Section 399-PP. Telemarketing and consumer fraud and abuse prevention act

1. Legislative findings  and  declaration.  The  legislature  finds  and
  declares  that  the  prevention  of  deceptive  and  unfair practices in
  association with telemarketing is in the public interest and subject  to
  the authority of appropriate political subdivisions of the state for the
  purpose  of  protecting  the  public  against fraud, deception and other
  abuses. The legislature  intends  that  the  federal  telemarketing  and
  consumer  fraud  and  abuse  prevention  act  (P.L.  103-297)  be  fully
  enforceable by appropriate state and local enforcement officials.
    The  legislature  further  declares   that   additional   requirements
  applicable  to  the  telemarketing  industry  not present in the federal
  statute are necessary to protect residents of the state and others  from
  telemarketing  abuses. The legislature therefore intends that provisions
  in this section which differ from the  aforementioned  federal  act  and
  other New York state laws regulating telemarketing be construed whenever
  reasonable   as   providing   additional   protections   to  victims  of
  telemarketing fraud.
    2. Definitions. As used in this section,  the  following  terms  shall
  have the following meanings:
    a. "Applicant" means a person seeking a certificate of registration or
  to renew a certificate of registration under this section.
    b. "Customer" means any person who is or may be required to pay for or
  to  exchange  consideration  for  goods  and  services  offered  through
  telemarketing.
    c. "Goods or services" means any goods or services, and shall  include
  any  real  property  or  any tangible or intangible personal property or
  services of any kind.
    d. "Investment opportunity" means  anything  tangible  or  intangible,
  that  is  offered  for  sale, sold, or traded based wholly or in part on
  representations, either express or  implied,  about  past,  present,  or
  future income, profit, or appreciation.
    e.  "Person" means any natural person, association, partnership, firm,
  corporation and its affiliates or subsidiaries or other business entity.
    f. "Premium" means anything offered or given, independent  of  chance,
  to customers as an incentive to purchase or otherwise contract for goods
  or services offered through telemarketing.
    g.  "Principal"  means  any person participating in or responsible for
  the management of a telemarketer's business, whether or not the position
  is compensated, including but not limited to an owner in the case  of  a
  sole  proprietorship,  an  officer, director or stockholder holding more
  than ten percent of the outstanding stock in the case of a  corporation,
  a  partner  in the case of a partnership, and a manager or member in the
  case of a limited liability company.
    h. "Prize" means anything offered or purportedly offered and given  or
  purportedly   given  to  a  person  by  chance.  For  purposes  of  this
  definition, chance exists if a person is guaranteed to receive  an  item
  and,  at the time of the offer or purported offer, the telemarketer does
  not identify the specific item that the person will receive.
    i. "Prize promotion" means a sweepstakes or other game of chance or an
  oral or written, express or implied representation  that  a  person  has
  won,  has  been selected to receive or is eligible or may be eligible to
  receive a prize or purported prize.
    j. "Telemarketer" means any  person,  who,  for  financial  profit  or
  commercial  purposes in connection with telemarketing, either initiates,
  or initiates and receives telephone calls to or from a customer when the
  customer is in this  state  or  any  person  who  directly  controls  or
  supervises  the  conduct  of  a  telemarketer.  For the purposes of this

  section, "commercial purposes" shall mean the sale or offer for sale  of
  goods and services.
    k.  "Telemarketing"  means  any  plan,  program  or  campaign which is
  conducted to induce payment or the exchange of any  other  consideration
  for  any  goods  or  services by use of one or more telephones and which
  involves more than one telephone call by a  telemarketer  in  which  the
  customer  is  located  within  the  state  at  the  time  of  the  call.
  Telemarketing does not include the solicitation  of  sales  through  any
  media other than by telephone calls.
    l. "Secretary" shall mean the secretary of state.
    m. "Department" shall mean the department of state.
