SECOND REGULAR SESSION

HOUSE BILL NO. 1501

90TH GENERAL ASSEMBLY

HOLLINGSWORTH AND CURLS.

Read 1^st time January 13, 2000, and 1000 copies ordered printed.

ANNE C. WALKER, Chief Clerk

2474L.03I

AN ACT

To repeal sections 392.540 and 407.025, RSMo Supp. 1999, relating to the regulation of telemarketing, and to enact in lieu thereof sixteen new sections relating to the same subject, with penalty provisions.

Section A. Sections 392.540 and 407.025, RSMo Supp. 1999, are repealed and sixteen new sections enacted in lieu thereof, to be known as sections 28.700, 28.705, 28.710, 28.715, 28.720, 28.725, 28.730, 392.540, 407.025, 407.775, 407.778, 407.781, 407.784, 407.787, 407.790 and 407.793, to read as follows:

28.700. All terms in section 28.700 to 28.730 shall have the same meaning as such terms have in chapter 386, RSMo, except that, as used in sections 28.700 to 28.730, the following terms mean:

(1) "Caller identification service", a type of telephone service which permits telephone subscribers to see the telephone number of incoming telephone calls;

(2) "Residential subscriber", a person who has subscribed to residential telephone service from a local exchange telecommunications company, or other persons living or residing with such person;

(3) "Telephone solicitation", any live, recorded or other voice communication over a telephone line for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, including the switching of any service from one telecommunications company to another; but not including communications:

(a) To any residential subscriber with that subscriber's prior express invitation or permission;

(b) By or on behalf of any person or entity with whom a residential subscriber has a prior or current business or personal relationship; or

(c) By or on behalf of a charitable organization which has filed a registration statement pursuant to sections 407.540 to 407.478, RSMo, or a religious or charitable organization exempt from such registration pursuant to section 407.456, RSMo.

28.705. 1. The secretary of state shall establish and provide for the operation of a database to compile a list of telephone numbers of residential subscribers who object to receiving telephone solicitations. The secretary of state shall also establish a toll-free telephone number that residential subscribers may call in order to be included in such database. It shall be the duty of the secretary of state to have the database and phone number in operation no later than July 1, 2000. The database and phone number may be operated by the secretary of state or by another entity pursuant to a contract with the secretary of state.

2. No later than July 1, 2001, the secretary of state shall promulgate rules which:

(1) Require each local exchange telecommunications company to inform its residential subscribers of the opportunity to provide notification to the secretary of state or its contractor that such subscriber objects to receiving telephone solicitations. Each such company shall include the toll-free telephone number described in subsection 1 of this section in any such information;

(2) Specify the methods, including the toll-free number, by which each residential subscriber may give, or revoke, notice to the secretary of state or its contractor of his or her objection to receiving such solicitations;

(3) Specify the length of time for which a notice of objection shall be effective and the effect of a change of telephone number on such notice;

(4) Specify the methods by which such objections and revocations shall be collected and added to the database;

(5) Specify the methods by which any person or entity desiring to make telephone solicitations will obtain access to the database as required to avoid calling the telephone numbers of residential subscribers included in the database;

(6) Establish a fee, which persons or entities desiring to make telephone solicitations shall be charged for access to or for paper or electronic copies of the information on the data base established pursuant to this section; and

(7) Specify such other matters relating to the database that the commission deems desirable.

3. If, pursuant to 47 U.S.C. Section 227(c)(3), the Federal Communications Commission establishes a single national database of telephone numbers of subscribers who object to receiving telephone solicitations, the secretary of state shall include the part of such single national database that relates to this state in the database established pursuant to this section.

4. Information contained in the database established pursuant to this section shall be used only for the purpose of compliance with this section or in a proceeding or action pursuant to this section. Such information shall not be subject to chapter 610, RSMo.

5. The secretary of state shall contract for public service advertisements designed to promote the database and the toll-free telephone number established pursuant to this section.

28.710. No person or entity shall make or cause to be made any telephone solicitation to the telephone line of any residential subscriber in this state who has given notice to the secretary of state, pursuant to rules promulgated pursuant to section 28.705, of such subscriber's objection to receiving telephone solicitations.

28.715. 1. The attorney general may initiate proceedings relating to a knowing violation or threatened knowing violation of section 28.710. Such proceedings may include, but are not limited to, proceedings to issue a cease and desist order, to issue an order imposing a civil penalty up to a maximum of two thousand dollars for each knowing violation, and to seek additional relief in any court of competent jurisdiction. Such actions shall be brought in the name of the state. The attorney general may issue investigative demands, issue subpoenas, administer oaths and conduct hearings in the course of investigating a violation of section 28.710.

