House Introduced Bill 5354

HOUSE BILL No. 5354

February 15, 2000, Introduced by Rep. Jansen and referred to the Committee on Energy and Technology.

A bill to regulate telephone solicitation; to prescribe the

powers and duties of certain state agencies and officials; and to

provide for penalties.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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Sec. 1. (1) This act shall be known and may be cited as the

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"Michigan telephone solicitation act".

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(2) As used in this act:

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(a) "ADAD" or "automatic dialing and announcing device"

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means any device or system of devices that is used, whether alone

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or in conjunction with other equipment, for the purpose of auto-

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matically selecting or dialing telephone numbers.

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(b) "Business telephone subscriber" means a person or com-

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pany who has subscribed to a business telephone service from a

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local exchange carrier.

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(c) "Caller identification service" or "caller ID" means

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telephone service that notifies telephone subscribers of the

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telephone number of incoming telephone calls.

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(d) "Commission" means the public service commission in the

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department of consumer and industry services.

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(e) "Databases" means the information from which the commis-

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sion compiles the register.

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(f) "Do not call register" or "register" means a list of

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telephone numbers of residential telephone subscribers who have

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properly enrolled with the commission that their telephone number

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not be solicited by telephone solicitors.

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(g) "Established business relationship" means all of the

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following:

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(i) Is based on inquiry, application, purchase, or transac-

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tion regarding products or services offered.

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(ii) Is formed by a voluntary 2-way communication between a

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person making a telephone solicitation and a person to whom a

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telephone solicitation is made.

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(iii) Has not been terminated by either party.

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(h) "Existing customer" includes a residential telephone

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subscriber with whom the person or entity making a telephone

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solicitation has had a business relationship within the prior 12

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months.

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(i) "Goods" means all tangible property purchased primarily

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for personal, family, or household use and not for commercial,

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agricultural, or business use. Goods include property that is

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furnished or used for the modernization, rehabilitation, repair,

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alteration, improvement, or construction of real property. Goods

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include merchandise certificates or coupons issued by a retail

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seller that are not redeemable in cash and that are to be used in

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their face amount instead of cash, in exchange for goods or serv-

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ices sold by the seller. Goods do not include a motor vehicle,

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money, a thing in action, intangible personal property, or their

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equivalent.

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(j) "Interexchange provider" means a company that is autho-

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rized by the commission to provide long distance toll telephone

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service.

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(k) "Negative response" means any statement from a party

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indicating that the party does not wish to listen to the sales

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presentation or participate in the solicitation presented in the

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telephone call.

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(l) "Not-for-profit" means an organization that is exempt

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from paying taxes under section 501(c) of the internal revenue

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code.

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(m) "Residential telephone subscriber" means a person resid-

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ing in this state who has residential telephone service.

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(n) "Services" means work, labor, advice, counseling, or

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instruction if purchased primarily for personal, family, or

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household use and not for commercial or business use. Services

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do not include any of the following:

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(i) Work, labor, advice, counseling, or instruction for

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which the cost is fixed by law or subject to the approval or dis-

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approval of the United States or this state.

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(ii) Educational counseling or instruction provided by an

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accredited college or university or a primary or secondary school

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providing education required by the state.

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(iii) Counseling or instruction of a kindergarten or nursery

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school.

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(o) "Telephone solicitor" means any person doing business in

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this state who makes or causes to be made a telephone solicita-

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tion from within or outside of this state, including, but not

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limited to, calls made by use of automated dialing and announcing

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devices or by a live person.

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(p) "Telephone solicitation" means any voice communication

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over a telephone for the purpose of encouraging the purchase or

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rental of, or investment in, goods or services. Telephone solic-

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itation does not include any of the following:

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(i) Any voice communication to any residential telephone

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subscriber with that subscriber's prior express invitation or

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permission.

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(ii) Any voice communication to a residential telephone sub-

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scriber if the communication is made on behalf of a

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not-for-profit organization, provided that a bona fide member of

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the exempt organization makes the voice communication.

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(iii) Any voice communication to any residential telephone

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subscriber who is an existing customer of the solicitor.

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(iv) Occasional and isolated voice communications to a resi-

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dential telephone subscriber provided all of the following condi-

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tions are met:

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(A) A direct employee of the business makes the voice

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communication.

