Introduced By: Representatives George, Henseler, Benoit, Winfield and Palangio
Date Introduced : February 2, 1999
It is enacted by the General Assembly as follows:
SECTION 1. Sections 5-61-1, 5-61-2 and 5-61-5 of the General Laws in Chapter 5-61 entitled "Telephone Sales Solicitation Act" are hereby amended to read as follows:
5-61-1. {DEL "Sales solicitation by
telephone" defined. DEL} {ADD "Telephone
Sales Solicitation Act". ADD} -- As used in this
{DEL section DEL} {ADD chapter ADD}, "telephone solicitation"
means the engagement of a telephone conversation for the purpose
of encouraging a person to purchase {DEL real DEL} {ADD personal
ADD}property, investment opportunities, goods or services, or
for the purpose of gathering information for sales solicitation.
5-61-2. Definitions. -- As used in this {DEL section DEL}
{ADD chapter ADD}, the following terms shall have the following meanings:
(1) "Department" means the department of attorney general.
(2) "Item" means any goods and services and includes coupon books which 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 claim to ten percent (10%) or more of the net income of, a telephonic seller.
(4) "Person" includes an 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 or does become obligated to a telephonic seller.
(7) "Salesperson" means any individual employed, appointed or authorized by a telephonic seller, whether referred to by the telephonic seller as an agent, representative, or independent contractor who attempts to solicit or solicits a sale on behalf of the telephonic seller. The principals of a seller are themselves salespersons if they solicit sales on behalf of the telephonic seller.
(8) "Telephonic seller" or "seller" means a person who, on his or her own behalf or through salespersons or through the use of an automatic dialing-announcing device, causes a telephone solicitation or attempted telephone solicitation to occur which meets the criteria specified as follows:
(i) A telephone solicitation or attempted telephone solicitation wherein the telephonic seller initiates or otherwise engages in telephonic contact with a prospective purchaser and represents or implies one or more of the following:
(A) That a prospective purchaser who buys one or more items will also receive additional or other items, whether or not of the same type as purchased, without "further cost". For the purposes of this subdivision, "further cost" does not include actual postage or common carrier delivery charges, if any;
(B) That a prospective purchaser will receive a prize or gift, if the person also encourages the prospective purchaser to purchase or rent any goods or services or pay any money, including, but not limited to, a delivery or handling charge;
(C) That a prospective purchaser who buys office equipment or supplies will, because of some unusual event or imminent price increase, be able to buy these items at prices which are below those that are usually charged or will be charged for the items;
(D) That the seller is a person other than the person he or she is;
(E) That the items for sale are manufactured or supplied by a person other than the actual manufacturer or supplier;
(F) That the seller is offering to sell the prospective purchaser any gold, silver, or other minerals, or any interest in oil, gas, or mineral field, wells, or exploration sites.
(ii) Solicitation or attempted solicitation which is made by telephone
in response to inquiries generated by advertisements or other
form of mail or any types of unrequested mailing or advertisement
sent by the seller which requires a consumer to respond telephonically
for further information wherein it is revealed that the seller
is offering to sell to the prospective purchaser on behalf of
the telephonic seller wherein it is represented or implied that
the seller is offering to sell to the prospective purchaser any
gold, silver, or other metals, diamonds, rubies, sapphires, or
other stones, coal or other minerals, or any interest in oil,
gas, or mineral fields, wells, or exploration sites; or that the
seller is offering to sell any goods or services not specifically
exempted in subsection {DEL (9) DEL} {ADD (10) ADD}.
{ADD (9) "Hours of operation" means Monday through Friday, except a state or federal holiday, nine o'clock (9:00 am) to six o'clock (6:00 pm), Saturday ten o'clock (10:00 am) to five o'clock (5:00 pm). ADD}
{DEL (9) DEL} {ADD (10) ADD} For purposes of this section,
"telephonic seller" or "seller" does not include
any of the following:
(i) A person selling a security which has been qualified for sale by the director of business regulation pursuant to section 7-11-301 et seq., or which is exempt under section 7-11-401 et seq. from the necessity to qualify.
(ii) A person licensed pursuant to section 5-20.5-6 when the solicited transaction is governed by that law.
(iii) A person licensed pursuant to chapter 1.1 of title 7, when the solicited transaction is governed by that law.
