Washington Report

Keeping Members Informed About Regulatory Issues

Contents
June 2000

STATE LEGISLATIVE UPDATE

We have more new laws than usual this month. For further information, contact Jerry Cerasale at 202-861-2423 or jcerasale@the-dma.org or Elizabeth Scanlon at 202-861-2418 or escanlon@the-dma.org.

Connecticut H.B. 5586 (Public Act 00-100, effective October 1, 2000) requires retailers who issue discount cards or devices to give written notice to consumers that information about them may be sold, leased, or relinquished to other persons, firms, or corporations; describe the purposes for which such information would be used, and include a form the consumer may use to prevent the retailer from selling, leasing, or relinquishing such information.

South Carolina H.B. 3509 (Act 305, effective May 17, 2000) makes it a felony to commit financial identity fraud by using another person's identifying information to access that person's financial records for one's own use or the use of a third party.

The new law also mandates the creation of a joint legislative commission to study personal information privacy issues, "to examine the relationship of information technology and privacy issues, and to seek to establish an appropriate balance which promotes the use of information for legitimate business purposes . . . while safeguarding the personal privacy rights of the citizens of South Carolina."

Maine S.P. 903/LD2355 (Public Law 581, effective August 11, 2000) eliminates language requiring the registration of automated telephone solicitors.

Maine H.P. 1855/LD2591 (Public Law 694, effective August 11, 2000) requires telephone marketers to obtain The DMA's Telephone Preference Service list twice a year and delete those consumers appearing on the list unless they have an established business relationship with them. Violation of the FTC's Telephone Sales Rule is a violation of Maine law, as well.

The law prohibits using a professional courier service to immediately obtain payment unless goods are delivered and may be inspected before payment is collected. Transcripts of automated calls must be kept for 24 months and be made available to the attorney general on request.

Tennessee S.B. 2995 (Public Chapter 670, effective July 1, 2000) states that a person who initiates unsolicited facsimile or e-mail messages to a recipient who has previously notified the initiator that he does not want to receive further unsolicited faxes or e-mail commits an unfair trade practice and will be subject to a civil penalty of between $100 and $500, if the initiator sends the e-mail as part of a pattern or practice of refusing to comply with the recipient's requests.

New Hampshire H.B. 1467 (ch. 187, effective October 1, 2000) requires any mail-order pharmacy located outside the state to register before shipping, mailing, or delivering prescription drugs to New Hampshire consumers. Mail-order pharmacies must: maintain a license in good standing from the state in which they are located; submit a registration application approved by the New Hampshire pharmacy board; and pay all appropriate registration fees (to be determined).

Colorado H.B. 1347 (ch. 203, effective August 4, 2000; however, The DMA requested and received a delayed effective date of October 3, 2000) prohibits the sponsor of a sweepstakes or contest from:

(1) requiring a person to pay money or any other consideration as a condition of winning a prize or as a condition of receiving, using, competing for, or obtaining a prize or information about a prize;

(2) representing that a person has won or unconditionally will be the winner of a prize, or leading a person to believe that he has won a prize, unless the person will be given the prize without obligation; the person will be notified at no expense within fifteen days of winning a prize; and the representation is not false, deceptive, or misleading;

(3) representing that a person has been specially selected in connection with a sweepstakes or contest, unless it is true;

(4) representing that a person may be or may become a winner of a prize or representing that the person, upon the satisfaction of some condition or the occurrence of some event, become the winner of a prize, unless disclosures are clearly and conspicuously made, including: the conditions that must be satisfied in order to be determined the winner; the fact that the person has not yet won; a "no purchase necessary" message; the retail value of each prize and the estimated odds of receiving each prize; any restrictions on the receipt of a prize; the deadline for submission of an entry; and the official rules.

The "no purchase necessary" message must be included in the official rules, set out in a separate paragraph, and printed in capital letters in contrasting type face not smaller than the largest type face used in the text of the official rules. If a person enters a sweepstakes or contest through a telephone call, the "no purchase necessary" message must be read to the person during the telephone call and prior to accepting any entry, purchase, or payment.

Sponsors may not represent that an entry accompanied by an order for products or services will have a greater chance to win than an entry not accompanied by such an order, nor may they penalize any entries that are not accompanied by an order. Sponsors may not imply that a person will have an increased chance of winning by making multiple or duplicate purchases, payments, or donations, or by entering a sweepstakes or contest more than once.

Sponsors are prohibited from implying that a prize notice is being delivered by any method other than bulk mail, unless that is the case, or otherwise misrepresent the manner in which the prize notice is delivered.

Washington S.B. 6373 (ch. 228, effective June 8, 2000) prohibits requiring any person eligible to receive a prize in a promotional contest to pay any consideration to participate in the contest or purchase any goods or thing of value from a business.

Florida has adopted an emergency rule, effective July 3, 2000, temporarily exempting from sales tax the sale of clothing, including by mail order. The exemption period is from July 29 through August 6, 2000, and applies to items selling for less than $100. Eligible mail-order sales include those transacted over the Internet, if the order is accepted by the mail-order company during the exemption period for immediate shipment. The exemption applies to orders shipped after August 6 if they were accepted during the exemption period.

