingredients, uses, benefits, or
quantities which they do not have or that a person has a
sponsorship, approval, status, affiliation, or connection which
he or she does not have.
b) Advertising or promoting any event, presentation, seminar,
workshop, or other public gathering regarding veterans' benefits
or entitlements that does not include the following statement in
the same type size and font as the term "veteran" or any
variation of that term: "I am not authorized to file an initial
application for Veterans' Aid and Attendance benefits on your
behalf, or to represent you before the Board of Veterans' Appeals
within the United States Department of Veterans Affairs in any
proceeding on any matter, including an application for such
benefits. It would be illegal for me to accept a fee for
preparing that application on your behalf." Requires statement
to be disseminated, both orally and in writing, at the beginning
of any event, presentation, seminar, workshop, or public
gathering regarding veterans' benefits or entitlements.
c) Advertising or promoting any event, presentation, seminar,
workshop, or other public gathering regarding veterans' benefits
or entitlements which is not sponsored by, or affiliated with,
the United States Department of Veterans Affairs, the California
Department of Veterans Affairs, or any other congressionally
chartered or recognized organization of honorably discharged
members of the Armed Forces of the United States, or any of their
auxiliaries that does not include the following statement, in the
same type size and font as the term "veteran" or the variation of
that term: "This event is not sponsored by, or affiliated with,
the United States Department of Veterans Affairs, the California
Department of Veterans Affairs, or any other congressionally
chartered or recognized organization of honorably discharged
members of the Armed Forces of the United States, or any of their
auxiliaries. None of the insurance products promoted at this
sales event are endorsed by those organizations, all of which
offer free advice to veterans about how to qualify and apply for
benefits." The statement must be disseminated, both orally and
in writing, at the beginning of any event, presentation, seminar,
workshop, or public gathering regarding veterans' benefits or
entitlements. (Civil Code § 1170 (a)(5) and (25))
1)Provides that any person who falsely represents himself or herself as
a veteran or ex-serviceman of any war in which the United States was
engaged, in connection with the soliciting of aid or the sale or
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attempted sale of any property, is guilty of a misdemeanor.
Provides that any person who falsely claims, or presents himself or
herself, to be a veteran or member of the Armed Forces of the United
States, with the intent to defraud, is guilty of a misdemeanor.
(Penal Code (PC) § 532b (a) and (b))
2)Provides that any person who solicits or attempts to solicit or
receives money or property of any kind for a charitable, religious
or eleemosynary purpose and who, directly or indirectly, makes,
utters, or delivers, either orally or in writing, an unqualified
statement of fact concerning the purpose or organization for which
the money or property is solicited or received, or concerning the
cost and expense of solicitation or the manner in which the money or
property or any part thereof is to be used, which statement is in
fact false and was made, uttered, or delivered by that person either
willfully and with knowledge of its falsity or negligently without
due consideration of those facts which by the use of ordinary care
he or she should have known, is guilty of a misdemeanor, and is
punishable by imprisonment in the county jail for not more than one
year, by a fine not exceeding five thousand dollars ($5,000), or by
both that imprisonment and fine. (PC § 532d)
This bill:
1) Prohibits the use of a seal, emblem, insignia, trade or brand name
or any other term, symbol or content that could be interpreted or
construed as implying federal, state or local government, military
veteran entity or military or veteran service connection approval
or endorsement of any product or service. Clarifies that any
product or service includes but is not limited to any financial
product, goods or services by any means including a mailing,
electronic message, Internet website, periodical or television
commercial disseminated in this state.
2) Provides that any nongovernmental person, firm, corporation or
association may only use a seal as described above if the
nongovernmental entity has a direct connection with, the approval
of, or endorsement by the federal, state, local government,
military veteran or military service organization whose seal is
being used.
3) Provides that any nongovernmental person, firm, corporation or
association may solicit the purchase of or payment for a service,
or solicit contributions or membership fees through a mailing,
electronic message, Internet website, periodical or television
commercial using a seal as described above according to
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requirements in current law for a solicitation.
4) Provides that, for purposes of a television commercial
solicitation, the disclosure requirements under current law for
mailed solicitations apply and the following must be disclosed at
the top of the television screen for the entire duration of the
commercial: "THIS PRODUCT OR SERVICE HAS NOT BEEN APPROVED OR
ENDORSED BY ANY GOVERNMENT AGENCY, AND THIS OFFER IS NOT BEING MADE
BY AN AGENCY OF THE GOVERNMENT."
FISCAL EFFECT: Unknown. This bill is keyed fiscal by Legislative
Counsel.
COMMENTS:
1. Purpose. This measure is co-sponsored by California Advocates for
Nursing Home Reform (CANHR), AMVETS - Department of California , VFW
- Department of California and the Vietnam Veterans of America -
California State Council . According to the Author, "as our service
men and women return from deployment and our veteran population
increases, some unscrupulous businesses and nongovernmental
entities are targeting veterans and increasingly trying to sell
their products or services or promote events by appearing to be
connected to the military". The Author states that these entities
establish a connection to the military by featuring military
emblems or military department insignias on promotional materials
and websites without receiving permission.