(iv) A person soliciting the sale of a franchise which is registered pursuant to section 19-28.1-5, or is exempt under section 19-28.1-6 from the necessity of registering.
(v) A person primarily soliciting the sale of a newspaper of general circulation, as defined in section 9-19.1-1, a magazine or periodical, or contractual plans, including book and record clubs, (A) under which the seller provides the consumer with a form which the consumer may use to instruct the seller not to ship the offered merchandise, and which is regulated by the federal trade commission trade regulation rule concerning "Use of Negative Option Plans by Sellers in Commerce," or (B) not covered under subdivision (A), such as continuity plans, subscription arrangements, standing order arrangements, supplements, and series arrangements under which the seller periodically ships merchandise to a consumer who has consented in advance to receive such merchandise on a periodic basis.
(vi) A person soliciting business from prospective purchasers who have previously purchased from the person making the solicitation or the business enterprise for which the person is calling.
{DEL (vii) A person soliciting without the intent to complete
and who does not complete the sales presentation during the telephone
solicitation and who only completes the sales presentation at
a later face-to-face meeting between the solicitor and the prospective
purchaser. DEL}
(viii) Any supervised financial institution or parent, subsidiary, or affiliate thereof. As used in this paragraph, "supervised financial institution" means any commercial bank, trust company, savings and loan association, credit union, industrial loan company, personal property broker, consumer finance lender, commercial finance lender, or insurer; provided that the institution is subject to supervision by an official or agency of this state or of the United States.
(ix) A person soliciting the sale of services provided by a cable television system licensed or franchised pursuant to chapter 19 of title 39.
(x) A person or affiliate of a person whose business is regulated by the public utilities commission.
(xi) A person soliciting the sale of a farm product, as defined in section 43-3-18, if the solicitation neither intends to, nor actually results in, a sale which costs the purchaser in excess of one hundred dollars ($100).
(xii) An issuer or subsidiary of an issuer that has a class of securities which is subject to section 12 of the Securities Exchange Act of 1934 (15 USC section 78 l ) and which is either registered or exempt from registration under paragraphs (A), (B), (C), (E), (F), (G), or (H) of subsection (g) of that section.
(xiii) A person soliciting sales which are exempted under section 6-13-5 (Unfair Sales Practices) or section 6-13.1-4 (Deceptive Trade Practices).
(xiv) A person soliciting exclusively the sale of telephone answering services to be provided by that person or that person's employer
5-61-5. {DEL Penalties. DEL} {ADD
Criminal Penalties. ADD} -- Any person, including but
not limited to, the seller, a salesperson, agent or representative
of the seller or an independent contractor, who willfully violates
any provision of this {DEL section DEL} {ADD chapter ADD}
or who directly or indirectly employs any device, scheme, or artifice
to deceive in connection with the offer or sale by any telephonic
seller, or who willfully, directly, or indirectly, engages in
any act, practice, or course of business which operates or would
operate as a fraud or deceit upon any person in connection with
a sale by any telephonic seller shall, upon conviction, be punished
as follows:
(1) By a fine not exceeding ten thousand dollars ($10,000) for each unlawful transaction;
(2) By imprisonment in the state prison for not more than one year;
(3) By both fine and imprisonment specified in subdivisions (1) and (2).
