|December 15, 2003|
Honorable Sheldon Silver
Dear Speaker Silver:
It is my pleasure to forward to you the 2003 Annual Report of the Assembly Standing Committee on Consumer Affairs and Protection.
This was a challenging and productive year for the Committee. I am proud of the accomplishments we achieved this legislative session. Through hard work and diligence, the Committee was responsible for enacting legislation banning the sale of dietary supplements containing ephedra. Chapter 385 of the Laws of 2003 prohibits the sale of ephedra unless it is sold or dispensed by a New York State licensed physician or acupuncturist or a practitioner of oriental medicine whose active certification is through the National Commission of Certifying Agencies.
Several other laws were enacted this year to protect consumers in the marketplace. Chapter 318 of the Laws of 2003 prohibits the use of prize boxes to collect authorizations for changing a consumer's electricity and natural gas supplier. This will eliminate problems faced by consumers who unwittingly have their energy supplier changed. Chapter 318 of the Laws of 2003 is important in a changing energy market that is dealing with the effects of deregulation.
I would like to take this opportunity to thank the Committee members for their continued contributions to this past year's achievements. I would also like to express my appreciation for the assistance that the Committee received from the Committee staff in the course of our work. Finally, Mr. Speaker, I commend you for your continued leadership and support of our legislative initiatives to better protect New York State consumers.
2003 ANNUAL REPORT
NEW YORK STATE ASSEMBLY
STANDING COMMITTEE ON CONSUMER AFFAIRS AND PROTECTION
AUDREY I. PHEFFER, CHAIR
Peter J. Abbate, Jr.
David G. McDonough,
Joanne Barker, Legislative Coordinator
|Table of Contents|
|I. Committee Responsibilities and Goals|
The Assembly Consumer Affairs and Protection Committee (the "Committee") is responsible for developing legislation aimed at protecting consumers' rights and ensuring the public's ability to make informed choices in the marketplace. Generally, the Committee has jurisdiction over legislation that amends sections of the General Business and Personal Property Laws and parts of the Agriculture and Markets and Education Laws. The broad interests of the Committee reflect the fact that today's consumers can be victims of fraud, misinformation, or lack of information that is vital to their health, safety, and welfare.
To protect consumer's rights and help them make informed choices, the Committee works with consumer groups and state and federal agencies. At the State level, these agencies include: the Department of Law, the Consumer Protection Board, the Department of Education, the Department of Environmental Conservation, the Department of Health, the Department of Agriculture and Markets, and the Department of State. The federal government agencies with which the Committee works include: the Federal Trade Commission (FTC), the Food and Drug Administration (FDA), the Federal Communications Commission (FCC), the Consumer Product Safety Commission (CPSC), and the National Highway Traffic Safety Administration (NHTSA). The Committee also works with local agencies, such as the New York City Department of Consumer Affairs, local consumer affairs offices, numerous Better Business Bureaus, and bar associations throughout the State.
In addition, the Committee works to help consumers in the development of legislation under the jurisdiction of other Assembly standing committees. Such committees include: Transportation, Corporations, Authorities and Commissions, Economic Development, Job Creation, Commerce and Industry, Agriculture, and Insurance.
|II. 2003 COMMITTEE ACCOMPLISHMENTS|
The Assembly has traditionally been a strong advocate for the protection of consumers' rights, including the protection of personal privacy. As technology continues to evolve, the potential for inappropriate actions concerning personal information has risen dramatically. The public is increasingly aware that it has less control over its personal and sensitive information. Privacy issues include a number of very broad topics, such as: the theft of identity; credit reporting; and telecommunications.
The Committee has taken great strides in promoting legislation that would protect the privacy of New York State's consumers.
This legislation would prohibit businesses from printing the full credit or debit card numbers, as well as the card's expiration date on electronically created receipts.
