(No. 210) (Approved August 28, 2003) AN ACT



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(S. B. 754) (No. 210) (Approved August 28, 2003) AN ACT To create an Act for the Prevention of Fraud in Telemarketing; to set forth its purposes and to establish penalties. STATEMENT OF MOTIVES In Puerto Rico there is no legislation or regulation to govern the practice of sales by the means of telemarketing. Each year, the Department of Consumer Affairs (DACO, in Spanish), receives innumerable complaints in which it is alleged that there are companies using the process of sales by telephone to swindle consumers into buying a good or service which turns out to be a deception, or the product simply does not have the features offered by the salesperson. Most of the persons deceived happen to be elderlies. Certain unscrupulous companies knowingly take advantage of the elderly aware and knowing that sometimes this group is an easy target for this type of sales, since most of them are at home at any time of the day or night. This legislation, which shall be known as the Act for the Prevention of Fraud in Telemarketing, reaffirms the intention of the Legislature of the Commonwealth of Puerto Rico to protect the Puerto Rican consumer, especially the elderly population, against deceitful practices by certain companies that sell their products by means of telemarketing.

At the same time, this Act regulates what shall be considered to be unfair or deceitful acts or practices prohibited in telemarketing, and establishes the policy that each of such companies doing business by telephone shall have an exact register of all the telemarketing activities they perform geared to consumers in the Commonwealth of Puerto Rico. BE IT ENACTED BY THE LEGISLATURE OF PUERTO RICO: Section 1.- Title This Act shall be known as the Telemarketing Fraud Prevention Act. Section 2.- Public Policy It is the public policy of the Government of the Commonwealth of Puerto Rico to protect all consumers residing in Puerto Rico from fraudulent and deceitful practices in telemarketing. Section 3.- Definitions 1) Consumer Any natural person to whom a good or service is offered by means of telemarketing, and who acquires the same as final recipient, authorizing the payment for such good or service by means of direct discount from a checking or savings account, or a credit card. 2) Express and Verifiable Authorization An authorization written by the consumer, which includes the signature of the consumer, authorizing a telephone solicitor to obtain a payment from a checking or savings account, or credit card. 3) Goods or Services Any tangible or intangible good, or any type of service offered to a person. 4) Prize Promotion Any type of game of chance or any oral or written representation stating that a specific person has won, been selected, or is eligible to receive a specific prize.

5) Salesperson Any person who, by means of a telephone transaction, solicits funds or contributions, provides, offers or coordinates for others the providing of goods or services to a consumer in exchange for some type of remuneration. 6) Telemarketing A plan, program or campaign conducted to introduce the purchase of goods and services by means of one or more telephones, and that involves more than one telephone call. 7) Telephone Solicitor Any person, business or company that, by means of telemarketing, initiates or receives telephone calls, or a call from a specific consumer, in which one of the parties is located in the Commonwealth of Puerto Rico. Section 4.- Prohibited Practices The following shall be considered to be prohibited or deceitful practices by any salesperson or telephone solicitor: 1) Failure to state at the beginning of the call and prior to requiring any payment: a) The true purpose of the telephone call. b) The real name of the company or entity initiating the telephone call. c) The goods or services being offered. 2) Failure to communicate clearly and in detail the following information: a) The total cost for the consumer of the sale of the goods to be received. b) Any restriction, limitation or condition on the purchase or use of the goods subject of the sale.

c) Any term or condition on the cancellation, return or exchange policy of the seller. d) Any cost or condition related to the granting of prices, including the probabilities of winning the prize, and the nature and value of the prize. e) The exact amount of any offer. 3) Failure to correctly inform the quality and basic characteristics of the goods or services being offered. 4) Falsely announcing that the product or company in question has the endorsement of any government entity or agency. 5) Requiring or submitting any charge to the bank account or credit card of a consumer without being authorized to do so by the consumer. Section 5.- Abusive or Prohibited Practices in Telemarketing It shall be considered abusive and prohibited practice in telemarketing when any salesperson or telephone solicitor incurs in the following behaviors: 1) Threatens or intimidates the consumer, as well as the using obscene and profane language. 2) Solicits any type of incentive for removing negative information from the credit history of a specific person. 3) Causes the telephone to ring more than five times on a call whose intention is telephone solicitation. 4) Initiates a telephone solicitation with a person when it has been reiterated previously that telephone solicitation calls from that specific salesperson are not wanted.

