BILL ANALYSIS                                                                                                                                                                                                                   1
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             SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                            DEBRA BOWEN, CHAIRWOMAN
          

          AB 2721 -  Wesson                                 Hearing  
          Date:  June 13, 2000                 A
          As Amended:         May 22, 2000             FISCAL       B

                                                                       
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                                   DESCRIPTION
           
           Current state law  prohibits, with specified exemptions, the  
          use of automatic dialing-announcing devices (e.g. automated  
          dialers broadcasting pre-recorded announcements) between  
          9:00 p.m. and 9:00 a.m..  One of those specified exemptions  
          is when the called party has an "existing business  
          relationship" with the caller.  Any person or company who  
          violates this law is guilty of a misdemeanor, subject to  
          one year in county jail and/or a maximum fine of $1,000.

           Current state law  requires when such devices are used, the  
          person receiving the call must be greeted by a live  
          operator who must ask whether the called party will give  
          his or her consent to hear the pre-recorded announcement. 

           This bill  narrows current law's "existing business  
          relationship" exemption to the live operator requirement to  
          only cover calls related to the product or service upon  
          which the business relationship is based.

           This bill  creates two brand new exemptions to the "live  
          operator" requirement:  One to allow automatic  
          dialing-announcing devices to be used for fraud prevention  
          and a second exemption to permit the devices to be used for  
          calls that aren't made for "commercial purposes."












                This bill  requires any company using automated dialers to  
               have a live operator greet the called person - instead of  
               terminating the call if the automated dialing device dials  
               faster than the live operator can get to the call - by July  
               1, 2001. 

                This bill  clarifies that when the user of the automated  
               dialer reaches an answering machine, consent is not implied  
               and no message may be left.

                                         BACKGROUND
                
               An "abandoned telephone call" is a phenomenon that occurs  
               when computers dial telephone calls quicker than the live  
               operators can pick them up in order to comply with the law  
               requiring phone call recipients to be greeted by a live  
               voice.





































          Telemarketing has long been the subject of legislation and  
          is often associated with solicitations for long-distance  
          telephone service.  Over the past three years, a number of  
          bills have been introduced in the Legislature to limit  
          telemarketing, but none of them have been successful - with  
          the exception of a "do-not-call" list for the solicitation  
          of electric service (SB 477 [Peace], Chapter 275, Statutes  
          of 1997). 

          Current federal law bans telemarketing between 9:00 p.m.  
          and 8:00 a.m. and generally conditions the use of automatic  
          dialing-announcing devices in ways similar to California  
          law.

                                    QUESTIONS  

          1.While abandoned telephone calls may be a nuisance, should  
            any person or company who uses an automated dialing  
            machine that inadvertently hangs up on people be guilty  
            of a misdemeanor, subject to up to a year in county jail  
            and/or a fine of up to $1,000?

          2.Since it's highly unlikely the recipient of any such  
            abandoned call will be able to know whether it was a  
            company using an automated dialing device that hung up on  
            them and if so, which company it was, how will this bill  
            be enforced?

          3.This bill creates an exemption to the requirement that  
            businesses use live operators to greet people before  
            playing a pre-recorded message for "fraud prevention"  
            calls and calls that aren't made for "commercial  
            purposes."  What is a "fraud prevention" call and what  
            are the likely "noncommercial" uses for such machines?

                                     COMMENTS

          1)Amendments  .  The author will propose amendments to strike  
            Section 2 of the bill, which begins on Page 3, Line 16  
            and runs through Page 7, Line 3.

           2)Hang Up On The Hang-Ups  .  The author believes abandoned  
            telephone calls are annoying, an invasion of privacy, and  
            potentially threatening to certain individuals.  











                 Such calls are the consequence of predictive dialers, a  
                 form of automated dialing where a computer dials  
                 telephone numbers from a database while telemarketers  
                 talk with potential customers.  Predictive dialers dial  
                 based on a statistical average of how long the average  
                 telemarketer conversation will last and the likelihood a  
                 person will answer their telephone.  Because the system  
                 is based on a "statistical average," inevitably some  
                 called parties will be greeted by silence.  This,  
                 according to supporters, is at minimum a nuisance, and it  
                 potentially brings an element of fear to some people who  
                 may think someone is watching their home and/or their  
                 movements.








































           3)How Will This Be Enforced  ?  Current law preventing  
            telemarketers from calling between 9:00 p.m. and 9:00  
            a.m., prohibiting the use of pre-recorded messages  
            without a live operator introduction, and banning  
            pre-recorded messages from being left on answering  
            machines is, at least conceptually, easy to enforce from  
            the standpoint that the recipient of the call will know  
            which company made it.

