NY Gen Bus L § 399-PP (2021)
2021 New York Laws GBS - General Business Article 26 - Miscellaneous 399-PP - Telemarketing and Consumer Fraud and Abuse Prevention Act.

§  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.   n. "Caller identification information" means information provided by a caller identification service regarding the telephone number and name of the person calling.   o.  "Caller  identification  service"  means  a  service that allows a telephone subscriber to have the telephone number, and, where available, name  of  the  calling  party  transmitted  contemporaneously  with  the telephone  call,  and  displayed  on  a  device  in  or connected to the subscriber's telephone.   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;  (c) the identity of the goods or services for  which  a  fee  will  be charged; and  (d) whether the call is being recorded.  (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.   f. knowingly make an  unsolicited  telemarketing  sales  call  to  any person  in  a  county,  city,  town or village under a declared state of emergency or disaster emergency as described in sections twenty-four  or twenty-eight of the executive law.   7-a.   Unlawful   transmission   of   certain   caller  identification information.  It shall be unlawful for any  telemarketer  or  seller  to knowingly   cause   any   caller   identification  service  to  transmit misleading, inaccurate,  or  false  caller  identification  information, provided  that  it  shall not be a violation to substitute (for the name and phone number used in, or billed for, making the call)  the  name  or telephone  number  of  the  person  or  seller  on  behalf  of  which  a telemarketing call is placed.   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)  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. §1692 et. seq.);  (2) telephone calls in which the sale, lease or  other  agreement  for goods  or  services  is  not  completed, and payment or authorization of payment is not required, until after a face-to-face  sales  presentation by a telemarketer, or a meeting between a telemarketer and customer;  (3) telephone calls that are received by a telemarketer initiated by a customer   that   are  not  the  result  of  any  solicitation  by  such telemarketer; and  (4)  telephone  calls  between  a  telemarketer  and  any   for-profit business, except calls involving the retail sale of nondurable office or cleaning supplies.   c. The following acts or practices are exempt from the requirements of paragraph b of subdivision six of this section.  (1)  telephone  calls  pertaining  to  a  renewal or continuation of an existing or prior contractual relationship or  the  continuation  of  an established   business   relationship   between   a   customer  and  any telemarketer, provided that  the  telemarketer  discloses  any  material changes  in  the  terms and conditions of the prior contract, except for calls made by a telemarketer in which the telemarketer  or  any  of  its principals  has  previously  engaged in any act or practice described in subparagraphs one, two, five, six, seven and eight  of  paragraph  a  of subdivision five of this section; and  (2)  unsolicited  telephone  calls  made  by  the telemarketer for the purpose of overall efforts to develop new business  that  include  other methods  and  techniques  intended  to  identify  and  communicate  with potential customers provided however that for all transactions which are incidental to the call and result in the exchange of goods and  services the telemarketer shall disclose the following information:  (a)  the  telemarketer's  name  and  the  person  on  whose behalf the solicitation is being made if other than the telemarketer;  (b) the identity of the goods or services for  which  a  fee  will  be charged; and  (c)  the  cost  of  the  goods or services that are the subject of the call.   10-a. The following persons  are  exempt  from  the  fee  and  bonding requirements   set  forth  in  paragraph  f  of  subdivision  three  and subdivision four of this section: 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.   11. Enforcement. a. Every violation of this section shall be deemed  a deceptive   act  and  practice  subject  to  enforcement  under  article twenty-two-A of this chapter. In addition, the district attorney, county attorney, and the corporation counsel shall have concurrent authority to seek the relief in paragraph  b  of  this  subdivision,  and  all  civil penalties  obtained  in  any  such  action  shall  be  retained  by  the municipality or county.   b. In every case where the court shall determine that a  violation  of this  section  has  occurred,  it may impose a civil penalty of not less than one thousand dollars nor more than two thousand  dollars  for  each violation.   Such  penalty  shall  be  in  addition  to  the  denial  of registration or renewal, suspension of  registration  or  revocation  of registration  or  assessment of a fine authorized by subdivision five of this section.    c. Any person who contracts  with  a  telemarketer  for  telemarketing services  and  has  actual  knowledge that the telemarketer is acting in violation of this section shall be deemed to be  in  violation  of  this section,  unless  such  person  takes reasonable measures to prevent and correct any conduct that violates this section.   d.  Nothing  in  this section shall be construed to restrict any right which any person may have under any other statute or the common law.   12. Criminal penalties. Any  person  who  is  convicted  of  knowingly violating  paragraph  a  or  b  of subdivision three of this section, or subparagraph two, three, four or five of paragraph a of subdivision  six of this section shall be guilty of a class B misdemeanor. Any person who is  convicted  of  knowingly  violating subparagraph eleven or twelve of paragraph a of subdivision six of this section  shall  be  guilty  of  a class A misdemeanor.   13.  Separability  clause;  construction.  If any part or provision of this section or the application thereof to any person  or  circumstances be  adjudged  invalid  by  any  court  of  competent  jurisdiction, such judgment shall be confined in its operations to the part,  provision  or application  directly involved in the controversy in which such judgment shall have been rendered and shall not affect or impair the validity  of the  remainder  of  this  section  or  the  application thereof to other persons or circumstances.