Reference Title: telephone solicitations; registration exemptions (NOW: telephone solicitation; limited registration)

AN ACT
AMENDING TITLE 44, CHAPTER 9, ARTICLE 6, ARIZONA REVISED STATUTES, BY ADDING SECTION 44-1272.01; AMENDING SECTIONS 44-1273 AND 44-1278, ARIZONA REVISED STATUTES; RELATING TO TELEPHONE SOLICITATIONS.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 44, chapter 9, article 6, Arizona Revised Statutes, is amended by adding section 44-1272.01, to read:

44-1272.01 . Limited registration; penalty; violation; classification

A. ANY SELLER WHO IS LISTED IN SECTION 44-1273, SUBSECTION B SHALL FILE WITH THE SECRETARY OF STATE A LIMITED REGISTRATION STATEMENT ON A FORM PRESCRIBED BY THE SECRETARY OF STATE BEFORE THE SELLER SOLICITS ANY CONSUMER FROM A LOCATION IN THIS STATE OR ANY CONSUMER LOCATED IN THIS STATE.

B. IF THERE IS A CHANGE IN ANY OF THE INFORMATION REQUIRED BY SUBSECTION C OF THIS SECTION, WITHIN TEN DAYS AFTER THE CHANGE THE SELLER SHALL FILE A SUPPLEMENTAL STATEMENT WITH THE SECRETARY OF STATE.

C. EACH LIMITED REGISTRATION STATEMENT SHALL INCLUDE ALL OF THE FOLLOWING INFORMATION:

1. THE TRUE LEGAL NAME OF THE SELLER.

2. ALL OF THE NAMES UNDER WHICH THE SELLER IS DOING BUSINESS OR INTENDS TO DO BUSINESS.

3. THE COMPLETE STREET ADDRESS OF THE PHYSICAL LOCATION OF THE PRINCIPAL PLACE OF BUSINESS OF THE SELLER AND THE TELEPHONE NUMBER FOR THE LOCATION.

4. THE NAME AND ADDRESS OF THE SELLER'S AGENT WHO IS AUTHORIZED TO RECEIVE SERVICE OF PROCESS. ALTERNATIVELY, THE SELLER MAY DESIGNATE THE SECRETARY OF STATE TO RECEIVE SERVICE OF PROCESS.

5. THE REASON THE SELLER IS EXEMPT FROM FULL REGISTRATION.

6. THE NAME AND ADDRESS OF THE PERSON WHO FILES THE LIMITED REGISTRATION STATEMENT.

D. A SELLER WHO FILES A LIMITED REGISTRATION STATEMENT PURSUANT TO THIS SECTION IS NOT REQUIRED TO PAY A FILING FEE AND IS NOT REQUIRED TO FILE AND MAINTAIN A BOND.

E. COMPLIANCE WITH THE LIMITED REGISTRATION PRESCRIBED IN THIS SECTION DOES NOT CONSTITUTE AN APPROVAL OR ENDORSEMENT BY THIS STATE OF THE SELLER'S LIMITED REGISTRATION OR CONDUCT.

F. THE SECRETARY OF STATE MAY SEND BY CERTIFIED MAIL A NOTICE OF FAILURE TO FILE A LIMITED REGISTRATION PURSUANT TO THIS SECTION TO ANY SELLER WHO IS LISTED IN SECTION 44-1273, SUBSECTION B AND WHO FAILS TO COMPLY WITH THE LIMITED REGISTRATION PRESCRIBED IN THIS SECTION. THE SELLER SHALL COMPLY WITH THE LIMITED REGISTRATION PRESCRIBED IN THIS SECTION WITHIN THIRTY DAYS AFTER RECEIVING THE NOTICE FROM THE SECRETARY OF STATE AND SHALL PAY A LATE REGISTRATION PENALTY OF TWENTY-FIVE DOLLARS. IF THE SELLER DOES NOT COMPLY WITH THIS SUBSECTION, THE SELLER IS GUILTY OF A CLASS 3 MISDEMEANOR.

