S 0978 General Bill, By Wilson, Alexander, Cork, Courtney, Drummond, Fair, 
Grooms, Hayes, Holland, Lander, Leatherman, Mescher, Ravenel, Russell, Setzler, 
J.V. Smith, Thomas and Waldrep
 A BILL TO ENACT THE "TELEMARKETING PRIVACY ACT OF 1998" BY AMENDING CHAPTER 9,
 TITLE 58, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PUBLIC UTILITIES
 AND TELEPHONE, TELEGRAPH, AND EXPRESS COMPANIES BY ADDING ARTICLE 23 SO AS TO
 ENACT PROVISIONS ESTABLISHING TELEMARKETING PRIVACY IN THIS STATE, INCLUDING
 PROVISIONS FOR, AMONG OTHER THINGS, A DATABASE, CRIMINAL PENALTIES,
 INVESTIGATIONS BY THE ATTORNEY GENERAL AND THE CIRCUIT SOLICITORS, AND THE
 SEEKING OF INJUNCTIVE AND OTHER RELIEF BY THE ATTORNEY GENERAL; BY AMENDING
 SECTION 35-1-520, AS AMENDED, RELATING TO THE UNIFORM SECURITIES ACT,
 BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, INVESTMENT ADVISER
 REPRESENTATIVES, AND DENIAL, SUSPENSION, OR REVOCATION OF REGISTRATION, SO AS
 TO PROVIDE THAT THE SECURITIES COMMISSIONER MAY BY ORDER DENY, SUSPEND, OR
 REVOKE A REGISTRATION IF HE FINDS THAT THE ORDER IS IN THE PUBLIC INTEREST AND
 THAT THE APPLICANT OR REGISTRANT OR, IN THE CASE OF A BROKER-DEALER OR
 INVESTMENT ADVISER, A PARTNER, OFFICER, OR DIRECTOR, A PERSON OCCUPYING A
 SIMILAR STATUS OR PERFORMING SIMILAR FUNCTIONS, OR A PERSON DIRECTLY OR
 INDIRECTLY CONTROLLING THE BROKER-DEALER OR INVESTMENT ADVISER HAS CONTACTED
 BY TELEPHONE A PERSON OR AN ENTITY WHO HAS FILED A NOTICE WITH THE LOCAL
 EXCHANGE CARRIER AS PROVIDED IN SECTION 58-9-2710; BY AMENDING SECTION
 33-56-140, AS AMENDED, RELATING TO SOLICITATION OF CHARITABLE FUNDS,
 INVESTIGATIONS OF CHARITABLE ORGANIZATIONS OR PROFESSIONAL SOLICITORS, NOTICE
 OF NONCOMPLIANCE, PENALTIES, AND GROUNDS FOR INJUNCTION, SO AS TO, AMONG OTHER
 THINGS, PROVIDE THAT IF A CHARITABLE ORGANIZATION, PROFESSIONAL FUND-RAISING
 COUNSEL, OR PROFESSIONAL SOLICITOR FAILS TO FILE A REGISTRATION APPLICATION,
 STATEMENT, REPORT, OR OTHER INFORMATION REQUIRED TO BE FILED WITH THE ATTORNEY
 GENERAL OR VIOLATES THE PROVISIONS OF CHAPTER 56 OF TITLE 33 OR OF THE
 TELEMARKETING PRIVACY ACT OF 1998, THE ATTORNEY GENERAL SHALL NOTIFY THE
 CHARITABLE ORGANIZATION, PROFESSIONAL FUND-RAISING COUNSEL, OR PROFESSIONAL
 SOLICITOR OF THIS FACT BY MAILING A NOTICE BY REGISTERED OR CERTIFIED MAIL,
 WITH RETURN RECEIPT REQUESTED, TO ITS LAST KNOWN ADDRESS, AND PROVIDE THAT THE
 ATTORNEY GENERAL, IF HE HAS REASON TO BELIEVE THAT A PERSON IS KNOWINGLY AND
 WILFULLY OPERATING IN VIOLATION OF CHAPTER 56 OF TITLE 33 OR OF THE
 TELEMARKETING PRIVACY ACT OF 1998, MAY BRING AN ACTION TO ENJOIN THE
 CHARITABLE ORGANIZATION, PROFESSIONAL FUND-RAISING COUNSEL, PROFESSIONAL
 SOLICITOR, OR OTHER PERSON FROM CONTINUING THE VIOLATION, DOING ANY OTHER ACTS
 IN FURTHERANCE OF IT, AND FOR OTHER RELIEF THE COURTS CONSIDER APPROPRIATE.

