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Connecticut Public Acts 1996

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Substitute House Bill No. 5211

PUBLIC ACT NO. 96-196

AN ACT CONCERNING TELEMARKETING, SWEEPSTAKES PROMOTIONS AND BUYING CLUBS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) As used in sections 1 to 5, inclusive, of this act:

(1) "Consumer" means an actual or prospective purchaser, lessee or recipient of goods or services; (2) "Person" means a natural person, corporation, trust, partnership, incorporated or unincorporated association and any other legal entity; and (3) "Telemarketer" means any person who initiates the sale, lease or rental of consumer goods or services, or offers gifts or prizes with the intent to sell, lease or rent consumer goods by: (A) Telephonic means; or (B) use of television, radio or printed advertisement, postcard or other written notice with requests that the consumer contact the seller by telephone to inquire about goods or services and such advertisement, postcard or notice does not contain the price or a description of the goods or services.

Sec. 2. (NEW) (a) No oral agreement made by a consumer to purchase, lease or rent goods or services from a telemarketer shall be a binding, valid or enforceable contract against the consumer unless the telemarketer receives from the consumer a written and signed contract that discloses in full the terms of the sale, lease or rental agreement. Any goods sent or services provided to a consumer by a telemarketer without such written contract shall be deemed to be an unconditional gift to the consumer without any obligation by the consumer to the telemarketer.

(b) The contract shall include, but shall not be limited to, the following information: (1) The name, address and telephone number of the telemarketer; (2) A list of all prices or fees being charged including any handling, shipping, delivery or other charges; (3) The date of the transaction; (4) A detailed description of the goods or services being sold, leased or rented; and (5) In ten-point boldface type, in a space immediately preceding the space allotted for the consumer's signature, the following statement: "YOU ARE NOT OBLIGATED TO PAY ANY MONEY UNLESS YOU SIGN THIS CONTRACT AND RETURN IT TO THE ADDRESS CONTAINED IN THIS CONTRACT".

(c) The telemarketer shall provide the consumer with a duplicate copy of the contract with the complete information as presented in the original contract, to be retained by the consumer as proof of the terms of the agreement to purchase, lease or rent.

Sec. 3. (NEW) (a) A telemarketer shall not accept payment from a consumer, or make or submit any charge to the consumer's credit card account, unless the telemarketer has received from the consumer a contract, signed by the consumer, which complies with section 2 of this act.

(b) In the event that the consumer sends payment to the telemarketer, or the telemarketer makes or submits a charge to the consumer's credit card account, and the telemarketer has not received a signed contract from the consumer which complies with section 2 of this act, the telemarketer shall refund the consumer's payment or credit the consumer's credit card account.