5) Makes a telephone solicitation call to a residence at any time that is not within 9:00 a.m. and 9:00 p.m., local time of the location of the person being called. Section 6.- Registry Policy All telephone solicitors shall maintain an exact registry of all telemarketing activities performed that are geared to consumers in the Commonwealth of Puerto Rico. Said registries shall be accessible to the Department of Consumer Affairs (DACO, in Spanish). Said registries shall be kept for a period of five (5) years from the beginning of any telephone call made to or received in the Commonwealth of Puerto Rico. Said registries shall include, as a minimum, the following information: a) The location of any telephone solicitor and the exact address of the different locations from which the calls originate. b) Copies of the script or presentation of a specific product, which the salesperson must use during the telephone call to sell same. c) Copies of all written authorizations of telemarketing transactions provided by the consumers. d) The complete name and address of all the persons who have expressed that they do not wish to receive telephone solicitations and the date on which they made such notification. e) Copy of the cancellation, reimbursement or return policy for any good or product offered by the telephone solicitor. f) Materials that justify any claim regarding the performance, efficiency, nature or features of the goods or services subject of a telephone solicitation. g) Any written consent for the use of the names of persons or organizations that endorse the product to be sold.

Section 7.- Exemptions to the Registry Policy The registry policy requirements shall not apply to the following: a) A person making telephone calls to the home of a citizen with the sole purpose of conducting a survey or to request the expression of ideas and opinions, or for political or religious reasons. b) A securities broker or investment consultant who is duly registered in the Commonwealth of Puerto Rico as a securities broker, provided the purpose of the call is to sell this type of securities. c) A financial institution authorized to accept deposits which are insured by the Federal Deposit Insurance Corporation or the Shares and Deposits Insurance Corporation for Cooperative Savings and Credit Unions (PROSAD, in Spanish), in the case of cooperative savings and credit unions located in the Commonwealth of Puerto Rico. d) An insurance company or other organization authorized to do business in the Commonwealth of Puerto Rico by the Insurance Commissioner. e) A college or university institution, duly approved by the Council on Higher Education of the Commonwealth of Puerto Rico and the United States Department of Education. f) Person or entity that publishes a catalogue with a minimum of 15 pages three times per year, and with a minimum circulation of at least 100,000 catalogues, clearly stating prices, shipping and handling costs, and other charges.

g) An instrumentality of the Government of the United States, any state, or the Commonwealth of Puerto Rico itself. h) A duly licensed real estate broker, when the telephone call is only to exercise the duties for which same is duly licensed. i) Any travel agency that is duly registered in the Department of State of the Commonwealth of Puerto Rico when the purpose of the call is to sell travel offers. Section 8.- Annulment of Agreements Any contract or agreement made as a result of a telemarketing agreement that violates any section of this Act may be annulled by the consumer at any time without the imposition of any type of debt, nor affecting the consumer s credit history. Section 9.- Penalties Any business or company, salesperson or telephone solicitor who violates this Act shall incur in a misdemeanor, and if convicted, shall be imposed a fine of not less than five hundred (500) dollars, nor more than five thousand (5,000) dollars, and/or a jail term of not more than six (6) months, as established by the court deems fit. The Department of Consumer Affairs (DACO) shall be empowered to set forth the regulations to enforce this Act and to oversee compliance with this Act by the persons, companies or businesses regulated by this Act. Section 10.- Penalties Any violation to the provisions of this Act shall be punishable by the imposition of an administrative fine of up to a maximum of ten thousand (10,000) dollars for each violation. The power to impose such fines shall be upon the Department of Consumer Affairs, pursuant to the provisions of

Section 18 of Act No. 5 of April 23, 1973, as amended, known as the Organic Act of the Department of Consumer Affairs, 3 LPRA 341q. To ensure implementation of this Act, the monies collected for such fines shall be deposited in the funds of the Department of Consumer Affairs, for which a special account shall be created for such purposes in the Department of the Treasury. Section 2.- Effectiveness This Act shall take effect immediately after its approval.

CERTIFICATION I hereby certify to the Secretary of State that the following Act No. 210 (S.B. 754) of the 5 th Session of the 14 th Legislature of Puerto Rico: AN ACT to create an Act for the Prevention of Fraud in Telemarketing; to set forth its purposes and to establish penalties, has been translated from Spanish to English and that the English version is correct. In San Juan, Puerto Rico, today 20 th of August of 2004. Elba Rosa Rodríguez-Fuentes Director