   02/03/98  Senate Introduced and read first time SJ-4
   02/03/98  Senate Referred to Committee on Judiciary SJ-4

A BILL

TO ENACT THE "TELEMARKETING PRIVACY ACT OF 1998" BY AMENDING CHAPTER 9, TITLE 58, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PUBLIC UTILITIES AND TELEPHONE, TELEGRAPH, AND EXPRESS COMPANIES BY ADDING ARTICLE 23 SO AS TO ENACT PROVISIONS ESTABLISHING TELEMARKETING PRIVACY IN THIS STATE, INCLUDING PROVISIONS FOR, AMONG OTHER THINGS, A DATABASE, CRIMINAL PENALTIES, INVESTIGATIONS BY THE ATTORNEY GENERAL AND THE CIRCUIT SOLICITORS, AND THE SEEKING OF INJUNCTIVE AND OTHER RELIEF BY THE ATTORNEY GENERAL; BY AMENDING SECTION 35-1-520, AS AMENDED, RELATING TO THE UNIFORM SECURITIES ACT, BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, INVESTMENT ADVISER REPRESENTATIVES, AND DENIAL, SUSPENSION, OR REVOCATION OF REGISTRATION, SO AS TO PROVIDE THAT THE SECURITIES COMMISSIONER MAY BY ORDER DENY, SUSPEND, OR REVOKE A REGISTRATION IF HE FINDS THAT THE ORDER IS IN THE PUBLIC INTEREST AND THAT THE APPLICANT OR REGISTRANT OR, IN THE CASE OF A BROKER-DEALER OR INVESTMENT ADVISER, A PARTNER, OFFICER, OR DIRECTOR, A PERSON OCCUPYING A SIMILAR STATUS OR PERFORMING SIMILAR FUNCTIONS, OR A PERSON DIRECTLY OR INDIRECTLY CONTROLLING THE BROKER-DEALER OR INVESTMENT ADVISER HAS CONTACTED BY TELEPHONE A PERSON OR AN ENTITY WHO HAS FILED A NOTICE WITH THE LOCAL EXCHANGE CARRIER AS PROVIDED IN SECTION 58-9-2710; BY AMENDING SECTION 33-56-140, AS AMENDED, RELATING TO SOLICITATION OF CHARITABLE FUNDS, INVESTIGATIONS OF CHARITABLE ORGANIZATIONS OR PROFESSIONAL SOLICITORS, NOTICE OF NONCOMPLIANCE, PENALTIES, AND GROUNDS FOR INJUNCTION, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT IF A CHARITABLE ORGANIZATION, PROFESSIONAL FUND-RAISING COUNSEL, OR PROFESSIONAL SOLICITOR FAILS TO FILE A REGISTRATION APPLICATION, STATEMENT, REPORT, OR OTHER INFORMATION REQUIRED TO BE FILED WITH THE ATTORNEY GENERAL OR VIOLATES THE PROVISIONS OF CHAPTER 56 OF TITLE 33 OR OF THE TELEMARKETING PRIVACY ACT OF 1998, THE ATTORNEY GENERAL SHALL NOTIFY THE CHARITABLE ORGANIZATION, PROFESSIONAL FUND-RASING COUNSEL, OR PROFESSIONAL SOLICITOR OF THIS FACT BY MAILING A NOTICE BY REGISTERED OR CERTIFIED MAIL, WITH RETURN RECEIPT REQUESTED, TO ITS LAST KNOWN ADDRESS, AND PROVIDE THAT THE ATTORNEY GENERAL, IF HE HAS REASON TO BELIEVE THAT A PERSON IS KNOWINGLY AND WILFULLY OPERATING IN VIOLATION OF CHAPTER 56 OF TITLE 33 OR OF THE TELEMARKETING PRIVACY ACT OF 1998, MAY BRING AN ACTION TO ENJOIN THE CHARITABLE ORGANIZATION, PROFESSIONAL FUND-RAISING COUNSEL, PROFESSIONAL SOLICITOR, OR OTHER PERSON FROM CONTINUING THE VIOLATION, DOING ANY OTHER ACTS IN FURTHERANCE OF IT, AND FOR OTHER RELIEF THE COURTS CONSIDER APPROPRIATE.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. This act may be cited as the "Telemarketing Privacy Act of 1998".

