SENATE BILL NO. 351

A bill to prescribe the rights and duties of parties to telephone solicitation sales; to regulate certain telephone solicitations; to provide for the powers and duties of certain state governmental officers and entities; to prohibit certain conduct; and to prescribe civil sanctions, penalties, and remedies.

the people of the state of michigan enact:

Sec. 1. This act may be cited as the "telephone solicitation act".

Sec. 2. As used in this act:

(a) "ADAD" means any device or system of devices that is used, whether alone or in conjunction with other equipment, for the purpose of automatically selecting or dialing telephone numbers.

(b) "Caller identification service" means a service or device designed to provide the use of the service or device with the telephone number of, or other information regarding the origination of, a telephone communication. Caller identification service includes automatic number identification.

(c) "Charitable organization" means a benevolent, educational, philanthropic, humane, patriotic, or public safety organization of persons that solicits or obtains contributions solicited from the public for charitable or purported charitable purposes. Charitable organization does not include a duly constituted religious organization.

(d) "Contribution" means a promise, grant, or payment of money or property of any kind or value, including a promise to pay, except payments by members of an organization for membership fees, dues, fines, or assessments, or for services rendered to individual members, if membership in the organization confers a bona fide right, privilege, professional standing, honor, or other direct benefit, other than the right to vote, elect officers, or hold offices, and except money or property received from a governmental authority or foundation restricted as to use.

(e) "Do-not-call list" means the national Do-Not-Call Registry maintained by the Federal Trade Commission.

(f) "Emergency telephone number" includes, but is not limited to, a 9-1-1 number and an emergency number of a hospital, medical physician or service office, health care facility, suicide prevention or domestic violence center, poison control center, or fire protection or law enforcement agency.

(g) "Existing customer" means an individual who has purchased goods or services from or has made a contribution to a charitable organization to the person on whose behalf the telephone solicitation was initiated within the 12 months before the telephone communication.

(h) "Express verifiable authorization" means a written agreement that includes all of the following:

(i) A signature of the subscriber being called. As used in this subparagraph, "signature" includes an electronic or digital signature, if the form of signature used is a valid signature form under federal law or another law of this state.

(ii) Clear authorization that the telephone solicitor may deliver or cause to be delivered a telephone solicitation to the subscriber using an ADAD, a recorded message, or a prerecorded voicemail.

(iii) The telephone number to which the subscriber authorizes a telephone solicitation to be delivered.

(iv) A clear and conspicuous disclosure that informs the subscriber of both of the following:

(A) By executing the agreement, the subscriber authorizes the telephone solicitor to deliver or cause to be delivered a telephone solicitation to the subscriber using an ADAD, a recorded message, or a prerecorded voicemail.

(B) The subscriber is not required to directly or indirectly sign the written agreement, or to agree to enter into the agreement as a condition of purchasing any property, goods, or services.

(i) "Lead generation" means the sourcing, sale, subscription, leasing, renting, distribution, purchase, wholesaling, or transfer of a list of telephone numbers utilized or intended to be utilized for telephone solicitations.

(j) "Low-income worker" means an employee who receives annual wages from the employer of the employee, excluding overtime wages, at a rate less than 138% of the federal poverty level guidelines for a family of 5 published annually in the Federal Register by the United States Department of Health and Human Services under its authority to revise the poverty line under 42 USC 9902.

(k) "Person" means an individual, partnership, corporation, limited liability company, association, organization, governmental entity, or other legal entity.

(l) "Residential telephone subscriber" or "subscriber" means an individual residing in this state who has a residential, wireless, or VoIP telephone service.

(m) "Telephone communication" means a communication via a telephone, including, but not limited to, any of the following:

(i) A voice communication, including, but not limited to, those made by use of an ADAD, a recorded message, in whole or in part, or VoIP.

(ii) Transmission of a text message, a graphic message using short message service, an image, a photograph, or a multimedia message service, including those transmitted via mobile application.

(n) "Telephone solicitation" means, except as otherwise provided in subdivision (o), a telephone communication made for any of the following purposes:

(i) To encourage the recipient to purchase, rent, receive, or invest in goods or services or make a contribution to a charitable organization.

(ii) To encourage the recipient to provide personal information, including, but not limited to, identity, financial, or preferences information.

