Session of 1999
         
SENATE BILL No. 127
         
By Senator Hensley
          
1-25
          
  9             AN  ACT amending and supplementing the Kansas consumer protection
10             act; relating to telemarketing fraud; requiring registration and certain
11             record keeping; prohibiting certain acts and providing penalties and
12             remedies for violations; concerning prize notification; amending K.S.A.
13             50-672, 50-675 and 50-692 and repealing the existing sections.
14      
15       Be it enacted by the Legislature of the State of Kansas:
16             Section  1. K.S.A. 50-672 is hereby amended to read as follows: 50-
17       672. (a) Any verbal agreement made by a consumer to purchase any
18       goods or services from a telemarketer shall not be considered valid and
19       legally binding unless the telemarketer receives from the consumer a
20       signed confirmation that discloses in full the terms of the sale agreed
21       upon.
22             (b) The confirmation shall include, but is not limited to, the following
23       information:
24             (1) The name of the telemarketer;
25             (2) the address and telephone number at which personal or voice
26       contact with an employee or agent of the telemarketer can be made dur-
27       ing normal business hours;
28             (3) a list of all prices or fees being requested, including any handling,
29       shipping, delivery, or other charges;
30             (4) the date of the transaction;
31             (5) a detailed description of the goods or services being sold;
32             (6) any restrictions, limitations or conditions to purchase the goods
33       or services being sold;
34             (7) any material aspect of the performance, quality, efficacy, nature
35       or basic characteristics of the goods or services being sold;
36             (8) any material aspect of the nature or terms of refund, cancellation,
37       exchange or repurchase policies;
38             (6) (9) a duplicate copy with the complete information as presented
39       in the original confirmation, to be retained by the consumer as proof of
40       the terms of the agreement to purchase; and
41             (7) (10) in a type size of a minimum of twelve points, in a space
42       immediately preceding the space allotted for the consumer signature, the
43       following statement:

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  1             "YOU ARE NOT OBLIGATED TO PAY ANY MONEY UNLESS
  2       YOU SIGN THIS CONFIRMATION AND RETURN IT TO THE
  3       SELLER."
  4             (c) A telemarketer may not make or submit any charge to the con-
  5       sumer's credit card account until the telemarketer has received from the
  6       consumer an original copy of a confirmation, signed by the consumer,
  7       that complies with this section. Any merchandise sent or services provided
  8       without such written confirmation shall be considered as unsolicited
  9       goods subject to the provisions of K.S.A. 50-617 and amendments thereto.
10             (d) No consumer shall be held liable for payment for any good or
11       service provided by a telemarketer unless such telemarketer has first re-
12       ceived the written consent of the consumer in the form of a confirmation
13       as defined in this section.
14             (e) In the event that the consumer sends payment to the telemarketer
15       in the form of a personal check, cash money, or any other form of payment
16       other than credit card without having included a signed copy of such
17       confirmation, the consumer shall have the right to choose at any time to
18       cancel the sale by notifying the telemarketer in writing, provided the
19       consumer returns to the telemarketer the goods sold in substantially the
20       same condition as when they were received by the consumer. A telemar-
21       keter that has received such notice to cancel from a consumer shall then,
22       within 10 business days of the receipt of such notice:
23             (1) Refund all payments made, including any down payment made
24       under the agreement;
25             (2) return any goods or property traded in to the seller on account of
26       or in contemplation of the agreement, in substantially the same condition
27       as when received by the telemarketer; and
28             (3) take any action necessary or appropriate to terminate promptly
29       any security interest created in connection with the agreement.
30             New Sec.  2. (a) No telemarketer shall conduct business in this state
31       without having registered with the attorney general at least 60 days before
32       conducting such business. An application for renewal shall be made on
33       an annual basis thereafter.
34             (b) The application for a certificate of registration or renewal shall
35       include, but not be limited to, the following information:
36             (1) The name, current address, telephone number and location of the
37       telemarketer, including each name under which the telemarketer intends
38       to engage in telemarketing;
39             (2) each occupation or business that the telemarketer's principal
40       owner has engaged in for two years immediately preceding the date of
41       the application;
42             (3) whether any principal or manager of the telemarketer has been
43       convicted or plead guilty to or is being prosecuted by indictment for