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(B) The communication is not made as part of a telecommuni-

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cations marketing plan.

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(C) The business has a reasonable belief that the specific

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person who is receiving the voice communication is considering

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the purchase of a good or service sold or leased by the business

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and the call is specifically directed to the person.

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(D) The business does not sell or engage in telephone

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solicitations.

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(E) The business does not make more than 3 such voice commu-

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nications in any 1 calendar week.

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Sec. 2. A home solicitation sale shall not be made by tele-

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phone solicitation except as provided under this act.

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Sec. 3. (1) A person shall not engage in the business of

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telephone solicitation in this state unless the person holds a

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license issued under this act.

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(2) The application for a license under this act shall be

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submitted to the commission for review and approval and shall be

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accompanied by a $500.00 license fee.

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(3) The application for a license under this act shall

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include all of the following:

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(a) Be in writing on a form approved by the commission.

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(b) Be verified by oath or affirmation.

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(c) Contain all information that the commission requires.

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(4) The commission may require 1 or more of the following

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before issuing a license:

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(a) Proof of financial integrity.

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(b) That the applicant post a bond or other similar instru-

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ment, if, in the commission's judgment, the bond or similar

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instrument is necessary to ensure the telephone solicitor's

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financial integrity.

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(c) That the applicant do both of the following:

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(i) Provide proof that the applicant is otherwise properly

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registered to do business in this state.

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(ii) Agree to be subject to and pay all applicable taxes of

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the state.

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(d) Adopt any other requirements the commission finds to be

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in the public interest.

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(5) If an applicant complies with the requirements of sub-

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sections (2), (3), and (4), the commission shall issue a license

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to allow the person to engage in the business of telephone

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solicitation.

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(6) A license granted under this section expires on January

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1 of each calendar year. The license may be renewed upon the

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filing of a renewal application on a form approved by the commis-

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sion and the payment of a renewal fee of $200.00.

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(7) Fees collected under this section or section 10 shall be

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deposited in the general fund in a restricted account. The fees

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collected under this act and placed in the restricted account

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shall be used exclusively for the funding of the commission.

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Sec. 4. (1) A telephone solicitor shall not place a tele-

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phone call to a residential telephone subscriber at any time

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other than between the hours of 8 a.m. to 5 p.m. and 7 p.m. to 9

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p.m. local time at the called party's location, without the

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residential telephone subscriber's prior express invitation or

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permission.

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(2) A telephone solicitation shall not be made in whole or

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in part by a recorded message.

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(3) Telephone solicitors shall comply with all state and

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federal statutes and regulations regarding telephone solicitation

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practices.

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Sec. 5. All telephone solicitations to residential tele-

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phone subscribers shall do both of the following:

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(a) Within the first 25 seconds of the call and at the con-

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clusion of the call, state the name and telephone number of the

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person or organization initiating the call. The telephone number

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given must be a toll-free number and be answered when telephone

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solicitations are being made.

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(b) The person answering the telephone number provided under

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subdivision (a) shall be able to provide information concerning

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the solicitation call.

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Sec. 6. (1) Telephone solicitors shall not use telephone

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equipment or telecommunications network elements that block or

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otherwise interfere with the caller ID function on the telephone

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of a residential telephone subscriber to whom a telephone solici-

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tation is made so that the telephone number of the caller is not

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displayed on the telephone equipment of the called party.

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(2) Local exchange providers and interexchange toll provid-

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ers are prohibited from providing any network element or service

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to telephone solicitors that would block or otherwise interfere

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with on a per line basis, the display of the telephone

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solicitor's name and telephone number on the residential

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subscriber's caller ID equipment. Local exchange providers and

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interexchange providers shall modify their tariffs to reflect the

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requirements of this act within 60 days of the effective date of

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this act.

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Sec. 7. It is an unfair or deceptive act or practice and a

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violation of this act for any telephone solicitor to do any of

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the following:

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(a) Misrepresent or fail to disclose, in a clear, conspicu-

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ous, and intelligible manner and before payment is received from

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the consumer, all of the following information:

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(i) Total purchase costs to the consumer of the goods or

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services to be received.

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(ii) Any restrictions, limitations, or conditions to pur-

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chase or to use the goods or services that are the subject of any

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offer.

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(iii) Any material term or condition of the seller's refund,

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cancellation, or exchange policy, including, if applicable, that

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no such policies exist.

