§ 399-PP — Telemarketing and consumer fraud and abuse prevention act

§ 399-pp. Telemarketing and consumer fraud and abuse prevention act.\n1. Legislative findings and declaration. The legislature finds and\ndeclares that the prevention of deceptive and unfair practices in\nassociation with telemarketing is in the public interest and subject to\nthe authority of appropriate political subdivisions of the state for the\npurpose of protecting the public against fraud, deception and other\nabuses. The legislature intends that the federal telemarketing and\nconsumer fraud and abuse prevention act (P.L. 103-297) be fully\nenforceable by appropriate state and local enforcement officials.\n The legislature further declares that additional requirements\napplicable to the telemarketing industry not present in the federal\nstatute are necessary to protect residents of the state and others from\ntelemarketing abuses. The legislature therefore intends that provisions\nin this section which differ from the aforementioned federal act and\nother New York state laws regulating telemarketing be construed whenever\nreasonable as providing additional protections to victims of\ntelemarketing fraud.\n 2. Definitions. As used in this section, the following terms shall\nhave the following meanings:\n a. "Applicant" means a person seeking a certificate of registration or\nto renew a certificate of registration under this section.\n b. "Customer" means any person who is or may be required to pay for or\nto exchange consideration for goods and services offered through\ntelemarketing.\n c. "Goods or services" means any goods or services, and shall include\nany real property or any tangible or intangible personal property or\nservices of any kind.\n d. "Investment opportunity" means anything tangible or intangible,\nthat is offered for sale, sold, or traded based wholly or in part on\nrepresentations, either express or implied, about past, present, or\nfuture income, profit, or appreciation.\n e. "Person" means any natural person, association, partnership, firm,\ncorporation and its affiliates or subsidiaries or other business entity.\n f. "Premium" means anything offered or given, independent of chance,\nto customers as an incentive to purchase or otherwise contract for goods\nor services offered through telemarketing.\n g. "Principal" means any person participating in or responsible for\nthe management of a telemarketer's business, whether or not the position\nis compensated, including but not limited to an owner in the case of a\nsole proprietorship, an officer, director or stockholder holding more\nthan ten percent of the outstanding stock in the case of a corporation,\na partner in the case of a partnership, and a manager or member in the\ncase of a limited liability company.\n h. "Prize" means anything offered or purportedly offered and given or\npurportedly given to a person by chance. For purposes of this\ndefinition, chance exists if a person is guaranteed to receive an item\nand, at the time of the offer or purported offer, the telemarketer does\nnot identify the specific item that the person will receive.\n i. "Prize promotion" means a sweepstakes or other game of chance or an\noral or written, express or implied representation that a person has\nwon, has been selected to receive or is eligible or may be eligible to\nreceive a prize or purported prize.\n j. "Telemarketer" means any person, who, for financial profit or\ncommercial purposes in connection with telemarketing, either initiates,\nor initiates and receives telephone calls to or from a customer when the\ncustomer is in this state or any person who directly controls or\nsupervises the conduct of a telemarketer. For the purposes of this\nsection, "commercial purposes" shall mean the sale or offer for sale of\ngoods and services.\n k. "Telemarketing" means any plan, program or campaign which is\nconducted to induce payment or the exchange of any other consideration\nfor any goods or services by use of one or more telephones and which\ninvolves more than one telephone call by a telemarketer in which the\ncustomer is located within the state at the time of the call.\nTelemarketing does not include the solicitation of sales through any\nmedia other than by telephone calls.\n l. "Secretary" shall mean the secretary of state.\n m. "Department" shall mean the department of state.\n n. "Caller identification information" means information provided by a\ncaller identification service regarding the telephone number and name of\nthe person calling.\n o. "Caller identification service" means a service that allows a\ntelephone subscriber to have the telephone number, and, where available,\nname of the calling party transmitted contemporaneously with the\ntelephone call, and displayed on a device in or connected to the\nsubscriber's telephone.\n 3. Registration of telemarketers. a. No person shall act as a\ntelemarketer without first having received a certificate of registration\nfrom the secretary as provided in this section. Employees of\ntelemarketers shall be exempt from the requirements of this paragraph\nand paragraph b of this subdivision.