Provides for enhanced consumer protection measures and enforcement of the do-not-call registry

Summary of Provisions: Section 1 of the bill amends General Business Law (GBL) § 399-z to do the following:

* define the term "negative option feature."

* include within the definition of "telemarketing sales call" any outbound telephone calling technology that delivers a prerecorded unso- licited telemarketing message to a customer or to his or her voicemail or answering machine service.

* limit the time of day that a telemarketer may call and requires a telemarketer to provide consumers with its name, the purpose of the call, and the identity and cost of the goods or services being offered, and the terms and conditions related to any offers that include a nega- tive option.

* provide the CPB with subpoena power during the investigatory phase of its enforcement proceedings.

* clarify the elements to be established for an alleged violator to assert a defense under this section.

* renumber various provisions in the interest of consistency with the amended law.

Section 2 of the bill provides that it would take effect one hundred and twenty days after it becomes law.

Existing Law: Currently, GBL § 399-z bars any telemarketer or seller from making any unsolicited telemarketing sales call to any customer when that customer's telephone number has been on the national "do-not- call" registry.

The federal Telemarketing Sales Rule (TSR) requires telemarketers to call only between 8:00 am. and 9:00 p.m. local time and requires them to disclose truthfully, promptly, and clearly and conspicuously, the (1) identity of the seller/telemarketer; ( 2) that the purpose of the call

is to sell goods or services; and (3) the nature of the goods and services. (16 CFR § 310.4)

The TSR, 16 CFR Part 310 et seq. prohibits certain telemarketing sales practices. Specifically, the TSR requires telemarketers to disclose all material terms and conditions of any offer that contains a negative option feature.

The federal Telephone Consumer Protection Act of 1991 (TCPA), among other provisions, restricts the use of automatic dialing systems and prerecorded or artificial messages. One of its implementing rules, 47 CFR § 64.200, prohibits any telemarketer from using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party.

Statement in Support: Since the State's Do-Not Call (DNC) law became effective in April 2001, it has become one of the most important consum- er laws enacted in New York State. DNC is the most common subject of complaint received by the CPB's Consumer Assistance Unit. In the first two quarters of 2008, the total number of DNC related complaints or inquiries totaled 52,425. However, notwithstanding its popularity, the statute needs to be revised to reflect new telemarketing practices and trends.

To save time and resources, many companies are turning to automatic prerecorded calling as opposed to live person-to-person calling. By further defining "telemarketing sales call" in the DNC statute to include any outbound telephone calling technology that delivers pre-re- corded unsolicited telemarketing sales call message either to a customer or to their voicemail or answering machine service, the CPB seeks to create more comprehensive protections for consumers. These amendments are consistent with current federal TCPA protections and bring the State law into parity with the federal law in this regard.

This bill clarifies that prerecorded unsolicited telemarketing sales calls are subject to the same enforcement provisions as "live" calls, as they are just as onerous and burdensome to New Yorkers who do not want to receive unsolicited calls. Further, it is important to limit the time of day that a telemarketer may call a consumer. The CPB enforcement staff has received numerous complaints relating to disruptive late night and early morning telemarketing calls. While the federal law contains this prohibition, the current State law does not. As. many telemarketing calls disrupt the dinner hour, this bill goes further than federal law to restrict telemarketing calls to the hours of 8:00 a.m. and 9:00 p.m.

In addition, the bill requires a telemarketer to provide consumers with his or her name, the entity on whose behalf the call is made, the purpose of the call, and the identity and cost of the goods or services being offered. Such information would allow consumers to determine the nature of the call and make informed choices, and aid enforcement by the CPB.

Many consumers have been frustrated by trial offers which invite their business for what seems to the consumer to be for a limited time, only for the consumer to realize they have signed onto a longer term commit- ment. This bill requires telemarketers and sellers to communicate all of the material terms and conditions of an offer when such offer contains a "negative option" feature, wherein the consumer is required to take affirmative steps to reject further provision of goods or services. This provision is consistent with the TSR and creates parity between State and federal law.

Finally, the bill would grant CPB the power to subpoena documents and records related to possible violations of this provision. This would greatly aid in enforcement of this provision, and in ensuring that violators receive appropriate sanction.

Budget Implications: None.

Effective Date: This act takes effect on the one hundred twentieth day after it shall have become law.