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(iv) All material costs or conditions related to receiving a

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prize, including the odds of winning the prize, and if the odds

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are not calculable in advance, the factors used in calculating

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the odds, the nature and value of a prize, that no purchase is

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necessary to win the prize, and the "no purchase" method of

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entering the contest.

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(v) Any material aspect of an investment opportunity being

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offered, including but not limited to risk, liquidity, earnings

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potential, market value, and profitability.

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(vi) The quantity and any material aspect of the quality or

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basic characteristics of any goods or services offered.

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(vii) The right to cancel any sale as provided under this

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act.

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(b) Misrepresent any material aspect of the quality or basic

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characteristics of any goods or services offered.

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(c) Make a false or misleading statement with the purpose of

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inducing a consumer to pay for any goods or services.

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(d) Request or accept payment from a consumer or make or

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submit any charge to the consumer's credit or bank account before

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the telephone solicitor or seller receives from the consumer an

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express verifiable authorization as required by this act.

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(e) Offer to consumers in this state any prize promotion in

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which a purchase or payment is necessary to obtain the prize.

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(f) Fail to comply with the record-keeping requirements of

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section 12.

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Sec. 8. (1) The telephone solicitor shall immediately dis-

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continue the solicitation if the person being solicited gives a

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negative response at any time during the telephone call.

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(2) The telephone solicitor shall hang up the telephone

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within 10 seconds of the termination of the call by the person

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being called.

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Sec. 9. (1) The commission shall establish and provide for

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the operation of a register on which to compile a list of

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telephone numbers of residential telephone subscribers who object

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to receiving telephone solicitations. The register may be oper-

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ated by the commission or by another entity under contract with

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the commission. The following are the guidelines for the opera-

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tion of the register:

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(a) Residential telephone subscribers may enroll on the reg-

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ister as provided by the commission. Enrollment onto the regis-

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ter will become effective 30 days following the date of enroll-

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ment by the subscriber.

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(b) A residential telephone subscriber will remain in the do

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not call register until the subscriber requests that the commis-

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sion remove his or her name from the register.

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(c) Business telephone subscribers may not be included on

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the register.

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(d) The commission will update the register at the beginning

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of each month.

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(e) The commission may purge the register periodically in

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order to ensure accuracy.

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(2) The information contained in the database is not open to

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public inspection or disclosure under the freedom of information

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act, 1976 PA 442, MCL 15.231 to 15.246. The commission will take

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all necessary steps to protect the confidentiality of the infor-

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mation in the database.

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(3) The commission shall forward the list of Michigan sub-

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scribers on the register to the federal communications

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commission's or any other federal agencies' do not call national

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database, if and when a federal list is established.

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Sec. 10. (1) Each telephone solicitor engaging in telephone

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solicitation in this state shall purchase from the commission the

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register established under section 9.

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(2) Each telephone solicitor shall pay to the commission, on

5 or before May 1 of each year, an annual fee of $500.00 for access

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to the do not call register. The annual fee shall cover the time

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period from the following July 1 through June 30.

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(3) It is the duty of telephone solicitors to ensure they

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have the latest version of the register before soliciting resi-

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dential telephone subscribers in this state.

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(4) In addition to paper copies, the do not call register

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shall also be provided, with unlimited access, via the internet

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or other electronic means to telephone solicitors.

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Sec. 11. (1) Local exchange providers shall notify their

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residential subscribers twice a year on how to enroll on the

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register. This notification shall accompany the subscriber's

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monthly telephone bill and shall be developed in cooperation with

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the commission.

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(2) In addition to the notification required by subsection

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(1), local exchange providers, working in cooperation with the

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commission, are required to place information in their white page

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telephone directory informing their residential telephone sub-

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scribers how to be included in the register.

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Sec. 12. Every telephone solicitor shall keep accurate

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records of all telemarketing activities initiated in this state

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or directed to consumers located in this state. Upon demand, the

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records shall be made available to the commission, the attorney

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general, and any other governmental entity with authority to

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enforce this act. These records shall be retained for a period

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of 2 years after the date of any outbound telephone call initi-

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ated from, directed into, or within this state. The records

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shall include but are not limited to all of the following

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information:

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(a) The location of the telephone solicitor and the street

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addresses of any locations from which the outbound telephone

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calls originated.