SECTION 2. Chapter 9, Title 58 of the 1976 Code is amended by adding:

Section 58-9-2710. (A)(1) The General Assembly recognizes that the citizens of this State receive numerous unsolicited telephone calls from various entities, interests, and industries and that telemarketers originate a high percentage of these calls. The General Assembly further recognizes that the citizens of South Carolina are entitled to enjoy freedom from unwanted intrusions into their homes. It is the intent of this article to:

(a) strike a balance between free speech and citizens' rights to privacy; and

(b) provide those citizens who do not wish to receive solicitations at home with a means of preventing such calls, while allowing telemarketers to continue to call those citizens who do wish to receive such calls at home.

(2) As used in this article, the term:

(a) 'Caller identification service' means a type of telephone service which permits telephone subscribers to see the telephone number of incoming telephone calls.

(b) 'Previously established relationship' means a prior or existing relationship, not previously terminated by either party, formed by a voluntary two-way communication between a person or an entity and a residential subscriber with or without an exchange of consideration, on the basis of an inquiry, application, purchase, or transaction by the residential subscriber regarding specific products or specific services offered by such person or entity but shall not extend to other products or services offered by such person or entity; this term also includes established relationships with not-for-profit entities through such means as donations to the entity or participation in the activities of the entity.

(c) 'Residential subscriber' means a person who has subscribed to residential telephone service from a local exchange carrier or the other persons living or residing with such person.

(d) 'Unsolicited telephone call' means any voice communication over a telephone line from or on behalf of a person or an entity with whom a residential subscriber has no previously established relationship or personal relationship. Such communication may be from a live operator, through the use of a dual party relay system as defined in Section 58-9-2510, or by other means.

(e) 'Local exchange carrier' means either an incumbent local exchange carrier or a new entrant local exchange carrier, as defined in Section 58-9-10.

(B) No person or entity shall make or cause to be made an unsolicited telephone call advertising or offering for sale, lease, rental, or as a gift any goods, services, or property or soliciting donations of money, goods, services, or property to the telephone line of any residential subscriber in this State who has given notice to the local exchange carrier, in accordance with subsection (C) of this section, of such subscriber's objection to receiving such unsolicited telephone calls.

(C)(1) Each local exchange carrier shall establish and provide, at no cost to residential subscribers, a database to compile a list of telephone numbers of residential subscribers who object to receiving unsolicited telephone calls of a type described in subsection (b) of this section. It shall be the duty of each local exchange carrier to have such database in operation no later than July 1, 1999.

(2) Such database may be operated by each local exchange carrier or by another entity under contract with each local exchange carrier.

