BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2654|
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THIRD READING
Bill No: AB 2654
Author: Hill (D)
Amended: 6/15/10 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 6-0,
6/21/10
AYES: Negrete McLeod, Aanestad, Calderon, Correa, Florez,
Yee
NO VOTE RECORDED: Wyland, Oropeza, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 43-24, 4/26/10 - See last page for vote
SUBJECT : Solicitations
SOURCE : Author
DIGEST : This bill specifies requirements for
solicitations that could be construed or interpreted as
involving a governmental entity, including certain
disclosures on the front and back of every page of the
solicitation, establishes penalties for violating specified
disclosure requirements, and makes various technical
changes.
ANALYSIS :
Existing law:
CONTINUED
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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 state or local government connection,
approval or endorsement, unless:
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.
B. The solicitation meets both of the following
requirements:
(1) The solicitation bears on its face, in
conspicuous and legible type in contrast by
typography, layout, or color with other type on
its face, 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."
(2) In the case of a mail solicitation, the
envelope or outside cover or wrapper in which the
matter is mailed bears on its face in capital
letters and in conspicuous and legible type, the
following notice: "THIS IS NOT A GOVERNMENT
DOCUMENT."
3. Requires that any business that solicits the purchase
of, or payment for, a service by means of an unsolicited
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mailing that offers to assist the recipient in dealing
with a state or local governmental agency to do both of
the following:
A. State on the envelope and in the mailing that it
is not a governmental agency and is not associated
with the governmental agency referenced.
B. Include in the mailing the contact information for
the governmental agency referenced.
4. Provides, however, that a business does not have to meet
the requirements of item # 3 above, if either or the
following requirements have been met:
A. The business has an expressed connection with, or
the approval or endorsement of, a state or local
governmental entity as permitted by law.
B. The business has an "established business
relationship," as defined by law, with the recipient.
This bill:
1. Makes various technical changes.
2. Defines "conspicuous" or "conspicuously" as displayed
apart from the other print on the page, envelope,
outside cover or wrapper, in at least 12-point boldface
font, in capital letters, that is at least 2-point
boldface font sizes larger than the next largest print
and in a contrasting type, layout, font, or color in a
manner that clearly calls attention to the language.
3. Adds "emblem" to the list of prohibited items contained
within a solicitation that imply connection to a
government entity.
4. Specifies that the following disclosure currently
required must also be conspicuously displayed on the
front and back of every page of a solicitation or
mailing: "THIS PRODUCT OR SERVICE HAS NOT BEEN APPROVED
OR ENDORSED BY ANY GOVERNMENT AGENCY, AND THIS OFFER IS
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NOT BEING MADE BY AN AGENCY OF THE GOVERNMENT."
5. Specifies that the statement currently required, that
the business is not a governmental agency and is not
associated with the governmental agency referenced, must
also be displayed conspicuously and immediately below
each portion of the solicitation that could be construed
to specify an amount due and payable to the recipient.
Removes the requirement for a solicitation to include
the contact information for the governmental agency
required.
6. Prohibits disclosures from preceding, following or
surrounding language, words, symbols, terms or other
content that result in disclosures not being conspicuous
or that introduce, modify, qualify or explain the text
of these disclosures.
7. Specifies that a solicitation cannot use a trade or
brand name that implies state or local government
connection, approval, or endorsement, as specified.
8. Specifies that no solicitation can state or imply
mandatory payment required is by law. Specifies that no
solicitation can state or imply that penalties or
consequences will occur if payment is not made to the
soliciting nongovernmental person, firm, corporation or
association.
9. Makes a violation of this law a misdemeanor punishable
by imprisonment in a county jail, up to six months, or a
fine, up to $2,500, or both.
10.Establishes remedies up to three times the amount
solicited for any person harmed as a result of a
violation.
Background
There are many unscrupulous businesses that reach out to
consumers and business owners, offering to provide services
as a third party between the consumer or business owner and
a government entity. Some even go so far as to mail
solicitations to consumers and business owners which are
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disguised as government forms or documents requiring
payment. The majority of these entities target consumers
and businesses with mandatory registrations or document
filings with government entities such as homeowners filing
property tax exemptions with a local county assessor's
office or businesses filing limited liability company
documents with the Secretary of State's Office. Examples
of misleading statements include representations that a fee
is required in order to receive a homeowners' exemption, or
that the advertised service is connected with any
government entity. One specific example highlighted by the
Secretary of State's Office involved letters sent to
California corporations directing them to submit $495 and a
completed form to a private company named "Business Filings
Division" in order to dissolve their business entity.
In one more publicized recent example of deceptive
solicitations, a San Diego County man plead guilty to
charges of conspiracy to commit wire fraud and money
laundering connected to his creation of a business
specifically designed to fraudulently sell loan
modification services to homeowners who were delinquent in
their monthly mortgage payments. The company mailed
solicitations throughout the county advising homeowners
that it employed highly trained staff and had a direct
connection to the United States Treasury. Over 300
homeowners paid between $2,500 and $3,000 to the company
between April and July 2009, which was used to continue to
operate the company and pay its principals and did not
result in any services to homeowners.
In response to consumer and business complaints about
deceptive solicitations, the Office of the Secretary of
State dedicated a webpage to inform consumers about these
mailings and clarify, "the requests are not being made by
the California Secretary of State's office and are not
being made by or on behalf of any governmental entity.
Although a business entity can use an intermediary to
submit filings and fees to our office, no business is
required to go through another company in order to file its
documents with the Secretary of State's office."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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SUPPORT : (Verified 8/4/10)
Consumer Federation of California
ARGUMENTS IN SUPPORT : According to the author, this bill
stems from constituent complaints about receiving what
appear to be official government documents warning of
penalties if the recipient does not remit a specified
payment and is the product of his "There Oughta Be A Law
Contest." The author states that "existing law provides
limited protections against fraudulent or deceptive
business solicitations and mailings that imply official
government status." The Author goes on to note, "Deceptive
solicitors follow the letter of the law by including a
disclosure statement buried deep in the communication
within 'fine print' but many of these advertisements look
official and appear to be from the State of California."
The author also states that requiring disclosure of
nongovernmental status at the top of the first page of a
solicitation will avoid deception.
ASSEMBLY FLOOR :
AYES: Ammiano, Beall, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer,
Fong, Fuentes, Galgiani, Hall, Hayashi, Hernandez, Hill,
Huber, Huffman, Jones, Lieu, Bonnie Lowenthal, Ma,
Mendoza, Monning, Nava, Portantino, Ruskin, Saldana,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada
NOES: Adams, Anderson, Tom Berryhill, Blakeslee, Conway,
DeVore, Gaines, Garrick, Gilmore, Hagman, Harkey,
Jeffries, Knight, Logue, Miller, Nestande, Niello,
Nielsen, Norby, Silva, Smyth, Audra Strickland, Tran,
Villines
NO VOTE RECORDED: Arambula, Bass, Bill Berryhill,
Bradford, Cook, Emmerson, Fletcher, Fuller, Furutani, V.
Manuel Perez, Salas, John A. Perez, Vacancy
JJA:mw 8/4/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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