Each year an estimated two billion dollars nationwide is lost because of credit and debit card fraud. As credit and debit card sales volume increases, so does the likelihood for fraud. Using information found on credit transaction forms, a thief could place telephone and mail orders. Prohibiting the printing of all but the last five numbers of credit or debit cards on transaction forms will reduce such fraud.
This bill would authorize the New York State Consumer Protection Board (CPB) to provide the phone numbers on the state registry to the Federal Trade Commission for inclusion on the national registry. The national registry, established and maintained by the Federal Trade Commission, may serve as the state registry.
This bill would restrict the dissemination and collection of Social Security Numbers thereby protecting the personal privacy of New Yorkers.
This bill tracks the intent of the federal Privacy Act of 1974 by stipulating that every person, firm, partnership or corporation which requests a social security number from an individual shall inform such individual, in writing or orally when the request is made orally, whether federal or state law or regulation authorizes the solicitation of the social security number, whether disclosure of such number is mandatory or voluntary and the principal purpose or purposes for which such information is intended to be used. If a person refuses to supply his or her social security number and a federal or state law or regulation does not mandate it, the person cannot be denied service. (Passed Assembly)
This bill would reduce the proliferation of unsolicited mail derived from the release or sale of cardholder information by granting consumers the choice of having personal information kept confidential.
Consumer resistance to unsolicited direct mail has been steadily increasing. Some responsible card issuers recognize the importance of consumer privacy and limit the release of cardholder information or notify their customers of the option not to have their personal data released. Unfortunately, not all consumers are aware of this option. This bill would increase consumer awareness and seek to provide a uniform industry standard regarding privacy of personal information. (Passed Assembly)
This bill would prohibit the sale, lease or exchange of a consumer's electronic mail address without that consumer's consent.
It would protect the privacy interests of consumers who, unknowingly and unwittingly, have their electronic mail address and other personal identifying information "harvested" online. Specifically, this bill prohibits the sale, lease or exchange of such information without the subject's affirmative consent. (Passed Assembly)
This bill would ban the use of prize boxes as a means of collecting authorizations to switch electricity or natural gas suppliers. Current law prohibits the use of prize boxes to switch telecommunication suppliers. As movement continues towards a more competitive marketplace for energy, current law should be extended to cover changes in electricity and gas suppliers.
This proactive measure would help ensure that consumers do not face the same problems with changes in energy suppliers that they experienced in the transition to a competitive telecommunications market.
This legislation would make permanent the requirement, enacted in Chapter 557 of the Laws of 2001, that all money used to purchase funeral merchandise be held in trust in an interest-bearing account.
It will also extend, until June 1, 2007, the provisions prohibiting funeral directors from accepting any consideration from an insurance company for the promotion of an insurance policy that is payable at the death of the insured for burial or funeral expenses, as well as prohibiting any company from giving any consideration to a funeral firm for inducing the sale of any contract or policy.
This bill would prohibit charging consumers for unordered or unrequested goods and services and "negative option plans" - offers by businesses that purport to be accepted if not rejected by the consumer within a stated period of time. The bill carves out an exception for membership or club arrangements in which the recipient receives goods at specified intervals and plans pursuant to which the recipient agrees to receive goods without further obligation. (Passed Assembly)
The purpose of this bill is to prohibit credit card companies from imposing a fee on customers who choose not to carry a monthly balance. Paying off the monthly balance on a credit card is something many people strive to accomplish. Imposing a fee on such conscientious credit card holders to offset the losses incurred by other card holders is an unjust business practice.
This bill would send a clear message that companies should support their customers who pay off their bills in a timely manner and not penalize them. (Passed Assembly)
This bill would require that rented clothing be cleaned prior to re-rental. Most consumers assume that rental clothing is cleaned prior to being rented. However, under current law, there is nothing that states that businesses are required to do so.