"Acceptance of an order" is defined as when the mail order company has taken any action to fill the order for immediate shipment, including, but not limited to, placing an "in date" stamp on a mail order or assigning an order number to a telephone order.

An order is considered "for immediate shipment" notwithstanding backlogs, unavailable stock, or back orders if "delayed shipment" has not been requested by the customer.

Shipping and handling charges are included as part of the sales price of an item. If multiple items are shipped on a single invoice, the shipping and handling charges must be proportionally allocated to each item and separately identified on the invoice to determine which items qualify for the temporary exemption.

Michigan H.B. 5850 requires computer network service providers to establish procedures that limit or restrict the use of its equipment in Michigan to send unsolicited e-mail advertisements without the consent of the computer service customer. All such procedures must be submitted to the attorney general's office for review and approval. The attorney general is authorized to promulgate rules to implement the proposed law.

Michigan H.B. 5863 deletes from existing law language allowing insurance agents to access motor vehicle registrant information for purposes of claims investigations or underwriting.

New York S.B. 7878, the "Personal Privacy Protection Act of 2001", requires those who obtain customer lists for unsolicited direct advertising to notify those customers of the option of deleting their names, addresses, or telephone numbers from mail or telephone lists. Mail order sellers must present the disclosure in writing; telephone sellers must disclose the opt-off option at the beginning of the call. Marketers must then maintain "exclusion lists" of those consumers who do not wish to receive unsolicited mail or telephone advertisements. Marketers are not required to provide the disclosure if they are contacting a consumer with whom they have an existing business relationship.

Any business that sells, rents, exchanges, or releases personal identification information to other parties for commercial purposes must, upon initial contact with a consumer, and at least annually thereafter, provide clear and conspicuous notice of the practice of selling or otherwise releasing personal information and clearly inform the consumer of the option to prohibit such sale or other release. Marketers must also provide written notice to each consumer at least 15 days before any sale, rental, or release of personal identification to any other person.

The bill requires telecommunications carriers to obtain a subscriber's affirmative, informed consent before they may rent, release, or disclose personally identifiable subscriber information to a third party. Such consent may be obtained only if the carrier has notified the subscriber in writing of the kind of personally identifiable information the carrier will collect and the intended use of the information; the nature, frequency, and purpose of any disclosure of that information; and the persons to whom disclosure may be made. If personally identifiable information is made available on a continuing basis, carriers must provide written notice to the subscriber at the time of, or before, the first release or transfer of information and annually thereafter.

New York S.B. 7937 requires the informed, written consent of the consumer before a business may release personal information to a third party.

New York S.B. 8021, entitled the "Cyberspace Privacy Protection Act", requires commercial enterprises that disseminate personal information obtained through online profiling to first obtain the affirmative, informed consent of the information subject.

New York A.B. 7641, the "Telemarketing and Consumer Fraud and Abuse Prevention Act", has passed both houses of the legislature.

The bill requires telephone solicitors to obtain a certificate of registration before doing business in the state; to pay a $500 application fee; and to file a $25,000 bond.

Telephone solicitors are prohibited from obtaining or submitting for payment a check, draft, or other form of payment without the customer's express written authorization; in addition, they may not procure the services of any courier or other pickup service to obtain a customer's payment unless the goods or services are delivered with a reasonable opportunity to inspect before payment is collected.

Exemptions from registration and bonding include: retail business establishments that have been operating for at least three years in New York under the same name as that used in telephone marketing; those engaged in businesses or occupations licensed, registered, chartered, certified, or incorporated with or by any state or federal agency; non-profit corporations; calls in which the sale, lease or other agreement for goods or services is not completed, and payment is not required until after a face-to-face meeting.

New York A.B. 10817 has passed both houses. As of April 1, 2001, requires the state to establish and maintain a "no telemarketing sales calls" statewide registry of persons who do not wish to receive unsolicited telephone marketing sales calls. Telephone solicitors are prohibited from contacting persons whose names and telephone numbers appear on the then-current quarterly no-calls registry. Telephone solicitors have thirty days to update their calling lists upon publication of the quarterly list.

Telephone solicitors who obtain and update copies of the registry and implement and train their personnel in no-call requirements are not held liable for accidental violations of the proposed law.

Pennsylvania S.B. 594 amends the state's telephone registration law to add a provision that establishes a do-not-call list of residents who do not wish to receive unsolicited telephone sales calls. Residential telephone customers may notify the office of the attorney general that they do not wish to receive such calls and pay an initial fee of $10. The attorney general must update the list quarterly and provide it to telephone marketers for a fee.

Pennsylvania S.B. 790 amends the telephone registration law to prohibit the use of a courier to pick up payment for a telephone sale unless the consumer has an opportunity to inspect the goods prior to payment. The bill also requires telephone solicitors calling for a charity to disclose how much of a charitable contribution will be paid to the charity.

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