GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

H	1 

HOUSE BILL 429

Short Title:  Telephone Consumer Protection Act/AB.	(Public)

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Sponsors: Representatives Thompson; Berry, Black, Buchanan, Culp, Gardner, Justus, Kiser, McMahan, K. Miller, Richardson, Robinson, Russell, and Sherrill.

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Referred to:  Public Utilities.

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March 9, 1995

A BILL TO BE ENTITLED
AN ACT TO REQUIRE THE REGISTRATION OF TELEPHONIC SELLERS IN NORTH CAROLINA AND TO MAKE THE OFFERING OF TELEPHONE SALES RECOVERY SERVICES A CRIMINAL OFFENSE.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 66 of the General Statutes is amended by adding a new Article to read:
"ARTICLE 32.
"Telephonic Seller Registration and Bond Requirement.
"§ 66-251.  Definitions.
As used in this Article, unless the context requires otherwise:
(1)	'Gift or Prize' means any premium, bonus, award, or any other thing of value.
(2)	'Item' means any good or any service.  'Item' includes coupon books, vouchers, or certificates that are to be used with businesses other than the seller's business.
(3)	'Owner' means a person who owns or controls ten percent (10%) or more of the equity of, or otherwise has a claim to ten percent (10%) or more of the net income of, a telephonic seller.
(4)	'Person' includes any individual, firm, association, corporation, partnership, joint venture, or any other business entity.
(5)	'Principal' means an owner, an executive officer of a corporation, a general partner of a partnership, a sole proprietor of a sole proprietorship, a trustee of a trust, or any other individual with similar supervisory functions with respect to any person.
(6)	'Purchaser' or 'Prospective Purchaser' means a person who is solicited to become obligated to a telephonic seller.
(7)	'Room Operator' means any principal, employee, or agent responsible for the operational management and supervision of facilities from which telephonic sales calls are made or received.
(8)	'Salesperson' means any individual employed, appointed, or authorized by a telephonic seller, whether referred to by the telephonic seller as an agency, representative, or independent contractor, who attempts to solicit or solicits a sale on behalf of the telephonic seller.
(9)	'Secretary' means the Office of the Secretary of State.
(10)	'Telephone solicitation' or 'attempted telephone solicitation' means any communication designed to persuade any person to purchase goods or services, to enter a contest, or to contribute to a charity, regardless of whether the telephone call initiating the solicitation is initiated by the telephonic seller or a person responding to notices sent or provided by or on behalf of the seller.
(11)	'Telephonic Seller' or 'Seller' means a person who, directly or through salespersons, causes a telephone solicitation or attempted telephone solicitation to occur.  'Telephonic seller' and 'seller' does not mean:
a.	A person who is offering or selling a registered security and is licensed to sell such security in North Carolina;
b.	Any person conducting sales or solicitations on behalf of a licensed utility regulated by the North Carolina Utilities Commission;
c.	Any insurance agent or broker who is properly licensed by the Department of Insurance and who is engaged in transactions regulated by the Department of Insurance;
d.	Any bank or savings institution properly licensed by the State or subject to federal regulating authorities;
e.	Any charity already accorded Section 501(c)(3) nonprofit status under the Internal Revenue Code or any 'charitable solicitor' properly licensed under Article 2 of Chapter 131F of the General Statutes;
f.	Any person who has made a related sale of an item to the purchaser within the previous year; and
g.	Any person taking callers' orders for the purchase of an item that has been offered for sale through an advertisement or a catalog, provided that the person taking the order makes no effort to solicit the purchase of additional items.
"§ 66-252.  Registration of telephonic sellers.
(1)	Not less than 10 days before commencing telephone solicitations in this State, a telephonic seller shall register with the Secretary by filing the information required in G.S. 66-253 and paying a filing fee of one hundred dollars ($100.00).  A telephonic seller is doing business in this State if it solicits or attempts to solicit prospective purchasers from locations in this State or solicits or attempts to solicit prospective purchasers who are located in this State.
(2)	The information required in G.S. 66-253 shall be submitted on a form provided by the Secretary and shall contain the notarized signatures of each principal of the telephonic seller.
(3)	Registration of a telephonic seller shall be valid for one year from the effective date thereof and may be annually renewed by making the filing required in G.S. 66-253 and paying the filing fee of one hundred dollars ($100.00).
(4)	Whenever, prior to expiration of a seller's annual registration, there is a material change in the information required by G.S. 66-253, the seller shall, within 10 days after the material change, file an addendum with the Secretary updating the information.
"§ 66-253.  Filing information.
(1)	Each filing submitted to the Secretary shall contain all of the following information:
a.	The name or names, including any assumed names, under which the telephonic seller is doing or intends to do business in this State.
b.	The telephonic seller's business form and place of organization and, if the seller is a corporation, copies of its articles of incorporation and bylaws and amendments thereto, or if a partnership, a copy of the partnership agreement.
c.	Complete street address of the telephonic seller's principal place of business.
d.	The complete street address of each location from which telephone solicitations are placed by the telephonic seller.