\n b. No person required to register pursuant to paragraph a of this\nsubdivision shall act as a telemarketer without holding a valid\ncertificate of registration from the secretary as provided in this\nsection.\n c. Any applicant shall file with the department an application for a\ncertificate of registration in such form and containing such information\nas the secretary shall prescribe, including the following:\n (1) the applicant's name, address and telephone number;\n (2) each business name under which the applicant engages in or intends\nto engage in telemarketing, if such name is different than the\napplicant's;\n (3) the complete street address and primary telephone number of each\nlocation, designating the principal location, from which the applicant\nengages in or intends to engage in telemarketing, including each\nlocation at which mail will be received by or on behalf of the\napplicant, and identifying any such location that is a post office box\nor mail drop;\n (4) the name, address and telephone number of each principal of the\nbusiness;\n (5) whether the applicant or any principal thereof has been convicted\nor plead guilty to or is being prosecuted by indictment or information\nfor racketeering, violations of securities laws, or a theft offense of\nany state, or the United States;\n (6) whether any injunction or judgment has been entered into against\nthe applicant or any principal, or such applicant or principal has\nentered into a settlement agreement, assurance of discontinuance,\nconsent decree or any similar instrument in any civil action involving\ntheft, racketeering, embezzlement, conversion, misappropriation of\nproperty, fraud, or deceptive, unfair, illegal or unconscionable trade\npractices, and whether any civil action involving such practices is\ncurrently pending, to the extent not inconsistent with any existing\ncourt orders; and\n (7) whether the license to engage in any business, trade or profession\nof the applicant or any principal thereof has been refused, suspended or\nrevoked in any jurisdiction.\n d. Upon receipt of the completed application for registration and\nrequired fee, and unless such certificate of registration has been\ndenied as provided in subdivision five of this section, the secretary\nshall issue and deliver to the applicant a certificate in such form and\nmanner as the secretary shall prescribe, but which must set forth the\napplicant's name, business address, and the effective term of the\nregistration. A registration certificate issued or renewed under the\nprovisions of this section shall entitle a person to act as a registered\ntelemarketer for a period of two years from the effective date of the\nregistration.\n e. Any registration granted under this section may be renewed by the\nsecretary upon application by the holder thereof, in such form as the\nsecretary may prescribe. The secretary shall have the authority to\nassign staggered expiration dates for licenses at the time of renewal.\nIf the assigned date results in a term that exceeds two years, the\napplicant shall pay an additional pro-rata adjustment together with the\nfee prescribed in paragraph f of this subdivision.\n f. Each application for a certificate of registration shall be\naccompanied by a fee of five hundred dollars, which shall not be\nrefundable.\n g. The fees collected pursuant to this subdivision shall be deposited\nto the credit of the business and licensing services account established\npursuant to the provisions of section ninety-seven-y of the state\nfinance law.\n h. Any person holding a certificate of registration shall be required\nto provide notice of any change in the information required of\napplicants by this section, in such form and manner, and within such\ntime period as the secretary shall prescribe.\n i. No person required to be registered under this subdivision shall be\nentitled to enforce any agreement or seek any consideration or any other\npayment for goods and services offered through telemarketing unless such\nperson is in compliance with this subdivision and subdivision four of\nthis section.\n j. The secretary shall prescribe rules and regulations to administer\nthis subdivision and subdivision four of this section.\n 4. Bonding of telemarketers. a. Any applicant shall, at the time of\nany original application for a certificate of registration, file with\nthe secretary, in the form and amount as prescribed in this subdivision\nand satisfactory to the secretary:\n (1) A bond with a corporate surety, from a company authorized to do\nbusiness in this state; or\n (2) An irrevocable letter of credit or a certificate of deposit from a\nNew York state or federally chartered bank, trust company, savings bank\nor savings and loan association qualified to do business in New York\nstate and insured by the federal deposit insurance corporation.