Sec. 2. Section 44-1273, Arizona Revised Statutes, is amended to read:

44-1273 . Limited exemptions

A. The following persons sellers are not required to register and, except for section 44-1278, subsection b, are exempt from this article:

1. A person acting within the scope of a license issued under title 6, 20. or 32 or by the corporation commission pursuant to this title, except this paragraph shall not exempt persons licensed under title 6, chapter 13.

2. If soliciting within the scope of the license, any licensed securities, commodities or investments broker, dealer or investment advisor or any licensed associated person of a securities, commodities or investments broker, dealer or investment advisor.

3. An issuer or a subsidiary of an issuer that has a class of securities that is subject to section 12 of the securities exchange act of 1934 (15 United States Code sections 78a through 78ll) and that is either registered or exempt from registration under paragraph (A), (B), (C), (E), (F), (G) or (H) or subsection (g) (2) of section 12 of the act. A subsidiary of an issuer that qualifies for exemption under this paragraph is not exempt unless at least sixty per cent of the voting power of the subsidiary's shares is owned by the qualifying issuer or issuers.

4. A person certificated or regulated by the corporation commission pursuant to title 40, chapter 2 or a subsidiary of that person or a federal communications commission licensed cellular telephone company or radio telecommunication services provider.

5. 2. A person who is registered with the secretary of state pursuant to section 44-6552 or who is exempt from registration pursuant to section 44-6553.

6. A person making telephone solicitations for a newspaper of general circulation, magazine or a licensed or franchised cable television system.

7. An issuer or subsidiary of an issuer which is subject to registration under chapter 12, article 6 or 7 of this title or which is exempt from registration under section 44-1843, paragraph 1, 2, 3, 4, 5, 7 or 9.

8. A person making telephone solicitations for the sale or purchase of books, recordings, videocassettes and similar goods through a membership group or club regulated by the federal trade commission or through a contractual plan or arrangement such as a continuity plan, subscription arrangement, series arrangement or single purchase under which the seller ships goods to a consumer who has consented in advance to receive such goods and the recipient is given the opportunity to review goods for at least seven days and to receive a full refund for return of undamaged goods.

9. A person or solicitor for a person when soliciting previous customers, if all of the following apply:

(a) The person is not offering to sell or selling a security that is not registered with any state or federal authority.

(b) The person makes the solicitation under the same name as the name used to sell merchandise to the customer previously.

(c) The person does not operate a recovery service.

(d) The person does not conduct a prize promotion that requires or implies that to win a consumer must pay money or purchase merchandise.

(e) The person has not, or any of its principals have not, within twenty years been convicted in any state of a felony or crime of moral turpitude, breach of trust, fraud, theft, dishonesty or violation of telephone solicitation laws, been subject to a final judgment in a civil action involving fraud, deceit or misrepresentation or been subject to an administrative order involving fraud, deceit, misrepresentation or any violation of telephone solicitations laws of any agency of this state, another state, the federal government, a territory of the United States or another country.

10. 3. A person making telephone solicitations without the intent to complete and who does not complete the sales presentation during the telephone solicitation but completes the sales presentation at a later face-to-face meeting between the solicitor and the consumer provided that the later face-to-face meeting is not for the purpose of collecting the payment or delivering any item purchased.

11. 4. A person who after making a telephone contact with a consumer sends the consumer descriptive literature and does not require payment before the consumer's review of the descriptive literature and the person is not conducting a solicitation involving any of the following:

(a) The sale of an investment or an opportunity for an investment that is not registered with any state or federal authority.

(b) A prize promotion or premium.

(c) A recovery service.

12. A person making telephone solicitations exclusively for the purpose of the sale of telephone answering services to be provided by that person or that person's employer.

13. Any bank holding company, bank, financial institution, trust company, savings and loan association, credit union, mortgage banker or broker, consumer lender or insurer, which is licensed or supervised by an official or agency of this state, any other state or the United States, including any parent, subsidiary or affiliate of these institutions.

14. 5. A person or solicitor for a person who operates a retail business establishment under the same name as the name used in the solicitation of sales by telephone, if on a continuing basis all of the following apply:

(a) Merchandise is displayed and offered for sale or services are offered for sale and provided at the person's business establishment.

(b) At least fifty per cent of the person's business involves the buyer obtaining the merchandise at the person's business establishment.