(iii) To encourage the recipient to accept or participate in any employment, whether temporary or permanent, contracting, investment, or other income opportunity.

(iv) To encourage the recipient to accept a prize promotion.

(v) To encourage the recipient or a member of the recipient's family to avoid liability, legal or otherwise.

(vi) To obtain or attempt to obtain anything of value from the recipient, including, but not limited to, under subparagraphs (i) to (v), with the intent to defraud, violate this act, or commit another unlawful act.

(o) "Telephone solicitation" does not include any of the following:

(i) A telephone communication to a residential telephone subscriber with that subscriber's express verifiable authorization.

(ii) A telephone communication to an existing customer of the person on whose behalf the telephone communication is made, unless the existing customer is a consumer who has requested to not receive telephone communications from or on behalf of that person under section 17(f).

(iii) A telephone communication made consistent with and not in violation of any federal or state law relating to debt collection.

(iv) A telephone communication to a business telephone number, unless the business has requested that it not receive telephone communications from or on behalf of that person under section 17(f).

(p) "Telephone solicitor" means a person that makes, or causes to be made, a telephone solicitation within this state from within or outside of this state.

(q) "VoIP" means a type of telephone communication service utilizing voice over internet protocol or otherwise utilizing the internet to generate, send, or receive telephone communications.

(r) "Vulnerable individual" means an individual who is 75 years of age or older or is a person with a disability as that term is defined in section 103 of the persons with disabilities civil rights act, 1976 PA 220, MCL 37.1103.

(s) "Vulnerable telephone number" means any of the following:

(i) An emergency telephone number.

(ii) A telephone number of a hospital, medical physician or service office, health care facility, or health care provider.

(iii) A telephone number of a governmental entity.

(iv) A telephone number of a school or educational facility.

Sec. 3. A person shall not make a telephone solicitation using a recorded message in whole or in part.

Sec. 5. (1) A telephone solicitor shall not make a telephone solicitation to a residential telephone subscriber whose home or wireless telephone number is on the most current version of the do-not-call list. This section does not apply to a telephone solicitation made on behalf of a charitable organization, but only if both of the following apply:

(a) The telephone solicitor making the telephone call is either a volunteer working under the direct supervision of an employee of the charitable organization or an employee of the charitable organization.

(b) The telephone solicitor making the telephone call immediately discloses both of the following:

(i) The solicitor's true first and last name.

(ii) The name, address, and telephone number of the charitable organization.

(2) A person shall not include the telephone number of a residential telephone subscriber that is on the most current version of the do-not-call list in a lead generation.

(3) There is a rebuttable presumption that a telephone solicitation made to any telephone number with an area code of this state is made to a residential telephone subscriber.

Sec. 7. (1) At the beginning of a telephone solicitation, the organization or other person on whose behalf the call is initiated shall ensure that the telephone solicitor states the telephone solicitor's true first and last name and the full name, address, and telephone number of the organization or other person on whose behalf the call is initiated.

(2) The organization or other person described in subsection (1) shall ensure that an individual is available to answer the telephone number provided under subsection (1) at any time during traditional business hours between 9 a.m. and 5 p.m. local time at the subscriber's residence.

(3) The organization or other person described in subsection (1) shall ensure that the individual answering the telephone number under subsection (2) provides a residential telephone subscriber who calls that telephone number with information to describe the purpose and operations of the organization or other person on whose behalf the telephone solicitation was made and with information to describe the purpose of the telephone solicitation described in subsection (1).

(4) A telephone solicitor shall not do any of the following:

(a) Block, restrict, circumvent, or otherwise interfere with a subscriber's caller identification service so that the telephone number of the telephone solicitor is not displayed properly on the caller identification service of the subscriber.

(b) Display, or cause to be displayed, a fictitious or misleading name or telephone number, or to otherwise misrepresent the location of origin of a telephone solicitation or the identity of the telephone solicitor, on a subscriber's caller identification service.

(c) Use a third party to display, or cause to be displayed, a fictitious or misleading name or telephone number, or to otherwise misrepresent the location of origin of a telephone solicitation or the identity of the telephone solicitor, on a subscriber's caller identification service.

(d) Use a telephone number associated with a direct inward dialing or direct dial-in system or use a telephone number otherwise purchased, leased, licensed, or rented from a person, for any telephone solicitation that misrepresents the location of origin of a telephone solicitation or the identity of the telephone solicitor, or otherwise violates this act.