SECTION 2. Chapter 5-61 of the General Laws entitled "Telephone Sales Solicitation Act" is hereby amended by adding thereto the following sections:
{ADD 5-61-3.1. Security. -- ADD} {ADD (a) Each telephonic seller, pursuant to the provisions of this chapter, shall deliver and file with the Consumer Protection Division of the Department before a confirmation of registration is issued or re-issued: ADD}
{ADD (i) a surety bond, written by a company recognized and approved by the Commissioner of Insurance within the Department of Business Regulation and approved by that Department with respect to its form, manner of execution, and sufficiency in due form to the State of Rhode Island; or ADD}
{ADD (ii) an irrevocable letter of credit issued for the benefit of the telephonic seller by a bank whose deposits are insured by an agency of the Federal government; or ADD}
{ADD (iii) a certificate of deposit in a financial institution insured by an agency of the Federal government which may be withdrawn only on the order of the Department, except that the interest may accrue to the telephonic seller. ADD}
{ADD (b) The amount of bond, letter of credit, or certificate of deposit must be a minimum of thirty thousand dollars ($30,000). The Department may, at its discretion, establish a bond of greater amount to ensure the general welfare of the public. ADD}
{ADD (c) The security set forth in subsection (a) shall be limited to indemnify the purchaser only for actual damages. This security shall neither limit or impair any right of recovery otherwise available pursuant to law, nor shall the amount of security be relevant in determining the amount of damage or other relief which any purchaser shall be entitled. The security shall be accessible only after all other legal remedies have been exhausted. In the event the security is exhausted, the telephonic seller shall immediately notify the Department, which shall cause such public notice as it deems appropriate to be given forthwith. ADD}
{ADD 5-61-3.2. Other grounds for denial of registration. -- ADD} {ADD (1) The department may delay, reject or revoke a registration if the department finds that a telephonic seller or any person applying for registration as a telephonic seller, including, but not limited to, owners, operators, officers, directors, partners, or other individuals engaged in the management activities of a business entity: ADD}
{ADD (a) Has been convicted or found guilty of, or has entered a plea of guilty or a plea of nolo contendere to, racketeering or any offense involving fraud, theft, embezzlement, fraudulent conversion, or misappropriation of property, or any other crime involving moral turpitude; ADD}
{ADD (b) For purposes of this section, a plea of nolo contendere is a conviction; ADD}
{ADD (c) Has had entered against him or her or an affiliated business, an injunction, a temporary restraining order, or a final judgment or order, including a stipulated judgment or order, an assurance of voluntary compliance, or any similar document, in any civil or administrative action involving racketeering, a fraud, theft, embezzlement, fraudulent conversion, or misappropriation of property or the use of any untrue or misleading representations in an attempt to sell or dispose of real or personal property or the use of any unfair, unlawful, or deceptive trade practice; ADD}
{ADD (d) Is subject to or been affiliated with any company which is, or ever has been, subject to any injunction, temporary restraining order, or final judgment or order, including a stipulated judgment or order, an assurance of voluntary compliance, or any similar document, or any restrictive court order relating to a business activity as the result of any action brought by a governmental agency, including any action affecting any license to do business or practice an occupation or trade; ADD}
{ADD (e) Has at any time during the previous seven (7) years filed for bankruptcy, been adjudged bankrupt, or been reorganized because of insolvency; ADD}
{ADD (f) Has been a principal, director, officer, or trustee of, or a general or limited partner in, or had responsibilities as a manager in, any corporation, partnership, joint venture, or other entity that filed the bankruptcy, was adjudged bankrupt, or was reorganized because of insolvency within one (1) year after the person held that position; ADD}
{ADD (g) Has been previously convicted of or found to have been acting as a salesperson or telephonic seller without a registration or whose registration has previously been refused, revoked, or suspended in any jurisdiction; ADD}
{ADD (h) Falsifies or willfully omits any material information asked for in any application, document, or record required to be submitted or retained under this chapter; ADD}
{ADD (i) Makes a material false statement in response to any request or investigation by the department. ADD}
{ADD (j) Refuses or fails, after notice, to produce any document or record or disclose any information required to be produced or disclosed under this chapter or the rules of the department; or ADD}
{ADD (k) Otherwise violates or is operating in violation of any of the provisions of this chapter or of the rules adopted or court orders issued thereunder. ADD}
{ADD 5-61-3.3. General disclosures. -- ADD} {ADD (1) Within the first thirty (30) seconds of a telephone call, a telephonic seller or salesperson shall identify herself or himself by stating her or his true name, the company on whose behalf the solicitation is being made, and the consumer goods or services being sold. ADD}
