MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
April 14, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on April 14, 1993, in Room 227 of the Legislative Building, Carson City, 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 Mike McGinness
Senator Raymond C. Shaffer
Senator Leonard V. Nevin
Senator Lori L. Brown
COMMITTEE MEMBERS ABSENT:
Senator Ann O'Connell (Excused)
STAFF MEMBERS PRESENT:
Beverly Willis, Committee Secretary
Brian Davie, Senior Research Analyst
OTHERS PRESENT:
John P.Kuminecz, Commissioner, Department of Commerce, Consumer Affairs Division
Colette L. Rausch, Deputy Attorney General, Consumer Affairs Division
Jolene B. Rose, Deputy Director, Department of Commerce, Office of the Director
Steve Sisolak, American Distributing Company
Lewis E. Laughlin, Chief Executive Officer, Laughlin Associates, Inc.
Senator Townsend opened the meeting with three Bill Draft Requests (BDRs) to be introduced.
BDR 57-1099: Clarifies that non-profit corporations for hospital, medical or dental services may issue blanket health insurance.
BDR 40-950:Prohibits certain activities near overhead line carrying high voltage.
BDR 54-884:Provides for regulation of supportive personnel in pharmacies and counseling of patients.
SENATOR NEVIN MOVED FOR COMMITTEE INTRODUCTION OF BDR 57-1099, BDR 40-950 AND BDR 54-884.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O'CONNELL WAS ABSENT FOR THE VOTE.)
Senator Townsend noted that commercial policies surrounding telemarketing in the State of Nevada would be discussed today. He stated all of the bills and BDRs that affect telemarketing were listed on the agenda, even though they are not all this committee's bills, because it would allow discussion on this subject. Senator Townsend went on to state there would be no action taken, since the intention would be to process one bill only on telemarketing. There will be another day scheduled for action on this subject.
John P. Kuminecz, Commissioner, Department of Commerce, Consumer Affairs Division and Colette L. Rausch, Deputy Attorney General, Consumer Affairs Division stated they wanted to give a history of telemarketing regulation and how they would hope to proceed.
Ms. Rausch gave a history of telemarketing regulation. She stated that early attempts at legislation had failed, but eventually succeeded. Basically, the general purpose was to provide for the licensing of the telemarketing industry, to protect consumers with the goal of ridding the industry of those businesses who could not operate legally and to eliminate those practicing deceptive business practices.
Mr. Kuminecz stated the purpose of his division was to help regulate the telemarketing industry, to keep it healthy and to preserve the consumer from harm. He noted the industry had grown immensely over the past few years. Part of the resources are dedicated to investigation of deceptively operated licensed firms, while a lot of effort goes to ferret out those outside the licensing process. Mr. Kuminecz went on to state there are many licensed Nevada telemarketers working to improve the industry and turn it into a bona fide retail sales trade. He stated that industry regulation needs to become more proactive as opposed to reactive.
Senator Townsend opened the hearing on BDR 52-540.
BDR 52-540:Makes various changes relating to regulation of solicitation by telephone.
Mr. Kuminecz gave a detailed explanation of proposed changes in
BDR 52-540 (Exhibit C).
Senator Nevin asked for clarification on section 5 regarding the wording "reject the voluntary surrender of a license." Mr. Kuminecz noted this might keep a licensee from escaping jurisdiction in case disciplinary action was needed. Ms. Rausch noted this wording would let licensees know that just because the license expired, or just because a voluntary surrender was attempted, it would not prevent disciplinary action for the time of misconduct.
Senator Nevin then asked about script approval or disapproval. Mr. Kuminecz answered the Consumer Affairs Division did not approve or disapprove a script. Mr. Kuminecz said his responsibility would be to take action if there is misrepresentation. Ms. Rausch went on to further clarify, stating it is up to the applicant to take responsibility for being in compliance with the law. If there is a violation, action will be taken against the applicant for violation of the statutes.
Senator Brown asked if extra fees would be involved for time when the license was trying to be surrendered, to which Ms. Rausch noted it would be only the original licensing fee. Senator Brown went on to inquire about section 10 and the addition of "violent felony," i.e., murder, manslaughter, mayhem, kidnaping, added to an application. Mr. Kuminecz replied trustworthiness of the company and the people who represent them are a key to customer satisfaction. The credibility and moral character of people who may have been involved in this type of felony might have a low level of dealing with the public. A discussion was held by Senator Lowden, Senator Brown and Mr. Kuminecz regarding the degree of thoroughness of a background check.
Senator McGinness asked if the list of felonies for section 10 was taken from the gaming statutes. Ms. Rausch noted the bill drafter had followed instructions by including dangerous felony and drug convictions. Mr. Kuminecz reiterated the basis of the request was trustworthiness of the telemarketer's contact with consumers in Nevada and throughout America. Answering Senator Brown's inquiry about the possibility of investigators being threatened, Mr. Kuminecz replied he thought there was a definite possibility of that happening.
Senator Brown then inquired about the possibility of assessing larger penalties for violations. Mr. Kuminecz and Ms. Rausch explored various possibilities available in lieu of higher monetary penalties.