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  1       racketeering, violations of state or federal securities laws or a theft
  2       offense;
  3             (4) whether there has been entered against any principal or manager
  4       of the telemarketer an injunction, temporary restraining order or a final
  5       judgment in any civil or administrative action, involving fraud, theft, rack-
  6       eteering, embezzlement, fraudulent conversion or misappropriation of
  7       property, including any pending litigation against the applicant;
  8             (5) whether the telemarketer, at any time during the previous seven
  9       years, has filed for bankruptcy, been adjudged bankrupt or been reor-
10       ganized because of insolvency;
11             (6) the name, current home address, date of birth, social security
12       number and all other names of the following:
13             (A) Each person to be employed by the telemarketer;
14             (B) each person participating in or responsible for the management
15       of the telemarketer's business; and
16             (C) each person, (office manager, supervisor) principally responsible
17       for the management of the telemarketer's business;
18             (7) the name, address and account number of every institution where
19       banking or any other monetary transactions are done by the seller; and
20             (8) a copy of all scripts, outlines or presentation material the tele-
21       marketer will use when soliciting as well as all sales information to be
22       provided by the telemarketer to a purchaser in connection with any te-
23       lemarketing contract.
24             New Sec.  3. (a) A telemarketer shall keep for a period of 24 months
25       from the date the record is produced, records of all financial transactions,
26       written notices, disclosures and acknowledgments, in the form, manner,
27       format or place as the telemarketer keeps such records in the ordinary
28       course of business, including but not limited to:
29             (1) All substantially different advertising, brochures, telemarketing
30       scripts and promotional materials;
31             (2) the name and last known address of each customer, the goods or
32       services purchased, the date such goods or services were shipped or pro-
33       vided and the amount provided and the amount paid by the customer for
34       the goods or services;
35             (3) the name, any fictitious name used, the last known home address
36       and telephone number and the job title for all current and former em-
37       ployees directly involved in telephone sales but, if the telemarketer per-
38       mits fictitious names to be used by employees, each fictitious name must
39       be traceable to only one specific employee; and
40             (4) all written authorizations or confirmations required to be pro-
41       vided or received under this act.
42             (b) In the event of any dissolution or termination of the telemarke-
43       ter's business, the principal of that telemarketer shall maintain all records

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  1       as required under this section. In the event of any sale, assignment or
  2       other change in ownership of the telemarketer's business, the successor
  3       shall maintain all records required under this section.
  4             Sec.  4. K.S.A. 50-675 is hereby amended to read as follows: 50-675.
  5       (a) This act shall be part of and supplemental to the Kansas consumer
  6       protection act.
  7             (b) Any It is an unconscionable act within the meaning of K.S.A. 50-
  8       627 and amendments thereto for a telemarketer or a telemarketer's agent
  9       to:
10             (1) Attempt to collect a fee, or enforce a credit card charge or trans-
11       action or any refusal refuse to make a refund to the consumer in violation
12       of this act is an unconscionable act within the meaning of K.S.A. 50-627
13       and amendments thereto;
14             (2) fail to register as required by section 2 and amendments thereto
15       or to misrepresent that the telemarketer is so registered;
16             (3) fail to maintain a certificate of registration issued pursuant to
17       section 2 and amendments thereto;
18             (4) include any false or misleading information on an application for
19       registration pursuant to section 2 and amendments thereto;
20             (5) fail to maintain any records as required by section 3;
21             (6) represent that registration as a telemarketer constitutes an en-
22       dorsement or approval by the state or a state agency;
23             (7) obtain or submit for payment a check, draft or other form of ne-
24       gotiable paper drawn on a person's checking, savings or bankcard account
25       without the consumer's express written authorization;
26             (8) procure the services of any professional delivery, courier or other
27       pickup service to obtain immediate receipt or possession of a consumer's
28       payment; unless the goods are delivered with the opportunity to inspect
29       before any payment is collected;
30             (9) threaten, intimidate or use profane or obscene language in a te-
31       lemarketing call;
32             (10) cause the telephone to ring more than five times in an intended
33       telemarketing call;
34             (11) engage any person repeatedly or continuously in a telemarketing
35       call with behavior a reasonable person would deem to be annoying, abu-
36       sive or harassing;
37             (12) initiate a telemarketing call to a person, when that person has
38       stated previously that the person does not wish to receive calls from the
39       telemarketer;
40             (13) engage in telemarketing calls to a person's residence at any time
41       other than between 8:00 a.m. and 9:00 p.m. local time, at the called per-
42       son's location; or
43             (14) engage in any other conduct in telemarketing calls that would be