\n b. Such bond, letter of credit, or certificate of deposit shall be\nmaintained for three years from the date the telemarketer ceases\ntelemarketing, or three years from the date the certificate of\nregistration terminates, whichever is earlier.\n c. The principal sum of the bond, letter of credit, or certificate of\ndeposit shall be twenty-five thousand dollars, which shall be maintained\nuntil the period specified in paragraph b of this subdivision, subject\nto paragraph g of this subdivision.\n d. The bond, letter of credit or certificate of deposit shall be\npayable in favor of the people of the state of New York for the benefit\nof any customer injured as a result of a violation of this section,\npursuant to a determination of any court of competent jurisdiction\npursuant to this section, or article ten-B of the personal property law.\n e. The aggregate liability of the surety upon the bond or the banking\norganization upon the letter of credit or certificate of deposit to all\npersons for all breaches of the conditions of the bond shall in no event\nexceed the amount of the bond, letter of credit or certificate of\ndeposit.\n f. The bond, letter of credit or certificate of deposit shall not be\ncanceled, revoked, diminished or terminated except after notice to, and\nwith the consent of, the secretary at least forty-five days in advance\nof such cancellation, revocation, or termination. Unless the bond is\nreplaced by another bond, letter of credit or certificate of deposit in\nconformity with this subdivision prior to the expiration of the\nforty-five day period, the registration of the telemarketer shall be\ntreated as terminated as of the cancellation, revocation or termination\nof the bond.\n g. The registration of the telemarketer shall be treated as terminated\nas of the date the amount of the bond, letter of credit or certificate\nof deposit falls below the amount required by this subdivision.\n h. Any change in ownership of a telemarketer shall not release, cancel\nor terminate liability under this subdivision under any bond, letter of\ncredit, or certificate of deposit filed for any telemarketer as to any\ncustomer who was injured as a result of a violation of this section or\narticle ten-B of the personal property law while such bond, letter of\ncredit or certificate of deposit was in effect unless such transferee,\npurchaser, successor or assignee of such telemarketer obtains a bond,\nletter of credit or certificate of deposit under this subdivision for\nthe benefit of such customer. Nothing in this paragraph shall be\nconstrued to authorize any telemarketer to cancel any bond, letter of\ncredit, or certificate of deposit where such cancellation is not\notherwise authorized by this subdivision.\n 5. Refusal to issue, suspension, and revocation of registration. a.\nThe secretary, or any person deputized or so designated by him or her\nmay deny the application of any person for a certificate of\nregistration, refuse to issue a renewal thereof, suspend or revoke such\ncertificate or in lieu thereof assess a fine not to exceed one thousand\ndollars per violation, if he or she determines that such applicant, or\nany of its principals:\n (1) has made a material false statement or omitted a material fact in\nconnection with an application under this section;\n (2) was the former holder of a certificate of registration issued\nhereunder which the secretary revoked, suspended, or refused to renew;\n (3) has failed to furnish satisfactory evidence of good character,\nreputation and fitness;\n (4) with respect to the applicant, is not the true owner of the\ntelemarketer, except in the case of a franchise;\n (5) is in violation of or has violated any of the following statutes\nand the regulations thereunder, as such statutes and regulations may\nfrom time to time be amended:\n (a) this section;\n (b) article ten-B of the personal property law;\n (c) the act of congress entitled the "telemarketing and consumer fraud\nand abuse prevention act" (P.L. 103-297);\n (6) has been convicted or plead guilty to or is being prosecuted by\nindictment or information for racketeering, violations of securities\nlaws, or a theft offense of this state, or the United States;\n (7) has had any injunction or judgment entered against him or her in\nany civil action, or such applicant or principal has entered into a\nsettlement agreement, assurance of discontinuance, consent decree or any\nsimilar instrument involving theft, racketeering, embezzlement,\nconversion, misappropriation of property, fraud or deceptive, unfair,\nillegal or unconscionable trade practices;\n (8) has had a license or registration to engage in any business,\noccupation or profession suspended or revoked in any jurisdiction which\nmay impact upon the applicant's fitness for registration under this\nsection; or\n (9) has committed, or is committing deceptive, unfair, illegal or\nunconscionable trade practices in violation of the laws of this or any\nother state or the United States.