Source: https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?division=7.&chapter=1.&part=3.&lawCode=BPC&article=1.4
Timestamp: 2019-07-18 11:58:43
Document Index: 725660270

Matched Legal Cases: ['art 2', 'art 2', 'art 2', 'art 2', 'art 2', 'art 2', 'art 2', 'art 2']

ARTICLE 1.4. Telephonic Sellers [17511 - 17514]
( Article 1.4 added by Stats. 1985, Ch. 1009, Sec. 1. )
(a) The Legislature finds and declares that the widespread use of telephone solicitors to initiate sales of goods, real property, and investment opportunities has created numerous problems for purchasers and investors which are inimical to good business practices. Telephonic sales have a significant impact upon the economy and well-being of this state and its local communities. However, purchasers have suffered substantial losses because of (1) misrepresentations, (2) lack of full and complete information regarding both the telephonic seller and the goods and investments the telephonic seller is offering, and (3) failure of delivery. The provisions of this article relating to telephonic sellers are necessary for the public welfare.
(b) It is the intent of the Legislature in enacting this article to (1) provide each prospective telephonic sales purchaser with information necessary to make an intelligent decision regarding the offer made, (2) safeguard the public against deceit and financial hardship, (3) insure, foster, and encourage competition and fair dealings among telephonic sellers by requiring adequate disclosure, and (4) prohibit representations that tend to mislead. This article shall be construed liberally in order to achieve these purposes.
(Added by Stats. 1985, Ch. 1009, Sec. 1.)
As used in this article, “telephonic seller” or “seller” means a person who, on his or her own behalf or through salespersons or through the use of an automatic dialing-announcing device, as defined in Section 2871 of the Public Utilities Code, causes a telephone solicitation or attempted telephone solicitation to occur which meets the criteria specified in subdivision (a), (b), (c), or (d) and who is not exempted by subdivision (e), as follows:
(3) That a prospective purchaser is able to obtain any item or service at a price which the seller states or implies is below the regular price of the item or service offered. This paragraph shall not apply to retailers who, within the previous 12 months, have sold a majority of their goods or services through in-person sales at retail stores.
(4) That a prospective purchaser who buys office equipment or supplies will, because of some unusual event or imminent price increase, be able to buy these items at prices which are below those that are usually charged or will be charged for the items.
(7) That the seller is offering to sell the prospective purchaser any gold, silver, or other metals, including coins, diamonds, rubies, sapphires, or other stones, coal or other minerals, or any interest in oil, gas, or mineral fields, wells, or exploration sites, or any other investment opportunity of any type whatsoever.
(8) That the seller is offering to make a loan, or to arrange or assist in arranging a loan or to assist in providing information which may lead to the obtaining of a loan, unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.
(b) A solicitation or attempted solicitation which is made by telephone in response to inquiries generated by unrequested notifications sent by the seller to persons who have not previously purchased goods or services from the seller or who have not previously requested credit from the seller, to a prospective purchaser wherein the seller represents or implies to the recipient of the notification that any of the following applies to the recipient:
(3) That if the recipient buys one or more items from the seller, the recipient will also receive additional or other items, whether or not of the same type as purchased, without further cost or at a cost which the seller states or implies is less than the regular price of such items.
(c) A solicitation or attempted solicitation which is made by telephone in response to inquiries generated by advertisements on behalf of the telephonic seller wherein it is represented or implied that the seller is offering to sell to the prospective purchaser any gold, silver, or other metals, including coins, diamonds, rubies, sapphires, or other stones, coal or other minerals, or any interest in oil, gas, or mineral fields, wells, or exploration sites, or any other investment opportunity of any type whatsoever.
(d) A solicitation or attempted solicitation which is made by telephone in response to inquiries generated by advertisements on behalf of the telephonic seller wherein it is represented or implied that the seller is offering to make a loan or to arrange or assist in arranging a loan or to assist in providing information which may lead to the obtaining of a loan, unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.
(1) A person offering or selling a security qualified under Section 25110, 25120, or 25130 of the Corporations Code or exempt from qualification under Chapter 1 (commencing with Section 25100) of Part 2 of Division 1 of Title 4 of the Corporations Code. The fact that a notice claiming an exemption under the Corporate Securities Law of 1968 is filed with the Department of Business Oversight does not create an exemption under this paragraph.