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(b) Copies of any injunction, temporary restraining order,

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judgment, consent judgment, or assurance of voluntary compliance

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in any civil or administrative action, including any pending

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action, involving a violation or alleged violation by the tele-

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phone solicitor or the seller of any state or federal telemarke-

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ting law.

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(c) The name, any fictitious name used, last known home

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address, telephone number, and job title of all telephone solici-

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tors, who place or placed calls on behalf of a seller or who par-

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ticipate in or are responsible for the management of the business

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of the telephone solicitor. If the seller or telephone solicitor

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permits fictitious names to be used by employees or agents, each

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fictitious name shall be traceable to only 1 specific telephone

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solicitor, employee, or agent. If 1 or more telephone solicitors

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is employed by or otherwise acting on behalf of a seller, the

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reporting requirements of this act may be met by the seller on

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behalf of itself and its telephone solicitors, but only to the

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extent the records comply with the requirements of this act.

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(d) Copies of all scripts, outlines, or presentation

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materials the seller requires a telephone solicitor to use when

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soliciting, as well as of all information to be provided by a

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telephone solicitor to a consumer in connection with any

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telemarketing.

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(e) All written consents to utilize a name or names of any

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person in any endorsement.

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(f) Materials that substantiate any claims about the per-

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formance, efficacy, nature, or characteristics of health, nutri-

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tion, or diet related goods or services that are the subject of

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telemarketing.

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(g) A copy of the refund, cancellation, exchange, or repur-

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chase policies for any goods or services offered by a seller or

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telephone solicitor, unless the seller or telephone solicitor

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offers and provides an unconditional satisfaction guaranteed

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policy and provides a full refund for returned goods or canceled

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services.

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(h) Copies of all express verifiable authorizations and

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signed order confirmations.

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(i) Copies of any training instructions, handbooks, or other

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guidelines distributed by telephone solicitors to their staff or

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by sellers to their telephone solicitors, employees, or agents.

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(j) Copies of written contracts and agreements between the

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telephone solicitor and the seller.

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Sec. 13. (1) For all complaints filed under section 14,

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before initiating a proceeding with the commission, the parties

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shall attempt alternative means of resolving the complaint.

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(2) Any alternative means that will result in a recommended

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settlement may be used that is agreed to by the principal parties

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of record, including, but not limited to, settlement conferences,

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mediation, and other informal dispute resolution methods. If the

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parties cannot agree on an alternative means within 20 days after

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the date the complaint is filed, the commission shall order

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mediation. Within the 45-day period from the date mediation is

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ordered under this subsection, a recommended settlement shall be

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made to the parties.

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(3) Within 7 days after the date of the recommended settle-

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ment, each party shall file with the commission a written accep-

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tance or rejection of the recommended settlement. If the parties

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accept the recommendation, then the recommendation shall become

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the final order in the proceeding under section 14.

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(4) If a party rejects the recommended settlement, then the

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application or complaint shall proceed to a proceeding under

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section 14.

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Sec. 14. (1) The commission shall establish a complaint

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procedure to allow persons, or the commission on its own motion,

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to file claims of violations of this act or a rule or order

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issued under this act.

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(2) Except as otherwise provided under section 13, upon the

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filing of a claim, the commission shall investigate and make

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findings of whether a violation has occurred.

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(3) In addition to any other penalties provided by law, if

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the commission finds, after notice and hearing, that there has

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been a violation of this act, it may do 1 or more of the

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following:

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(a) Issue a cease and desist order.

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(b) Order the person to pay a fine of not less than

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$10,000.00 or more than $50,000.00 per day that the person is in

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violation of this section.

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(c) Order that the person's telephone solicitation license

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be revoked.

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(4) If the violation warrants immediate action, the commis-

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sion may issue a preliminary cease and desist order. A request

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for preliminary order under this subsection shall be either

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granted or denied within 3 business days from the date the com-

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plaint is filed.

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(5) If a person violates an order issued under subsection

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(3) or (4), the commission may order the person to pay a fine of

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not more than $10,000.00 per day for each day the person is in

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violation and to make whole any person injured by the violation,

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including the payment of reasonable attorney fees.

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Sec. 15. A person shall not bring a cause of action for the

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collection of any sale made by telephone solicitation unless that

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person acted in compliance with this act.

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