HB2246 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 44-1271, Arizona Revised Statutes, is amended to read:

START_STATUTE44-1271. Definitions

In this article, unless the context otherwise requires:

1. "Business opportunity":

(a) Means the sale or lease, or offer for sale or lease, of any goods or services to a consumer for an initial payment of five hundred dollars or greater for the purpose of enabling the consumer to start or operate a business, which sale or lease is not limited to sales initiated or made by the telephone.

(b) Includes a solicitation of consumers in which the seller represents one or more of the following:

(i) That the consumer may or will earn an amount in excess of the initial payment as a result of the purchase.

(ii) That a market exists for any goods to be made or sold or services to be rendered by the consumer.

(iii) That the seller will provide locations or assist the consumer in finding locations for the use or operation of vending machines, racks, display cases or other similar devices or currency-operated amusement machines or devices or any other devices.

(iv) That the seller may purchase from the consumer goods to be made or services to be rendered by the consumer.

(v) That the seller guarantees, either conditionally or unconditionally, that the consumer will derive income from the business opportunity or that the seller will refund all or part of the price paid for the business opportunity or repurchase any of the goods supplied by the seller if the consumer is unsatisfied with the business opportunity.

(vi) That the seller or an entity associated with the seller will provide a sales program or marketing program to the consumer unless the marketing program is offered in conjunction with the licensing of a registered trademark or service mark, if the trademark or service mark has been effectively registered under federal law.

(i) The sale of all or substantially all of the assets of an ongoing business where the owner of that business sells and intends to sell only that one business opportunity.

(ii) The not-for-profit sale of sales demonstration equipment, materials or samples for a total price of five hundred dollars or less.

(iii) The sale of a franchise as defined by the federal trade commission regulations as set forth in 16 Code of Federal Regulations section 436.1.

2. "Consumer" means a person who is solicited by a seller or solicitor.

3. "Goods" means any merchandise, equipment, products, supplies or materials.

4. "Initial payment" means the total amount the purchaser becomes obligated to pay to the seller and to any third party for goods, services or merchandise related to a previously purchased business opportunity, either prior to or at the time of the delivery of any goods, services or merchandise within six months after the commencement of the operation of the business opportunity by the purchaser.

5. "Licensed associated person of a securities, commodities or investments broker" means any associated person registered or licensed by the national association of securities dealers, a self-regulatory organization as defined in the securities exchange act of 1934 (15 United States Code section 78c) or an official or agency of this state or of any other state of the United States.

6. "Licensed securities commodities or investments broker, dealer or investment advisor" means a person licensed or registered as a securities commodities or investments broker, dealer or investment advisor by the securities and exchange commission, the national association of securities dealers, a self-regulatory organization as defined in the securities exchange act of 1934 (15 United States Code section 78c) or an official or agency of this state or of any other state of the United States.

7. "Manager" means a person who supervises the work of a solicitor.

8. "Merchandise" means objects, wares, goods, commodities, intangibles, real estate, securities or services.

9. "Person" means:

(a) A natural person or the person's legal representative.

(b) A partnership, a limited liability company, a limited liability partnership or a domestic or foreign corporation.

(d) An agent, employee, salesman, partner, officer, director, member, stockholder, associate or trustee.

(e) Any other legal entity or any group associated in fact although not a legal entity.

10. "Premium" means any gift, bonus, prize, award or other incentive or inducement to purchase merchandise.

11. "Principal" means an owner or an officer of a corporation or limited liability company, a general partner of a partnership, a sole proprietor of a sole proprietorship, a partner of a limited liability partnership, a trustee of a trust and any other individual who controls, manages or supervises a telephone sales operation.

12. "Prize" means anything offered or purportedly offered and given or purportedly given to a person by chance. Chance exists if a person is guaranteed to receive an item and at the time of the offer or purported offer the seller or solicitor does not identify the specific item that the person will receive.

13. "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 may be eligible to receive a prize or purported prize.

14. "Recovery service" means any business or other practice in which a person represents or implies that the person will recover or assist in recovering for a fee any amount of money that a consumer has provided to a seller pursuant to a telephone solicitation.

15. "Seller" means a person who, directly or through a solicitor, does any of the following:

(a) Initiates telephone calls to provide or arrange to provide merchandise to consumers in exchange for payment.

(b) Solicits by telephone in response to inquiries from a consumer generated by a notification or communication sent or delivered to the consumer that represents or implies that:

(i) The consumer has been specially selected in any manner to receive the notification or communication or the offer contained in the notification or communication.

(ii) The consumer will receive a premium if the consumer calls the person.