\n b. Any proceeding conducted pursuant to paragraph a of this\nsubdivision shall be subject to the state administrative procedure act.\n 6. Deceptive telemarketing acts and practices. a. It shall be unlawful\nfor any telemarketer to directly or indirectly engage in the following\nconduct:\n (1) fail to furnish a copy of the certificate of registration at the\nrequest of any interested party;\n (2) present or attempt to present, as their own, the registration\ncertificate of another;\n (3) give false or misleading information;\n (4) misrepresent himself or herself to be registered;\n (5) use or attempt to use a registration certificate which has been\nrevoked, suspended or is otherwise not valid;\n (6) advertise telemarketing services without having a valid\ncertificate of registration under this section;\n (7) represent in any manner that his or her registration constitutes\napproval or endorsement of any governmental agency;\n (8) assist or support any person when the telemarketer or any\nidentified employee knew or should have known that the person was\nengaged in an act or practice in violation of this section or article\nten-B of the personal property law;\n (9) request a fee in advance to remove adverse information or modify\nadverse information to improve a person's credit history or credit\nrecord;\n (10) except for an attorney engaged in the practice of law, request or\nreceive payment in advance from a person to recover or otherwise aid in\nthe return of money or any other item lost by the customer in a prior\ntelemarketing transaction;\n (11) obtain or submit for payment a check, draft, or other form of\nnegotiable paper drawn on a person's checking, savings, share, or\nsimilar account, without that person's express written authorization;\n (12) procure the services of any professional delivery, courier or\nother pickup service to obtain receipt or possession of a customer's\npayment, unless the goods or services are delivered with the reasonable\nopportunity to inspect before any payment is collected; or\n (13) misrepresent, directly or by implication, that a premium is a\nprize.\n b. Telemarketers shall provide all of the following information, in a\nclear and coherent manner using words with common and everyday meanings,\nwhen making a telemarketing call:\n (1) at the beginning but no later than thirty seconds from the\ncommencement of the call and prior to any request by the caller of the\ncustomer to release or disclose any of the customer's personal or\nfinancial information, including but not limited, to the customer's\nname, address, credit card, checking account or other financial account\nnumber or information:\n (a) that the purpose of the telephone call is to offer goods or\nservices for which a fee will be charged or to provide an investment\nopportunity, whichever is the case;\n (b) the telemarketer's name and the person on whose behalf the\nsolicitation is being made if other than the telemarketer;\n (c) the identity of the goods or services for which a fee will be\ncharged; and\n (d) whether the call is being recorded.\n (2) the cost of the goods or services that are the subject of the\ncall.\n (3) in any prize promotion, the odds of being able to receive the\nprize, and if the odds are not calculable in advance, the factors used\nin calculating the odds; that no purchase or payment is required to win\na prize or to participate in a prize promotion; and the no purchase/no\npayment method of participating in the prize promotion with either\ninstructions on how to participate or an address or local or toll-free\ntelephone number to which customers may write or call for information on\nhow to participate; and all material costs or conditions to receive or\nredeem a prize that is the subject of the prize promotion.\n 7. Abusive telemarketing acts or practices. It shall be unlawful for\nany telemarketer to:\n a. threaten, intimidate or use profane or obscene language;\n b. engage in conduct or behavior a reasonable person would deem to be\nabusive or harassing;\n c. initiate a telemarketing call to a person, when that person has\nstated previously that he or she does not wish to receive solicitation\ncalls from that telemarketer provided, however that nothing in this\nsection shall be construed to prohibit a telemarketer from telemarketing\ngoods, services or investment opportunities to any customer of any\naffiliate, subsidiary or parent of such telemarketer;\n d. engage in telemarketing to a person's residence at any time other\nthan between 8:00 A.M. and 9:00 P.M. local time, at the called person's\nlocation; or\n e. make a false, deceptive or misleading statement in regard to the\nrequirements of subdivision six of this section to a customer, or to\nengage in any deceptive or unfair act or practice in association with\ntelemarketing.\n f. knowingly make an unsolicited telemarketing sales call to any\nperson in a county, city, town or village under a declared state of\nemergency or disaster emergency as described in sections twenty-four or\ntwenty-eight of the executive law.