            Under this bill, if a person gets an "abandoned call,"  
            it's highly unlikely they'll be able to know whether it  
            was a company using an automated dialing device that hung  
            up on them and if so, which company made the call.   
            Granted, a person could have a Caller ID box  
            (telemarketers are precluded by law from blocking their  
            numbers to hide them from a Caller ID box) to help  
            identify the caller, but arguably any business that would  
            violate this proposed law probably wouldn't be adverse to  
            violating the state's "no blocking" law.
           
          4)Narrowing An Existing Exemption  .  Section 3 of the bill  
            (Page 7, Line 4 through Page 8, Line 39) deals with the  
            issue of when a company can call a person and simply play  
            a pre-recorded message without having a live operator  
            "introduce" the message.

            Under current law, these pre-recorded messages can be  
            used when there's an "existing business relationship."   
            This allows, for example, your doctor's office to call  
            and leave a pre-recorded message to confirm an  
            appointment.  It also allows, for example, a store from  
            which you've purchased a washing machine to call and  
            leave a pre-recorded message to let you know about an  
            upcoming sale on dryers.

            This bill narrows the use of pre-recorded messages to  
            instances where the new commercial transaction is related  
            to a prior commercial transaction.  So, using the above  
            "washer-dryer" example, if this section of the bill were  
            to become law, the store could call you and leave a  
            pre-recorded message if it had something to say about  
            your washing machine (perhaps it's subject to a factory  
            recall), but it couldn't leave a pre-recorded message to  
            tell you about a sale on dryers, washing machine soap or  










                 any "related" product. 

                5)Creating Two New Exemptions  .  While certain portions of  
                 this measure are aimed at enhancing consumer protections,  
                 this bill also creates two new exemptions from the law  
                 banning the use of pre-recorded messages.  

                 The first exemption permits the devices to be used for  
                 "fraud prevention," but since that term isn't defined in  
                 the bill, it's unclear which companies would be able to  
                 use this exemption and for what purpose.  Would this  
                 apply, for example, to credit card companies that offer  
                 "fraud protection/prevention" services for their card  
                 holders?  In that case, this new exemption would  
                 effectively defeat the purpose of narrowing the existing  
                 "prior business relationship" exemption elsewhere in the  
                 bill.

                 The second exemption for calls that aren't made for  
                 "commercial purposes" is more problematic because it  
                 arguably opens the door for a wide variety of groups to  
                 call people using pre-recorded messages that aren't using  
                 them now.  This exemption appears to sanction the use of  
                 pre-recorded messages for among other things, non-profit  
                 solicitations as well as campaign and political  
                 fundraising purposes.   The author and committee may wish  
                 to consider whether  this exemption is too broad and  
                 whether a more narrow exemption should be added to the  
                 existing list of exemptions to permit calls using  
                 pre-recorded messages in certain circumstances.  That  
                 list, which is delineated in the bill, allows  
                 pre-recorded messages to be used for school purposes,  
                 non-profit membership purposes, pre-arranged cable  
                 television appointments, petroleum or chemical  
                 emergencies, law enforcement emergencies, and debt  
                 collection.

                6)Double Referral  .  Should this bill be approved by this  
                 committee, the Senate Rules Committee has requested that  
                 it be referred to the Senate Judiciary Committee.
                
                                      ASSEMBLY VOTES
                
               Assembly Utilities & Commerce Committee(9-2)










          Assembly C.P., G.E. & E.D. Committee(6-0)
          Assembly Appropriations Committee  (14-6)
          Assembly Floor                     (50-25)


                                    POSITIONS
           
           Sponsor:
           Author
           
          Support:
           Office of Ratepayer Advocates
          Privacy Rights Clearinghouse
          The Utility Reform Network
          Utility Consumer Action Network

           Oppose:
           None on file.

          Randy Chinn 
          AB 2721 Analysis
          Hearing Date:  June 13, 2000