2. Any person who has received more than one telephone solicitation within any twelve month period by or on behalf of the same person or entity in violation of section 28.710 may bring one or both of the following:

(1) An action to enjoin such violation; or

(2) An action to recover the greater of:

(a) Actual monetary loss from such knowing violation; or

(b) Up to two thousand dollars in damages for each such knowing violation.

28.720. 1. It shall be a defense in any action or proceeding brought pursuant to sections 28.710 and 28.715 that the defendant has established and implemented, with due care, reasonable practices and procedures to effectively prevent telephone solicitations in violation of section 28.710. The secretary of state may promulgate rules regarding the scope of practices and procedures required pursuant to this subsection.

2. No provider of telephone caller identification service shall be held liable for violations of section 28.710 committed by other persons or entities.

3. No action or proceeding may be brought pursuant to sections 28.710 and 28.715:

(1) More than two years after the person bringing the action knew or should have known of the occurrence of the alleged violation; or

(2) More than two years after the termination of any proceeding or action by this state, whichever is later.

28.725. A court of this state may, pursuant to section 506.500, RSMo, exercise personal jurisdiction over any nonresident or his or her executor or administrator as to an action pursuant to sections 28.710 and 28.715. The remedies, duties, prohibitions, and penalties of sections 28.710 and 28.715 are not exclusive and are in addition to all other causes of action, remedies, and penalties provided by law.

28.730. No rule or portion of a rule promulgated pursuant to sections 28.700 to 28.730 shall take effect unless such rule has been promulgated pursuant to chapter 536, RSMo.

392.540. 1. Notwithstanding any other provision of law to the contrary, the public service commission shall promulgate rules which shall be effective by January 1, 1999, for the submission or execution of changes by a telecommunications company to a subscriber's selected provider of basic interexchange or basic local telecommunications services, and requiring verification by customers to telecommunication companies for any changes in such customer's telecommunication service. Any rule promulgated shall be consistent with rules prescribed by the Federal Communications Commission pursuant to 47 U.S.C. Section 258(a).

2. Notwithstanding any other provision of law to the contrary, the public service commission shall promulgate rules which shall be effective by January 1, 2001, for the advertisement and sale of merchandise through telemarketing, as defined in section 407.775, by or on behalf of a telecommunications company. Any rule promulgated shall not be inconsistent with the rules promulgated by the Federal Communications Commission pursuant to 47 U.S.C. Section 258(a).

407.025. 1. Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by [section 407.020] this chapter, may bring a private civil action in either the circuit court of the county in which the seller or lessor resides or in which the transaction complained of took place, to recover actual damages. The court may, in its discretion, award punitive damages and may award to the prevailing party attorney's fees, based on the amount of time reasonably expended, and may provide such equitable relief as it deems necessary or proper.

2. Persons entitled to bring an action [under] pursuant to subsection 1 of this section may, if the unlawful method, act or practice has caused similar injury to numerous other persons, institute an action as representative or representatives of a class against one or more defendants as representatives of a class, and the petition shall allege such facts as will show that these persons or the named defendants specifically named and served with process have been fairly chosen and adequately and fairly represent the whole class, to recover damages as provided for in subsection 1 of this section. The plaintiff shall be required to prove such allegations, unless all of the members of the class have entered their appearance, and it shall not be sufficient to prove such facts by the admission or admissions of the defendants who have entered their appearance. In any action brought [under] pursuant to this section, the court may in its discretion order, in addition to damages, injunction or other equitable relief and reasonable attorney's fees.

3. An action may be maintained as a class action in a manner consistent with Rule 23 of the Federal Rules of Civil Procedure and Missouri rule of civil procedure 52.08 to the extent such state rule is not inconsistent with the federal rule if:

(1) The class is so numerous that joinder of all members is impracticable;

(2) There are questions of law or fact common to the class;

(3) The claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) The representative parties will fairly and adequately protect the interests of the class; and, in addition

(5) The prosecution of separate action by or against individual members of the class would create a risk of:

(a) Inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class; or

(b) Adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

(6) The party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

(7) The court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include:

(a) The interest of members of the class in individually controlling the prosecution or defense of separate actions;

(b) The extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

(c) The desirability or undesirability of concentrating the litigation of the claims in the particular forum;

(d) The difficulties likely to be encountered in the management of a class action.