{ADD (2) If a sale or an agreement to purchase is completed, the telephonic seller must inform the purchaser of her or his cancellation rights as provided in this chapter, state the registration number issued by the department for both the telephonic seller and the salesperson, and give the street address of the telephonic seller. ADD}
{ADD (3) All oral disclosures required by this section shall be made in a clear and intelligible manner. ADD}
{ADD 5-61-3.4. Use of prerecorded or synthesized voice messages. -- ADD} {ADD A telephonic seller shall not use or connect to a telephone line an automatic dialing-announcing device unless (1) the subscriber has knowingly or voluntarily requested, consented to, permitted, or authorized receipt of the message; or (2) the message is immediately preceded by a live operator who obtains the subscriber's consent before the message is delivered. This section shall not apply to (1) recorded messages from school districts to students, parents, or employees, or (2) messages advising employees of work schedules. ADD}
{ADD Whenever the message is preceded by a live operator, the operator must, at the outset of the message, disclose: ADD}
{ADD (a) the name of the business, firm, organization, association, partnership, or entity for which the message is being made; ADD}
{ADD (b) the purpose of the message; ADD}
{ADD (c) the identity or kinds of goods or services the message is promoting; and ADD}
{ADD (d) if applicable, the fact that the message intends to solicit payment or commitment of funds. ADD}
{ADD A telephonic seller shall not use an automatic dialing-announcing device, to make calls into or within this state, unless the device is designed and operated so as to create a disconnect signal or an on-hook condition which allows the subscriber's line to be released within five (5) seconds after termination of the telephone call by the subscriber. ADD}
{ADD 5-61-3.5. Do not call lists. --ADD} {ADD (a) No salesperson or telephonic seller shall make or cause to be made any unsolicited telephonic sales calls to any residential, mobile or telephonic paging device telephone number unless such salesperson or telephonic seller has instituted procedures for maintaining a list of persons who do not wish to receive telephonic sales calls made by or on behalf of that person, in compliance with 47 CFR 64 or 16 CFR 310. ADD}
{ADD (b) Any person who violates any provision of this section shall be guilty of a misdemeanor, and upon conviction shall be punished by a fine of not more than five hundred dollars ($500) per violation. ADD}
{ADD 5-61-3.6. Hours of operation. -- ADD} {ADD (a) No salesperson or telephonic seller shall make or cause to be made any unsolicited telephonic sales calls to any residential, mobile or telephonic paging device telephone number except during hours of operation as defined in section 5-61-2(9). ADD}
{ADD (b) Any person who violates any provision of this section shall be guilty of a misdemeanor, and upon conviction shall be punished by a fine of not more than five hundred dollars ($500) per violation. ADD}
{ADD 5-61-5.1. Remedies, Injunctive relief and civil penalties. -- ADD} {ADD (a) Any purchaser may have a right of action against a telephonic seller which is in material violation of this chapter. The purchaser may recover triple the amount actually paid to the telephonic seller. In addition to any judgment awarded to the purchaser, the court may allow reasonable attorney's fees to be taxed as cost. ADD}
{ADD (b) The superior court of this state shall have jurisdiction to prevent and restrain violations of this chapter. The court may issue appropriate decrees upon consent and stipulation by the parties. The court may also issue restraining orders. Under no circumstances shall the state be required to post bond in any action hereunder. ADD}
{ADD (c) The Department may institute proceedings to prevent and restrain violations of this chapter, as provided in subsection (b). ADD}
{ADD (d) The Department may bring an action to obtain a declaratory judgment that an act or practice violates the provisions of this chapter. ADD}
{ADD (e) Any person may institute proceedings for injunctive relief, temporary or permanent, as provided in subsection (b) against threatened loss or damage by a violation of this chapter. A preliminary injunction may be issued upon a showing that the danger of irreparable loss or damage is immediate and, within the court's discretion, the execution of a property bond against damages for an injunction improvidently granted. If the court issues a permanent injunction, the plaintiff shall be awarded reasonable attorney's fees, filing fees, and reasonable costs of the suit. Reasonable costs of the suit may include, but not be limited to, the expenses of discovery and document production. ADD}
{ADD (f) In any action brought under this section, the court may make appropriate orders, including appointment of a master or receiver or sequestration of assets, to reimburse purchasers found to have been damaged, to carry out a transaction in accordance with the purchaser's reasonable expectations, or to grant other appropriate relief. The court may assess expenses of a master or receiver against a telephonic seller. ADD}
{ADD (g) In addition to injunctive relief authorized pursuant to subsection (b), any person, firm, corporation, or other entity who violates this chapter may be liable for a civil penalty in a suit by the Department of not more than ten thousand dollars ($10,000) for each such violation. The Department or the court may waive any such civil penalty or other fines or costs if the person has previously made full restitution or reimbursement or has paid actual damages to the purchasers who have been injured by the unlawful act or practice. ADD}
SECTION 3. This act shall take effect upon passage.
