MINUTES OF THE meeting

of the

ASSEMBLY Subcommittee on Commerce and Labor

 

Seventy-First Session

April 13, 2001

 

 

The Subcommittee on Commerce and Labor was called to order at 10:40 a.m. on Friday, April 13, 2001.  Chairman David Humke presided in Room 4100 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

SUBCOMMITTEE MEMBERS PRESENT:

 

Mr.                     David Humke, Chairman

Mr. Joseph Dini, Jr.

 

GUEST LEGISLATORS PRESENT:

 

Assemblyman Greg Brower

 

STAFF MEMBERS PRESENT:

 

Vance Hughey, Committee Policy Analyst

Darlene Nevin, Committee Secretary

 

OTHERS PRESENT:

 

Sam McMullen, Legislative Advocate, Retail Association of Nevada, Las Vegas Chamber of Commerce and AT&T

Mary Lau, Executive Director, Retail Association of Nevada

Kimberly Maxson‑Rushton, Office of the Attorney General

Patricia Jarman‑Manning, Commissioner, Consumer Affairs Division

Alfredo Alonso, CitiGroup

 

Chairman Humke called the meeting to order at 10:40 a.m. and opened the hearing on A.B. 439.

 

Assembly Bill 439:  Revises provisions relating to deceptive trade practices. (BDR 52-1263)

 

Assemblyman Greg Brower indicated Mr. McMullen was distributing his proposed amendments to the subcommittee.  He referred the subcommittee to another amendment dated April 12, 2001 (Exhibit C), and informed the subcommittee it was agreeable to the sponsors of A.B. 439.  Chairman Humke noted the amendment would be added to those already agreed upon by the concerned parties.

 

Assemblyman Dini asked if the amendment was proposed by AT&T.  Mr. Brower thought AT&T produced the amendment, but that MCI and others might have been involved as well.  Mr. Brower explained the amendment allowed for the now “competitive“ nature of telephone companies.  Chairman Humke asked if there was any testimony on the amendment.  There was none.  The amendment was added to the file.

 

Mr. Brower then referred to the list of proposed amendments submitted by Sam McMullen on behalf of the Retail Association of Nevada (Exhibit D).  The first amendment ensured that the name and phone number of the consumer would be placed in the registry.  He felt only the phone number should be included and that the consumer’s name be omitted.

 

Sam McMullen, Legislative Advocate, Retail Association of Nevada, Las Vegas Chamber of Commerce and AT&T, explained the origin of the amendment.  Business groups had met and ideas were shared with the Attorney General’s Office.  The consideration of including consumer names and phone numbers in the registry was based on the utilization of that information.  They considered the high frequency of “line changes,” and the numerous reassignments of phone numbers.  Because these parties were concerned about consumer privacy and due to the possibility of publishing these names on the Internet, Mr. McMullen suggested listing only phone numbers in the registry.

 

Assemblyman Brower suggested the statute indicate that information included in the registry would be determined in regulation.  Mr. McMullen agreed.

 

Chairman Humke understood why a businessperson would want the names included in the registry.  He acknowledged the Attorney General’s Office only wanted the phone number and wanted to assure privacy.  He speculated that if only the number were on the registry, once it was removed it would be removed forever.  Mr. McMullen suggested there was already a solution to Chairman Humke’s concern that would be presented later in the testimony.

 

Mary Lau, Executive Director, Retail Association of Nevada, proposed A.B. 439 be given “enabling language” and that regulation have available both names and phone numbers for business persons to cross reference.

 

Kimberly Maxson‑Rushton, Office of the Attorney General, suggested including only the number; modifications could be made when A.B. 439 was heard in the Senate.  Mr. McMullen recommended adding, “such other information as the Commissioner may prescribe by regulation.”  Assemblyman Brower and Ms. Maxson-Rushton both agreed.

 

The second proposed amendment placed an annual maximum of $200 on costs of obtaining the registry.  Assemblyman Brower recommended the cost be determined by regulation with some type of maximum and indicated Mr. McMullen agreed.  Mr. McMullen clarified for the record that not all of the proposed amendments came from him.  He also claimed that other parties had anticipated a fee of only $25.

 

Patricia Jarman‑Manning, Commissioner, Consumer Affairs Division, argued that neither she nor the Attorney General’s Office recommended a fee of $25.  Not having submitted a fiscal note, not knowing the cost of the program, and having to do “everything in‑house with the existing resources,” she suggested a fee starting at $150, and not exceeding $500.  Ms. Jarman‑Manning visualized the program eventually being self‑funded, with the funds received being internally generated to update software and technology.