(5) A person offering or selling a franchise registered pursuant to Section 31110 of the Corporations Code or exempt from registration under Chapter 1 (commencing with Section 31100) of Part 2 of Division 5 of Title 4 of the Corporations Code. The fact that a notice claiming an exemption under the Franchise Investment Law is filed with the Department of Business Oversight does not create an exemption under this paragraph.
(10) Any supervised financial institution or parent, subsidiary, or subsidiary of parent thereof. As used in this paragraph, “supervised financial institution” means any commercial bank, trust company, savings and loan association, credit union, industrial loan company, finance lender or broker, or insurer, provided that the institution is subject to supervision by an official or agency of this state or of the United States.
(15) A person soliciting the sale of a commodity pursuant to Part 2 (commencing with Section 58601) of Division 21 of the Food and Agricultural Code, if the solicitation neither intends to, nor actually results in, a sale which costs the purchaser in excess of one hundred dollars ($100).
(16) An issuer or subsidiary of an issuer that has a security listed on a national securities exchange if the exchange has been certified by rule or order of the Commissioner of Business Oversight under subdivision (o) of Section 25100 of the Corporations Code. A subsidiary of an issuer that qualifies for exemption under this paragraph is not itself exempt unless not less than 60 percent of the voting power of its shares is owned by the qualifying issuer or issuers.
(19) A person who sells coins or bullion at a price which is not more than 25 percent more than the price at which the seller is concurrently buying the same coins or bullion, if: (A) the seller has had a retail location in California from which he or she has been selling coins or bullion to the public in person for at least three years; (B) the telephonic solicitations are not the person’s primary business and sales made telephonically make up less than 20 percent of the person’s total retail sales; and (C) the person claiming an exemption pursuant to this subdivision complies with Section 17511.3, as applicable, and subdivision (p) of Section 17511.4.
(20) A person licensed pursuant to Division 1.2 (commencing with Section 2000) of the Financial Code to engage in the business of money transmission if the license has not expired or been suspended or revoked.
(Amended by Stats. 2016, Ch. 277, Sec. 2. (AB 2907) Effective January 1, 2017.)
17511.2.
(b) “Item” means any goods and services, and includes coupon books which are to be used with businesses other than the seller’s business.
(c) “Owner” means a person who owns or controls 10 percent or more of the equity of, or otherwise has claim to 10 percent or more of the net income of, a telephonic seller.
(d) “Person” includes an individual, firm, association, corporation, partnership, joint venture, or any other business entity.
(e) “Principal” means an owner, an executive officer of a corporation, a general partner of a partnership, a sole proprietor of a sole proprietorship, a trustee of a trust, or any other individual with similar supervisory functions with respect to any person.
(f) “Purchaser” or “prospective purchaser” means a person who is solicited to become or does become obligated to a telephonic seller.
(g) “Salesperson” means any individual employed, appointed or authorized by a telephonic seller, whether referred to by the telephonic seller as an agent, representative, or independent contractor, who attempts to solicit or solicits a sale on behalf of the telephonic seller. The principals of a seller are themselves salespersons if they solicit sales on behalf of the telephonic seller.
17511.3.
(a) Not less than 10 days prior to doing business in this state, a telephonic seller shall register with the department by filing with the Consumer Law Section of the department the information required by Section 17511.4 and a filing fee of fifty dollars ($50). A seller shall be deemed to do business in this state if the seller solicits prospective purchasers from locations in this state or solicits prospective purchasers who are located in this state.
A person claiming an exemption pursuant to paragraph (19) of subdivision (d) of Section 17511.1 shall file with the Consumer Law Section of the department, in lieu of the information required by subdivisions (a) to (o), inclusive, of Section 17511.4, the information required by subdivision (p) of Section 17511.4 and a filing fee of fifty dollars ($50).
(b) Registration of a telephonic seller shall be valid for one year from the effective date thereof and may be annually renewed by making the filing required by Section 17511.4 and paying a filing fee of fifty dollars ($50).
