BILL ANALYSIS Ó
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair S
2013-2014 Regular Session B
2
7
2
SB 272 (Corbett)
As Amended April 8, 2013
Hearing date: April 30, 2013
Business and Professions Code
AA/NM:mc
ADVERTISING AND SOLICITATIONS:
GOVERNMENT AND MILITARY ENDORSEMENTS
HISTORY
Source: California Advocates for Nursing Home Reform; AMVETS -
Department of California; Veterans of Foreign Wars -
Department of California; Vietnam Veterans of America
- California State Council
Prior Legislation: SB 1170 (Leno) - Ch. 653, Stats. 2012
SB 1184 (Corbett) - Ch. 222, Stats. 2012
SB 180 (Corbett) - Ch. 79, Stats. 2011
AB 167 (Cook) - Ch. 69, Stats. 2011
AB 75 (Hill) - Ch. 269, Stats. 2011
SB 1240 (Figueroa) - Ch. 319, Stats. 2002
AB 532 (Morrow) - Ch. 348, Stats. 1993
Support: American Legion - Department of California; California
Association of County Veterans Service Officers;
California State Commanders Veterans Council; Consumer
Federation of California
Opposition: None known
(More)
SB 272 (Corbett)
PageB
KEY ISSUE
SHOULD THE CRIME OF ILLEGAL USE OF A GOVERNMENT SEAL, EMBLEM,
INSIGNIA, TRADE OR BRAND NAME OR OTHER SYMBOL BE EXPANDED TO INCLUDE
(1) MILITARY VETERAN ENTITY SYMBOLS; (2) SYMBOLS USED TO ADVERTISE
OR PROMOTE EVENTS; AND (3) SYMBOLS DISPLAYED IN TELEVISION
COMMERCIALS, PERIODICALS OR BY ANY OTHER MEANS?
PURPOSE
The purpose of this bill is to expand the existing crime
pertaining to the commercial use of government emblems to
include (1) specified symbols of a military veteran entity; (2)
specified symbols used to advertise or promote events,
presentations, seminars, workshops or other public gatherings;
and (3) specified symbols displayed in television commercials,
periodicals or by any other means.
Existing law prohibits an individual from falsely representing
himself or herself as a veteran, ex-serviceman or member in
connection with the soliciting of aid, the sale or attempted
sale of any property or the intent to defraud. This section
does not apply to face-to-face solicitations involving less
than ten dollars. Violation of this prohibition is a
misdemeanor. (Cal. Pen. Code § 532 subd. (b).)
Existing law prohibits false or misleading statements or
advertisements in the sale or solicitation of goods or
services. Violation of this prohibition is a misdemeanor
punishable by imprisonment in a county jail not exceeding six
months, or by a fine not exceeding two thousand five hundred
dollars ($2,500), or by both fine and imprisonment. (Bus. &
Prof. Code § 17500.)
Existing law establishes that is unlawful for any
nongovernmental person or entity to solicit information, or to
(More)
SB 272 (Corbett)
PageC
solicit the purchase of or payment for a product or service by
means of a mailing, electronic message, or Internet Web site
that contains a seal, emblem, insignia, trade or brand name
that reasonably could be interpreted or construed as implying
any federal, state, or local government connection. (Bus. &
Prof. Code § 17533.6 subd. (a).)
Existing law establishes two distinct exceptions to this
prohibition against solicitations:
(1) The nongovernmental entity has an expressed connection
with, or approval or endorsement of, a federal, state, or
local government entity, if permitted by other provisions of
law. (Bus. & Prof. Code § 17533.6 subd. (a)(1).)
(2) The solicitation meets all of the following requirements:
The solicitation conspicuously<1> displays the
following disclosure on the front and back of every page
of the solicitation as well as immediately below each
portion of the solicitation that reasonably could be
construed to specify an amount due and payable by the
recipient: "This product or service has not been approved
or endorsed by any governmental agency, and this offer is
not being made by an agency of the government." (Bus. &
Prof. Code § 17533.6 subd. (a)(2)(A).)