(c) The person holds a transaction privilege tax license pursuant to title 42, chapter 5.

15. A person providing telemarketing sales service continuously for at least five years under the same ownership and control that derives seventy-five per cent of its gross telemarketing sales revenues from contracts with persons exempted by this section. A seller using an exempt telemarketing sales service is not exempted unless otherwise qualifying for an exemption under this section.

16. 6. A person or solicitor for a person soliciting another business if all of the following occur:

(a) At least fifty per cent of the person's dollar volume consists of repeat sales to existing businesses.

(b) The person does not conduct a prize promotion that requires or implies that to win a consumer must pay money or purchase merchandise.

(c) Neither the person nor any of the person's principals has within twenty years been convicted in any state of a felony or crime of moral turpitude, breach of trust, fraud, theft, dishonesty or violation of telephone solicitation laws, been subject to a final judgment in a civil action involving fraud, deceit or misrepresentation or been subject to an administrative order involving fraud, deceit, misrepresentation or any violation of telephone solicitations laws of any agency of this state, another state, the federal government, a territory of the United States or another country.

17. 7. A person or solicitor on behalf of a person who solicits sales by periodically publishing and delivering a catalog to consumers if all of the following apply:

(a) The catalog contains a written description or illustration of each item offered for sale and the price of each item offered for sale.

(b) The catalog includes the business address or home office address of the person.

(c) The catalog includes at least twenty-four pages of written material and illustrations.

(d) The catalog is distributed in more than one state and has an annual circulation by mail of at least two hundred fifty thousand.

B. THE FOLLOWING SELLERS SHALL FILE A LIMITED REGISTRATION STATEMENT PURSUANT TO SECTION 44-1272.01 AND, EXCEPT FOR SECTION 44-1278, ARE EXEMPT FROM THIS ARTICLE:

1. A PERSON ACTING WITHIN THE SCOPE OF A LICENSE ISSUED UNDER TITLE 6 OR 32 OR BY THE CORPORATION COMMISSION PURSUANT TO THIS TITLE, EXCEPT PERSONS LICENSED UNDER TITLE 6, CHAPTER 13.

2. IF SOLICITING WITHIN THE SCOPE OF THE LICENSE, ANY LICENSED SECURITIES, COMMODITIES OR INVESTMENTS BROKER, DEALER OR INVESTMENT ADVISOR OR ANY LICENSED ASSOCIATED PERSON OF A SECURITIES, COMMODITIES OR INVESTMENTS BROKER, DEALER OR INVESTMENT ADVISOR.

3. AN ISSUER OR A SUBSIDIARY OF AN ISSUER THAT HAS A CLASS OF SECURITIES THAT IS SUBJECT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 (15 UNITED STATES CODE SECTIONS 78A THROUGH 78LL) AND THAT IS EITHER REGISTERED OR EXEMPT FROM REGISTRATION UNDER PARAGRAPH (A), (B), (C), (E), (F), (G) OR (H) OR SUBSECTION ( g ) (2) OF SECTION 12 OF THE ACT. A SUBSIDIARY OF AN ISSUER THAT QUALIFIES FOR EXEMPTION UNDER THIS PARAGRAPH IS NOT EXEMPT UNLESS AT LEAST SIXTY PER CENT OF THE VOTING POWER OF THE SUBSIDIARY'S SHARES IS OWNED BY THE QUALIFYING ISSUER OR ISSUERS.

4. A PERSON CERTIFICATED OR REGULATED BY THE CORPORATION COMMISSION PURSUANT TO TITLE 40, CHAPTER 2 OR A SUBSIDIARY OF THAT PERSON OR A FEDERAL COMMUNICATIONS COMMISSION LICENSED CELLULAR TELEPHONE COMPANY OR RADIO TELECOMMUNICATION SERVICES PROVIDER.

5. A PERSON MAKING TELEPHONE SOLICITATIONS FOR A NEWSPAPER OF GENERAL CIRCULATION, A MAGAZINE OR A LICENSED OR FRANCHISED CABLE TELEVISION SYSTEM.