Sec. 4. (NEW) The provisions of sections 1 to 3, inclusive, of this act shall not apply to: (1) Any transaction between a consumer and a publisher, owner, agent or employee of a newspaper marketing its own publications; (2) Any transaction between a consumer and a bank, out-of-state bank, Connecticut credit union, federal credit union, or out-of-state credit union as each is defined in section 36a-2 of the general statutes, or a first mortgage broker or lender, second mortgage broker or lender, sales finance company or small loan lender licensed under chapter 668 of the general statutes in which any such person, or such person's subsidiary, affiliate or agent markets its own services to a consumer; (3) Any transaction made pursuant to prior negotiations in the course of a visit by a consumer to a retail business establishment having a fixed, permanent location where goods are exhibited or services are offered for sale on a continuing basis; (4) Any transaction in which the business establishment or its majority-owned affiliate making the solicitation has a clear, preexisting business relationship with the consumer, provided the consumer has been provided the full name and the business location or phone number of the establishment or its majority-owned affiliate; (5) Any transaction in which the consumer purchases goods or services pursuant to an examination of a printed advertisement, brochure, catalogue or other written material of the telemarketer which contains: (A) The name, address or post office box and telephone number of the telemarketer; (B) a full description of the goods or services being requested, including any handling, shipping or delivery charges; (C) any limitations, conditions or restrictions that apply to the offer; and (D) the refund policy of the telemarketer; (6) Any transaction in which the telemarketer or its subsidiaries, affiliates or agents is certified by, or providing services pursuant to tariffs filed with, the Department of Public Utility Control, the Federal Communications Commission or in which the telemarketer is a corporation which is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and in which the telemarketer is initiating the sale, lease or rental of consumer goods or services or offering gifts with the intent to sell, lease or rent consumer goods or services on its own behalf; (7) Any transaction in which: (A) The consumer may obtain a full refund for the return of undamaged and unused goods or services to the seller within seven days of receipt by the consumer; (B) the seller will process the refund within thirty days of receipt of the returned goods or notice of cancellation of services by the consumer; and (C) the consumer is clearly and conspicuously notified of his right to full refund for the return of undamaged and unused goods or any services not performed or a pro rata refund for any services not yet performed for the consumer; (8) Any transaction regulated under chapter 672a of the general statutes between a consumer and any broker-dealer, agent, investment advisor or investment advisor agent registered or specifically excluded from the registration requirement pursuant to chapter 672a of the general statutes; (9) Any transaction which is subject to the provisions of chapter 740 of the general statutes; (10) Any transaction which is subject to the provisions of chapter 704 of the general statutes; or (11) Any transaction between a consumer and a person or its majority-owned affiliate where such person or its majority-owned affiliate has been continuously operating for at least two years a retail business establishment having a fixed, permanent location under the same name as that used in connection with the telemarketing transaction and the goods or services offered in the telemarketing transaction are also offered for sale at the retail business establishment and telemarketer-originated sales comprise less than fifty per cent of establishment's total sales.

Sec. 5. (NEW) (a) For the purposes of sections 1 to 5, inclusive, of this act, any transaction which occurs between a telemarketer and a consumer shall be considered to have taken place in this state if either the telemarketer or the consumer is domiciled in this state.

(b) Violation of any provision of sections 1 to 5, inclusive, of this act shall be an unfair or deceptive act or practice in violation of subsection (a) of section 42-110b of the general statutes.

Sec. 6. (NEW) As used in sections 6 to 11, inclusive, of this act: (1) "Advertise" means the use of the media, mail, computer, telephone or personal contact to offer to a specifically named person the opportunity to participate in a sweepstakes or a game of skill and such offer represents that such person has been awarded or will be awarded a prize; (2) "Consumer product" means any article used primarily for personal, family or household purposes; (3) "Person" means an individual, corporation, association, partnership or any other entity; (4) "Prize" includes, but is not limited to, an award, gift certificate, travel coupon or anything else of value regardless of whether there are any conditions or restrictions attached to the receipt of the prize that is separate and distinct from the goods, services or property promoted by the sponsor; (5) "Promoter" means a person conducting a sweepstakes; (6) "Simulated check" means a document which looks similar to a check but is not currency or a check, draft, note, bond or other negotiable instrument; (7) "Sponsor" means a person on whose behalf the sweepstakes is being conducted to promote or advertise goods or services of that person; (8) "Sweepstakes" means a legal contest or game where a prize is distributed by lot or by chance and does not require a permit or license to operate in the state; (9) "Verifiable retail value" means: (A) A price at which a substantial number of the prizes have sold at retail in the local market no earlier than one year prior to the advertisement of the sweepstakes by a person other than the promoter or sponsor; (B) if the prize is not available for retail sale in the local market, the retail value of an item substantially similar to the prize in quality, quantity, grade and utility; or (C) if the value cannot be established under subparagraph (A) or (B) of this subdivision, no more than three times the cost of the prize to the promoter or sponsor; and (10) "800 number" means a prefixed telephone number for which no charge is assessed.

Sec. 7. (NEW) No person may advertise a sweepstakes if there is any condition or restriction attached to the receipt of any prize a person wins in the sweepstakes, unless the condition or restriction to claim the prize is through any method which does not require any purchase, payment of a fee or any other consideration, such as (1) a telephone call in the participant's extended local calling area, (2) a telephone call to an 800 number, or (3) a visit to a retail establishment in the local marketing area which does not require the participant to attend a sales presentation. For purposes of this section, completing publicity or liability releases, eligibility affidavits or assuming liability for federal, state or local taxes, federal, state or local licenses or registration fees or other similar costs does not constitute a condition or restriction.

