BILL ANALYSIS
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|Hearing Date:June 21, 2010 |Bill No:AB |
| |2076 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 2076Author:Salas
As Introduced: February 18, 2010 Fiscal:Yes
SUBJECT: Advertising: business location representations: floral and
ornamental products and services.
SUMMARY: Makes it unlawful for a provider or vendor of floral or
ornamental products or services, as defined, to misrepresent the
geographic location of its business, as specified.
Existing law, the Business and Professions Code:
1)Regulates advertising, generally, and makes it unlawful for any
person, firm, corporation or association, or any employee to make
any statement in any advertising which is untrue or misleading, and
which is known or, in the exercise of reasonable care, should be
known to be untrue or misleading.
2)Provides that unfair competition includes any unlawful, unfair or
fraudulent business act or practice and unfair, deceptive, untrue or
misleading advertising and other prohibited acts, as specified.
Existing law, the Civil Code:
1) Provides, among other things, that using deceptive representations
or designations of geographical origin in connection with goods or
services in a consumer transaction and misrepresenting the source,
sponsorship, approval, or certification of goods and services are
unlawful as unfair methods of competition and unfair or deceptive
acts or practices.
This bill:
1)Makes it unlawful for a provider or vendor of floral or ornamental
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products or services to misrepresent the geographic location of its
business by either:
a) Listing a local telephone number in any advertisement or
listing if both the following are met:
i) Calls to the telephone number are routinely forwarded or
otherwise transferred to a provider's or vendor's business
location that is different from the geographic location of the
business indicated in the advertisement or listing.
ii) The advertisement or listing does not identify the
true physical address, including the city and state of the
provider's or vendor's business.
b) Listing a fictitious business name or an assumed business name
in any advertisement or listing if both of the following are met:
i) The name of the business misrepresents the provider's or
vendor's geographic location;
ii) The advertisement or listing does not identify the
true physical address, including the city and state, of the
provider's or vendor's business.
2) States that this bill does not create or impose any duty or
obligation on a person other than a vendor or provider, as
specified.
3)Defines the following terms for purposes of the provisions above:
a) "Floral or ornamental products or services" to mean floral
arrangements, cut flowers, bouquets, potted plants, balloons,
floral designs, and related products and services.
b) "Local telephone number" to mean a specific telephone number
(area code and prefix) assigned for the purpose of completing
local calls between a calling party or station and any other
party or station within a designated exchange or all of its
designated local calling areas. The term would not include long
distance telephone numbers or 800, 888, or 900 exchange telephone
numbers listed in a local telephone directory.
FISCAL EFFECT: The Assembly Appropriations Committee analysis, dated
April 28, 2010, indicates potential minor non-reimbursable local costs
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for investigation and prosecution of violations, potentially offset by
fine revenue.
COMMENTS:
1.Purpose. This bill is sponsored by California State Floral
Association (Sponsor) in order to prohibit floral vendors from
misrepresenting their business location by adopting fictitious local
names and telephone numbers for advertising purposes or by omitting
the true physical address of their business in telephone listings.
The Sponsor states that the bill seeks to increase consumer
awareness, support economic activity in local communities, improve
sales tax collection and help encourage job retention and growth
within California's floral industry.
The Author states the following need for the bill:
California floral shops are often locally owned community based
businesses that rely on localized marketing to attract business.
They often use local names consistent with the communities they
serve such as "Lodi Florists." Flower buyers are unique as well.
They often call remotely and order and establish an amount they
are willing to spend or they order a set item (i.e. "Please give
me a bouquet for $50" or "I would like a dozen roses") purchased
sight unseen. The local flower shop has advertised and promoted
and their business is relying on trust and quality because often
the purchase is sight unseen.
Out of state call centers are taking advantage of this business
model to the detriment of California consumers and local floral
shops by advertising as a "local" shop, often using similar names
as the locally established shop and piggybacking on their
advertising and community relationships (i.e. A New Jersey based
company advertising as "Lodi Floral and Gift") with no local
presence except an ad in the phone book and an internet website
with a local phone number. Originally, this phenomena was
occurring in telephone advertising only but has now spread to the
internet. The result is consumers believe they are buying from
their local shop and receiving $50 worth of flowers, when they
are actually purchasing from a New Jersey based call center for
$50, the call center takes a cut, the wire service takes a cut
and the consumer gets $30 worth of flowers.
To add insult to injury, often dissatisfied customers come into
the local community based shop and complain about the poor
quality or skimpy order because they thought they purchased from
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"Lodi Florists." The local florist has to handle an unsatisfied
customer and not even get the benefit of the sale. This bill
establishes a simple compliance requirement that any floral
retailer that uses a local phone number provide address in the
advertisement.