(c) Whenever, prior to expiration of a seller’s annual registration, there is a material change in the information required by Section 17511.4, the seller shall, within 10 days, file an addendum updating the information with the Consumer Law Section of the department. However, changes in salespersons soliciting on behalf of a seller shall be updated by addendums filed, if necessary, in quarterly intervals computed from the effective date of registration. The addendum shall provide the required information for all salespersons who are currently soliciting or have solicited on behalf of the seller at any time during the period between the filing of the registration, or the last addendum, and the current addendum, and shall include salespersons no longer soliciting for the seller as of the date of the filing of the current addendum.
(d) Upon receipt of a filing and filing fee pursuant to subdivision (a) or (b), the department shall send the telephonic seller a written confirmation of receipt of the filing. If the seller has more than one business location, the written confirmation shall be sent to the principal business location identified in the seller’s filing in sufficient number so that the seller has receipt of filing, within 10 days of receipt thereof, in a conspicuous place at each of the seller’s business locations and shall have available for inspection by any governmental agency at each location a copy of the entire registration statement which has been filed with the department. Until confirmation of receipt of filing is received and posted, the seller shall post in a conspicuous place at each of the seller’s business locations within this state a copy of the first page of the registration form sent to the department. The seller shall also post in close proximity to either the confirmation of receipt of filing, or until the confirmation is received, the first page of the submitted registration form, the name of the individual or individuals in charge of each location from which the seller does business in this state, as defined in subdivision (a).
(Amended by Stats. 1991, Ch. 1091, Sec. 12.)
(Amended by Stats. 2009, Ch. 500, Sec. 4. (AB 1059) Effective January 1, 2010.)
17511.5.
In addition to complying with the requirements of Section 17500.3, as applicable, a telephonic seller, shall, at the time the solicitation is made and prior to consummation of a sales transaction, provide all of the following information to a prospective purchaser:
(a) If the telephonic seller represents or implies that a prospective purchaser will receive, without charge therefor, certain specific items or one item from among designated items, whether the items are denominated as gifts, premiums, bonuses, prizes, or otherwise, the seller shall provide the following:
(1) The information required to be filed by subparagraphs (A) and (B) of paragraph (4) of, and paragraph (5) of, subdivision (l) of Section 17511.4. In addition, each time the telephonic seller makes reference to an item or items, the telephonic seller shall state that no purchase is necessary, and that the purchase of goods will have no greater chance of receiving the more valuable item or items than the person who does not purchase. The seller shall state, in a manner enabling a consumer to copy the information, the method, including the telephonic seller’s address, for obtaining without purchase the item or items or for a chance to obtain the item or items. The provisions of Section 17537.2 of the Business and Professions Code shall apply to all offers.
(2) The complete street address of the location from which the salesperson is calling the prospective purchaser and, if different, the complete street address of the telephonic seller’s principal location.
(3) The total number of individuals who have actually received from the telephonic seller, during the preceding 12 months (or if the seller has not been in business that long, during the period the telephonic seller has been in business), the item having the greatest value and the item with the smallest odds of being received.
(b) If the telephonic seller is offering to sell any metal, stone, or mineral, the seller shall provide the following information:
(1) The complete street address of the location from which the salesperson is calling the prospective purchaser and, if different, the complete street address of the telephonic seller’s principal location.
(2) When required to be filed pursuant to Section 17511.4, the information specified in subparagraphs (A) and (B) of paragraph (2) of, and paragraph (5) of, subdivision (m) of Section 17511.4.
(c) If the telephonic seller is offering to sell an interest in oil, gas, or mineral fields, wells, or exploration sites the seller shall provide the following information:
(2) The information required to be filed by paragraphs (1), (2), and (4) of, and subparagraph (A) of paragraph (3) of, subdivision (n) of Section 17511.4.
(d) If the telephonic seller represents that office equipment or supplies being offered are offered at prices which are below those usually charged for these items, the seller shall provide the following information:
(2) The name of the manufacturer of each of the items the telephonic seller has represented for sale and in which the prospective purchaser expresses interest.