4. (1) As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order [under] pursuant to this subdivision may be conditional, and may be altered or amended before the decision on the merits.

(2) In any class action maintained [under] pursuant to subdivision (7) of subsection 3, the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice shall advise each member that:

(a) The court will exclude him in the class if he so requests by a specified date;

(b) The judgment, whether favorable or not, will include all members who do not request exclusion; and

(c) Any member who does request exclusion may, if he desires, enter an appearance through his counsel.

(3) The judgment in an action maintained as a class action [under] pursuant to subdivision (5) of subsection 3 or subdivision (6) of subsection 3, whether or not favorable to the class, shall include and describe those whom the court finds to be members of the class. The judgment in an action maintained as a class action [under] pursuant to subdivision (7) of subsection 3, whether or not favorable to the class, shall include and specify or describe those to whom the notice provided in subdivision (2) of subsection 4 was directed, and who have requested exclusion, and whom the court finds to be members of the class.

(4) When appropriate an action may be brought or maintained as a class action with respect to particular issues, or a class may be divided into subclasses and each subclass treated as a class, and the provisions of this section shall then be construed and applied accordingly.

5. In the conduct of actions to which this section applies, the court may make appropriate orders:

(1) Determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument;

(2) Requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in such manner as the court may direct to some or all of the members of any step in the action, or of the proposed extent of the judgment, or of the opportunity of members to signify whether they consider the representation fair and adequate, to intervene and present claims or defenses, or otherwise to come into the action;

(3) Imposing conditions on the representative parties or on intervenors;

(4) Requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly;

(5) Dealing with similar procedural matters.

6. A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.

7. Upon commencement of any action brought [under] pursuant to subsection 1 of this section, the plaintiff or plaintiffs shall inform the clerk of the court in which such action is brought, on forms to be provided by such clerk, that the action is brought [under] pursuant to this section. The clerk of the court shall forthwith inform the attorney general of the commencement of such action, together with a copy of the complaint or other initial pleading, and, upon entry of any judgment or decree in the action, the clerk shall mail a copy of such judgment or decree to the attorney general.

8. Any permanent injunction, judgment or order of the court made [under] pursuant to section 407.100 shall be prima facie evidence in an action brought [under] pursuant to this section that the respondent used or employed a method, act or practice declared unlawful by [section 407.020] this chapter.

407.775. As used in sections 407.775 to 407.790, the following terms shall mean:

(1) "Advertisement", as defined in section 407.010;

(2) "Consumer", a natural person who purchases, may purchase or is solicited for purchase of merchandise or an investment opportunity by a telemarketer through telemarketing;

(3) "Established business relationship", a prior or existing relationship formed by a voluntary two-way communication between a seller or telemarketer and a consumer with or without an exchange of consideration, on the basis of an inquiry, application, purchase or transaction by the consumer regarding products or services offered by such seller or telemarketer, which relationship has not been previously terminated by either party;

(4) "Fictitious name", any name, other than the legal name, used by a seller or telemarketer;

(5) "Investment opportunity", anything tangible or intangible that is offered for sale, sold or traded based wholly or in part on representations, either express or implied, about past, present or future income, profit or appreciation;

(6) "Material aspect or element", any factor likely to significantly influence the consumer's choice of, or conduct regarding, merchandise;

(7) "Prize", anything offered or purportedly offered or given or purportedly given to a consumer by chance.  For purposes of this definition, chance exists if a consumer is guaranteed to receive anything of value and, at the time of the offer or purported offer, the telemarketer does not identify the specific item that the consumer will receive;

(8) "Promptly", immediately at the beginning of any call initiated by a telemarketer to a consumer;

(9) "Seller", any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide merchandise to the consumer in exchange for consideration;

(10) "Telemarketing", a plan, program or campaign which is conducted to induce the purchase or lease of merchandise by use of one or more telephones and which involves more than one telephone call;

(11) "Telemarketer", any person who, in connection with telemarketing, initiates or receives telephone calls to or from a consumer. A telemarketer includes, but is not limited to, any such person that is an owner, operator, officer, director or partner to the management activities of a business.

407.778. 1. A telemarketer shall disclose, promptly and in a clear and conspicuous manner, to the consumer receiving the telephone call the following:

(1) That the purpose of the telephone call is to make a sale;

(2) The telemarketer's identifiable name and the seller on whose behalf the solicitation is being made;

(3) The nature of the merchandise or investment opportunity being sold; and

(4) That no purchase or payment is necessary to be able to win a prize or participate in a prize promotion if a prize promotion is offered. This disclosure must be made before or in conjunction with the description of the prize to the consumer called.