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  1       considered abusive to any reasonable consumer.
  2             (c) It is an unconscionable act within the meaning of K.S.A. 50-627
  3       and amendments thereto for any person to:
  4             (1) Assist, support or provide substantial assistance to any telemar-
  5       keter when the person knew or should have known that the telemarketer
  6       was engaged in an act or practice described by subsection (b); or
  7             (2) request or receive payment in advance from a person, to recover
  8       or otherwise aid in the return of money or any other item lost by the
  9       consumer in a prior telemarketing transaction.
10             Sec.  5. K.S.A. 50-692 is hereby amended to read as follows: 50-692.
11       (a) As used in this section:
12             (1) "Prize" means a gift, award or other item or service of value.
13             (2) "Prize notice" means a notice given to an individual in this state
14       that satisfies all of the following:
15             (A) Is or contains a representation that the individual has been se-
16       lected or may be eligible to receive a prize.; and
17             (B) conditions receipt of a prize on a payment from the individual or
18       requires or invites the individual to make a contact to learn how to receive
19       the prize or to obtain other information related to the notice.
20             (3) "Solicitor" means a person who represents to an individual that
21       the individual has been selected or may be eligible to receive a prize.
22             (4) "Sponsor" means a person on whose behalf a solicitor gives a prize
23       notice.
24             (5) "Verifiable retail value" of a prize means:
25             (A) A price at which the solicitor or sponsor can demonstrate that a
26       substantial number of the prizes have been sold by a person other than
27       the solicitor or sponsor in the trade area in which the prize notice is given.;
28       or
29             (B) if the solicitor or sponsor is unable to satisfy paragraph (A), no
30       more than 1.5 times the amount the solicitor or sponsor paid for the prize.
31             (b) If a solicitor represents to an individual, by oral or written com-
32       munication, that the individual has been selected or may be eligible to
33       receive a prize, the solicitor shall not request, and the solicitor or sponsor
34       shall not accept, a payment from the individual in any form and the so-
35       licitor shall not create the reasonable impression that such payment is
36       required before the individual receives a written prize notice that contains
37       all of the information required under subsection (c)(1) presented in the
38       manner required under subsection (c)(2) through (6).
39             (c)  (1) A written prize notice shall contain all of the following infor-
40       mation presented in the manner required under paragraphs (1) through
41       (6):
42             (A) The name and address of the solicitor and sponsor.
43             (B) The description and verifiable retail value of each prize the in-

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  1       dividual has been selected or may be eligible to receive.
  2             (C) The actual number of each prize to be awarded.
  3             (D) If the notice lists more than one prize that the individual has
  4       been selected or may be eligible to receive, a statement of the odds the
  5       individual has of receiving each prize.
  6             (D) (E) Any requirement or invitation for the individual to view, hear
  7       or attend a sales presentation in order to claim a prize, the approximate
  8       length of the sales presentation and a description of the property or serv-
  9       ice that is the subject of the sales presentation.
10             (E) (F) Any requirement that the individual pay shipping or handling
11       fees or any other charges to obtain or use a prize.
12             (F) (G) If a receipt or redemption of the prize is subject to a any
13       condition or restriction, a statement that a restriction applies restrictions
14       and conditions apply, a description of the restriction all restrictions and
15       conditions and a statement containing the location in the notice where
16       the restriction is restrictions and conditions are described.
17             (G) (H) Any limitations on eligibility.
18             (2)  (A) The verifiable retail value and the statement of odds required
19       in a written prize notice under paragraphs (1)(B) and (C) shall be stated
20       in immediate proximity to each listing of the prize in each place the prize
21       appears on the written prize notice and shall be in the same size and
22       boldness of type as the prize.
23             (B) The statement of odds shall include, for each prize, the total num-
24       ber of prizes to be given away and the total number of written prize
25       notices to be delivered. The number of prizes and written prize notices
26       shall be stated in Arabic numerals. The statement of odds shall be in the
27         (number of prizes)
28       following form: "__________________ out of ________ written
29       prize notices."
30             (C) The verifiable retail value shall be in the following form: "veri-
31       fiable retail value: $________."
32             (3) If an individual is required to pay shipping or handling fees or any
33       other charges to obtain or use a prize, the following statement shall appear
34       in immediate proximity to each listing of the prize in each place the prize
35       appears in the written prize notice and shall be in not less than 10-point
36       boldface type: "YOU MUST PAY $________ IN ORDER TO RE-
37       CEIVE OR USE THIS ITEM."
38             (4) The information required in a written prize notice under para-
39       graph (1)(D) shall be on the first page of the written prize notice in not
40       less than 10-point boldface type. The information required under para-
41       graph (1)(F) and (G) shall be in not less than 10-point boldface type.
42             (5) If a written prize notice is given by a solicitor on behalf of a
43       sponsor, the name of the sponsor shall be more prominently and con-
44       spicuously displayed than the name of the promoter.