\n 7-a. Unlawful transmission of certain caller identification\ninformation. It shall be unlawful for any telemarketer or seller to\nknowingly cause any caller identification service to transmit\nmisleading, inaccurate, or false caller identification information,\nprovided that it shall not be a violation to substitute (for the name\nand phone number used in, or billed for, making the call) the name or\ntelephone number of the person or seller on behalf of which a\ntelemarketing call is placed.\n 8. Recordkeeping requirements. a. All telemarketers shall keep for a\nperiod of twenty-four months from the date the record is produced\nrecords of all financial transactions, written notices, disclosures and\nacknowledgments, including but not limited to:\n (1) records of calls resulting in a promise by the customer to pay or\notherwise exchange consideration for goods and services, including but\nnot limited to the name and last known address of each customer, the\ngoods or services selected, the date such goods were shipped or provided\nand the quantity provided, the amount charged by the company for the\ngoods or services provided (including all other related fees or charges\nof any kind, including shipping and handling fees), and the amount\nactually paid by the customer for the goods and services provided;\n (2) the name and last known address of each prize recipient and the\nprize awarded having a value of twenty-five dollars or more; and\n (3) the name, any fictitious name used, the last known home address\nand telephone number, and the job title for all current and former\nemployees directly involved in telephone sales; provided, however, that\nif the telemarketer permits fictitious names to be used by employees,\neach fictitious name must be traceable to only one specific employee.\n b. A telemarketer may keep the records required by paragraph a of this\nsubdivision in any form, and in the manner, format, or place as they\nkeep such records in the ordinary course of business.\n c. In the event of any dissolution or termination of the\ntelemarketer's business, a representative of the telemarketer shall\nmaintain all records as required under this subdivision, which shall be\nthe person required to maintain such records in the event of dissolution\nor termination under rules and regulations issued under the act of\ncongress entitled the "telemarketing and consumer fraud and abuse\nprevention act" (P.L. 103-297), or any person designated by the\ntelemarketer. In the event of any sale, assignment or other change of\nownership of the telemarketer's business, the successor or assignee\nshall maintain all records required by this subdivision. In any case in\nwhich this paragraph applies, the telemarketer shall provide notice to\nthe secretary, in the form and manner designated by the secretary of the\ndisposition of such records within thirty days of the dissolution,\ntermination, sale, assignment or change of ownership.\n 9. Waiver. Any waiver of the provisions of this section by any\ncustomer shall be unenforceable and void.\n 10. Exemptions. a. The following persons shall be exempt from the\nregistration and bonding requirements set forth in subdivisions three\nand four of this section:\n (1) the state, municipalities of the state, or any department or\ndivision of the state or such municipalities;\n (2) the United States or any of its departments, agencies or\ndivisions;\n (3) colleges, universities and other institutions authorized by the\nregents of the university of the state of New York or comparable body in\nany other state or jurisdiction, to grant degrees, including licensed\nprivate schools and any registered business schools regulated by article\none hundred one of the education law;\n (4) a person, which has been operating for at least three years a\nretail business establishment in this state under the same name as that\nused in connection with telemarketing, and both of the following occur\non a continuing basis:\n (a) Either products are displayed and offered for sale or services are\noffered for sale and provided at the business establishment; and\n (b) A majority of the person's business involves buyers' obtaining\nsuch products or services at the person's location;\n (5) any not-for-profit corporation as defined in section one hundred\ntwo of the not-for-profit corporation law and charitable organizations.\n b. The following acts or practices are exempt from the requirements of\nthis section:\n (1) telephone calls made by a telemarketer, collection agency or\nattorney engaged in the practice of law for the exclusive purpose of\ncollecting a legal debt owed, in accordance with the applicable\nprovisions of the Federal Fair Debt Collection Practices Act (15 U.S.C.