6. AN ISSUER OR SUBSIDIARY OF AN ISSUER THAT IS SUBJECT TO REGISTRATION UNDER CHAPTER 12, ARTICLE 6 OR 7 OF THIS TITLE OR THAT IS EXEMPT FROM REGISTRATION UNDER SECTION 44-1843, PARAGRAPH 1, 2, 3, 4, 5, 7 OR 9.

7. A PERSON MAKING TELEPHONE SOLICITATIONS FOR THE SALE OR PURCHASE OF BOOKS, RECORDINGS, VIDEOCASSETTES AND SIMILAR GOODS THROUGH A MEMBERSHIP GROUP OR CLUB REGULATED BY THE FEDERAL TRADE COMMISSION OR THROUGH A CONTRACTUAL PLAN OR ARRANGEMENT SUCH AS A CONTINUITY PLAN, SUBSCRIPTION ARRANGEMENT, SERIES ARRANGEMENT OR SINGLE PURCHASE UNDER WHICH THE SELLER SHIPS GOODS TO A CONSUMER WHO HAS CONSENTED IN ADVANCE TO RECEIVE THOSE GOODS AND THE RECIPIENT IS GIVEN THE OPPORTUNITY TO REVIEW GOODS FOR AT LEAST SEVEN DAYS AND TO RECEIVE A FULL REFUND FOR RETURN OF UNDAMAGED GOODS.

8. A PERSON OR SOLICITOR FOR A PERSON WHEN SOLICITING PREVIOUS CUSTOMERS, IF ALL OF THE FOLLOWING APPLY:

(a) THE PERSON IS NOT OFFERING TO SELL OR SELLING A SECURITY THAT IS NOT REGISTERED WITH ANY STATE OR FEDERAL AUTHORITY.

(b) THE PERSON MAKES THE SOLICITATION UNDER THE SAME NAME AS THE NAME USED TO SELL MERCHANDISE TO THE CUSTOMER PREVIOUSLY.

(c) THE PERSON DOES NOT OPERATE A RECOVERY SERVICE.

(d) THE PERSON DOES NOT CONDUCT A PRIZE PROMOTION THAT REQUIRES A CONSUMER TO, OR IMPLIES THAT TO WIN A CONSUMER MUST, PAY MONEY OR PURCHASE MERCHANDISE.

(e) THE PERSON HAS NOT, OR ANY OF ITS PRINCIPALS HAVE NOT, WITHIN TWENTY YEARS BEEN CONVICTED IN ANY STATE OF A FELONY OR A CRIME OF MORAL TURPITUDE, BREACH OF TRUST, FRAUD, THEFT, DISHONESTY OR VIOLATION OF TELEPHONE SOLICITATION LAWS, BEEN SUBJECT TO A FINAL JUDGMENT IN A CIVIL ACTION INVOLVING FRAUD, DECEIT OR MISREPRESENTATION OR BEEN SUBJECT TO AN ADMINISTRATIVE ORDER INVOLVING FRAUD, DECEIT, MISREPRESENTATION OR ANY VIOLATION OF TELEPHONE SOLICITATIONS LAWS OF ANY AGENCY OF THIS STATE, ANOTHER STATE, THE FEDERAL GOVERNMENT, A TERRITORY OF THE UNITED STATES OR ANOTHER COUNTRY.

9. A PERSON MAKING TELEPHONE SOLICITATIONS EXCLUSIVELY FOR THE PURPOSE OF THE SALE OF TELEPHONE ANSWERING SERVICES TO BE PROVIDED BY THAT PERSON OR THAT PERSON'S EMPLOYER.

10. ANY BANK HOLDING COMPANY, BANK, FINANCIAL INSTITUTION, TRUST COMPANY, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, MORTGAGE BANKER OR BROKER, CONSUMER LENDER OR INSURER THAT IS LICENSED OR SUPERVISED BY AN OFFICIAL OR AGENCY OF THIS STATE, ANY OTHER STATE OR THE UNITED STATES, INCLUDING ANY PARENT, SUBSIDIARY OR AFFILIATE OF THESE INSTITUTIONS.

