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U.S. State Issues -- May 2004 Public Policy Update

Alaska

Alaska House Bill No. 15 is a bill amending the current statute concerning fair trade practices and consumer protection, telephone solicitations and charitable solicitations. A person would now be in violation of the statute if the person engages in the telephone solicitation of a customer who has previously communicated to the telephone solicitor or to the charitable organization for which the person is calling, the customer's desire not to receive telephone solicitations to that number.

However, an individual who solicits a telephone customer in violation of this statute is not liable for the violation IF the individual establishes that the individual did not intend to make the call in violation of the statute and did not recklessly disregard procedures that would have avoided the improper call. Note that under current law, it is unlawful to originate a telephone call using an automated or recorded message as a telephone solicitation. There is no defense to this infraction.

California

California Senate Bill No. 1262 would amend existing law pertaining to fundraisers in the following ways: Under existing law, the Supervision of Trustees and Fundraisers for Charitable Purposes Act governs charitable corporations, trustees, commercial fundraisers, fundraising counsel, and commercial coventurers who hold or solicit property for charitable purposes. This bill would expand its application to also apply existing law to unincorporated associations and other legal entities holding property for charitable purposes. This bill would revise existing law to require charitable organizations and fundraisers to (i) include specified disclosures in any written or oral solicitation or any other means not involving direct personal contact, (ii) make sure that a the charity accepts contributions only for a charitable purpose that is expressly stated in the solicitation for contributions and which conforms to the charitable purposes expressed in the articles of incorporation, and (iii) apply the contributions only in a manner consistent with those purposes.

The bill would require every charity to make a disclosure to the Attorney General of receipt of charitable property within 30 days after the entity receives charitable property. In addition, the bill would require charities that receive or accrue gross revenue of $2,000,000 or more in any fiscal year to prepare annual audit financial statements (current law does not require audited financials). This bill would also require all persons required to register in California to maintain records (including electronic records) for at least 10 years after the end of the registration period to which the records relate and make those records available for inspection upon demand by the Attorney General.

The bill has been approved by the Senate and is now being considered in the General Assembly. AFP still has several concerns with the legislation is working in a coalition of organizations to see the bill amended before final passage.

Maryland

Maryland Senate Bill No. 88 would make it a violation of state law for any person to violate either the federal Telemarketing and Consumer Fraud and Abuse Prevention Act as implemented by the Federal Trade Commission in the Telemarketing Sales Rule (16 CFR Part 310) or the Telephone Consumer Protection Act (47 USC § 227). A violation of this state law would be labeled an 'unfair or deceptive trade practice' and would subject the person violating it to certain enforcement actions and penalties under Maryland law.

This bill would further give standing to individuals who are affected by a violation this bill to bring a private action against a violator to recover reasonable attorney's fees and damages in the amount of the greater of (a) $500 per violation or (b) the person's actual damages sustained as a result of the violation. Each prohibited telephone solicitation and each prohibited practice during a telephone solicitation would be treated as a separate violation.

New Jersey

New Jersey Assembly Bill No. 2654 would prohibit a candidate or elected public official from raising funds in his own name for charitable or non-campaign purposes, unless such funds are first deposited in his campaign depository and reported to Election Law Enforcement Commission. The bill also provides that a candidate or an elected public official who organizes or conducts a charitable solicitation, or who serves as the chairperson of a charitable solicitation, and who receives donations in response to that solicitation in the form of checks, money orders or any other negotiable financial instrument made out to the charitable or nonprofit association is not required to deposit funds thus addressed into the elected public official's campaign depository prior to remitting those funds to the nonprofit organization for which such moneys were raised or to report to the commission the receipt, the amount or the remittance of such funds.

Ohio

Ohio House Bill No. 495 would require political fundraisers and their employers to file statements regarding their fundraising activities and financial transactions. Further, it would require campaign finance statements to identify contributions received through the efforts of political fundraisers and would prohibit political fundraisers from receiving payments on a contingent fee basis.

Rhode Island

The Charities Section of the Securities Division of the Rhode Island Department of Business Regulation is now requiring that all applications for Professional Solicitors must be accompanied by a Criminal Background Investigation report from the Solicitor's state of residence and a Federal search as well. No application for a Professional Solicitor will be processed without the submission of such accompanying documentation. If you have any questions on this matter, please call Alicia Mildner, Securities Examiner (401) 222-3048.

Vermont

In Vermont, additions to existing statutes were enacted and will be added (effective immediately) to the Vermont statutes. The law in Vermont now allows the attorney general to adopt rules requiring that: (1) the notice of solicitation must be filed electronically, (2) paid fundraisers must provide with the notice of solicitation an electronic copy of its contract with the charitable organization, and (3) paid fundraisers must provide an electronic copy of their bond with the notice of solicitation. The attorney general may also adopt rules requiring financial reports to be filed electronically, if accompanied by the proper verification.

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