    3.  Registration  of  telemarketers.  a.  No  person  shall  act  as a
  telemarketer without first having received a certificate of registration
  from  the  secretary  as  provided  in  this   section.   Employees   of
  telemarketers  shall  be  exempt from the requirements of this paragraph
  and paragraph b of this subdivision.
    b. No person required to register pursuant  to  paragraph  a  of  this
  subdivision  shall  act  as  a  telemarketer  without  holding  a  valid
  certificate of registration from  the  secretary  as  provided  in  this
  section.
    c.  Any  applicant shall file with the department an application for a
  certificate of registration in such form and containing such information
  as the secretary shall prescribe, including the following:
    (1) the applicant's name, address and telephone number;
    (2) each business name under which the applicant engages in or intends
  to  engage  in  telemarketing,  if  such  name  is  different  than  the
  applicant's;
    (3)  the  complete street address and primary telephone number of each
  location, designating the principal location, from which  the  applicant
  engages  in  or  intends  to  engage  in  telemarketing,  including each
  location at which  mail  will  be  received  by  or  on  behalf  of  the
  applicant,  and  identifying any such location that is a post office box
  or mail drop;
    (4) the name, address and telephone number of each  principal  of  the
  business;
    (5)  whether the applicant or any principal thereof has been convicted
  or plead guilty to or is being prosecuted by indictment  or  information
  for  racketeering,  violations of securities laws, or a theft offense of
  any state, or the United States;
    (6) whether any injunction or judgment has been entered  into  against
  the  applicant  or  any  principal,  or  such applicant or principal has
  entered  into  a  settlement  agreement,  assurance  of  discontinuance,
  consent  decree  or any similar instrument in any civil action involving
  theft,  racketeering,  embezzlement,  conversion,  misappropriation   of
  property,  fraud,  or deceptive, unfair, illegal or unconscionable trade
  practices, and whether any civil  action  involving  such  practices  is
  currently  pending,  to  the  extent  not inconsistent with any existing
  court orders; and
    (7) whether the license to engage in any business, trade or profession
  of the applicant or any principal thereof has been refused, suspended or
  revoked in any jurisdiction.
    d. Upon receipt of the  completed  application  for  registration  and
  required  fee,  and  unless  such  certificate  of registration has been
  denied as provided in subdivision five of this  section,  the  secretary
  shall  issue and deliver to the applicant a certificate in such form and
  manner as the secretary shall prescribe, but which must  set  forth  the
  applicant's  name,  business  address,  and  the  effective  term of the
  registration. A registration certificate issued  or  renewed  under  the

  provisions of this section shall entitle a person to act as a registered
  telemarketer  for  a  period of two years from the effective date of the
  registration.
    e.  Any  registration granted under this section may be renewed by the
  secretary upon application by the holder thereof, in such  form  as  the
  secretary  may  prescribe.  The  secretary  shall  have the authority to
  assign staggered expiration dates for licenses at the time  of  renewal.
  If  the  assigned  date  results  in  a term that exceeds two years, the
  applicant shall pay an additional pro-rata adjustment together with  the
  fee prescribed in paragraph f of this subdivision.
    f.  Each  application  for  a  certificate  of  registration  shall be
  accompanied by a fee  of  five  hundred  dollars,  which  shall  not  be
  refundable.
    g.  The fees collected pursuant to this subdivision shall be deposited
  to the credit of the business and licensing services account established
  pursuant to the  provisions  of  section  ninety-seven-y  of  the  state
  finance law.
    h.  Any person holding a certificate of registration shall be required
  to  provide  notice  of  any  change  in  the  information  required  of
  applicants  by  this  section,  in such form and manner, and within such
  time period as the secretary shall prescribe.
    i. No person required to be registered under this subdivision shall be
  entitled to enforce any agreement or seek any consideration or any other
  payment for goods and services offered through telemarketing unless such
  person is in compliance with this subdivision and  subdivision  four  of
  this section.
    j.  The  secretary shall prescribe rules and regulations to administer
  this subdivision and subdivision four of this section.
    4. Bonding of telemarketers. a. Any applicant shall, at  the  time  of
  any  original  application  for a certificate of registration, file with
  the secretary, in the form and amount as prescribed in this  subdivision
  and satisfactory to the secretary:
    (1)  A  bond  with a corporate surety, from a company authorized to do
  business in this state; or
    (2) An irrevocable letter of credit or a certificate of deposit from a
  New York state or federally chartered bank, trust company, savings  bank
  or  savings  and  loan  association qualified to do business in New York
  state and insured by the federal deposit insurance corporation.
    b. Such bond, letter of credit, or certificate  of  deposit  shall  be
  maintained  for  three  years  from  the  date  the  telemarketer ceases
  telemarketing,  or  three  years  from  the  date  the  certificate   of
  registration terminates, whichever is earlier.
