S. HFS 55.51 (1) had a correction made under
s. 13.93 (2m) (b) 7., Stats.
(Health, Chs. HFS/HSS 110--)
Ch. HFS 113 was renumbered from ch. HSS 113 under s. 13.93 (2m) (b) 1., Stats., and corrections were made under s. 13.93 (2m) (b) 6. and 7., Stats.
Ch. HFS 133 was renumbered from ch. HSS 133 under s. 13.93 (2m) (b) 1., Stats.
Insurance, Commissioner of:
Ch. Ins 3
S. Ins 3.08 (3) (a)
S. Ins 3.09 (3) (b) and (j) and (19)
S. Ins 3.28 (6) (a)
S. Ins 3.31 (3) (a) and (4)
S. Ins 3.50 (4) and (8) (c)
S. Ins 3.65 (4) (a)
Natural Resources:
(Fish, Game, etc., Chs. NR 1--)
Ch. NR 25
S. NR 25.08 (2t) had a correction made
under s. 13.93 (2m) (b) 1., Stats.
Workforce Development:
Ch. DWD 41
S. DWD 41.01 (2) had a correction made under
s. 13.93 (2m) (b) 7., Stats.
Final Regulatory Flexibility Analyses
1.
Agriculture, Trade & Consumer Protection
(CR 98-117)
Ch. ATCP 127 - Direct marketing.
Summary of Final Regulatory Flexibility Analysis:
Direct Marketing
This rule regulates businesses that solicit and sell consumer goods by mail, telephone, other electronic means such as e-mail or facsimile, or in face-to-face transactions away from the seller's regular place of business. The rule provides methods whereby buyers can be informed of the conditions of their agreements in a manner that is meaningful and available to the consumer after the transaction is done and the seller no longer available.
These requirements should have little if any impact on small business. It is general business practice to inform potential customers who you are and the product you are selling an to produce invoices following the sale. It is also general practice to retain business records for a period of time for tax and other purposes. The practices regulated by the prize promotion, unauthorized payment, telephone solicitation, and credit card laundering sections have been identified at federal rules hearings as practices which have led to abuse of consumers and are already in effect for any business that solicits on an interstate scale. Businesses' recordkeeping requirements are necessary for meaningful enforcement of the rules and should already be the norm for most businesses.
Scope
This rule modernizes the restrictions on small business created by the current ch. ATCP 127, Wis. Adm. Code, which was promulgated in 1972./ This rule also incorporates the provisions of the Federal trade Commission telemarketing rules, and clarifies and expands its scope to include other electronic communications such as e-mail and telefax, and direct mail.
This rule does not apply to sales at the sellers' regular place of business, catalog sales, mass advertising, an established public market such as a farmers' market, or business-to-business sales. This rule does not apply to financial institutions, insurance companies, utilities, or real estate sales (other than cemetery lots and “time shares”).
Opening Disclosures
This rule requires initial disclosures such as the seller's correct name, other name of the individual making the solicitation, the fact that the seller is offering or promoting a sale of goods or services, and the kind of goods or services the seller is offering or promoting.
These disclosures must be made orally, if the direct marketing involves an oral or face-to-face communication and in writing, if the direct marketing involves a written or face-to-face solicitation.
These requirements should have no significant impact on small business. Most sellers, as a mater of preference, leave written information about their company and products with the consumer whenever engaged in a home solicitation.
Disclosures Prior to Sale
Before the sale or acceptance of payment, a seller must disclose the material terms and conditions of sale. These requirements add no additional cost to legitimate small business who already provide this information to consumers.
Unauthorized Payment
Under this rule, no seller may obtain or submit any negotiable instrument drawn on a consumer s account without express, verifiable authorization. Authorizations may be written or oral, and must be verifiable by writing or tape recording. Honest businesses should have no objection to these provisions. Businesses that wish to tape record oral authorizations may find it necessary to make a one-time purchase of equipment.
Credit Card Laundering
This rule prohibits “credit card laundering” schemes by which unscrupulous sellers gain access to the credit card system by processing credit card transactions under the name of another merchant. This section targets only those sellers engaged in unscrupulous practices and should have no impact on legitimate small businesses.