Sec. 8. (NEW) (a) A person advertising a sweepstakes in this state shall disclose in immediate proximity to and in at least the same size and face type as the description of each prize in the advertisements: (1) The verifiable retail value of such prize; (2) if the element of chance is involved, the odds of winning such prize, expressed in arabic numerals as a fraction or ratio or, if the odds depend upon the number of entries received, a statement that the odds depend upon the number of entries received; and (3) whether the receipt of the prize is restricted or qualified in any way, including, but not limited to, travel dates or times, classes of travel or airlines, provided the person advertising the sweepstakes may include a statement substantially similar to the following: "major restrictions may apply to the use, availability or receipt of this prize" and include the specific rules or restrictions in a separate statement in the advertisement.

(b) A person advertising a sweepstakes in this state shall clearly and conspicuously disclose the following information: (1) The name and address of the promoter and the sponsor of the sweepstakes; and (2) any conditions or restrictions on the eligibility to receive the prize, including, but not limited to, age, residence, employment or marital status.

Sec. 9. (NEW) No person shall advertise a game of skill where a prize with a fair market value of over two hundred dollars is awarded to a winner if participants are required to pay an entry or judging fee or are solicited to purchase a good or service designed to assist the participant in winning the game of skill provided the participant may be required to purchase a consumer product or service if the game of skill is designed primarily to promote such product or service.

Sec. 10. (NEW) No person may distribute or otherwise transfer a simulated check in connection with a sweepstakes in this state unless the simulated check clearly and conspicuously bears the phrase "THIS IS NOT A CHECK" diagonally printed on the face of the check.

Sec. 11. (NEW) A violation of sections 6 to 11, inclusive, of this act shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b of the general statutes.

Sec. 12. (NEW) (a) As used in this section: (1) "Buying club" means any partnership, corporation, limited liability company, association, trust, or any other legal entity that offers memberships to consumers for a fee whereby such consumers may purchase consumer goods from such entity either exclusively from a catalogue or whose membership fee is two hundred dollars or greater; (2) "Consumer" means any person who purchases a consumer good other than for resale; (3) "Consumer goods" means goods purchased or leased primarily for personal, family, or household purposes.

(b) (1) No agreement between a buying club and a consumer shall be effective if it is not in writing and does not include a conspicuous statement, in boldface type of a minimum size of ten points in substantially the following form: YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT. (2) No buying club shall: (A) Fail to furnish each buyer, at the time he signs the membership contract or otherwise agrees to join such buying club, a completed form in duplicate, captioned "NOTICE OF CANCELLATION", which shall be attached to the contract and easily detachable, and which shall contain in ten-point boldface type the following information and statements in the same language as that used in the contract:

NOTICE OF CANCELLATION

.... (Date of Transaction)

YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION, WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE. IF YOU CANCEL, ANY PAYMENTS MADE BY YOU UNDER THE CONTRACT WILL BE RETURNED WITHIN TEN BUSINESS DAYS FOLLOWING RECEIPT BY THE BUYING CLUB OF YOUR CANCELLATION NOTICE. 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 .... (Date) I HEREBY CANCEL THIS TRANSACTION. .... (Date) .... (Buyer's Signature)

(B)Fail to inform each consumer, orally, at the time he signs the contract of his right to cancel; (C) Misrepresent in any manner the buyer's right to cancel; or (D) Fail or refuse to honor any valid notice of cancellation by a consumer and within ten business days after the receipt of such notice to refund all payments made under the contract or sale.

Sec. 13. (NEW) A violation of any of the provisions of section 12 of this act shall constitute an unfair or deceptive act or practice as defined by section 42-110b of the general statutes.

Approved June 3, 1996. Effective October 1, 1996.

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