AMENDED IN SENATE OCTOBER 21, 2003

SENIOR SENATE FEDERAL PROPOSAL NO. 1

INTRODUCED BY SENIOR SENATOR ERVEN

LEGISLATIVE COUNSEL'S DIGEST

SFP 1:  TELEMARKETING.

UNDER EXISTING LAW, THE FEDERAL TELEMARKETING SALES RULE PROHIBITS A SELLER OR TELEMARKETER, AS DEFINED, FROM ENGAGING IN DECEPTIVE OR ABUSIVE TELEMARKETING ACTS OR PRACTICES, INCLUDING, BUT NOT LIMITED TO, (1) CAUSING BILLING INFORMATION TO BE SUBMITTED FOR PAYMENT, DIRECTLY OR INDIRECTLY, WITHOUT THE EXPRESS INFORMED CONSENT OF THE CUSTOMER OR DONOR, AS SPECIFIED, AND (2) KEEPING, FOR 24 MONTHS, CERTAIN AUTHORIZATIONS OR RECORDS.

THIS MEASURE WOULD MEMORIALIZE THE CONGRESS AND THE PRESIDENT TO ENACT LEGISLATION THAT WOULD REQUIRE CREDIT CARD ISSUERS TO REQUIRE THE AFFIRMATIVE WRITTEN CONSENT OF CUSTOMERS PRIOR TO BILLING THE CUSTOMER FOR CHARGES RESULTING FROM TELEMARKETING ACTS OR PRACTICES.

VOTE: MAJORITY.

SFP1:  RELATING TO TELEMARKETING

WHEREAS, INDIVIDUALS WHO ARE CONTACTED BY TELEMARKETERS ARE IDENTIFIED AS "MARKS" WHETHER THEY APPROVE OR DISAPPROVE, PURCHASE, OR REJECT THE "SERVICE" OR PRODUCT OFFERED. THE SERVICE INCLUDES, BUT IS NOT LIMITED TO, MARKETING DISCOUNT PLANS, HEALTH SERVICES, AND PURCHASING AGREEMENTS. A PRODUCT INCLUDES, BUT IS NOT LIMITED TO, ANY ITEM WHICH IS PACKAGED AND DELIVERED TO THE "MARK" BY ANY MEANS, INCLUDING USPS, UPS, OR ANY OTHER DELIVERY SERVICE, LICENSED OR NOT AND INCLUDES ANY TRANSACTION REQUIRING A MONTHLY CHARGE AGAINST A CREDIT CARD; AND

WHEREAS, A CREDIT CARD ISSUER IS A FINANCIAL INSTITUTION WHO ISSUES A LINE OF CREDIT TO "MARKS" AND ISSUES A WALLET SIZE CARD, GENERALLY PLASTIC, IDENTICAL IN SIZE TO A STANDARD DRIVERS LICENSE; AND

WHEREAS, A FINANCIAL INSTITUTION IS GENERALLY A BANK, SAVINGS AND LOAN, OR ANY OTHER ENTITY ORGANIZED AND LICENSED BY ANY STATE TO CONDUCT BUSINESS INVOLVING LENDING MONEY, OR ADVANCING CREDIT BASED ON A "CREDIT CARD" HELD BY ANY INDIVIDUAL USING SAME FOR THE PURPOSE OF MAKING A PURCHASE OF MERCHANDISE, SERVICES, OR ANYTHING ELSE OF "VALUE"; AND 

WHEREAS, THE "MARK," OFTEN KNOWN AS THE "CARD HOLDER," DOES NOT, DURING THE COURSE OF CONVERSATION WITH THE TELEMARKETER, GIVE HIS OR HER ACCOUNT NUMBER, AND HIS OR HER ACCOUNT IS CHARGED WITHOUT VERBAL CONSENT; AND 

WHEREAS, A TELEMARKETER MAY CONTACT A "MARK" AND INDUCE A TRIAL PERIOD OF A SERVICE WITH CANCELLATION PRIVILEGES WITHIN A SPECIFIED TIMEFRAME, EVEN WHEN A VERBAL CONSENT IS NOT RECEIVED; AND

WHEREAS, SOME "MARKS" MAY, UPON HEARING A RECORDED "SPEIL," DISCONNECT THE TELEPHONE CALL, YET THE TELEMARKETER ACCEPTS THE RESULT OF HIS OR HER "CONTACT" WITH THE "MARK" AS AUTHORIZATION TO CHARGE THE "MARKS" CREDIT CARD DUE TO THE LACK OF A REFUSAL; AND

WHEREAS, FINANCIAL INSTITUTIONS PERMIT OR ENCOURAGE TELEMARKETERS TO FILE A MONTHLY CHARGE AGAINST THE ACCOUNT OF A "MARK" BASED ON THE TELEMARKETER'S ASSERTION OF SAID CHARGE BEING AUTHORIZED BY AN ALLEGED VERBAL CONSENT; AND

WHEREAS, ONCE A CHARGE HAS BEEN MADE AGAINST THE CREDIT CARD ACCOUNT OF A "MARK," IT IS DIFFICULT TO REMOVE THAT CHARGE; AND

WHEREAS, THE TELEMARKETER IS GENERALLY OPERATING OUT OF THE STATE OF THE "MARK," AND THE CREDIT CARD ISSUER, ALSO IS OUTSIDE THE STATE OF RESIDENCE OF THE "MARK"; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THE FOLLOWING: (1) NO CREDIT CARD ISSUER CONDUCTING BUSINESS WITHIN THE UNITED STATES, USING THE UNITED STATES POSTAL SERVICE FOR WRITTEN COMMUNICATIONS, MAY INITIATE A CHARGE AGAINST THE ACCOUNT OF ANY INDIVIDUAL HOLDING A VALID CREDIT CARD WITHOUT SPECIFIC WRITTEN CONSENT OF THAT INDIVIDUAL, (2) THAT AFTER JANUARY I, 2005, NO FINANCIAL INSTITUTION MAY MAKE A CHARGE AGAINST THE ACCOUNT OF ANY OF ITS CARD HOLDERS WITHOUT A WRITTEN DIRECTIVE FROM THAT CARD HOLDER OVER THE SIGNATURE OF THE CARD HOLDER, AND (3) THAT AFTER JANUARY 1, 2005, ANY TELEMARKETER WHO FAILS OR REFUSES TO SUBMIT TO THE CREDIT CARD ISSUER THE SIGNATURE OF ANY "MARK" MAY NOT MAKE THAT CHARGE WITHOUT A LETTER OF CONSENT FOR SAME. FAILURE TO SUBMIT WRITTEN CONSENT SHALL BE PRIMA FACIE EVIDENCE OF INTENT TO DEFRAUD; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE CONGRESS AND THE PRESIDENT TO ENACT APPROPRIATE LEGISLATION WHICH WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE PRESIDENT AND VICE PRESIDENT, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, THE CHAIRPERSONS OF THE HOUSE AND SENATE COMMITTEES ON AGING AND TO EACH SENATOR AND REPRESENTATIVE FROM CALIFORNIA IN THE CONGRESS OF THE UNITED STATES.

RN0316380

- 0 -