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  1             (6) A solicitor or sponsor shall not do any of the following:
  2             (A) Place on an envelope containing a written prize notice any rep-
  3       resentation that the person to whom the envelope is addressed has been
  4       selected or may be eligible to receive a prize.
  5             (B) Deliver a written prize notice that contains language, or is de-
  6       signed in a manner, that would lead a reasonable person to believe that
  7       it originates from a government agency, public utility, insurance company,
  8       consumer reporting agency, debt collector or law firm unless the written
  9       prize notice originates from that source.
10             (C) Represent directly or by implication that the number of individ-
11       uals eligible for the prize is limited or that an individual has been selected
12       to receive a particular prize unless the representation is true.
13             (d) If a prize notice requires or invites an individual to view, hear or
14       attend a sales presentation in order to claim a prize, the sales presentation
15       shall not begin until the solicitor does all of the following:
16             (1) Informs the individual of the prize, if any, that has been awarded
17       to the individual.
18             (2) If the individual has been awarded a prize, delivers to the indi-
19       vidual the prize or the item selected by the individual under subsection
20       (e) if the prize is not available.
21             (e)  (1) A solicitor who represents to an individual in a written prize
22       notice that the individual has been awarded a prize shall provide the prize
23       to the individual unless the prize is not available. If the prize is not avail-
24       able, the solicitor shall provide the individual with any one of the following
25       items selected by the individual:
26             (A) Any other prize listed in the written prize notice that is available
27       and that is of equal or greater value.
28             (B) The verifiable retail value of the prize in the form of cash, a
29       money order or a certified check.
30             (C) A voucher, certificate or other evidence of obligation stating that
31       the prize will be shipped to the individual within 30 days at no cost to
32       the individual.
33             (2) If a voucher, certificate of other evidence of obligation delivered
34       under paragraph (1)(C) is not honored within 30 days, the solicitor shall
35       deliver to the individual the verifiable retail value of the prize in the form
36       of cash, a money order or a certified check. The sponsor shall make the
37       payment to the individual if the solicitor fails to do so.
38             (f) Nothing in this section shall be construed to permit an activity
39       otherwise prohibited by law.
40             (g) Any violation of this section is an unconscionable act or practice
41       under the Kansas consumer protection act.
42             (h) In addition to any other remedies, a person suffering pecuniary
43       loss because of a violation by another person of this section may bring an

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  1       action in any court of competent jurisdiction and shall recover all of the
  2       following:
  3             (1) The greater of $500 or twice the amount of the pecuniary loss.
  4             (2) Costs and reasonable attorney fees.
  5             (i) The provisions of this section shall not apply to the sale or pur-
  6       chase, or solicitation or representation in connection therewith, of goods
  7       from a catalog or of books, recordings, videocassettes, periodicals and
  8       similar goods through a membership group or club which is regulated by
  9       the federal trade commission trade regulation rule concerning use of neg-
10       ative option plans by sellers in commerce or through a contractual plan
11       or arrangement such as a continuity plan, subscription arrangement or a
12       single sale or purchase series arrangement under which the seller ships
13       goods to a consumer who has consented in advance to receive such goods
14       and the recipient of such goods is given the opportunity, after examination
15       of the goods, to receive a full refund of charges for the goods or unused
16       portion thereof, upon return of the goods or unused portion thereof,
17       undamaged. A sponsor shall maintain, for a period of 24 months after the
18       award of a prize, a record of the name and last known address of the
19       prize recipient and the prize awarded such recipient.
20             (j) This section shall be part of and supplemental to the Kansas con-
21       sumer protection act. 
22       Sec.  6. K.S.A. 50-672, 50-675 and 50-692 are hereby repealed.
23        Sec.  7. This act shall take effect and be in force from and after its
24       publication in the statute book.