 

Assemblyman Brower felt the amount was “workable” and that the individual costs could be adjusted as necessary according to the cost of the program.  Mr. McMullen suggested $300.  Ms. Maxson‑Rushton revealed that $500 maximum was one of the original proposals submitted to them, and that it would be charged annually.  Mr. McMullen agreed to the $500 maximum.

 

Ms. Lau wondered how many small employers would consider telemarketing at a cost of $500.  Mr. McMullen explained the costs would probably be closer to $150 to $200 annually, and the $500 maximum provided flexibility if needed.

 

The third amendment ensured “that any outside contractor utilized to run the registry had a minimum two years experience in running a similar type of registry database and distributing information reliably to recipient sellers.”  Mr. McMullen related the importance of having an experienced contractor.  Mr. Brower said it was not the intention of the division to contract for services; it intended to operate “in‑house.”  However, he did not object to the language.

 

Ms. Jarman‑Manning related that someone volunteered services.  She also stressed it would be done with a “bare bones” budget in the best way possible.  She explored the possibility of a cooperative agreement with the industry under which the industry might donate software or technology, and emphasized the value of the industry’s input.

 

Ms. McMullen contended the amendment simply needed to provide for a commitment to reliability, and that providing for a contractor could be considered at the next legislative session.  Mr. Humke affirmed that the concerns of the third proposed amendment would be addressed through regulation and mentioned in a floor statement.

 

The fourth amendment proposed that a registry “must be purged semi-annually, at the maximum annually, to compensate for unfettered growth of lists without concurrent obligation of consumer to delete number upon change.”  Mr. Brower referred to the amendment as a “mechanism for making it work properly” and deferred to the Commissioner and the Attorney General’s Office.

 

Ms. Jarman-Manning indicated they had discussed the purging of the list with Mr. McMullen.  They hoped to have a good database that would automatically be purged annually at the maximum, and possibly semi-annually.  If consumers did not give notification that they wanted to continue on the list, the database would automatically remove them from the registry after six months or a year.  She verbalized that this, too, would have to be worked out “as they go along.”

 

Mr. McMullen acknowledged it was difficult to give specific intervals for purging the list, and they could be more definite after one year’s experience.  He did suggest the proposed legislation should give some indication of their intentions, however.  Ms. Jarman‑Manning suggested once a year, and more often if they could.  Mr. Dini suggested the amendment stipulate annual purging and also permit the Commissioner to change through regulation.

 

Ms. Maxson-Rushton suggested purging at least annually.  Mr. Brower added that purging would become easier and more frequent as the maintenance of a registry progressed.  He agreed annual purging was a good starting point.

 

Chairman Humke asked if there were further comments on the amendments discussed so far.  There were none.  He confirmed through Mr. Brower that the fourth amendment provided for annual purging at the minimum.

 

The fifth proposed amendment would increase from 30 days to 60 days the period of time from receipt of the directory in which a business could not make an unsolicited phone call.  Mr. McMullen explained that businesses using paper rather than electronic procedures might need more than 30 days.

 

Chairman Humke asked if the amendment was related to the intent requirement for a violation, intent generally being defined as having placed an unsolicited phone call without having checked the registry.  Mr. McMullen affirmed it was related to that violation; it provided new companies time to assimilate the new information so they would know who was on the registry and who was not.

 

Ms. Maxson-Rushton felt 30 days was adequate time.  She explained that the registry would be provided in any “median or mode” that could accommodate the businesses’ needs.  Ms. Maxson-Rushton also speculated that most companies could afford electronic entry of the registry instead of the more time-consuming manual entry.

 

Mr. McMullen felt 30 days would be adequate if the registry was updated on specific dates, semi-annually, those dates being January 1 and July 1.  In this way the public would anticipate the new lists and be prepared to incorporate the information into their systems.  He also stated that following experience with the registry, changes deemed necessary could be approached at the next legislative session.

 

Ms. Maxson-Rushton agreed with Mr. McMullen and stated they had anticipated publishing the list semi-annually on January 1 and July 1, and having 30 days to obtain the list and implement it into their systems.

 

Reverting momentarily to the second proposed amendment, Ms. Jarman-Manning emphasized the need for funding the program with the funds generated by it.