    c.  The principal sum of the bond, letter of credit, or certificate of
  deposit shall be twenty-five thousand dollars, which shall be maintained
  until the period specified in paragraph b of this  subdivision,  subject
  to paragraph g of this subdivision.
    d.  The  bond,  letter  of  credit  or certificate of deposit shall be
  payable in favor of the people of the state of New York for the  benefit
  of  any  customer  injured  as  a result of a violation of this section,
  pursuant to a determination  of  any  court  of  competent  jurisdiction
  pursuant to this section, or article ten-B of the personal property law.
    e.  The aggregate liability of the surety upon the bond or the banking
  organization upon the letter of credit or certificate of deposit to  all
  persons for all breaches of the conditions of the bond shall in no event
  exceed  the  amount  of  the  bond,  letter  of credit or certificate of
  deposit.
    f. The bond, letter of credit or certificate of deposit shall  not  be
  canceled,  revoked, diminished or terminated except after notice to, and

  with the consent of, the secretary at least forty-five days  in  advance
  of  such  cancellation,  revocation,  or termination. Unless the bond is
  replaced by another bond, letter of credit or certificate of deposit  in
  conformity  with  this  subdivision  prior  to  the  expiration  of  the
  forty-five day period, the registration of  the  telemarketer  shall  be
  treated  as terminated as of the cancellation, revocation or termination
  of the bond.
    g. The registration of the telemarketer shall be treated as terminated
  as of the date the amount of the bond, letter of credit  or  certificate
  of deposit falls below the amount required by this subdivision.
    h. Any change in ownership of a telemarketer shall not release, cancel
  or  terminate liability under this subdivision under any bond, letter of
  credit, or certificate of deposit filed for any telemarketer as  to  any
  customer  who  was injured as a result of a violation of this section or
  article ten-B of the personal property law while such  bond,  letter  of
  credit  or  certificate of deposit was in effect unless such transferee,
  purchaser, successor or assignee of such telemarketer  obtains  a  bond,
  letter  of  credit  or certificate of deposit under this subdivision for
  the benefit of  such  customer.  Nothing  in  this  paragraph  shall  be
  construed  to  authorize  any telemarketer to cancel any bond, letter of
  credit, or  certificate  of  deposit  where  such  cancellation  is  not
  otherwise authorized by this subdivision.
    5.  Refusal  to  issue, suspension, and revocation of registration. a.
  The secretary, or any person deputized or so designated by  him  or  her
  may   deny   the   application  of  any  person  for  a  certificate  of
  registration, refuse to issue a renewal thereof, suspend or revoke  such
  certificate  or in lieu thereof assess a fine not to exceed one thousand
  dollars per violation, if he or she determines that such  applicant,  or
  any of its principals:
    (1)  has made a material false statement or omitted a material fact in
  connection with an application under this section;
    (2) was the former holder of  a  certificate  of  registration  issued
  hereunder which the secretary revoked, suspended, or refused to renew;
    (3)  has  failed  to  furnish satisfactory evidence of good character,
  reputation and fitness;
    (4) with respect to the applicant,  is  not  the  true  owner  of  the
  telemarketer, except in the case of a franchise;
    (5)  is  in violation of or has violated any of the following statutes
  and the regulations thereunder, as such  statutes  and  regulations  may
  from time to time be amended:
    (a) this section;
    (b) article ten-B of the personal property law;
    (c) the act of congress entitled the "telemarketing and consumer fraud
  and abuse prevention act" (P.L. 103-297);
    (6)  has  been  convicted or plead guilty to or is being prosecuted by
  indictment or information for  racketeering,  violations  of  securities
  laws, or a theft offense of this state, or the United States;
    (7)  has  had any injunction or judgment entered against him or her in
  any civil action, or such applicant or  principal  has  entered  into  a
  settlement agreement, assurance of discontinuance, consent decree or any
  similar   instrument   involving   theft,   racketeering,  embezzlement,
  conversion, misappropriation of property, fraud  or  deceptive,  unfair,
  illegal or unconscionable trade practices;
    (8)  has  had  a  license  or  registration to engage in any business,
  occupation or profession suspended or revoked in any jurisdiction  which
  may  impact  upon  the  applicant's  fitness for registration under this
  section; or

    (9) has committed, or is  committing  deceptive,  unfair,  illegal  or
  unconscionable  trade  practices in violation of the laws of this or any
  other state or the United States.
    b.   Any   proceeding  conducted  pursuant  to  paragraph  a  of  this
  subdivision shall be subject to the state administrative procedure act.