(3) In order to create the database required by this section, each local exchange carrier shall:

(a) inform its residential subscribers of the opportunity to provide notification to the local exchange carrier or its contractor that such subscriber objects to receiving unsolicited telephone calls:

(b) mail to each residential subscriber a returnable card by which the residential subscriber may give notice to the local exchange carrier or its contractor of his objection to receiving such calls or revocation of such notice;

(c) specify the length of time for which a notice of objection shall be effective and the effect of a change of telephone number on such notice;

(d) specify the methods by which a person desiring to make unsolicited telephone calls can obtain access to the database as required to avoid calling the telephone numbers of residential subscribers included in the database.

(4) If, pursuant to 47 U.S.C. Section 227(c)(3), the Federal Communications Commission establishes a single national database of telephone numbers of subscribers who object to receiving telephone solicitations, the local exchange carrier shall include the part of such single national database that relates to South Carolina in the database established under this section.

(D) A person or an entity desiring to make unsolicited telephone calls shall be charged a fee payable to the local exchange carrier for access to or for paper or electronic copies of the database established under this section. The local exchange carrier may require that fees so charged are sufficient to cover the carrier's costs in the compilation and preparation of the database.

(E)(1) A person or an entity who makes an unsolicited telephone call to the telephone line of a residential subscriber in this State, at the beginning of such call, shall state clearly the identity of the person or entity initiating the call.

(2) A person or an entity who makes an unsolicited telephone call to the telephone line of a residential subscriber in this State shall not utilize any method to block or otherwise circumvent such subscriber's use of a caller identification services.

(3)(a) A person or an entity who makes an unsolicited telephone call, other than a call to the telephone line of a residential subscriber in this State for the purpose of providing, offering to provide, or arranging for other to provide goods or services to the customer in exchange for consideration, at the beginning of such call, shall disclose the following information:

(i) the identity of the seller;

(ii) that the purpose of the call is to sell goods or services;

(iii) the nature of the goods or services;

(iv) that no purchase or payment is necessary to be able to win a prize or participate in a prize promotion if a prize promotion is offered. This disclosure must be made before or in conjunction with the description of the prize to the person called. If requested by that person, the telemarketer must disclose the no-purchase/no-payment entry method for the prize promotion.

(b) Before a customer pays for goods or services offered, the telemarketer shall disclose to the customer the following material information:

(i) the total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of the sales offer;

(ii) all material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer;

(iii) if the seller has a policy of not making refunds, cancellations, exchanges, or repurchases, a statement informing the customer that this is the seller's policy; or, if the seller or telemarketer makes a representation about a refund, cancellation, exchange, or repurchase policy, a statement of all material terms and conditions of such policy;

(iv) any material aspect of an investment opportunity including, but not limited to, risk, liquidity, earnings potential, or profitability.

(c) The telemarketer's sales transaction shall be considered final only after the customer has received a written notice which shall

contain in not less than 12-point bold face type the oral disclosures required by (E)(3)(b) of this section. Such written notice must be delivered by certified mail to the customer. The customer's payment is not due until after receipt of the required notice.

(F) The Attorney General and the State's judicial circuit solicitors shall investigate complaints received concerning violations of this article. A person violating the provisions of this article is guilty of a misdemeanor and, upon conviction for a first offense, must be fined not more than two hundred dollars or imprisoned for not more than thirty days; upon conviction for a second offense, must be fined not more than one thousand dollars or imprisoned for one year; and upon conviction for a third or subsequent offense, must be fined not more than five thousand dollars or imprisoned for not more than five years. Each violation constitutes a separate offense for purposes of the criminal penalties in this section. In addition, if the Attorney General finds that there has been a violation of this article, he may seek other relief, including injunctive relief, as the court considers appropriate against the telephone solicitor.

(G) A court of this State may exercise personal jurisdiction over a nonresident or his executor or administrator as to an action or proceeding authorized by this section in accordance with the provisions of Title 36, Chapter 2, Part 8.