\n§1692 et. seq.);\n (2) telephone calls in which the sale, lease or other agreement for\ngoods or services is not completed, and payment or authorization of\npayment is not required, until after a face-to-face sales presentation\nby a telemarketer, or a meeting between a telemarketer and customer;\n (3) telephone calls that are received by a telemarketer initiated by a\ncustomer that are not the result of any solicitation by such\ntelemarketer; and\n (4) telephone calls between a telemarketer and any for-profit\nbusiness, except calls involving the retail sale of nondurable office or\ncleaning supplies.\n c. The following acts or practices are exempt from the requirements of\nparagraph b of subdivision six of this section.\n (1) telephone calls pertaining to a renewal or continuation of an\nexisting or prior contractual relationship or the continuation of an\nestablished business relationship between a customer and any\ntelemarketer, provided that the telemarketer discloses any material\nchanges in the terms and conditions of the prior contract, except for\ncalls made by a telemarketer in which the telemarketer or any of its\nprincipals has previously engaged in any act or practice described in\nsubparagraphs one, two, five, six, seven and eight of paragraph a of\nsubdivision five of this section; and\n (2) unsolicited telephone calls made by the telemarketer for the\npurpose of overall efforts to develop new business that include other\nmethods and techniques intended to identify and communicate with\npotential customers provided however that for all transactions which are\nincidental to the call and result in the exchange of goods and services\nthe telemarketer shall disclose the following information:\n (a) the telemarketer's name and the person on whose behalf the\nsolicitation is being made if other than the telemarketer;\n (b) the identity of the goods or services for which a fee will be\ncharged; and\n (c) the cost of the goods or services that are the subject of the\ncall.\n 10-a. The following persons are exempt from the fee and bonding\nrequirements set forth in paragraph f of subdivision three and\nsubdivision four of this section: A person engaged in a business or\noccupation which is licensed, registered, chartered, certified or\nincorporated with or by any state or federal agency. Provided, however,\nany person not licensed, registered, chartered, certified or\nincorporated with any New York state or federal agency, shall submit\nevidence to the secretary of state, in a form and manner to be\nprescribed by the secretary, of any license, registration, charter,\ncertification or incorporation issued by an agency or governmental\nentity in this or any other state.\n 10-b. A telemarketer shall disclose the address of any company on\nwhose behalf such telemarketer is providing telemarketing services, on\nany website owned or operated by the telemarketer and on any subsequent\nwritten communication to any customer.\n 11. Enforcement. a. Every violation of this section shall be deemed a\ndeceptive act and practice subject to enforcement under article\ntwenty-two-A of this chapter. In addition, the district attorney, county\nattorney, and the corporation counsel shall have concurrent authority to\nseek the relief in paragraph b of this subdivision, and all civil\npenalties obtained in any such action shall be retained by the\nmunicipality or county.\n b. In every case where the court shall determine that a violation of\nthis section has occurred, it may impose a civil penalty of not less\nthan one thousand dollars nor more than two thousand dollars for each\nviolation. Such penalty shall be in addition to the denial of\nregistration or renewal, suspension of registration or revocation of\nregistration or assessment of a fine authorized by subdivision five of\nthis section.\n c. Any person who contracts with a telemarketer for telemarketing\nservices and has actual knowledge that the telemarketer is acting in\nviolation of this section shall be deemed to be in violation of this\nsection, unless such person takes reasonable measures to prevent and\ncorrect any conduct that violates this section.\n d. Nothing in this section shall be construed to restrict any right\nwhich any person may have under any other statute or the common law.\n 12. Criminal penalties. Any person who is convicted of knowingly\nviolating paragraph a or b of subdivision three of this section, or\nsubparagraph two, three, four or five of paragraph a of subdivision six\nof this section shall be guilty of a class B misdemeanor. Any person who\nis convicted of knowingly violating subparagraph eleven or twelve of\nparagraph a of subdivision six of this section shall be guilty of a\nclass A misdemeanor.\n 13. Separability clause; construction. If any part or provision of\nthis section or the application thereof to any person or circumstances\nbe adjudged invalid by any court of competent jurisdiction, such\njudgment shall be confined in its operations to the part, provision or\napplication directly involved in the controversy in which such judgment\nshall have been rendered and shall not affect or impair the validity of\nthe remainder of this section or the application thereof to other\npersons or circumstances.\n