In the case of a mailed solicitation, the front of the
envelope, outside cover, or wrapper in which the matter
is mailed, as well as immediately below the area of the
-------------------------
<1> "For purposes of this section, 'conspicuous' or
'conspicuously' means displayed apart from other print on the
page, envelope, outside cover, or wrapper and in 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 page, envelope, outside cover, or wrapper and in
contrasting type, layout, font, or color in a manner that
clearly calls attention to the language." (Cal. Bus. & Prof.
Code § 17533.6 subd. (d).)
(More)
SB 272 (Corbett)
PageD
envelope, outside cover, or wrapper that is used for a
return address, conspicuously, displays the following
disclosure: "This is not a government document." (Bus. &
Prof. Code § 17533.6 subd. (a)(2)(B).)
Disclosures shall not be preceded, followed, or
surrounded by symbols, terms, or other content that
result in the disclosures not being conspicuous or
introduce, modify, qualify, or explain the text of those
disclosures. (Bus. & Prof. Code § 17533.6 subd.
(a)(2)(C).)
The solicitation shall not use a title or trade or
brand name that reasonably could be interpreted or
construed as implying any federal, state, or local
government connection, approval, or endorsement.<2>
(Bus. & Prof. Code § 17533.6 subd. (a)(2)(D).)
The solicitation shall not specify a date or time
period when payment to the soliciting nongovernmental
person, firm, corporation, or association is due,<3>
unless the solicitation displays, in the same sentence as
the date or time period specified, how the information
being solicited will be used, a description of the
product or service that is to be provided and to what
government agency it shall be rendered, or how the
solicited funds or membership fees will be used, as
applicable. (Bus. & Prof. Code § 17533.6 subd.
(a)(2)(E).)
--------------------------
<2> Including, but not limited to, use of the term "agency,"
"administrative," "assessor," "board," "bureau," "collector,"
"commission," "committee," "department," "division,"
"recorder," "unit," "federal," "state," "county," "city," or
"municipal," or the name or division of any government agency.
(Bus. & Prof. Code § 17533.6 subd. (a)(2)(D).)
<3> Including, but not limited to, use of the terms "due date,"
"due now," "remit by," "remit immediately," "payment due," "pay
now," "pay immediately," or "pay no later than." (Bus. & Prof.
Code § 17533.6 subd. (a)(2)(E).)
(More)
SB 272 (Corbett)
PageE
The solicitation shall not state or imply that payment
is mandatory or required by law, or state or imply that
consequences will occur if payment is not made to the
soliciting nongovernmental person, firm, corporation, or
association. (Bus. & Prof. Code § 17533.6 subd.
(a)(2)(F).)
Existing law provides that notwithstanding Section 17534,<4>
any violation of Business and Professions Code section 17533.6
is a misdemeanor punishable by imprisonment in a county jail
not exceeding six months, or by a fine not exceeding two
thousand five hundred dollars ($2,500), or by both that fine
and imprisonment. (Bus. & Prof. Code § 17533.6 subd. (b).)
This bill would expand this provision to:
prohibit the use of any "military veteran entity or
military or veteran service organization" seal, emblem,
insignia, trade or brand name or other symbol ("specified
symbols");
prohibit the use of specified symbols by any means,
including but not limited to, a mailing, electronic
message, Internet Web site, periodical or television
commercial disseminated in this state;
prohibit the use of specified symbols to imply a
connection, approval or endorsement of any product or
service, including, but not limited to, any financial
product, good or service; and
prohibit the use of specified symbols in advertisements
of promotions for an event, presentation, seminar, workshop
or other public gathering unless the nongovernmental entity
has an express connection with or approval or endorsement
of the government or military veteran entity.
--------------------------
<4> Any person, firm, corporation, partnership or association or
any employee or agent thereof who violates this chapter is
guilty of a misdemeanor. (Bus. & Prof. Code §17534.)
(More)
SB 272 (Corbett)
PageF
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation
relating to conditions of confinement. On May 23, 2011, the
United States Supreme Court ordered California to reduce its
prison population to 137.5 percent of design capacity within two
years from the date of its ruling, subject to the right of the
state to seek modifications in appropriate circumstances.