(e) If the solicitation is a “home solicitation contract or offer” within the meaning of Section 1689.5 of the Civil Code, the seller shall comply with the following:
(1) At the time the solicitation is made, the telephonic seller shall inform the buyer orally of the following:
(A) The buyer has the right to cancel the contract or offer until midnight of the third business day after the day on which the buyer receives the product or products ordered or the notice of confirmation of services ordered. This right of cancellation begins to run from the date of the buyer’s receipt of the product or products ordered or, in the case of services ordered, from the buyer’s receipt of the notice of confirmation of services ordered.
(B) A written notice of cancellation will be sent with the product or products ordered or, in the case of services, the notice of cancellation shall accompany a notice of confirmation that shall be sent to the purchaser immediately following the telephonic agreement to purchase those services.
(2) The telephonic seller shall provide the buyer with a written notice of cancellation that shall accompany and be attached to any product or products sent to the purchaser in response to a telephone solicitation or, in the case of services, shall accompany a notice of confirmation of the agreement to purchase services. The notice of cancellation shall be in duplicate, captioned “Notice of Buyer’s Right of Cancellation,” which shall be separate from or easily detachable from any agreement or offer to purchase which accompanies the product or products or notice of confirmation, and shall contain, in type of at least 10-point, the following cancellation statement, and no other information or statement, written in the same language used in the telephone solicitation:
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to__________(name of seller), at________(address of seller’s place of business) not later than midnight of the third business day after receipt of the products and this notice of cancellation.
BUYER’S SIGNATURE _____
(Amended by Stats. 1995, Ch. 109, Sec. 1. Effective January 1, 1996.)
17511.6.
Every telephonic seller shall file with the Attorney General, in the form prescribed by the Attorney General, an irrevocable consent appointing the Attorney General to act as the seller’s attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against the seller or the seller’s successor, executor, or administrator, which may arise under this article, when the agent designated pursuant to subdivision (o) of Section 17511.4 has resigned and has not been replaced or if the agent so designated cannot with reasonable diligence be found at the address designated pursuant to subdivision (o) of Section 17511.4 or if no agent has been designated pursuant thereto. When service is made upon the Attorney General in conformance with this section, it shall have the same force and validity as if served personally on the seller. Service may be made by leaving a copy of the process in the office of the Attorney General, but it shall not be effective unless both of the following are done:
(a) When service is effected pursuant to this section, the plaintiff shall forthwith send by first-class mail a notice of the service and a copy of the process to the defendant or respondent at the last address on file with the department.
(b) The plaintiff’s affidavit of compliance with this section shall be filed in the case on or before the return date of the process, if any, or within such further time as the court allows.
17511.7.
No seller shall make or authorize the making of any references to its compliance with this article to any prospective or actual purchaser.
17511.8.
No salesperson shall solicit prospective purchasers on behalf of a telephonic seller who is not currently registered with the department pursuant to this article. Any salesperson who violates this section is guilty of a misdemeanor punishable by imprisonment in the county jail for not more than six months, by a fine not exceeding two thousand five hundred dollars ($2,500), or by both that fine and imprisonment.
17511.9.
Except as provided in Section 17511.8, any person, including, but not limited to, the seller, a salesperson, agent or representative of the seller, or an independent contractor, who willfully violates any provision of this article or who directly or indirectly employs any device, scheme, or artifice to deceive in connection with the offer or sale by any telephonic seller, or who willfully, directly, or indirectly, engages in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person in connection with a sale by any telephonic seller shall, upon conviction, be punished as follows:
(c) By both the fine and imprisonment specified in subdivisions (a) and (b).
(Amended by Stats. 2011, Ch. 15, Sec. 27. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)
17511.10.
The provisions of this article are not exclusive. The remedies specified in this article for violation of any section of this article or for conduct proscribed by any section of this article shall be in addition to any other procedures or remedies for any violation or conduct provided for in any other law.
Nothing in this article shall limit any other statutory or any common law rights of the Attorney General, any district attorney or city attorney, or any other person. If any act or practice proscribed by this article is also the basis for a cause of action in common law or a violation of another statute, the purchaser may assert the common law or statutory cause of action under the procedures and with the remedies applicable thereto.
17511.12.