(iii) If the consumer purchases merchandise from the person, the consumer will also receive additional or other merchandise, the same as or different from the type of merchandise purchased, without any additional charge or for a price that the person represents or implies is less than the regular price of the merchandise.

(iv) The person is offering for sale the services of a recovery service.

(v) The person is offering to make a loan, to arrange or assist in arranging a loan or to assist in providing information that may lead to obtaining a loan unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.

(vi) The consumer will receive a credit card if the consumer pays a fee for the card before receiving the card.

(vii) The person is offering for sale identity protection assistance.

(c) Solicits by telephone in response to inquiries generated by advertisements on behalf of the person that represent or imply that:

(i) The person is offering to sell the services of a recovery service.

(ii) The person is offering to make a loan, to arrange or assist in arranging a loan or to assist in providing information that may lead to obtaining a loan unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.

(iii) The consumer will receive a credit card if the consumer pays a fee for the card before receiving the card.

(d) Solicits consumers to purchase a business opportunity or merchandise related to a business opportunity through any means including the telephone, internet or mail or other hard copy text or through any electronic, wireless or other communication media.

16. "Solicitor" means a person, other than a seller or employee of a seller, who uses a telephone to seek sales or rentals of merchandise on behalf of a seller or uses a telephone to verify sales or rentals for a seller.

17. "Subscriber" means a person who subscribes to residential telephone service from a local exchange company and any person who lives or subscribes with that person.

18. "Telephone call" means any communication, contact or attempt to communicate with a person by using a telephone or telephone service.

18. 19. "Telephone solicitation" means any voice communication from a live operator, announcing device or otherwise or text message transmitted to a cellular telephone that offers merchandise for sale or rent and that is to or from a person located in this state. END_STATUTE

Sec. 2. Section 44-1278, Arizona Revised Statutes, is amended to read:

START_STATUTE44-1278. Unlawful practice; powers of attorney general; cumulative remedies

A. It is an unlawful practice pursuant to section 44-1522 for a seller or solicitor or anyone acting on their behalf of either a seller or solicitor to make or authorize to any consumer any reference to the seller's or solicitor's compliance with this article other than on inquiry by the consumer.

B. It is an unlawful practice pursuant to section 44-1522 for any seller or solicitor or anyone acting on their behalf of either a seller or solicitor who conducts a telephone solicitation in this state to do any of the following:

1. Use telephone equipment that blocks the caller identification function on the telephone or telephone equipment of the telephone number dialed so that the telephone number of the caller party that initiates the telephone call is not displayed on the telephone or telephone equipment that is capable of displaying the telephone number of the caller party that initiated the telephone call.

2. Initiate an outbound telephone call to a person if that person has previously stated a desire not to receive outbound telephone calls made by or on behalf of the seller whose goods or services are being offered. A seller or solicitor is not liable under this paragraph or paragraph 3 if all of the following apply:

(a) The seller or solicitor has established and implemented written procedures to comply with this paragraph.

(b) The seller or solicitor has trained the seller's or solicitor's personnel according to the written procedures prescribed in subdivision (a) of this paragraph.

(c) The seller or the solicitor acting on behalf of the seller establishes and maintains a no call list comprised of all persons who request not to be contacted and keeps all do not call requests for at least ten years.

(d) The initial outbound telephone call or any subsequent outbound telephone call made by the seller or solicitor is the result of an error.

3. Intentionally make or cause to be made any unsolicited telephone sales call solicitation to any cellular telephone, mobile or telephone paging device.

4. Make a telephone call to any residential or cellular telephone using an artificial or prerecorded voice to deliver a message unless the telephone call is initiated for emergency purposes or the telephone call is made with the prior express consent of the called party.

5. Use any automatic terminal equipment that uses a random or sequential number generator unless the equipment excludes telephone calls to the following telephone numbers:

(a) Emergency telephone numbers, including 911, of any hospital, medical physician, health care facility, poison control center, fire protection facility or law enforcement agency.

(b) Any guest room or patient room of a hospital, health care facility, elderly care home or similar establishment.

(c) A paging service, a cellular telephone service, a specialized mobile radio service or any service for which the called party is charged for the telephone call.

(d) The telephone numbers maintained on a no call list established pursuant to paragraph 2 of this subsection.

6. Initiate an outbound telephone call except as provided in 47 Code of Federal Regulations, section 64.1200 or 16 Code of Federal Regulations section 310.4.

C. Failure to comply with this article is an unlawful practice pursuant to section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

D. The provisions of this article are in addition to all other causes of action, remedies and penalties available to this state.

E. The attorney general may bring an action in federal court in accordance with 15 United States Code sections 6101 through 6108. END_STATUTE