Beginning in early 2007, Senate leadership initiated a policy to
hold legislative proposals which could further aggravate the
prison overcrowding crisis through new or expanded felony
prosecutions. Under the resulting policy known as "ROCA" (which
stands for "Receivership/ Overcrowding Crisis Aggravation"), the
Committee held measures which created a new felony, expanded the
scope or penalty of an existing felony, or otherwise increased
the application of a felony in a manner which could exacerbate
the prison overcrowding crisis. Under these principles, ROCA
was applied as a content-neutral, provisional measure necessary
to ensure that the Legislature did not erode progress towards
reducing prison overcrowding by passing legislation which would
increase the prison population. ROCA necessitated many hard and
difficult decisions for the Committee.
In January of 2013, just over a year after the enactment of the
historic Public Safety Realignment Act of 2011, the State of
California filed court documents seeking to vacate or modify the
federal court order issued by the Three-Judge Court three years
earlier to reduce the state's prison population to 137.5 percent
of design capacity. The State submitted in part that the, ". .
. population in the State's 33 prisons has been reduced by over
24,000 inmates since October 2011 when public safety realignment
went into effect, by more than 36,000 inmates compared to the
2008 population . . . , and by nearly 42,000 inmates since 2006
. . . ." Plaintiffs, who opposed the state's motion, argue in
part that, "California prisons, which currently average 150% of
capacity, and reach as high as 185% of capacity at one prison,
continue to deliver health care that is constitutionally
(More)
SB 272 (Corbett)
PageG
deficient." In an order dated January 29, 2013, the federal
court granted the state a six-month extension to achieve the
137.5 % prisoner population cap by December 31st of this year.
In an order dated April 11, 2013, the Three-Judge Court denied
the state's motions, and ordered the state of California to
"immediately take all steps necessary to comply with this
Court's . . . Order . . . requiring defendants to reduce overall
prison population to 137.5% design capacity by December 31,
2013."
The ongoing litigation indicates that prison capacity and
related issues concerning conditions of confinement remain
unresolved. However, in light of the real gains in reducing the
prison population that have been made, although even greater
reductions are required by the court, the Committee will review
each ROCA bill with more flexible consideration. The following
questions will inform this consideration:
whether a measure erodes realignment;
whether a measure addresses a crime which is directly
dangerous to the physical safety of others for which there
is no other reasonably appropriate sanction;
whether a bill corrects a constitutional infirmity or
legislative drafting error;
whether a measure proposes penalties which are
proportionate, and cannot be achieved through any other
reasonably appropriate remedy; and
whether a bill addresses a major area of public safety
or criminal activity for which there is no other
reasonable, appropriate remedy.
COMMENTS
1. Need for This Bill
(More)
SB 272 (Corbett)
PageH
According to the author:
As our service members return from deployment and our
veteran population increases, some businesses and
nongovernmental entities are increasingly trying to
sell their products or services or promote events by
appearing to be connected to the military.
This bill would increase consumer protections against
deceptive advertising by expanding current law to
include on the list of prohibited actions, the
advertising or promotion of any event or presentation
using any seal, emblem or insignia that could
reasonably be construed as implying any federal, state
or local government connection or endorsement of any
financial product, goods or services.
In line with the punishment in current law, a
violation of this provision is considered a
misdemeanor crime punishable by up to six months in
county jail and/or a fine of up to $2,500. This bill
would also continue to provide for damages equal to
three times the amount solicited.