(5) Subsection (4) does not create liability for a carrier or VoIP whose action is undertaken for the purpose of complying with a wireless local number portability requirement promulgated by the Federal Communications Commission.

Sec. 9. (1) A person shall not do any of the following in using an ADAD:

(a) Use the ADAD for a telephone solicitation that otherwise violates this act.

(b) Use the ADAD for a telephone solicitation unless the list of numbers from which the ADAD selects telephone numbers excludes both of the following:

(i) Vulnerable telephone numbers.

(ii) Telephone numbers of subscribers who are on the most current version of the do-not-call list.

(2) Subject to subsection (3), subsection (1) does not apply to a telephone solicitation to which any of the following apply:

(a) The telephone solicitation is made to a subscriber with that subscriber's express verifiable authorization.

(b) The telephone solicitation is made to an existing customer of the person on whose behalf the telephone communication is made, unless the existing customer is a consumer who has requested to not receive telephone communications from or on behalf of that person under section 17(f).

(c) The telephone solicitation is made by a representative of an entity utilizing an emergency telephone number.

(d) The telephone solicitation is made by a representative of a school or educational facility if the subscriber is an employee, student, or student's guardian or family member of the school or educational facility.

(e) The telephone solicitation is made consistent with and not in violation of any federal or state law relating to debt collection.

(3) A person making a telephone solicitation must demonstrate that subsection (2) applies before using an ADAD under subsection (1).

Sec. 11. (1) A telephone solicitor shall not transfer a telephone solicitation that has reached a subscriber to 1 or more persons if the telephone solicitation otherwise violates this act.

(2) A person shall not provide substantial assistance or support to another person or a telephone solicitor if the person knows, should know, or avoids knowing that the other person or telephone solicitor is engaged in any method, act, or practice that violates this act.

Sec. 13. (1) A contract made in accordance with a telephone solicitation must satisfy all of the following requirements:

(a) The contract must be in writing and signed by the subscriber.

(b) The contract must contain the name, address, and business telephone number of the seller, the total price of the contract, and a detailed description of the goods or services being sold.

(c) The description of goods or services as stated in the contract must be the same as the description principally used in the telephone solicitation.

(d) The contract must contain, in bold, conspicuous type immediately preceding the signature the words "You are not obligated to pay any money unless you sign this contract and return this contract to the seller.".

(e) The contract must not exclude from the seller's terms any oral or written representations made by the telephone solicitor to the subscriber in connection with the transaction.

(2) Except as otherwise provided in subsection (3), a contract made in accordance with a telephone solicitation is not valid and enforceable against a consumer unless the contract complies with this section.

(3) This section does not apply to either of the following:

(a) A sale in which all of the following apply:

(i) A prior payment is not made to a seller.

(ii) An invoice accompanies the goods or services.

(iii) A subscriber is allowed 7 days to cancel the services or return the goods without obligation for payment.

(b) A contractual agreement that requires payment and allows the subscriber not less than 10 days to cancel the contract and receive a full refund of the payment.

Sec. 15. It is an abusive method, act, or practice and a violation of this act for a telephone solicitor to, or for a telephone solicitor to cause another person to, do any of the following:

(a) Cause a telephone to ring repeatedly, continuously, or in a manner that a reasonable person would consider annoying, harassing, or abusive.

(b) Engage a subscriber in a telephone solicitation repeatedly, continuously, or in a manner that a reasonable person would consider annoying, harassing, or abusive.

(c) Without the express verifiable authorization of the subscriber, send a telephone solicitation to a subscriber's telephone at a time other than between 9 a.m. and 8 p.m. local time at the subscriber's residence.

Sec. 17. It is an unfair or deceptive method, act, or practice and a violation of this act for a telephone solicitor to, or for a telephone solicitor to cause another person to, do any of the following during the course of a telephone solicitation:

(a) Misrepresent or fail to disclose, in a clear, conspicuous, and intelligible manner and before payment is received from the subscriber, all of the following information:

(i) The total purchase price to the subscriber of the goods or services sold to the subscriber.

(ii) Any restrictions, limitations, or conditions to purchase or to use the goods or services that are the subject of an offer to sell goods or services.