Misrepresentations
This rule prohibits the seller from misrepresenting any of the following:
• The seller's identity, affiliation, location or characteristics or the nature, purpose or intended length of a home solicitation.
• The cost, nature or terms of purchase, including restrictions, limitations or conditions on the receipt, use or return of goods or services. This rule requires affirmative disclosure of key sales terms.
• The nature, quantity, or material characteristics of the goods or services.
• That the seller has specifically chosen the consumer or is making a special sales promotion limited to a few individuals, unless this is true and the basis for the representation is revealed.
• That the seller is participating in a contest or conducting a survey unless it is true and the seller describes the contest or survey.
• That a seller is affiliated with, or endorsed by, any government or 3rd-party organization or has specially selected the consumer.
• Any material aspect of an investment opportunity, including risk, liquidity, earnings potential or profitability.
These prohibitions should pose no problem for honest businesses, and should place no additional burden on small businesses. For the most part, they merely continue prohibitions contained in current rules.
Prohibited Practices; General
This rule prohibits a seller from doing any of the following in a direct marketing transaction:
• Threatening, intimidating, or harassing a consumer.
• Failing to leave a consumer's premises upon request.
• Requesting or receiving payment for “loan finder” services until the consumer actually receives the promised loan.
These prohibitions should pose no problem for honest businesses, and should place no additional burden on small businesses. For the most part, they merely continue prohibitions contained in current rules.
Prohibited Telephone Solicitation Practices
This rule prohibits a direct marketing seller from doing any of the following:
• Initiating a telephone solicitation to a consumer who has previously stated that he or she does not wish to receive telephone solicitations from the seller.
• Repeatedly causing a consumer's telephone to ring, or repeatedly engaging a consumer in telephone conversation, with intent to annoy, abuse or harass a consumer.
• Initiating a telephone solicitation before 8:00 am or after 9:00 PM without the prior consent of the consumer.
These prohibitions are consistent with FTC rule provisions, and should pose no problem for legitimate telemarketers.
Recordkeeping
This rule requires a direct marketing seller to keep copies of all solicitation scripts and documents, transaction receipts, a description of each prize offered and the name and address of every consumer who received a prize. The rule also requires a seller to keep the real names, any fictitious name(s) used, address and telephone number, and job title or titles of individual solicitors acting on the seller's behalf.
This section is similar to the federal telemarketing rule requirements. Additionally, the records to be kept are generally held by small business for other purposes. Therefore, there should be no fiscal impact to most small businesses. There will be some limited fiscal impact to small businesses who do not otherwise come under the federal rules and do not otherwise keep the required documentation.
Small Business Impact; Summary
The impact on small business should be limited to those who are not already covered by federal telemarketing rules or current DATCP rules under ch. ATCP 127, Wis. Adm. Code. Some small businesses may need to purchase equipment to tape record telephone authorizations from consumers. Most other requirements can be met by adhering to normal good business and recordkeeping practices. This rule will not ordinarily require small businesses to retain additional professional services.
Summary of Comments from Legislative Committees:
On March 17, 1999, this department transmitted the above rule for legislative committee review.
The rule was assigned to the Senate Committee on Judiciary and Consumer Affairs on March 25,1999, and to the Assembly Committee on Consumer Affairs on March 30, 1999.
On May 6, 1999, a hearing was held on the rule by the Assembly Committee on Consumer Affairs. Both committees recommended a modification to the proposed rule which would exempt credit unions from the definition of “seller.”
On May 19, 1999, the department submitted a letter to both legislative committees informing then that the department agreed to make the following modification to the rule:
• On page 20, at line 24, add the words “credit union” as follows:
“association, credit union, insurance company, public utility or telecommunications carrier
The department also informed the committees on May 19, 1999, that it was adding the two following notes to the rule:
• On page 2l, after line 19:
NOTE: Paragraph (b) does not except a face-to-face communication.
• On page 22, after line 9:
NOTE: A “solicitation under sub. (22) is covered by this rule even though it is not the first communication between the seller and the consumer.
Neither legislative committee took any action on the rule during its review period.