Senator Shaffer, Senator Nevin, Mr. Kuminecz and Jolene B. Rose, Deputy Director, Department of Commerce, Office of the Director, discussed the problem of staffing. The problem regarding excess funds going to the General Fund versus raising licensing fees to compensate for lack of money was also discussed. Senator Lowden and Senator Townsend joined the discussion on funding.
Senator Townsend closed the hearing on BDR 52-540 and opened the hearing on Senate Bill (S.B. 375).
SENATE BILL 375: Makes various changes relating to solicitation by telephone.
Senator Townsend noted there were a number of changes to be addressed. Chairman Townsend then asked for testimony on the changes and what precipitated them.
Steve Sisolak, American Distributing Company, came forward to testify, noting he had worked with Senator Nevin on the drafting of this bill. Mr. Sisolak gave an explanation of the various changes. Senator Townsend closed the hearing on S.B. 375 and opened the hearing on Assembly Bill (A.B.) 210.
ASSEMBLY BILL 210: Creates additional exemptions to provisions governing solicitation by telephone.
At the request of Senator Townsend, Mr. Sisolak went on to testify on (A.B.) 210.
Mr. Sisolak noted A.B. 210, was directed towards a resident agent company that uses the telephone to market their products. Mr. Kuminecz stated the statue would not apply to resident agents.
Lewis E. Laughlin, Chief Executive Officer, Laughlin Associates, Inc., noted his company had made a request for a letter outlining whether or not his company was covered by telemarketing regulations. He went on to state, no response had been received.
Due to the uncertainty, Mr. Laughlin was seeking legislative protection. At that time, Mr. Laughlin presented Exhibit D, a letter stating his concerns. Mr. Laughlin went on to give an explanation on the activities of his company.
Senator Townsend closed the hearing on A.B. 210 and opened the hearing on BDR 52-1440.
BDR 52-1440: Requires additional security for sales by telephone using credit cards.
Mr. Sisolak gave an explanation of BDR 52-1440. There was discussion between Senator Townsend and Mr. Sisolak regarding the origination of this bill. Senator Townsend asked Mr. Sisolak to let the originators know they needed to come forward before the bill could be processed.
Senator Townsend closed the hearing on BDR 52-1440. He noted that S.B. 45 was being held by Senator Raggio, so there would be no comment at this time.
SENATE BILL 45: Regulates solicitation of elderly persons.
Chairman Townsend held further discussion with Mr. Kuminecz on several questions.
The first issue noted regarded complaints received from outside of Nevada about persons doing business inside of Nevada. The next was regarding whether there were complaints to the division from Nevada individuals about companies outside of Nevada. Mr. Kuminecz stated he did not have the figures broken down at this time. Senator Townsend asked that this information be compiled and given to the committee just as soon as possible. Senator Townsend, Mr. Sisolak and Ms. Rausch discussed this in greater depth.
Senator Townsend, Mr. Kuminecz and Ms. Rausch discussed staffing and budgetary requirements and problems. Mr. Kuminecz declared the Consumer Affairs Division needed a Deputy Administrator as well as more investigators. Senator Shaffer expressed concerns over the lack of personnel for investigations. Senator Townsend concurred. Senator Brown voiced her concerns regarding lack of staff.
Mr. Kuminecz said he felt part of Nevada's problem was the rapid growth of the industry. He also noted other states were copying Nevada's laws. Senator Brown and Mr. Kuminecz discussed ways of monitoring companies for deceptive practices. Senator Brown wanted to know if any other regulatory agencies could be used to control telemarketing practices. Ms. Rausch replied not really.
Ms. Rose noted that since 1989 the Consumer Affairs Division had obtained approximately $2.3 million back for the consumer. Because restitution was a top priority for a number of years, enforcement was not emphasized as much. Mr. Kuminecz, Senator Townsend and Ms. Rausch discussed various problems associated with telemarketing fraud. Ms. Rausch noted her office was in touch with a number of attorney general's offices throughout the country in an effort to create a national campaign on telemarketing fraud.
Senator Townsend stated he had tentatively scheduled a subcommittee meeting for April 27, chaired by Senator Shaffer. He expressed the hope this meeting could take place with the attorney general, Mr. Kuminecz, Larry Struve, Director, Department of Commerce, Scott Craigie, Chief of Staff, Governor's Office, Judy Matteucci, Director, Department of Administration and even Governor Miller, if at all possible. Senator Townsend went on to state at that time the committee would hear all the bills, go through them and probably use S.B. 375 as a vehicle for things processed in the committee.
Senator Townsend asked for a motion to introduce BDR 52-540, BDR 57-1243, and BDR 54-1267
BDR 52-540:Makes various changes relating to regulation of solicitation by telephone.
BDR 57-1243: Authorizes payments to license escrow agents for services rendered to title insurer.
BDR 54-1267: Makes various changes relating to professional land surveyors.
SENATOR NEVIN MOVED FOR COMMITTEE INTRODUCTION OF BDR 52-540, BDR 57-1243, AND BDR 54-1267.
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O'CONNELL WAS ABSENT FOR THE VOTE.)
Senator Townsend noted he had an amendment back on S.B. 201. No action was taken on this amendment.
There being no further business, the meeting was adjourned at
10:30 a.m.
RESPECTFULLY SUBMITTED:
Beverly Willis,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
April 14, 1993
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