(iii) Any material term or condition of the seller's refund, cancellation, or exchange policy, including, but not limited to, a subscriber's right to cancel a purchase made in accordance with a telephone solicitation under section 13, and, if applicable, that the seller does not have a refund, cancellation, or exchange policy.

(iv) Any material costs or conditions related to receiving a prize, including, but not limited to, the odds of winning the prize, and if the odds are not calculable in advance, the factors used in calculating the odds, the nature and value of a prize, that no purchase is necessary to win the prize, and the method of entering the contest if no purchase is required.

(v) Any material aspect of an investment opportunity the seller is offering, including, but not limited to, risk, liquidity, earnings potential, market value, and profitability.

(vi) The quantity and any material aspect of the quality or basic characteristics of any goods or services offered.

(b) Make a false or misleading statement or misrepresentation with the purpose of inducing a subscriber to pay for goods or services, make a contribution, or pay to avoid liability, legal or otherwise, on behalf of the subscriber or a member of the subscriber's family, or wrongfully obtain anything of value.

(c) Request or accept payment from a consumer or make or submit a charge to the subscriber's credit or bank account before the telephone solicitor or seller receives from the subscriber an express verifiable authorization.

(d) Offer to a subscriber a prize promotion in which a purchase or payment is necessary to obtain the prize.

(e) Fail to comply with the requirements of sections 3, 5, 7, 9, 11, 13, or 19.

(f) Make a telephone solicitation to a subscriber who or business that has requested to not receive telephone communications from the organization or other person on whose behalf the telephone solicitation is made.

(g) While making a telephone solicitation, misrepresent in a message left for a subscriber on the subscriber's answering machine or voice mail that the subscriber is an existing customer of, or otherwise has a current business matter or transaction with, the telephone solicitor or the organization or other person on whose behalf the telephone solicitation is being made, and request that the subscriber call the telephone solicitor or another person to discuss that matter, transaction, or relationship.

(h) Make a false or misleading statement or misrepresentation with the purpose of inducing a subscriber to provide personal information, including, but not limited to, identity, financial, or preferences information.

(i) Make a false or misleading statement or misrepresentation relating to any employment, whether temporary or permanent, contracting, investment, or other income opportunities.

Sec. 19. A violation of a federal law, rule, or regulation relating to the subject matter of this act, including, but not limited to, the telemarketing and consumer fraud and abuse prevention act, 15 USC 6101 to 6102, and the regulations promulgated under that act, and the telephone consumer protection act of 1991, Public Law 102-243, and the regulations promulgated under that act, is a violation of this act.

Sec. 21. This act must be liberally construed to effectuate this act's purpose and the remedies provided under this act are in addition to any other remedy provided by law.

Sec. 23. This act does not relieve a person from complying with any other applicable law.

Sec. 25. (1) If the attorney general has probable cause to believe that a person has engaged, is engaging, or is about to engage in a method, act, or practice that is unlawful under this act and gives notice in accordance with this section, the attorney general may bring a civil action to restrain the defendant by temporary or permanent injunction from engaging in the method, act, or practice. The civil action may be brought in the circuit court of the county where the defendant is established or conducts business or, if the defendant is not established in this state, in the circuit court of Ingham County. The court may award costs to the prevailing party. For each violation, the court may assess the defendant a civil fine of not more than $25,000.00. For purposes of this subsection, each telephone communication may be considered a separate violation and a singular telephone communication may generate multiple separate violations.

(2) Unless waived by the court on good cause shown not less than 10 days before the commencement of a civil action under this section, the attorney general shall notify the person of the intended action and give the person an opportunity to cease and desist from the alleged unlawful method, act, or practice or to confer with the attorney general in person, by counsel, or by other representative as to the proposed action before the proposed filing date. The notice may be given to the person by mail, postage prepaid, to the person's usual place of business or, if the person does not have a usual place of business, to the person's last known address, or, if the person is a corporation, only to a resident agent who is designated to receive service of process or to an officer of the corporation.

(3) A prosecuting attorney or law enforcement officer receiving notice of an alleged violation of this act, or of a violation of an injunction, order, decree, or judgment issued in a civil action brought under this section, or of a violation of an assurance under this act, shall immediately forward written notice of the violation together with any information the prosecuting attorney or law enforcement officer may have to the office of attorney general.