2.Federal Trade Commission (FTC) Consumer Alert. In April 1998, the
FTC issued a consumer alert regarding absentee, "long-distance"
florists that mislead consumers into believing they are local
florists but are not:
Flowers are a great way to celebrate a birthday, cheer up a sick
friend, or simply brighten someone's day. Your local florist is
just a phone call away, or so you think. Some unscrupulous
telemarketing firms are posing as local florists, charging you
higher fees and taking business away from legitimate florists in
your town.
Here's how the deception works: A telemarketer takes out a bogus
listing in the white pages of your telephone directory. The
company may use your town's name in its own to make you believe
it's local. Or, name of a legitimate local florist may be listed
with a different local phone number.
When you call, you're unknowingly forwarded to an out-of-town
telemarketing operation. The telemarketer takes your order and
credit card information for payment, and forwards your order to
an area florist. The telemarketer pockets a processing fee and
usually a percentage of the sale as well. You don't realize
you've been scammed until you get higher than expected charges
from an out-of-town company on your credit card statement, or
learn that the flowers weren't delivered as ordered, or were
never delivered at all.
Following the FTC's consumer alert, Congress adopted a concurrent
resolution resolving that the FTC should exercise its broad
authority "to investigate businesses that are engaging in the
deceptive advertising practice of misrepresenting their geographic
location in telephone listings, Internet advertisements, and other
advertising media" (H. Con. Res. 318, 105th Congress, 2d Session,
August 1998).
3.23 Other States Have Enacted Similar Laws. The Sponsor writes that
23 states have enacted legislation similar to this measure to
prohibit deceptive telephone listings by absentee florists,
including: Arizona, Connecticut, Delaware, Florida, Illinois,
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Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, New Hampshire, New
Jersey, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota,
Tennessee, Texas, Virginia, and Washington.
4.Prior Legislation. This bill is the fourth bill introduced in the
last eleven years on this same issue. Each of the bills were
substantially the same. Each bill was vetoed by the Governor. In
vetoing the latest bill, AB 1282 in 2007, the Governor stated in
part, "In today's global economy, it is unreasonable to limit
out-of-area businesses from using local names and telephone numbers.
In virtually every aspect of the economy, consumers are accustomed
to purchasing products from around the world via many methods." It
is unclear how the Sponsor and Author will address the Governor's
veto message .
AB 1282 (Salas, 2007) a nearly identical measure which was vetoed by
Governor Schwarzenegger.
AB 1074 (Nakano, 2002), also a substantially similar bill, was vetoed
by Governor Davis, who noted the same concerns as Governor
Schwarzenegger did in his veto of AB 1282 (Salas).
AB 1375 (House, 1999) a similar measure was also vetoed by Governor
Davis.
5. Arguments in Support. The Sponsor, California State Floral
Association, writes that California is the number one state for
flower sales and we have yet to put a similar statute on the books
in this state. Besides educating consumers and preventing
inappropriate advertising activities, the Sponsor believes that the
bill will result in increased sales tax revenues and job creation
and retention. The Sponsor states that when a $50 bouquet is
purchased from an out of state call center, studies show that on an
average $29 flows back to the local flower shop that makes the
delivery after the call center and wire service takes their
portion. Current sales tax law assesses sales tax collection on
the $29 transaction with the local floral shop, resulting in a 42%
reduction in sales tax. The Sponsor further states that studies by
the "Buy California marketing program" show that California
consumers prefer to purchase from local retailers and California
grown products, and this bill provides consumer the information
necessary to make informed decisions on their purchase.
6. Author's Amendments to be Taken in Committee. The Author is
proposing amendments to clarify the bill and further remove any
ambiguity. The amendments which will be proposed in Committee and
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are described below:
On page 2, revise lines 15 through 26 as follows:
(c) It is unlawful for a provider or vendor of floral or
ornamental products or services to misrepresent the geographic
location of its business by doing either of the following:
(1) Listing listing a local telephone number in any
advertisement or listing if both of the following criteria are
met:
(A) Calls to the telephone number are routinely forwarded or
otherwise transferred to a provider's or vendor's business
location that is different from the geographic location of the
business indicated in the advertisement or listing.
(B) The advertisement or listing does not identify unless the
advertisement identifies the true physical address, including the
city and state, of the provider's or vendor's business.
SUPPORT AND OPPOSITION:
Support: California State Floral Association
Opposition: None received as of June 15, 2010
Consultant:G. V. Ayers