2. Before a consumer pays for merchandise offered for sale through telemarketing, the telemarketer shall disclose, in a clear and conspicuous manner, the following:

(1) The seller or telemarketer's identifiable name and the address or telephone number where the seller or telemarketer can be reached;

(2) The total cost and quantity of the merchandise that are the subject of the telemarketing sales call;

(3) Any material restriction, limitation or condition to purchase, receive or use the merchandise that is the subject of a telemarketing sales call;

(4) Any material aspect of the nature or terms of the refund, cancellation, exchange or repurchase policies, including the absence of such policies;

(5) Any material aspect of an investment opportunity being offered, including benefits, the price of the land or other investment, and the location of the investment;

(6) Material elements of a prize promotion, including:

(a) The odds of being able to receive the prize and, if the odds are not calculable in advance, the factors and methods used in calculating the odds;

(b) That no purchase or payment of any kind is required to win a prize or to participate in a prize promotion;

(c) The no-purchase or no-payment method of participating in the prize promotion, with either instructions on how to participate or an address or local or toll-free telephone number to which consumers may write or call for information on how to participate;

(d) All material conditions to receive or redeem the prize.

3. A telemarketer may not misrepresent, directly or by implication, any of the following:

(1) A description of the prize;

(2) Its market value;

(3) The actual number of each prize to be awarded;

(4) The date by which the prize will be awarded.

4. A telemarketer may not misrepresent any material aspect of the performance, quality, efficacy, nature or basic characteristics of merchandise that is the subject of a telemarketing sales call.

407.781. It is an unlawful telemarketing act or practice for any seller or telemarketer to engage in the following conduct:

(1) Omit or misrepresent any material fact required pursuant to section 407.778;

(2) Threaten, intimidate or use profane or obscene language;

(3) Cause the telephone to ring or engage any consumer in telephone conversation, repeatedly or continuously in a manner a reasonable consumer would deem to be annoying, abusive or harassing;

(4) Knowingly and willfully initiate a telemarketing call to a consumer, or transfer or make available to others for telemarketing purposes a consumer's telephone number when that consumer has:

(a) Stated previously that he or she does not wish to receive solicitation calls by or on behalf of the seller unless such request has been rescinded; or

(b) Subscribed to the no-call database established pursuant to section 28.705, RSMo;

(5) Engage in telemarketing to a consumer's residence at any time other than between 8:00 a.m. and 9:00 p.m. local time, at the called consumer's location;

(6) Request or receive payment in advance to remove derogatory information from or improve a consumer's credit history, credit record or credit rating;

(7) Request or receive payment in advance from a consumer, to recover or otherwise aid in the return of money or any other item lost by the consumer in a prior telemarketing transaction, except that this provision shall not apply to services provided by a licensed attorney;

(8) Obtain or submit for payment a check, draft or other form of negotiable paper drawn on a consumer's checking, savings, share or similar account without the consumer's express written or oral authorization. Such authorization shall be deemed verifiable if any of the following means are employed:

(a) Express written authorization by the consumer, which may include the consumer's signature on the negotiable instrument;

(b) Express oral authorization which is tape recorded and made available upon request to the consumer's bank and which evidences clearly both the consumer's authorization of payment for the merchandise that is the subject of the sales offer and the consumer's receipt of all of the following information:

a. The date of the draft or drafts;

b. The amount of the draft or drafts;

c. The payor's name;

d. The number of draft payments;

e. A telephone number for consumer inquiry that is answered during normal business hours; and

f. The date of the consumer's oral authorization; or

(c) Written confirmation of the transaction, sent to the consumer prior to submission for payment of the consumer's check, draft or other form of negotiable paper, which shall include:

a. All of the information contained in paragraph (b) of this subdivision; and

b. The procedures by which the consumer can obtain a refund from the seller or telemarketer in the event that the confirmation is inaccurate;

(9) Procure the services of any professional delivery, courier or other pick-up service to obtain immediate receipt or possession of a consumer's payment, unless the merchandise or investment opportunity is delivered with the opportunity to inspect before any payment is collected;

(10) Knowingly utilize any method to block or otherwise circumvent a consumer's use of a caller identification service; or

(11) Knowingly assist or support any telemarketer when the seller knew or should have known that the telemarketer was engaged in any act in violation of sections 407.775 to 407.790.