(4) A person that knowingly violates the terms of an injunction, order, decree, or judgment issued under this section is subject to a civil fine of not more than $25,000.00 for each violation. For purposes of this subsection, both of the following apply:

(a) Each telephone communication may be considered a separate violation and a singular telephone communication may generate multiple separate violations.

(b) The court issuing an injunction, order, decree, or judgment retains jurisdiction, the cause must be continued, and the attorney general may petition for recovery of a civil fine as provided under this subsection.

(5) It is a defense to a claim brought under this act that a practice engaged in or a communication made was not a telephone solicitation under section 2(o). The burden of proof is on the person claiming the communication was not a telephone solicitation.

Sec. 27. (1) A person that knowingly uses, or has knowingly used, a method, act, or practice that targets vulnerable individuals and is in violation of this act is subject to a civil fine of not more than $50,000.00 for each violation, or $75,000.00 for each persistent and knowing violation. For purposes of this subsection, each telephone communication may be considered a separate violation and a singular telephone communication may generate multiple separate violations.

(2) A person that knowingly uses, or has knowingly used, a method, act, or practice that targets or mimics vulnerable telephone numbers and is in violation of this act is subject to a civil fine of not more than $75,000.00 for each violation, or $100,000.00 for each persistent and knowing violation. For purposes of this subsection, each telephone communication may be considered a separate violation and a singular telephone communication may generate multiple separate violations.

(3) When determining the amount of the civil fine to be imposed under this section for a person that violates this section, the court may consider:

(a) The good or bad faith of the person as it relates to the violation.

(b) The injury to the public.

(c) The person's ability to pay.

(d) The public's interest in eliminating the benefits derived by the person from the violation.

(e) The necessity of vindicating the authority of this state.

(f) The public's interest in deterring future similar methods, acts, or practices.

(4) The civil fines recoverable by this state under this section are in addition to any other available civil fine and relief available under this act and other laws, regulations, or rules.

Sec. 29. (1) If the attorney general has authority to bring a civil action or proceeding under section 25, the attorney general may accept an assurance of discontinuance of a method, act, or practice that is alleged to be unlawful from the person that is alleged to have engaged, be engaging, or be about to engage in the method, act, or practice. An assurance under this section is not an admission of guilt and must not be introduced in any other proceeding. The assurance may include a stipulation for any or all of the following:

(a) The voluntary payment by the person for the costs of investigation and reasonable attorney fees.

(b) An amount to be held in escrow pending the outcome of an action.

(c) An amount for restitution to any aggrieved individual.

(2) An assurance of discontinuance must be in writing and may be filed in the circuit court of Ingham County. The clerk of the circuit court shall maintain a record of the filings. Unless rescinded by the parties or voided by the circuit court for good cause, the assurance may be enforced in the circuit court by the parties to the assurance. The assurance may be modified by the parties under an agreement by all parties in writing or by a court for good cause.

Sec. 31. (1) If the attorney general has reason to believe that a person has information or is in possession, custody, or control of any document or other tangible object relevant to an investigation for a violation of this act, the attorney general may serve on the person, before bringing a civil action, a written demand to appear and be examined under oath, and to produce the document or object for inspection and copying. All of the following apply to the demand under this subsection:

(a) The demand must be served on the person in the manner required for service of process in this state.

(b) The demand must describe the nature of the conduct constituting the violation under investigation.

(c) The demand must describe the document or object with sufficient definiteness to permit the document or object to be fairly identified.

(d) If requested, the demand must contain a copy of the written interrogatories.

(e) The demand must prescribe a reasonable time at which the person must appear to testify, within which to answer the written interrogatories, and within which the document or object must be produced, and advise the person that objections to or reasons for not complying with the demand may be filed with the attorney general on or before that time.

(f) The demand must specify a place for the taking of testimony or for production and designate the individual who is custodian of the document or object.

(2) At any time before the return date specified in the demand for information under subsection (1), or not more than 14 days after notice of the demand, whichever is shorter, a person that information has been requested from may petition the circuit court of Ingham County, stating good cause, for a protective order to extend the return date for a reasonable time, or to modify or set aside the demand. The attorney general must receive not less than 14 days' notice of the petition described in this subsection and must be given an opportunity to respond.

(3) If no protective order from the circuit court of Ingham County is secured under subsection (2) and the demand is not complied with by the return date, the attorney general, on notice to the person requested to provide information, may apply to the court for an order compelling compliance with the request made under subsection (1).