 

The sixth proposed amendment called for reinstating Section 4, subsection 2, of the original bill draft.  Assemblyman Brower felt subsection 2 was not necessary, as it basically provided “defenses” for violations of the proposed legislation.  For instance, subsection 2 prevented legal proceedings against a seller who violated the provisions of subsection 1 yet had provided training to the employees.  The employer could use this as his/her defense.  Mr. Brower provided that changing subsection 1 to reflect “intentional” violations would make subsection 2 unnecessary.

 

Chairman Humke added that subsection 1, by specifying that violations had to clearly be intentional, would keep the offense from being interpreted as a strict liability.  Agreeing, Mr. Brower summarized they only wanted to pursue violators who intentionally failed to obtain and use the “no‑call” list.

 

Mr. McMullen contended that the language of Section 4, subsection 2, was not intended to provide defense, but rather to help the business demonstrate in any disciplinary proceeding that it tried to follow the law.

 

Chairman Humke speculated that the provisions of subsection 2 would “give notice to the businessperson of what he or she can do to prevent prosecution.”

 

Ms. Maxson-Rushton agreed but said they used the word “intentionally” because it was “an exceptionally high standard they were willing to presume on behalf of the prosecutors.”  She added that eliminating subsection 2 did not preclude violators from using its provisions as defenses.  Ms. Maxson-Rushton emphasized they set exceptionally high standards to assure businesses they would not, for example, prosecute them for an employee who inadvertently dialed a wrong number.

 

Mr. McMullen added they did not want circumstances such as those listed in subsection 2 to be “bars to prosecution.”  They were trying to say that such circumstances “would be taken into evidence.”

 

Mr. McMullen explained the eighth proposed amendment provided the option of “step discipline” whereby each violation brought a progressively more serious consequence.  The other option was to place the statute in NRS Chapter 597, “Miscellaneous Trade Regulations and Prohibited Acts,” make it a misdemeanor, and let the District Attorneys or others determine what was “intentional.”

 

Chairman Humke asked if the intent of this bill was to provide for Attorney General prosecution.  Mr. McMullen had mentioned District Attorney prosecution.  Ms. Maxson-Rushton replied it was the intent to provide Attorney General prosecution.  Mr. McMullen clarified that in his group there were some who thought District Attorney prosecution would be better, but he did not expect the division to approve.

 

Ms. Jarman-Manning expounded that they were looking for “grievous” offenders, those who deliberately violated the law.  She described the steps taken before the case would be turned over to the Attorney General’s Office and stressed they would “work with the industry to try to make this program work.”

 

Chairman Humke perceived a “give and take” situation with regards to the sixth and eighth proposed amendments.  He reiterated his earlier comments that Section 4, subsection 2, “gave a road map to the calling industry,” and repeated Mr. McMullen’s suggestion of “stepped enforcement” in the eighth proposed amendment.

 

Ms. Maxson-Rushton agreed, but remarked that NRS Chapter 597 was not applicable to this type of statute “because the District Attorney’s office will never prosecute these cases.”  Their primary jurisdiction was over other criminal matters.  She explained such violations were often addressed by the Bureau of Consumer Protection and therefore recommended leaving the statute in NRS Chapter 598, “Deceptive Trade Practices.”  She said they agreed with the proposed “step discipline” and offered to work with industry to draft the necessary language.  This, along with removing subsection 2, she felt, would resolve proposed amendments 6 and 8 simultaneously.

 

Mary Lau stated that including Section 4, subsection 2, would enable smaller companies to better know their obligations.  She remarked that “setting up a trap to make sure they do everything” did not work; rather, she wanted to include subsection 2 to help companies “do things right” and help them train their employees.  Ms. Lau revealed several parties had considered including the statute in NRS Chapter 597, although some felt the statute belonged in NRS Chapter 598, Deceptive Trade Practices.  This also supported her reasoning that subsection 2 should remain “for the protection of companies and employers.”  She expected that the “statutory certainty,” as well as the fact that other states had adopted the same provisions, was important to her members.

 

Ms. Maxson-Rushton contended that the language, rather than provide a defense for the telemarketer or solicitor, mandated their compliance with the provisions.  She interpreted the provisions would be used “as a defense if you do all these things,” and provided that in other jurisdictions it was mandated that the telemarketer did “A, B and C.”  They were agreeable to the progressive or “stepped” discipline.  She explained that if Section 4 was rewritten to make the language mandatory, companies that already had a system in place would not be in a position to incorporate those provisions.

