MINUTES OF THE

      SENATE COMMITTEE ON COMMERCE AND LABOR

 

      Sixty-seventh Session

      February 18, 1993

 

 

 

The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Thursday, February 18, 1993, in Room 207/208 at Cashman Field Center, Las Vegas, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

Senator Randolph J. Townsend, Chairman

Senator Sue Lowden, Vice Chairman

Senator Ann O'Connell

Senator Mike McGinness

Senator Raymond C. Shaffer

Senator Leonard V. Nevin

Senator Lori L. Brown

 

 

STAFF MEMBERS PRESENT:

 

Brian Davie, Senior Research Analyst

Sheri Asay, Committee Secretary

Denise Pinnock, Committee Secretary

Frank Krajewski, Senior Research Analyst

 

 

OTHERS PRESENT:

 

Cheryl Lau, Secretary of State, Testified from    Carson City

Sherry Porter, Trademark Supervisor, Office of the Secretary of    State, Testified from Carson City

Colette Rausch, Deputy Attorney General, Consumer Affairs Division,       Office of the Attorney General

Steve Sisolak, Owner, American Distributing Co./Telemarketing       Communications Board

Tammie Smith, Chief Compliance Investigator, Consumer

      Affairs/Telemarketing, Office of the Attorney General

Ray Trease, Supervising Compliance Investigator, Consumer Affairs       Division, Department of Commerce, Testified from Carson City

John Kendrick, Private Citizen

 

 

 

Senator McGinness chaired the meeting. He announced that the topic for today's hearing would be Title 52, Trade Regulations and Practices.

 

Cheryl Lau, Secretary of State, testified from Carson City and said she was introducing Senate Bill (S.B.) 214, which contains changes to the registration of trademarks and insignia. Ms. Lau said there have been no changes to this portion of the statute since the 1970s. She explained the changes in section 1, subsection 2, which deals with the filing fee. Section 2, subsection 1, deals with the time of registration from 5 years to 10 years, Ms. Lau said. She explained the need for this change and for the changes in section 4 and section 6.

 

Ms. Lau said, "These are the reasons why we want to raise the fees, and that is to keep in line with the other states, and also, to make sure that we keep our administrative work up." She pointed out that she has had no complaints about the rate increase, and asked the committee if they had any questions.

 

Senator O'Connell asked, "Do these (the trademarks) just stay on file until somebody requests pulling them?" She wondered if there was a review process, and expressed concern about the storage of trademarks. Ms. Lau responded that "we do not purge, unless we don't hear from them after that end of the 10 years...." She added that her office has been getting a lot more trademarks.

 

Senator O'Connell inquired about the number of personnel. Ms. Lau replied, "I only have one staff person, and that is Sherry Porter.." She explained Ms. Porter's duties.

 

Sherry Porter, Trademark Supervisor, Office of the Secretary of State, testified from Carson City on the method she uses to store the trademarks.

 

At the request of Senator O'Connell, Ms. Lau explained the difference between a trademark and a patent.

 

Senator Lowden introduced Las Vegas High School, and gave the class an introduction to the legislature.

 

Senator McGinness asked if the time change from 10 to 5 years would necessitate additional staff. Ms. Lau replied they would still be able to handle the work with one staff person.

 

In response to a request by Senator Townsend, Ms. Lau agreed to provide a yearly update, if S.B. 214 passes, on the financial change it has created in her office, and give an accounting of what she has done with the monetary increase. Ms. Lau pointed out that all of the filing fees go to the General Fund. Senator Townsend stated that the committee would have asked different questions, had they known about the General Fund.

 

Colette Rausch, Deputy Attorney General, Consumer Affairs Division, Office of the Attorney General, testified about the responsibilities of the Attorney General's Office (AGO), and those of the Consumer Affairs Division.

 

Senator Townsend inquired about the lack of a Commissioner of Consumer Affairs. Ms. Rausch explained how her department operates with that position unfilled.

 

Steve Sisolak, Owner, American Distributing Co./Telemarketing Communications Board, addressed the committee regarding the lack of a commissioner. He thought the vacancy sent the wrong message to some of the telemarketing industry members, that there is no one in charge.

 

Mr. Sisolak praised the work of the AGO Consumer Affairs Division, but noted there had been a marked increase in actions by other states and the Federal Trade Commission (FTC) against Nevada telemarketers.

 

Senator Townsend suggested they leave the commissioner position vacant, and let the deputy attorney general and two extra staff people do the work.

 

Mr. Sisolak agreed with Senator Townsend. He mentioned a problem of senior citizens being victimized by telemarketers. Ms. Sisolak said legitimate industry wants more regulation of the deceptive telemarketers, and expressed concern about the lack of funding for investigators to deal with them.

 

Tammie Smith, Chief Compliance Investigator, Consumer Affairs/ Telemarketing, Office of the Attorney General, testified. In response to a question by Senator O'Connell, she replied that there are currently 685 licensed telemarketing companies operating in Nevada. Ms. Smith told of several companies not regulated by the Consumer Affairs Division, which operate under an "umbrella of publicly traded."