11. A PERSON PROVIDING TELEMARKETING SALES SERVICE CONTINUOUSLY FOR AT LEAST FIVE YEARS UNDER THE SAME OWNERSHIP AND CONTROL THAT DERIVES SEVENTY-FIVE PER CENT OF ITS GROSS TELEMARKETING SALES REVENUES FROM CONTRACTS WITH PERSONS EXEMPTED BY THIS SECTION. A SELLER USING AN EXEMPT TELEMARKETING SALES SERVICE IS NOT EXEMPT UNLESS OTHERWISE QUALIFYING FOR AN EXEMPTION UNDER THIS SECTION.

C. ON REQUEST BY THE SECRETARY OF STATE, THE DIRECTOR OF THE DEPARTMENT OF INSURANCE SHALL PROVIDE A CURRENT LIST IN A MUTUALLY ACCEPTABLE ELECTRONIC FORMAT TO THE SECRETARY OF STATE OF THE REQUESTED LICENSEES DESCRIBED IN SUBSECTION A, PARAGRAPH 1 OF THIS SECTION THAT INCLUDES ALL OF THE FOLLOWING INFORMATION:

1. THE TRUE LEGAL NAME OF THE SELLER.

2. ALL OF THE NAMES UNDER WHICH THE SELLER IS DOING BUSINESS OR INTENDS TO DO BUSINESS.

3. THE COMPLETE STREET ADDRESS OF THE PHYSICAL LOCATION OF THE PRINCIPAL PLACE OF BUSINESS OF THE SELLER AND THE TELEPHONE NUMBER FOR THE LOCATION.

4. THE NAME AND ADDRESS OF THE SELLER'S AGENT WHO IS AUTHORIZED TO RECEIVE SERVICE OF PROCESS.

B. D. In any civil proceeding alleging a violation of this article, the burden of proving an exemption or an exception from a definition is on the person claiming the exemption or exception. In any criminal proceeding in which a violation of this article is alleged, the burden of producing evidence to support a defense based on an exemption or an exception from a definition is on the person claiming the exemption or exception.

C. E. Any person or solicitor exempted IN PART from this article by this section shall not make or submit a charge to a consumer's credit card account or a consumer's checking, savings, share or similar account unless any of the following apply:

1. The person provides that the consumer may receive a full refund for the return of undamaged and unused goods or a cancellation of services by providing notice to the person within seven days after the date that the consumer receives the merchandise and the person processes:

(a) A full refund within thirty days after the date that the person receives the returned merchandise from the consumer.

(b) A full refund within thirty days after the purchaser of services cancels an order for the services or a pro rata refund for any services not yet performed for the consumer.

2. The person provides the consumer with a signed copy of a written contract that includes the person's name, address and business telephone number and that fully describes the merchandise offered by the person, the total price to be charged by the person and any terms or conditions affecting the sale.

3. The person is an organization that is registered with the secretary of state pursuant to section 44-6552 or that is exempt from registration pursuant to section 44-6553.

Sec. 3. Section 44-1278, Arizona Revised Statutes, is amended to read:

44-1278 . Unlawful practice; powers of attorney general; cumulative remedies

A. It is an unlawful practice pursuant to section 44-1522 for a seller to make or authorize to any consumer any reference to the seller's compliance with this article other than on inquiry by the consumer.

B. IT IS AN UNLAWFUL PRACTICE PURSUANT TO SECTION 44-1522 FOR ANY SELLER OR SOLICITOR WHO CONDUCTS A TELEPHONE SOLICITATION IN THIS STATE TO DO ANY OF THE FOLLOWING:

1. USE TELEPHONE EQUIPMENT THAT BLOCKS THE CALLER IDENTIFICATION FUNCTION ON THE TELEPHONE OR TELEPHONE EQUIPMENT OF THE TELEPHONE NUMBER DIALED SO THAT THE TELEPHONE NUMBER OF THE CALLER IS NOT DISPLAYED ON THE TELEPHONE OR TELEPHONE EQUIPMENT THAT IS CAPABLE OF DISPLAYING THE TELEPHONE NUMBER OF THE CALLER.