A consumers expectation for hygienic rental practices should be met. Customers who are paying for the rental of clothing should know that such item has been properly cleaned and cared for before it is available for rent. (Passed Assembly)
This bill would require any written solicitation, the purpose of which is to provide credit protection services, to disclose that the purchase of such services, is not required to secure or retain a credit card. In addition, the solicitation would also include a concise statement about a consumer's rights under the Fair Credit Reporting Act. The bill would prohibit the automatic renewal of credit protection services unless the consumer is notified not more than sixty days in advance nor fifteen days prior to the termination of the existing agreement.
Companies that offer credit card protection services should be required to disclose current federal regulations regarding consumer credit and debit card liability, as well as consumer rights under the Fair Credit Reporting Act. These simple disclosures will enable a consumer to make an informed decision prior to entering into a credit protection service agreement. (Passed Assembly)
This legislation would require telephone service providers to furnish toll-free customer service numbers for consumers offered unsolicited services through a negative option sales plan. Under current law, a company or business offering unsolicited telephone service in New York State for any specific period of time is not required to provide a toll-free number for consumers to discontinue such service.
Without appropriate access to service providers in respect to billing, rate, and other information, a consumer may be vulnerable to charges for additional services that they do not want or cannot afford. (Passed Assembly)
This bill would require organizations that are for-profit to label their collection bins as belonging to for-profit organizations.
People who wish to donate to these organizations should be able to distinguish which bins belong to for-profit organizations and which are for non-profit organizations. Some people may not want to donate to organizations that wish to make a profit from their donations. (Passed Assembly)
This bill would increase, from $500 to $5,000, the maximum penalty that may be imposed on a commercial enterprise that engages in an unfair or deceptive trade practices.
The New York law, which provides for penalties of up to $500 per violation of the state's deceptive practices and false advertising statutes, went into effect in 1963 and the amount of the penalty has not been adjusted upward since then. This amount is grossly outdated and such an insignificant penalty does not provide a disincentive to the commission of deceptive acts and practices. (Passed Assembly)
This bill would prohibit the sending of unsolicited facsimiles to an individual or business if no prior business relationship was established. This bill would eliminate the loophole in the current law, which allows companies to transmit advertising faxes overnight during the hours of 9:00 p.m. and 6:00 a.m. This bill would still allow the transmittal of faxes if there was a previous business relationship with the person receiving them.
This bill attempts to secure a persons peace and quite without interruption from the ringing of their fax machine which is receiving an advertisement from a company with which they never had a business relationship. (Passed Assembly)
This bill would protect consumers from fraudulent practices by computer manufacturers and retailers by prohibiting the industry from selling as "new" computers and computer accessories with old or recycled parts. For example, in 1996, the Packard-Bell Computer Company was caught and convicted of trying to pass off as new remanufactured and used computer parts.
This bill would mandate that the computer industry use only new computer parts when it sells "new" computer hardware, monitors, printers, and other accessories to consumers. It also would require retailers to affix a label or tag on the outside of the container box indicating that only new parts have been used on the computer. (Passed Assembly)
This bill would prohibit the advertising or offering of free estimates unless the estimate is in writing and there is no charge for providing such estimate. Unscrupulous merchants sometimes offer "free estimates." After providing the offered estimate, the merchant then insists on being paid for a written estimate.
This proposed legislation would require that estimates advertised as free are indeed provided at no charge to the customer. This requirement would protect consumers from merchants who might try to employ misleading business practices. (Passed Assembly)
This legislation would ban, in New York State, the over-the-counter sale of dietary supplements containing ephedra. Since 1993, the FDA has received 2,797 reports of serious problems, including 105 deaths -linked to supplements. Supplements containing ephedrine alkaloids, which are promoted for weight loss and energy building, have accounted for 1,173 reports of adverse effects, more than any other supplement. As of October 2000, sixty deaths have been linked to ephedra.
Although consumer sales are increasing, the NFL, NCAA, and IOC have added ephedra to their banned lists. NFL players may neither use nor endorse supplements containing ephedra because such products may present significant health risks to athletes.