(a) Every telephonic seller shall maintain a bond issued by a surety company admitted to do business in this state. The bond shall be in the amount of one hundred thousand dollars ($100,000) in favor of the State of California for the benefit of any person suffering pecuniary loss in a transaction commenced during the period of bond coverage with a telephonic seller who violated this chapter. The bond shall include coverage for the payment of the portion of any judgment, including a judgment entered pursuant to Section 17203 or 17535, that provides for restitution to any person suffering pecuniary loss, notwithstanding whether the surety is joined or served in the action or proceeding. A copy of the bond shall be filed with the Consumer Law Section of the Department of Justice. This bond may not be required of any cable television operator franchised or licensed pursuant to Section 53066 of the Government Code.
(b) (1) At least 10 days prior to the inception of any promotion offering a premium with an actual market value or advertised value of five hundred dollars ($500) or more, the telephonic seller shall notify the Attorney General in writing of the details of the promotion, describing the premium, its current market value, the value at which it is advertised or held out to the customer, and the date the premium shall be awarded. All premiums offered shall be awarded. The telephonic seller shall maintain an additional bond for the total current market value or advertised value, whichever is greater, of the premiums held out or advertised to be available to a purchaser or recipient. A copy of the bond shall be filed with the Consumer Law Section of the Department of Justice. The bond shall be for the benefit of any person entitled to the premium who did not receive it within 30 days of the date disclosed to the Attorney General as the date on which the premium would be awarded. The amount paid to a person under a bond required by this subdivision may not exceed the greater of the current market value or advertised or represented value of the premium offered to that person. The bond shall include coverage for the payment of any judgment, including a judgment entered pursuant to Section 17203 or 17535, that provides for payment of the value of premiums that were not timely awarded, notwithstanding whether the surety is joined or served in the action or proceeding. The bond shall also provide for payment upon motion by the Attorney General pursuant to subdivision (d) in the event the seller fails to provide the Attorney General with proof of the award of premiums as required in paragraph (2).
(2) Within 45 days after the date disclosed to the Attorney General for the award of premiums, the seller shall provide to the Attorney General proof that all premiums were awarded. The proof shall include the names, addresses, and telephone numbers of the recipients of the premiums and the date or dates on which the premiums were awarded. The bond shall be maintained until the seller files proof with the Attorney General as required by this subdivision or until payment of the amount of the bond is ordered pursuant to subdivision (d).
(c) (1) In addition to any other means for the enforcement of the surety’s liability on a bond required by this section, the surety’s liability on the bond may be enforced by motion, as provided in this subdivision, after a judgment has been obtained against the seller.
(2) The Attorney General, district attorney, city attorney, or any other person who obtained a judgment for restitution against the seller, as described in subdivision (a), may file a motion in the court that entered the judgment to enforce liability on the bond without first attempting to enforce the judgment against any party liable under the judgment.
(3) The notice of motion, the motion, and a copy for the judgment shall be served on the surety as provided in Chapter 5 (commencing with Section 1010) of Title 14 of Part 2 of the Code of Civil Procedure. The notice shall set forth the amount of the claim and a brief statement indicating that the claim is covered by the bond. Service shall also be made on the Consumer Law Section of the Department of Justice.
(4) The court shall grant the motion unless the surety establishes that the claim is not covered by the bond, or the court sustains an objection made by the Attorney General that the grant of the motion might impair the rights of actual or potential claimants or is not in the public interest.
(d) (1) In addition to any other means for the enforcement of the surety’s liability on a bond required by subdivision (b), the surety’s liability on the bond may be enforced by motion as provided in this subdivision.
(2) The Attorney General, district attorney, city attorney, or any person who claims the premium, may file a motion in the superior court of the county from which the seller made an offer of a premium, in which the seller maintains any office or place of business, or in which an offeree of the premium resides, or in any other court of competent jurisdiction. The motion shall set forth the nature of the seller’s offer, the greater of the current market value or advertised or represented value of the premium, the date by which the premium should have been awarded, and the fact that the premium was not awarded as represented.
(3) The notice of motion and motion shall be served on the surety as provided in Chapter 5 (commencing with Section 1010) of Title 14 of Part 2 of the Code of Civil Procedure.