2. INITIATE AN OUTBOUND TELEPHONE CALL TO A PERSON IF THAT PERSON HAS PREVIOUSLY STATED A DESIRE NOT TO RECEIVE OUTBOUND TELEPHONE CALLS MADE BY OR ON BEHALF OF THE SELLER WHOSE GOODS OR SERVICES ARE BEING OFFERED. A SELLER OR SOLICITOR IS NOT LIABLE UNDER THIS PARAGRAPH OR PARAGRAPH 3 IF ALL OF THE FOLLOWING APPLY:

(a) THE SELLER OR SOLICITOR HAS ESTABLISHED AND IMPLEMENTED WRITTEN PROCEDURES TO COMPLY WITH THIS PARAGRAPH.

(b) THE SELLER OR SOLICITOR HAS TRAINED THE SELLER'S OR SOLICITOR'S PERSONNEL ACCORDING TO THE WRITTEN PROCEDURES PRESCRIBED IN SUBDIVISION ( a ) OF THIS PARAGRAPH.

( c ) THE SELLER OR THE SOLICITOR ACTING ON BEHALF OF THE SELLER ESTABLISHES AND MAINTAINS A NO CALL LIST COMPRISED OF ALL PERSONS WHO REQUEST NOT TO BE CONTACTED AND KEEPS ALL DO NOT CALL REQUESTS FOR AT LEAST TEN YEARS.

( d ) THE INITIAL OUTBOUND CALL OR ANY SUBSEQUENT OUTBOUND CALL MADE BY THE SELLER OR SOLICITOR IS THE RESULT OF AN ERROR.

3. INTENTIONALLY MAKE OR CAUSE TO BE MADE ANY UNSOLICITED TELEPHONE SALES CALL TO ANY MOBILE OR TELEPHONE PAGING DEVICE.

4. MAKE A TELEPHONE CALL TO ANY RESIDENTIAL TELEPHONE USING AN ARTIFICIAL OR PRERECORDED VOICE TO DELIVER A MESSAGE UNLESS THE CALL IS INITIATED FOR EMERGENCY PURPOSES OR THE CALL IS MADE WITH THE PRIOR EXPRESS CONSENT OF THE CALLED PARTY.

5. USE ANY AUTOMATIC TERMINAL EQUIPMENT THAT USES A RANDOM OR SEQUENTIAL NUMBER GENERATOR UNLESS THE EQUIPMENT EXCLUDES CALLS TO THE FOLLOWING TELEPHONE NUMBERS:

(a ) EMERGENCY TELEPHONE NUMBERS, INCLUDING 911, OF ANY HOSPITAL, MEDICAL PHYSICIAN, HEALTH CARE FACILITY, POISON CONTROL CENTER, FIRE PROTECTION FACILITY OR LAW ENFORCEMENT AGENCY.

( b ) ANY GUEST ROOM OR PATIENT ROOM OF A HOSPITAL, HEALTH CARE FACILITY, ELDERLY CARE HOME OR SIMILAR ESTABLISHMENT.

( c ) A PAGING SERVICE, A CELLULAR TELEPHONE SERVICE, A SPECIALIZED MOBILE RADIO SERVICE OR ANY SERVICE FOR WHICH THE CALLED PARTY IS CHARGED FOR THE CALL.

( d ) THE TELEPHONE NUMBERS MAINTAINED ON A NO CALL LIST ESTABLISHED PURSUANT TO PARAGRAPH 2 OF THIS SUBSECTION.

B. C. Failure to comply with this article is an unlawful practice pursuant to section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

C. D. The provisions of this article are in addition to all other causes of action, remedies and penalties available to this state.

D. E. The attorney general may bring an action in federal court in accordance with 15 United States Code sections 6101 through 6108.

Sec. 4. Limited registration grace period

Any seller that is required to file with the secretary of state a limited registration statement pursuant to section 44-1272.01, Arizona Revised Statutes, as added by this act, is not subject to the penalties prescribed in section 44-1272.01, subsection F, Arizona Revised Statutes, as added by this act, for six months after the effective date of this act.

Sec. 5. Interagency service agreement

The secretary of state shall enter into an interagency service agreement with the director of the department of insurance pursuant to section 35-148, Arizona Revised Statutes, to provide the list of requested licensees and related information prescribed in section 44-1273, subsection C, Arizona Revised Statutes, as added by this act.

APPROVED BY THE GOVERNOR MAY 12, 1999.

FILED IN THE OFFICE OF THE SECRETARY OF STATE MAY 12, 1999.