This bill would prohibit the sale of utility knives or "box cutters" to persons under the age of eighteen. In the past few years, the incidence of assaults on students and teachers in New York State has escalated dramatically, and utility knives are sometimes being used as weapons by students. This legislation would prevent these tools from being misused and brought into schools. In addition, this legislation would allow communities to enact laws stricter than the state law regarding the sale and regulation of box cutters. (Passed Assembly)
This bill would mandate labeling to inform consumers of the date of preparation of foods intended for off-premises consumption offered for sale in delicatessens, salad bars and other food establishments by requiring a label indicating the date of preparation. By labeling the freshly prepared food, consumers will be given the information necessary to decide whether it is in their best interest to purchase the item. (Passed Assembly)
This bill would require all sunscreen products to be labeled with an expiration date. According to the American Cancer Society, over 800,000 new skin cancer cases of highly curable basal cell or squamous cell cancers are diagnosed each year. Since 1973, the incidence of skin cancer has increased about 4% per year.
Many consumers use sunscreen products to prevent the risk of skin cancer. In light of how important these products are in combating skin cancer, it is important that the consumer be aware that sunscreen is not protective against the sun's rays after a certain shelf life. This legislation would increase consumer awareness of sunscreen products effectiveness by requiring all products to be labeled with an expiration date and storage recommendations. (Passed Assembly)
The purpose of this bill is to provide consumers with guidance and protection when choosing weight loss services and products. It requires anyone selling or offering for sale weight loss services or products to provide certain disclosures to the consumer.
Millions of New Yorkers have tried or are trying to lose weight for medical and cosmetic reasons. It is estimated that dieters across the nation are spending as much as $33 billion each year on diet programs and products. Unfortunately, the results of medical research about the safety and effectiveness of diet programs are often vague and contradictory. This makes it difficult for consumers to decide what programs and products to use. The disclosure of certain weight loss and dieting information will be useful to such a consumer prior to purchasing a product or service. (Passed Assembly)
This bill would prohibit the sale of laser pointing devices to persons under eighteen years of age. The Food and Drug Administration (FDA) warns parents that children may risk their eyesight if they play with laser pointing devices. The FDA has stated that the light energy that such devices emit can be more damaging than staring directly into the sun. Eye injuries have already been reported to the FDA as a result of improper use of such devices. In addition, this bill would set up restricted access for the sale of these devices in stores. (Passed Assembly)
This bill would apply the same consumer protections that currently exist for purchasers of motorized wheelchairs to non-motorized wheelchairs. It would extend warranty, replacement, and quality standards to wheelchairs purchased by State agencies, non-profit medical, dental, health and hospital service corporations, and health maintenance organizations.
Wheelchairs and their customized component parts are absolutely essential to the mobility of many persons with disabilities. Wheelchairs are also very expensive, costing as much as $8,000. Much of this equipment is subject to frequent breakdown and is often not covered by warranties or other basic consumer protection. This bill would significantly reduce financial stress for those citizens who rely on wheelchairs to meet their basic transportation needs. (Passed Assembly)
This legislation would expand the New York State Motor Vehicle Lemon Law protections to include motorcycles.
New York has more than 200,000 registered motorcycles and more than 500,000 licensed motorcyclists. The Motor Vehicle Lemon Law permits the purchaser of a defective motor vehicle to obtain a refund or a new vehicle.
This legislation would provide consumers with important information regarding child safety seats and their proper use for maximum safety. The National Highway Traffic and Safety Administration (NHTSA) estimated that a properly used child car seat reduces the risk of fatality by 71% and the risk of serious injury by 67% for children of less than five years of age.
This legislation would require the disclosure of the compatibility of the seat with the automobile and require labeling regarding the age limit of the child user. This measure would serve to help consumers in selecting a safe, compatible car seat. (Passed Assembly)
This bill would correct a legislative oversight, by affording consumers who allege anti-trust violations the right to file suit as part of a class action and seek damages as a group.