2. Scams on Seniors and Veterans. This bill seeks to protect
consumers from potentially being defrauded into purchasing services
or goods based on the use of certain identifying seals and emblems
that imply connection to a military or veterans group. California
is currently home to over 2 million veterans and large numbers of
elder veterans. According to the Center of Excellence on Elder
Abuse and Neglect, part of the UC Irvine Program in Geriatrics,
older people are often targeted by unscrupulous businesses and
individuals because they generally have more resources available
through pensions, retirement assets, Social Security or property.
The Center notes that businesses use deceptive marketing and sales
tactics to appeal to elders, including the use of patriotic logos
and/or military insignia to appeal to elders' sense of patriotism
or trust in government to sell a product or service. One common
example of a product these agents may try to sell seniors is a
reverse mortgage, which allows persons 62 years of age of older to
convert home equity into tax-free monthly income, or a lump sum
cash payment. In a conventional "forward" mortgage, the borrower
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makes payments to the lender so that debt decreases and equity
increases. In a "reverse" mortgage, the lender makes payments to
the borrower so that debt increases and equity decreases. The
senior (or his or her estate) then does not repay the loan until
the last borrower dies, sells the home, or moves out. The reverse
mortgage is a sensible financial tool for many seniors in that it
allows them to stay in their homes, provides them with a
supplemental income or needed cash, and eliminates monthly mortgage
payments. But they also can include extremely high costs and may
not provide the senior with the desired benefit.
The U.S. Senate Special Committee on Aging recently heard testimony
about a rise in predatory practices aimed at aging veterans.
Businesses may charge veterans upfront monies for services that
they claim will assist veterans in receiving pension funds or aid
they are due. Testimony included anecdotes from several states
about veterans falling prey to unethical businesses, including a
California veteran who received services from an organization
promising to help file a claim for Aid and Attendance benefits
(which are paid to veterans, veteran spouses or surviving spouses
who need financial help for in-home care, to pay for an assisted
living facility or a nursing home) in order to live at an
assisted-living facility. The veteran was told he had to pay
$1,700 in advance to complete the paperwork which would allow him
to receive a monthly benefit of $1,800. Advocates state that these
organizations may not have veterans' and their families' interests
in mind and may not even be able to provide accurate information
about navigating the system to receive benefits veterans are
eligible for.
The Federal Trade Commission (FTC) and federal Consumer Financial
Protection Bureau (CFPB) recently issued a "buyer beware"
notification to consumers about potentially deceptive mortgage ads
targeting veterans and older Americans. The organization advised
consumers to be on the lookout for mortgage advertisements with
official-looking seals or logos that imply some kind of government
status or connection to the Department of Veterans Affairs (VA) and
specifically warned that advertisers may use military or veteran
status as a way to approach them.
3.Similar and Related Previous Legislation. SB 1170 (Leno, Chapter
653, Statutes of 2012) expands consumer protections governing the
sale of insurance to any person 65 years of age or older, and adds
specific protections for senior veterans.
SB 1184 (Corbett, Chapter 222, Statutes of 2012) prohibits an
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insurance agent from providing assistance to a senior in obtaining
veterans benefits through government programs, unless the agent
maintains procedural safeguards designed to ensure that the agent
or broker transacting insurance has no direct financial incentive
to refer the policyholder or purchaser to any government benefits
program.
SB 180 (Corbett, Chapter 79, Statutes of 2011) prohibits a person
from charging or receiving an unreasonable fee to prepare, aid or
advise certain persons in procuring, maintaining or securing public
social services, including activities and functions administered or
supervised by the United States Department of Veterans Affairs or
the California Department of Veterans Affairs, including pension
benefits.
AB 75 (Hill, Chapter 269, Statutes of 2011) specified disclosure
requirements for solicitations that could be construed or
interpreted as involving a governmental entity.
SB 1240 (Figueroa, Chapter 319, Statutes of 2002) specified that
solicitations by e-mail and on Internet websites shall be governed
by the same state laws regulating mail solicitations using words or
symbols that can potentially cause a misimpression of a state or
local governmental connection with the solicitations.
AB 532 (Morrow, Chapter 348, Statutes of 1993) conformed California
law to Federal law prohibiting certain mail from nongovernmental
entities to contain any term or symbol, as specified, that
reasonably could be interpreted or construed as implying any
federal government connection, approval, or endorsement.
4. Arguments in Support. The sponsors and veterans organizations
write in support of this bill, noting that it is important to
address the misleading advertising used by some unscrupulous
individuals and businesses who target veterans by claiming to be
affiliated with the military, the Veterans Administration or a
veterans service organization.
NOTE : Double-referral to Senate Rules Committee second.
SUPPORT AND OPPOSITION:
Support:
California Advocates for Nursing Home Reform (CANHR), Co-Sponsor
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AMVETS - Department of California, Co-Sponsor
VFW - Department of California, Co-Sponsor
Vietnam Veterans of America - California State Council, Co-Sponsor
American Legion - Department of California
California Association of County Veterans Service Officers
California State Commanders Veterans Council
Opposition:
None on file as of April 9, 2013
Consultant: Sarah Mason