2. Background
This bill is intended to address the use of seals, emblems or
insignia, commonly viewed as trademarks. Trademarks, governed
by federal statutes, state statutes and common law, are viewed
as a benefit to consumers in that "the use of trademarks is said
to lower the costs associated with shopping for goods and
services."<5> Trademarks also serve to reduce "consumer
confusion by helping trademark owners to distinguish their goods
and services ? Indeed, states have a strong public policy
interest in preventing private individuals and companies from
using marks that improperly suggest a connection with a
---------------------------
---------------------------
<5> Sharon Sandeen, Preserving Public Trust in State-Owned
Intellectual Property: A Recommendation for Legislative Action,
32 McGeorge L. Rev. 385, 389 (2001).
(More)
SB 272 (Corbett)
PageI
(More)
SB 272 (Corbett)
PageJ
government entity."<6>
AB 532 (Morrow) was enacted in 1993, adding Section 17533.6 to
the Business and Professions Code to address these issues. The
bill was sponsored by the County of San Diego in response to
perceived widespread use of "official looking" solicitations
bearing names or letterhead with seals to entice consumers to
pay for services provided at no charge by government
agencies.<7> Those in support of AB 532 asserted that such
mailings particularly impacted elderly and disabled residents
who believed the information in the mailings was coming from the
government and paid unnecessary fees for free government
services.<8>
3. Addressing Fraud Aimed at Veterans
The Veteran's Affairs (VA) enhanced pension with aid and
attendance program, commonly referred to as Aid and Attendance
or A&A, is designed to provide an elderly veteran and his or her
spouse with a pension for living expenses he, she or they cannot
afford.<9> According to the United States Senate Special
Committee on Aging, there is a growing industry of predatory
financial planners and attorneys who take advantage of loopholes
in the design and administration of the A&A program.<10> A
"pension poacher" persuades a senior veteran that he or she is
entitled to a pension for which he or she would not otherwise
qualify, then sells him or her an inappropriate financial
---------------------------
<6> Id.
<7> Business and Professions Committee, AB 532 Bill Analysis,
June 28, 1993,
http://www.leginfo.ca.gov/pub/93-94/bill/asm/ab_0501-0550/ab_532_
cfa_930322_122303_sen_comm.
<8> Id.
<9> United States Senate Special Committee on Aging, Hearing to
Investigate Claims of Exploitation of Seniors Applying for VA's
Pension Plan, June 4, 2012,
http://www.aging.senate.gov/record.cfm?id=336928.
<10> Id.
(More)
SB 272 (Corbett)
PageK
instrument making him or her appear in need of assistance to the
federal government.<11> When the VA first began tracking
pension claims in 2009, there were 55,546 pension claims pending
each month.<12> By May, 2012 the number of monthly pension
claims had increased by nearly 75% to 74,987.<13>
In June 2012, the assistant director of the American Legion's
Veterans Affairs and Rehabilitation Division, testified in
Washington before the Senate Special Committee on Aging citing
examples of opportunistic organizations "seeking to worm their
way into the veterans elder-care industry."<14> American
Legion's testimony included one example from California in which
an organization promised a veteran assistance in filing a claim
for A&A benefits, asking for $1,700 in advance in order to
secure $1,800 in monthly benefits for the veteran. In February
of this year, the Federal Trade Commission issued a warning
advising veterans and their families to "be wary of dishonest
advisers offering "free" help with paperwork for pension
claims."<15>
These practices, in addition to businesses practices targeting
veterans through deceptive mortgage ads<16> are the basis for
this bill. In an effort to address these concerns, this bill
seeks to expand existing law to also prohibit use of specified
symbols to imply military veteran entity or military or veteran
service connection approval or endorsement of any product or
service. This bill also specifically refers to financial
products to address the increase in the prevalence of such
schemes.
---------------------------
<11> Id.
<12> The American Legion, Predatory Practices Target Veterans,
June 7, 2012 (2009 data represents October, 2009)
http://www.legion.org/veteransbenefits/181911/predatory-practices
-target-veterans.
<13> Id.
<14> Id.
<15> Federal Trade Commission, Tips for Consumers: FTC Warns
Veterans: Be Wary of 'Free' Pension Advice, February 25, 2013.
<16> Senate Committee on Business, Professions and Economic
Development, SB 272, bill analysis, April 15, 2013.
(More)
SB 272 (Corbett)
PageL
(More)
4. Means of Implying Affiliation
The original provision specifically prohibited nongovernmental
entities from engaging in solicitations by means of a mailing.