(4) A court, on a showing by the attorney general that there are reasonable grounds to believe that the provisions of this act are being, have been, or are about to be violated; that the person that is committing, has committed, or is about to commit methods, acts, or practices that violate this act or that possess the relevant documentary material has left this state or is about to leave this state; and that an order to comply with the provisions of subsection (1) is necessary for the enforcement of this act, may order the person described in this subsection to comply with the provisions of subsection (1) whether the attorney general has made a prior demand for information or not. The court may, immediately and without notice, forbid the removal from any place, concealment, withholding, destruction, mutilation, falsification, or alteration by any other means of a documentary material in the possession, custody, or control of a person believed to be connected with methods, acts, or practices that violate this act.

(5) A person that has received notice of a demand for information under subsection (1), or of an order under subsection (3) or (4), and with intent to avoid, evade, or prevent compliance, in whole or in part, with a civil investigation or order under this section, removes from any place, conceals, withholds, destroys, mutilates, falsifies, or by any other means alters any documentary material in the possession, custody, or control of a person subject to that notice, is subject to a civil fine of not more than $10,000.00 per violation, recoverable by this state in addition to any other appropriate sanction.

(6) Except as otherwise provided in this subsection, any procedure, testimony taken, or material produced must be kept confidential by the attorney general before bringing a civil action against a person under this act for the violation under investigation, unless this information has become a matter of public record in an enforcement proceeding or confidentiality is waived by the person being investigated and by the person that has testified, answered interrogatories, or produced material. The attorney general may disclose any testimony taken or material produced under this section to assist a state, local, or federal government official with an investigation of a violation of a similar telephone privacy and consumer protection law.

(7) Any compliance with a demand for information under subsection (1) or of an order under subsection (3) or (4) does not create liability for a carrier or VoIP by a subscriber to whom the information relates.

Sec. 33. (1) A person that is served under section 25 must comply with the terms of the notice unless otherwise provided by an order of the circuit court.

(2) A person that does any of the following shall pay a civil fine of not more than $10,000.00:

(a) Knowingly and without good cause fails to appear as provided in the notice.

(b) Knowingly avoids, evades, or prevents compliance, in whole or in part, with an investigation under this act, including, but not limited to, the removal from any place, concealment, destruction, mutilation, alteration, or falsification of documentary material in the possession, custody, or control of a person subject to the notice.

(c) Knowingly conceals relevant information in an investigation under this act.

(3) The attorney general may file a petition in the circuit court of the county in which the person is established or conducts business or, if the person is not established in this state, in the circuit court of Ingham County for an order to enforce compliance with this section. A person that violates a final order entered under this section is subject to punishment for civil contempt under chapter 17 of the revised judicature act of 1961, 1961 PA 236, MCL 600.1701 to 600.1745.

(4) On the petition of the attorney general, the circuit court may enjoin a person from doing business in this state if the person persistently and knowingly evades or prevents compliance with an injunction issued under this act.

Sec. 35. (1) A person that suffers a loss as a result of a violation of this act may bring a civil action to recover 1 of the following, whichever is greater:

(a) Actual damages plus reasonable attorney fees.

(b) $1,000.00 plus reasonable attorney fees.

(2) This section does not prevent a consumer from asserting the consumer's rights under 1971 PA 227, MCL 445.111 to 445.117, if the telephone solicitation results in a home solicitation sale, or asserting any other right or claim the consumer may have under any other applicable state or federal law.

(3) This section does not apply to a carrier or VoIP that is in compliance with 16 CFR part 310 and 47 USC 227.

Sec. 39. (1) An action under this act is barred if not commenced within 4 years after the claim of relief or cause of action accrues.

(2) A telephone solicitor shall keep, for not less than 4 years, records relating to telephone solicitations.

(3) A low-income worker who is not responsible for managerial, strategic, supervisorial, structural, policy, or other organizational decision making is not liable under this act if the low-income worker's violative action is undertaken under the direction of a supervisor.

Enacting section 1. This act does not take effect unless all of the following bills of the 103rd Legislature are enacted into law:

(a) Senate Bill No. 352.

(b) Senate Bill No. 353.

(c) Senate Bill No. 354.

(d) Senate Bill No. 355.