 

Chairman Humke thought mandating the steps was an acceptable policy.  He considered it a “road map” to assist the employers, and asserted he did not want to provide defenses.  He cited the high turnover in the labor market as another reason to provide the information to the employers.

 

Ms. Maxson-Rushton was amenable to changing the language to obligate the employer to not only obtain the list, but to also provide training to the employees and maintain records.

 

Assemblyman Brower wondered if the concerns raised were totally necessary.  He reminded all parties that investigation or prosecution would result only for intentional violations.  He acknowledged most of the concerns were valid, but sensed “a consistent effort to complicate” what he described as “very simple.”

 

Mr. McMullen voiced the concern was that of a violation being determined intentional or unintentional.  He reasoned there would be mistakes, which is why some wanted the statute in NRS Chapter 597 as only a misdemeanor.  Mr. McMullen proposed a “don’t do it again” type of response to a first violation and “marrying together” that response with the “stepped” or “progressive” discipline.  He felt this would still enable the prosecution of a business that “was really trying to be a problem.”

 

Ms. Maxson-Rushton agreed with Mr. McMullen’s proposal and recommended that penalties be specified as well as procedures to follow.  Chairman Humke responded that, with respect to penalties, he expected a clarifying amendment, not regulations.  He asked if there were further comments from those present.

 

The seventh proposed amendment addressed established business relationships.  It proposed that A.B. 439 should “allow contact for those customers who have had a business relationship or purchased a product/service within the past five years.”

 

Ms. Jarman-Manning disclosed that the division and the Office of the Attorney General agreed to a “prior business relationship” being the span of one year.  Mr. McMullen added that a prior business relationship included sales or services to customers within that year.

 

Alfredo Alonso, CitiGroup, substantiated the need to include affiliates due to the rising incidents of mergers.

 

Mr. McMullen suggested a database of complaints and problems be maintained with regard to affiliate transactions, to be examined after two years.

 

Ms. Lau acknowledged there were “huge” affiliate issues.  Mr. Alonso asserted the inclusion of affiliates would help the banking industry, and other industries involved in mergers, keep their customers informed.

 

Mr. Humke understood that businesses would want to continue offering their services to former customers.

 

Mr. McMullen explored the impact of affiliate language on cross marketing.  Exclusion of affiliates would complicate, and perhaps duplicate, the process of establishing and utilizing the registry.

 

Ms. Maxson-Rushton was concerned how affiliate language would affect the numerous mergers; some involved people in completely different businesses and some involved subsidiary companies that did not practice in the same area.  She suggested clearly defining “affiliate” as someone in a related or similar business.  She related that mega-mergers, such as Time Warner and AOL, could erode A.B. 439.

 

Mr. McMullen offered a twofold proposition.  He recommended excluding the one‑year established business relationships in which service was provided or goods were sold.  These businesses could make unsolicited calls to their established clientele.  Affiliate language also would apply only to those businesses with established business relationships.

 

Vance Hughey, Legislative Counsel Bureau, Research Division, conveyed changes that were suggested in the first work session.  The first was to change the chapter reference to NRS Chapter 598.  All parties agreed.  The second suggestion, page 1, line 8, was to replace ”quarterly” with “semi-annually.”

 

Mr. McMullen said “at least” should be removed, or it should be clarified that the registry would be distributed no less than semi-annually.  He pointed out the need for specific dates so the businesses could update their lists.  Ms. Maxson‑Rushton suggested January 15 and July 15.  Mr. McMullen agreed.

 

Mr. Hughey continued.  It was suggested that Sections 5 and 6 be deleted because they referenced a different chapter.  There was also a new Section 5 that required the Commissioner adopt regulations to carry out the provisions of Sections 2, 3 and 4.  All parties present agreed.  In closing, Mr. Hughey indicated the aforementioned proposals came from the sponsor of A.B. 439 and the Attorney General’s Office.

 

Chairman Humke asked if there was any further testimony on the proposed amendments.

 

Assemblyman Brower thanked Mr. Humke and Mr. Hughey for their time.  It was clarified that A.B. 439 would go to work session after the floor session.

 

Chairman Humke adjourned the meeting at 11:37 a.m.

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Darlene Nevin

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Assemblyman David Humke, Chairman

 

 

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