In 2002, the provision was amended by SB 1240 (Figueroa) to
include solicitations by means of an electronic message or
Internet Web site.<17> This bill seeks to again expand the
definition of the crime, this time creating a non-exhaustive
list of means by which this activity is prohibited. This bill
would restrict use of specified symbols implying a connection to
a governmental entity or military or veterans organization "by
any means, including, but not limited to, a mailing, electronic
message, Internet Web site, periodical or television commercial
disseminated in the state."
According to representatives of the author, television
commercials are specifically mentioned in this bill in response
to an increase in the prevalence of television advertisements
using specified symbols to imply a connection to a military or
veterans organization. However, broadening this provision's
application to "any means" would appear to also include mediums
such as flyers, YouTube videos and social media memes. Members
may wish to consider the implications of expanding this
provision's reach in this manner in light of the fact that this
bill also would remove the provision's limiting language
regarding specific types of solicitation in subdivision (a),<18>
requiring instead that the individual imply connection with or
approval or endorsement of any product or service, including,
but not limited to, any financial product, goods or services.
SHOULD THIS LAW CONTINUE TO PROVIDE AN ENUMERATED LIST OF MEANS
OR BE AMENDED TO PROVIDE A NON-EXHAUSTIVE LIST?
---------------------------
<17> Senate Bill 1240, Chapter 319,
http://www.leginfo.ca.gov/pub/01-02/bill/sen/sb_1201-1250/sb_1240
_bill_20020903_chaptered.pdf.
<18> Exact language this bill seeks to remove: "to solicit
information, or to solicit the purchase or payment for a product
or service or to solicit the contribution of funds for a product
or service?" (SB 272, Section 1(a).)
(More)
SB 272 (Corbett)
PageN
5. Definition of Terms
This bill would distinguish between advertise<19> and
solicit<20> without defining this terminology. The Business and
Professions Code offers some indication as to how these terms
should be interpreted, but those definitions do not explicitly
apply to this provision.<21>
The distinction between an advertisement and a solicitation may
be important to a nongovernmental entity wishing to make use of
an existing exception to this provision. This exception,
allowing entities to use specified symbols as long as symbols
are accompanied by conspicuously displayed disclosures, applies
only to solicitations and not to advertisements. Thus, while a
---------------------------
<19> "Advertise or promote any event, presentation, seminar,
workshop or other public gathering?" (SB 272, Section 1(b).)
<20> "Solicit information, solicit the purchase of or payment
for a product or service, or solicit the contribution of funds
or membership fees?" (SB 272, Section 1(c).)
<21> "Solicitation" is defined elsewhere in the Business and
Professions Code as: "all forms of solicitation for
information-access services, including, but not limited to,
mailings, advertisements in newspapers and magazines,
advertisements broadcast by radio or television,
advertisements contained in home videos or appearing on movie
screens, telephone solicitations, and advertisements
transmitted over the Internet. 'Solicitation' does not include
simple listings in telephone directories provided those
listings are not accompanied by any advertising text." (Bus.
& Prof. Code § 17539.5 subd. (a)(11), for the purposes of §§
17539.5 - 17539.6.) "Unsolicited advertisement" is defined
elsewhere in the Business and Professions Code as: "any
material advertising the commercial availability or quality of
any property, goods, or services that is transmitted to any
person or entity without that person's or entity's prior
express invitation or permission. Prior express invitation or
permission may be obtained for a specific or unlimited number
of advertisements and may be obtained for a specific or
unlimited period of time." (Bus. & Prof. Code § 17538.43, for
the purposes of § 17538.43.)
SB 272 (Corbett)
PageO
solicitation may use a symbol if there is a disclaimer, this
would not be allowed for advertisements. A nongovernmental
entity using a specified symbol in an advertisement can only use
specified symbols with express connections or approval from the
government or military veteran organization.
SHOULD THIS BILL DEFINE "ADVERTISE" AND "SOLICIT" IN SUBSECTION
(F) IN ADDITION TO THE EXISTING DEFINITIONS OF "CONSPICUOUS" AND
"CONSPICUOUSLY" TO ENSURE COMPLIANCE?
***************