407.784. 1. A seller or telemarketer shall keep for a period of twenty-four months from the date the record is produced, all verifiable authorizations and records as required in this act, in the form, manner, format or place as they keep such records in the ordinary course of business, including but not limited to:

(1) All substantially different advertising, brochures, telemarketing scripts and promotional materials;

(2) For any prize with a value of twenty-five dollars or greater, the name and last known address of each prize recipient and the prize awarded;

(3) The name and last known address of each consumer, the merchandise purchased, the date such merchandise was shipped or provided and the amount paid by the consumer for the merchandise;

(4) The name, any fictitious name used, the last known home address and telephone number, and the job title for all current and former employees directly involved in telephone sales, provided, that if the seller permits fictitious names to be used by employees, each fictitious name must be traceable to only one specific employee; and

(5) All written authorizations required to be provided or received pursuant to sections 407.775 to 407.790.

2. In the event of any dissolution or termination of the telemarketer's business, the telemarketer shall maintain all records as required pursuant to this section. In the event of any sale, assignment or other change in ownership of the seller's business, the successor shall maintain all records required pursuant to this section.

407.787. 1. It is unlawful to violate any provision of sections 407.775 to 407.790 or to misrepresent or omit the required disclosures of section 407.778 or 407.781, and pursuant to sections 407.010 to 407.145 the violator shall be subject to all penalties, remedies and procedures provided in sections 407.010 to 407.145. The remedies available in this section are cumulative and in addition to any other remedies available by law; except that, for any violation of paragraph (b) of subdivision (4) of section 407.781, such violation may be remedied pursuant to either this section or section 28.715, RSMo, but not both, in addition to any other remedies provided by law.

2. Any person who willfully and knowingly engages in any act or practice declared to be unlawful by any provision of section 407.781 shall be guilty of a class D felony. For the sole purpose of the criminal penalty for acts declared unlawful pursuant to section 407.781, the provisions of this subsection and subsection 3 of this section shall control over subsection 3 of section 407.020.

3. Any person previously convicted of a class D felony pursuant to subsection 2 of this section shall, for each subsequent conviction, be guilty of a class D felony punishable by the term of years set out for a class D felony, but with a fine of not more than five thousand dollars or a fine equal to triple the gain, with no limit on the amount recoverable pursuant to any triple the gain penalty.

4. In addition to the remedies already provided in sections 407.775 to 407.790, any consumer that suffers a loss or harm as a result of any unlawful telemarketing act or practice pursuant to section 407.781 shall recover actual and punitive damages, reasonable attorney's fees, court costs and any other remedies provided by law.

407.790. The provisions of sections 407.775 to 407.787 shall not apply to:

(1) Telephone calls in which the sale of merchandise is not completed, and payment or authorization of payment is not required, until after a face-to-face sales presentation by the telemarketer or seller;

(2) Telephone calls initiated by a consumer that:

(a) Are not the result of any advertisement by a seller or telemarketer;

(b) Are in response to an advertisement through any media, other than direct mail or telemarketing, which disclose the name of the seller and the identity of the merchandise; provided, however, that this exemption shall not apply to calls initiated by the consumer in response to an advertisement that offers a prize or investment opportunity, or is used to engage in telemarketing activities prohibited by subdivision (7), (8) or (9) of section 407.781;

(c) Are in response to direct mail solicitations that clearly and conspicuously disclose and do not misrepresent the material information required by subsection 2 of section 407.778; provided, however, that this exemption does not apply to calls initiated by the consumer in response to an advertisement that offers a prize or investment opportunity, or is to engage in telemarketing activities prohibited by subdivision (7), (8) or (9) of section 407.781; or

(d) Are in response to the mailing of a catalog which contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller, includes multiple pages of written materials or illustrations; and has been issued not less frequently than once a year, when the seller or telemarketer does not contact consumers by telephone but only receives calls initiated by consumers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of this paragraph, the term "further solicitation" does not include providing the consumer with information about, or attempting to sell, any other item included in the same catalog which prompted the consumer's call or in a substantially similar catalog; and

(3) Telephone calls or messages:

(a) To any consumer with such consumer's prior express invitation or permission;

(b) To any consumer with whom the seller has an established business relationship; or

(c) By a tax-exempt nonprofit organization.

407.793. Nothing in sections 407.775 to 407.790 shall apply to an entity or industry regulated by the public service commission pursuant to section 392.540, RSMo.

Missouri House of Representatives