 

Ms. Smith explained how the Consumer Affairs Division works with other agencies to track these companies. Ms. Rausch elaborated on the process of bringing charges of deceptive trade practices against them.

 

There was further discussion on monitoring the activities of telemarketers. Ms. Rausch stressed the value of tape recordings in prosecuting them.

 

Senator Townsend suggested a small fee increase to telemarketers. The money would be used to hire more staff, he explained. Ms. Sisolak responded, "...they are just accumulating money. I mean they've got a million and a half dollars that's not getting spent." He spoke of his efforts to get more people hired. Ms. Rausch responded to Senator Townsend's request to explain the problem of using the money to hire more people. She said "right now that is a proposal (that is) out, to increase the staffing of attorneys."

 

There was further discussion on why the money is not being spent for additional investigators. Senator O'Connell suggested the commerce and labor committee request a hearing in front of the finance committee. She said, "This (the telemarketing situation) is one of the blackest eyes Nevada gets."

 

Mr. Sisolak expressed appreciation for the committee's support because, "we know that our industry is going to be wiped out, if something's not done." He asked for more regulation of his industry, to protect the legitimate telemarketers. Ms. Rausch said there would be ways coming up for the committee to toughen up the laws. She mentioned increasing the security posted by each telemarketer, both as a deterrent to the deceptive companies, and to have funds available to pay restitution to the victims.

 

Mr. Sisolak mentioned several other loopholes that telemarketers are using to avoid regulation. Ms. Rausch cautioned the committee about the lobbyists who would try to persuade the committee against the regulations. There was discussion on advertising campaigns, and a possible speakers bureau, to warn the public of deceptive telemarketing practices.

 

Ms. Smith discussed her efforts to educate students. She pointed out that high school students were being hired by telemarketing agencies, and that she cautions the students about unethical telemarketers. Ms. Smith listed other groups she has spoken to in her education attempts. She related stories of consumers who had been defrauded by telemarketing companies.

 

Senator Shaffer suggested prohibiting telemarketing companies from locating near a high school.

 

There was discussion on how consumer lists are appropriated by telemarketers. Ms. Smith explained how the telemarketers garner personal information about a consumer, and how they use that information.

 

Ms. Rausch stressed that the law now prohibits disclosure of consumer's names. But it does not prohibit buying a list, she said, so it targets the seller, but not the buyer.

 

Mr. Sisolak clarified that the unethical practices spoken of in the hearing are not practiced by his company, nor other legitimate companies. He discussed the problem of senior citizens being defrauded, and explained why they are such easy prey. Mr. Sisolak also cautioned about the easy access to a consumer's charge cards and bank accounts.

 

Senator Brown wondered whether the fines were high enough to deter fraud. Ms. Rausch explained that there are two categories, one of which is "unlicensed activity," which is a felony. There is a "pretty low" fine according to Ms. Rausch.

 

The other category involves suspending or revoking a telemarketer's license. "The administrative set-up does not provide for fines," she said. "If we catch someone, we take administrative action against their license." Ms. Rausch thought the fines for criminal action should be set higher.

 

Ms. Smith and Mr. Sisolak spoke about the outcome of criminal action regarding telemarketing in several cases in Nevada. Mr. Sisolak thought the fines were merely a "slap on the wrist" to the larger telemarketers.

 

Ray Trease, Supervising Compliance Investigator, Consumer Affairs Division, Department of Commerce, testified from Carson City. He discussed pending legislation regarding telemarketing. Mr. Trease explained the steps his department has taken to protect consumers.

 

Ms. Rausch spoke about the deceptive trade regulations. She discussed the cases her department has settled with the three major credit reporting companies. Ms. Rausch stated that, as a result, her agency brought in $29,428 to the state in costs, in addition to helping consumers who had problems with their credit reports. She discussed pending state and federal legislation. 

 

Senator Townsend recommended they "...take all bill draft request (BDRs) that are currently available for telemarketing and meld them into Senator Nevin's bill. And then add to that any of the loophole plugs the three of you can bring forward. And then we will have one vehicle to strengthen this whole area." He thought that would take care of the issues of the funding that would go into the General Fund, and how quickly investigative staff should be hired, etc.

 

John Kendrick, Private Citizen, testified regarding telemarketing. He was discouraged with telemarketers and assumed they are all fraudulent. Mr. Kendrick expressed his displeasure with the intrusion into his privacy, when they call his home.

 

Senator McGinness thanked Mr. Kendrick for his comments, and gave him advice on how to handle telemarketers to whom he did not wish to talk.

 

Senator Lowden introduced the 8th grade class at St. Francis de Sales School. She explained the teleconferencing system to the students.

 

There being no further business, the meeting was adjourned at 10:15 a.m.

 

 

 

 

            RESPECTFULLY SUBMITTED:

 

 

 

                                    

            Sheri Asay,

            Committee Secretary

 

 

 

APPROVED BY:

 

 

 

 

                                     

Senator Randolph J. Townsend, Chairman

 

 

DATE:                                 

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Senate Committee on Commerce and Labor

February 18, 1993

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