    6. Deceptive telemarketing acts and practices. a. It shall be unlawful
  for any telemarketer to directly or indirectly engage in  the  following
  conduct:
    (1)  fail  to furnish a copy of the certificate of registration at the
  request of any interested party;
    (2) present or attempt to present,  as  their  own,  the  registration
  certificate of another;
    (3) give false or misleading information;
    (4) misrepresent himself or herself to be registered;
    (5)  use  or  attempt to use a registration certificate which has been
  revoked, suspended or is otherwise not valid;
    (6)  advertise  telemarketing  services   without   having   a   valid
  certificate of registration under this section;
    (7)  represent  in any manner that his or her registration constitutes
  approval or endorsement of any governmental agency;
    (8) assist  or  support  any  person  when  the  telemarketer  or  any
  identified  employee  knew  or  should  have  known  that the person was
  engaged in an act or practice in violation of this  section  or  article
  ten-B of the personal property law;
    (9)  request  a fee in advance to remove adverse information or modify
  adverse information to improve  a  person's  credit  history  or  credit
  record;
    (10) except for an attorney engaged in the practice of law, request or
  receive  payment in advance from a person to recover or otherwise aid in
  the return of money or any other item lost by the customer  in  a  prior
  telemarketing transaction;
    (11)  obtain  or  submit  for payment a check, draft, or other form of
  negotiable paper drawn  on  a  person's  checking,  savings,  share,  or
  similar account, without that person's express written authorization;
    (12)  procure  the  services  of any professional delivery, courier or
  other pickup service to obtain receipt or  possession  of  a  customer's
  payment,  unless the goods or services are delivered with the reasonable
  opportunity to inspect before any payment is collected; or
    (13) misrepresent, directly or by implication, that  a  premium  is  a
  prize.
    b.  Telemarketers shall provide all of the following information, in a
  clear and coherent manner using words with common and everyday meanings,
  when making a telemarketing call:
    (1) at the beginning of the call and  prior  to  any  request  by  the
  caller  of  the  customer  to  release or disclose any of the customer's
  personal or financial information, including but  not  limited,  to  the
  customer's  name,  address,  credit  card,  checking  account  or  other
  financial account number or information:
    (a) that the purpose of the  telephone  call  is  to  offer  goods  or
  services  for  which  a  fee will be charged or to provide an investment
  opportunity, whichever is the case;
    (b) the telemarketer's  name  and  the  person  on  whose  behalf  the
  solicitation is being made if other than the telemarketer; and
    (c)  the  identity  of  the  goods or services for which a fee will be
  charged;
    (2) the cost of the goods or services that  are  the  subject  of  the
  call.

    (3)  in  any  prize  promotion,  the odds of being able to receive the
  prize, and if the odds are not calculable in advance, the  factors  used
  in  calculating the odds; that no purchase or payment is required to win
  a prize or to participate in a prize promotion; and the  no  purchase/no
  payment  method  of  participating  in  the  prize promotion with either
  instructions on how to participate or an address or local  or  toll-free
  telephone number to which customers may write or call for information on
  how  to  participate; and all material costs or conditions to receive or
  redeem a prize that is the subject of the prize promotion.
    7. Abusive telemarketing acts or practices. It shall be  unlawful  for
  any telemarketer to:
    a. threaten, intimidate or use profane or obscene language;
    b.  engage in conduct or behavior a reasonable person would deem to be
  abusive or harassing;
    c. initiate a telemarketing call to a person,  when  that  person  has
  stated  previously  that he or she does not wish to receive solicitation
  calls from that telemarketer provided,  however  that  nothing  in  this
  section shall be construed to prohibit a telemarketer from telemarketing
  goods,  services  or  investment  opportunities  to  any customer of any
  affiliate, subsidiary or parent of such telemarketer;
    d. engage in telemarketing to a person's residence at any  time  other
  than  between 8:00 A.M. and 9:00 P.M. local time, at the called person's
  location; or
    e. make a false, deceptive or misleading statement in  regard  to  the
  requirements  of  subdivision  six  of this section to a customer, or to
  engage in any deceptive or unfair act or practice  in  association  with
  telemarketing.