(H) The remedies, duties, prohibitions, and penalties of this section are not exclusive and are in addition to all other causes of action, remedies, and penalties provided by law.

(I) No provider of telephone caller identification service shall be held liable for violations of this section committed by other persons or entities."

SECTION 3. Section 35-1-520(1) of the 1976 Code, as last amended by Act 134 of 1997, is further amended to read:

"(1) The Securities Commissioner may by order deny, suspend, or revoke any a registration if he finds (a) that the order is in the public interest and (b) that the applicant or registrant or, in the case of a broker-dealer or investment adviser, any a partner, officer, or director, any a person occupying a similar status or performing similar functions or any a person directly or indirectly controlling the broker-dealer or investment adviser:

(i) has filed an application for registration which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any a statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;

(ii) has wilfully violated or wilfully failed to comply with any provision of this chapter or a predecessor law or any rule or order under this chapter or a predecessor law;

(iii) has been convicted, within the past ten years, of any a misdemeanor involving a security or any aspect of the securities business or any felony;

(iv) is permanently or temporarily enjoined by any a court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business;

(v) is the subject of an order of the Securities Commissioner denying, suspending, or revoking registration as a broker-dealer, agent, investment adviser, or investment adviser representative;

(vi) is the subject of an order entered within the past five years by the securities administrator of any other another state or by the Securities and Exchange Commission denying or revoking registration as a broker-dealer, agent, investment adviser, or investment adviser representative or the substantial equivalent of those terms as defined in this chapter, is the subject of an order of the Securities and Exchange Commission suspending or expelling him from a national securities exchange or national securities association registered under the Securities Exchange Act of 1934 or is the subject of a United States post office fraud order; but (1) the Securities Commissioner may not institute a revocation or suspension proceeding under this item (vi) more than one year from the date of the order relied on and (2) he may not enter an order under this item (vi) on the basis of an order under another state act unless that order was based on facts which would currently constitute a ground for an order under this section;

(vii) has engaged in dishonest or unethical practices in the securities business;

(viii) is insolvent, either in the sense that his liabilities exceed his assets or in the sense that he cannot meet his obligations as they mature, but the Securities Commissioner may not enter an order against a broker-dealer or investment adviser under this item (viii) without a finding of insolvency as to the broker-dealer or investment adviser; or

(ix) is not qualified on the basis of such factors as training, experience and knowledge of the securities business, except as otherwise provided in Section 35-1-530; or

(x) has contacted by telephone a person or an entity who has filed a notice with the local exchange carrier as provided in Section 58-9-2710(B)."

SECTION 4. Section 33-56-140(2) of the 1976 Code, as amended by Section 28O., Part II of Act 458 of 1996, is further amended to read:

"(2) If any a charitable organization, professional fund-raising counsel, or professional solicitor fails to file a registration application, statement, report, or other information required to be filed with the Attorney General under this chapter, or violates the provisions of this chapter or of the Telemarketing Privacy Act of 1998, the Attorney General shall notify the delinquent charitable organization, professional fund-raising counsel, or professional solicitor of this fact by mailing a notice by registered or certified mail, with return receipt requested, to its last known address. If the required registration application, statement, annual report, assurance of voluntary compliance, or other information is not filed or if the existing violation is not discontinued within fifteen days after the formal notification or receipt of the notice, the Attorney General may assess an administrative fine not to exceed two thousand dollars against the delinquent organization."

SECTION 5. Section 33-56-140(3)(a) of the 1976 Code, as added by Act 461 of 1994, is amended to read:

"(a) a person is knowingly and wilfully operating in violation of the provisions of this chapter or of the Telemarketing Privacy Act of 1998;"

SECTION 6. The provisions in Section 58-9-2710 of the 1976 Code, as contained in Section 2 of this act, relating to administrative establishment of the database, including receipt of notices by the local exchange carriers, take effect upon approval by the Governor. All other provisions of this act take effect July 1, 1999.