e.	A listing of all telephone numbers to be used by the telephonic seller, including area codes, and the complete street address of the business premises served by each number.
f.	The name and title of each principal.
g.	The complete street address of the residence, the date of birth, and the social security number of each principal.
h.	The true name, street address, date of birth, and the social security number  of each room operator, together with the room operator's full employment history during the preceding two years.
i.	The name and address of all banks or savings institutions where the telephonic seller maintains deposit accounts.
j.	The name and address of each long distance telephone carrier used by the telephonic seller.
k.	A summary of each civil or criminal proceeding brought against the telephonic seller, any of its principals, or any of its room operators during the preceding five years by federal, State, or local officials relating to telephonic sales practices of each.  The summary shall include the date each action was commenced, the criminal or civil charges alleged, the case caption, the court file number, the court venue, and the disposition of the action.  For purposes of this section, assurances of voluntary compliance, assurances of discontinuance, consent judgments, and similar agreements executed with federal, State, or local officials, is a 'civil action'.
"§ 66-254.  Bond requirement: prizes and gifts.
(a)	At least 10 days before the commencement of any promotion offering any gift or prize with an actual or represented market value of five hundred dollars ($500.00) or more, the telephonic seller shall notify the Secretary in writing of the details of the promotion, describing all gifts or prizes and their current market value, the seller's rules and regulations governing the promotion, and the date the gifts or prizes are to be awarded.  All gifts or prizes offered shall be awarded.  The telephonic seller shall maintain a bond for the market value or the advertised value, whichever is greater, of all gifts or prizes represented as available under the promotion.  They must be issued by a surety company authorized to do business in this State.  The bond shall be in favor of the State of North Carolina for any person entitled to receive a gift or prize under the promotion who did not receive it within 30 days of the specified date of award.  The amount recoverable by any person under the bond shall not be greater than the market value or the advertised value of the gift or prize, whichever is greater.
(b)	Within 45 days after the specified date of the award of the gift or prize, the seller shall provide, in writing, to the Secretary, proof that the gifts or prizes were awarded.  The writing shall include the name, address, and telephone number of all persons receiving awards or prizes.  The bond shall be maintained until the Secretary confirms the awards.
(c)	The Attorney General or any person who obtains a judgment for restitution or damages against the telephonic seller may file a motion in the court which entered the judgment to enforce liability on the bond without first attempting to enforce the judgment against the party liable under the judgment.
"§ 66-255.  Calls made to minors.
A telephonic seller must inquire as to the age of the prospective purchaser it is contacting.  If the prospective purchaser is under 18 years of age, the telephonic seller must discontinue the call immediately.
"§ 66-256.  Offers of gifts or prizes.
(a)	It shall be unlawful for any telephonic seller to make a telephone solicitation or attempted telephone solicitation involving any gift or prize when the solicitation or attempted solicitation:
(1)	Requests or directs the consumer to further the transaction by calling a 900 number or a pay per call number.
(2)	Requests or directs the consumer to send any payment or make a donation in order to collect the gift or prize.
(3)	Does not comply fully with G.S. 75-30, 75-32, 75-33, or 75-34.
"§ 66-257.  Penalties.
(a)	Any violation of this Article shall constitute an unfair and deceptive trade practice in violation of G.S. 75-1.1.
(b)	In an action by the Attorney General against a telephonic seller for violation of this Article, or for any other act or practice constituting a violation of G.S. 75-1.1, the court may impose civil penalties of up to twenty-five thousand dollars ($25,000) for each violation involving North Carolina purchasers or prospective purchasers who are more than 64 years of age.
(c)	The remedies and penalties available under this section shall be supplemental to others available under the law, both civil and criminal.
(d)	Compliance with this Article does not satisfy or substitute for any other requirements for license, registration, or conduct imposed by law."
Sec. 2.  Chapter 14 of Article 52 of the General Statutes is amended by adding a new section to read:
"§ 14-401.15.  Telephone sales recovery services.
(a)	Except as provided in subsection (c) of this section, it shall be unlawful for any person or firm to solicit or require payment of money or other consideration in exchange for recovering or attempting to recover:
(1)	Money or other valuable consideration previously tendered to a telephonic seller, as defined in G.S. 66-251; or
(2)	Prizes, awards, or other things of value that the telephonic seller represented would be delivered.
(b)	A violation of this section shall be punishable as a Class 1 misdemeanor.  Any violation involving actual collection of money or other consideration from a customer shall be punishable as a Class H felony.  Any violation involving collection of money or other consideration from a customer more than 65 years of age shall be punishable as a Class G felony.
(c)	This section does not apply to attorneys licensed to practice law in this State, to persons licensed by the North Carolina Private Protective Services Board, or to any collection agent properly holding a permit issued by the Department of Insurance to do business in this State."
Sec. 3.  Section 2 of this act becomes effective January 1, 1996.  The remaining sections of this act are effective upon ratification.