    8.  Recordkeeping  requirements. a. All telemarketers shall keep for a
  period of twenty-four months  from  the  date  the  record  is  produced
  records  of all financial transactions, written notices, disclosures and
  acknowledgments, including but not limited to:
    (1) records of calls resulting in a promise by the customer to pay  or
  otherwise  exchange  consideration for goods and services, including but
  not limited to the name and last known address  of  each  customer,  the
  goods or services selected, the date such goods were shipped or provided
  and  the  quantity  provided,  the amount charged by the company for the
  goods or services provided (including all other related fees or  charges
  of  any  kind,  including  shipping  and  handling fees), and the amount
  actually paid by the customer for the goods and services provided;
    (2) the name and last known address of each prize  recipient  and  the
  prize awarded having a value of twenty-five dollars or more; and
    (3)  the  name,  any fictitious name used, the last known home address
  and telephone number, and the job  title  for  all  current  and  former
  employees  directly involved in telephone sales; provided, however, that
  if the telemarketer permits fictitious names to be  used  by  employees,
  each fictitious name must be traceable to only one specific employee.
    b. A telemarketer may keep the records required by paragraph a of this
  subdivision  in  any  form,  and in the manner, format, or place as they
  keep such records in the ordinary course of business.
    c.  In  the  event  of  any  dissolution   or   termination   of   the
  telemarketer's  business,  a  representative  of  the telemarketer shall
  maintain all records as required under this subdivision, which shall  be
  the person required to maintain such records in the event of dissolution
  or  termination  under  rules  and  regulations  issued under the act of
  congress entitled  the  "telemarketing  and  consumer  fraud  and  abuse
  prevention  act"  (P.  L.  103-297),  or  any  person  designated by the
  telemarketer. In the event of any sale, assignment or  other  change  of
  ownership  of  the  telemarketer's  business,  the successor or assignee

  shall maintain all records required by this subdivision. In any case  in
  which  this  paragraph applies, the telemarketer shall provide notice to
  the secretary, in the form and manner designated by the secretary of the
  disposition  of  such  records  within  thirty  days of the dissolution,
  termination, sale, assignment or change of ownership.
    9. Waiver. Any waiver  of  the  provisions  of  this  section  by  any
  customer shall be unenforceable and void.
    10.  Exemptions.  a.  The  following  persons shall be exempt from the
  registration and bonding requirements set forth  in  subdivisions  three
  and four of this section:
    (1)  the  state,  municipalities  of  the  state, or any department or
  division of the state or such municipalities;
    (2)  the  United  States  or  any  of  its  departments,  agencies  or
  divisions;
    (3)  colleges,  universities  and other institutions authorized by the
  regents of the university of the state of New York or comparable body in
  any other state or jurisdiction, to grant  degrees,  including  licensed
  private schools and any registered business schools regulated by article
  one hundred one of the education law;
    (4)  a  person,  which  has  been operating for at least three years a
  retail business establishment in this state under the same name as  that
  used  in  connection with telemarketing, and both of the following occur
  on a continuing basis:
    (a) Either products are displayed and offered for sale or services are
  offered for sale and provided at the business establishment; and
    (b) A majority of the person's  business  involves  buyers'  obtaining
  such products or services at the person's location;
    (5)  a  person  engaged in a business or occupation which is licensed,
  registered, chartered, certified or incorporated with or by any state or
  federal agency. Provided, however, any person not licensed,  registered,
  chartered,  certified or incorporated with any New York state or federal
  agency, shall submit evidence to the secretary of state, in a  form  and
  manner  to be prescribed by the secretary, of any license, registration,
  charter,  certification  or  incorporation  issued  by  an   agency   or
  governmental entity in this or any other state; and
    (6)  any  not-for-profit corporation as defined in section one hundred
  two of the not-for-profit corporation law and charitable organizations.
    b. The following acts or practices are exempt from the requirements of
  this section:
    (1) telephone calls made  by  a  telemarketer,  collection  agency  or
  attorney  engaged  in  the  practice of law for the exclusive purpose of
  collecting  a  legal  debt  owed,  in  accordance  with  the  applicable
  provisions  of the Federal Fair Debt Collection Practices Act (15 U.S.C.