(4) The court shall grant the motion unless the surety establishes that the claim is untrue or is not covered by the bond.
(5) The Attorney General may file a motion in the superior court of the county from which the seller made an offer of a premium, or in which an offeree of a premium resides, or in any other court of competent jurisdiction, for the payment of the entire bond if the seller fails to file proof with the Attorney General of the award of all premiums as required by paragraph (2) of subdivision (b). The notice of motion and motion shall be served as provided in Chapter 5 (commencing with Section 1010) of Title 14 of Part 2 of the Code of Civil Procedure. The motion shall be granted if the Attorney General establishes that the seller failed to file proof of making the timely award of all premiums. The recovery on the bond shall be distributed pro rata to the promised recipients of the premiums to the extent their identity is actually known to the Attorney General at the time payment is made by the surety. The balance of the recovery shall be paid to any judicially established consumer protection trust fund designated by the Attorney General or as directed by the court under the cy pres doctrine.
(e) No stay of a motion filed pursuant to this section may be granted pending the determination of conflicting claims among beneficiaries. An order enforcing liability on a bond may be enforced in the same manner as a money judgment pursuant to Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure. Nothing herein affects the rights of the surety against the principal.
(f) The surety is not liable on the bond for payment of a judgment against a seller for any violation of this chapter unless the action or proceeding is filed within two years after the cancellation or termination of the bond, the termination of the seller’s registration, or the seller’s cessation of business, whichever is later.
(g) The surety is not liable on a motion made pursuant to subdivision (d) unless the motion is filed within two years of the date on which the seller represented the premium was to have been awarded.
(h) For the purpose of this section, “judgment” includes a final order in a proceeding for the termination of telephone service pursuant to Public Utilities Commission Tariff Rule 31.
(i) Chapter 2 (commencing with Section 995.010) of Title 14 of Part 2 of the Code of Civil Procedure shall apply to the enforcement of a bond given pursuant to this section except to the extent of any inconsistency with this section, in which event this section shall apply.
(Amended by Stats. 2003, Ch. 449, Sec. 1. Effective January 1, 2004.)
(a) It shall be unlawful for any person to request or receive payment of any fee or consideration from a person for goods or services represented to recover or otherwise assist in the return of money or any other item of value paid for by, or promised to, that person in a previous telemarketing transaction, until seven business days after that money or other item is delivered to that person.
(b) This section shall not apply to an attorney licensed to practice law in this state and specifically retained for the recovery of money or any other item of value.
(c) Notwithstanding Section 17511.9, any person who violates subdivision (a) shall be guilty of a misdemeanor, and shall be punished by imprisonment in a county jail for up to one year.
(Added by Stats. 1998, Ch. 446, Sec. 1. Effective January 1, 1999.)
(a) It shall be unlawful for any telephonic seller to procure, either directly or through an agent, the services of any third-party delivery, courier, or other pickup service, for the purpose of obtaining a purchaser’s payment for goods sold by the telephonic seller, unless the goods are delivered before or at the same time the purchaser’s payment is obtained.
(b) Notwithstanding Section 17511.9, any person who violates subdivision (a) shall be guilty of a misdemeanor, and shall be punished by imprisonment in a county jail for up to one year.
(Added by Stats. 1998, Ch. 446, Sec. 2. Effective January 1, 1999.)
(a) A person who sends a solicitation by mail that solicits a recipient to consent to receive information via telephone, where that recipient’s telephone number is not listed on the national “do not call” registry established and maintained by the Federal Trade Commission, as described in Section 310.4(b)(1)(iii)(B) of Title 16 of the Code of Federal Regulations, shall include in the solicitation a clear and conspicuous disclosure of the following information:
(1) Identification of the name of the sender of the mailing and of the entity that is requesting permission to call.
(2) The telephone number to which calls are to be placed.
(3) Notice that the recipient may be contacted by a telephone solicitor.
(b) A violation of this section shall not be a crime, notwithstanding Section 17534. However, all available civil remedies that are applicable to a violation of this section may be employed.
(Added by Stats. 2008, Ch. 738, Sec. 1. Effective January 1, 2009.)
BPCBusiness and Professions Code - BPC1.4