Section 340 of the General Business law provides that agreements for monopoly or in restraint of trade are illegal and void and that the state or any person damaged by such agreements may sue for damages. In 1999, a new subdivision was added, providing a right of action where the claim arose from a purchase made indirectly. In 2000, the New York Supreme Court dismissed two class action suits brought pursuant to section 340 of the General Business law holding that section 340 provides for treble damages and is therefore punitive. In that instance a class action will survive only when a statute specifically provides for it.
This bill would extend that remedy to private suits. The history of the anti-trust law reflects the desire of the legislature to protect consumers and to enable them to seek damages if appropriate. Broadening the methods of righting the wrong would better utilize resources and reduce the costs of bringing actions. This would serve both the legal system and the consumer. (Passed Assembly)
This bill would permit the arbitrator in a dispute over a motorized wheelchair warranty to award reasonable attorney fees and the reasonable and necessary costs of attending an in-person hearing to a prevailing consumer. Current law provides that each party has the right to be in attendance at any presentation, but does not provide for reimbursement to disabled consumers the cost of transportation to a presentation. (Passed Assembly)
|III. HEARINGS AND ROUNDTABLES|
In May, the Committee held a joint roundtable with the Committee on Tourism, Arts and Sports Development, the Committee on Health, the Task Force on Food, Farm, and Nutrition Policy, and the Subcommittee on Child Product Safety. The purpose of the roundtable was to discuss issues involving the use of ephedra supplements by athletes and consumers, and its dangers and benefits. The roundtable also assisted the Assembly in better understanding current uses of ephedra to increase sport performance and advance weight loss objectives. The goal was to explore policy solutions to protect the public from the potential hazards associated with ephedra.
Representatives from the federal government, state government, local government, the business community, the medical and educational community, and consumer advocacy groups met in Albany to discuss the issues surrounding ephedra.
Assembly bill 6921 was drafted in response to concerns raised at this roundtable. It became Chapter 385 of the Laws of 2003.
On October 21, 2003, the Assembly held a roundtable addressing the increasing problem of unsolicited bulk commercial electronic mail, also known as spam. According to the Radicati Group, a market research firm, in 2003 spam cost companies $20.5 billion. In addition, according to Jupiter Research, U.S. e-mail users received more than 140 billion pieces of spam in 2001 and 261 billion pieces in 2002. That is an eighty-six percent increase. AOL estimates that it blocks 2.3 billion spam e-mails daily.
Among the participants were the office of the Attorney General, the Consumer Protection Board, the Federal Trade Commission, New York City Department of Consumer Affairs, Time Warner, Microsoft, MasterCard, Direct Marking Association, and other consumer and business groups.
The roundtable marked a successful dialogue on possible policy solutions to curb the proliferation of spam. Issues included the viability of different enforcement methods and rights of action by the consumer and businesses. The committee plans on continuing the dialogue with government, consumers and business advocates and drafting legislation.
The Committee held a joint hearing with the Committee on Banks, the Puerto Rican/Hispanic Task Force, and the New York City Department of Consumer Affairs on the issue of remittance agencies and money transmission businesses.
In recent years, the transmission of money sent overseas from New York State residents has increased dramatically to $3 billion annually. Although the industry is comprised of approximately 15,000 storefront agencies, the domination of the industry by a small handful of agencies permits remittance companies to charge inconsistent rates for transferring money while not disclosing either the cost of exchange rates or any other hidden fees.
Additionally, remittance agents currently are not directly regulated, but are overseen by parent companies regulated by the New York State Banking Department. The hearing sought to foster a better understanding of the industry. In 2003, the legislature will continue investigating their role on this issue.
IV. OUTLOOK AND GOALS FOR 2003
The Committee will pursue many of the issues it addressed during the 2003 Session. The Committee remains committed to enacting legislation to further protect consumers by providing them with one free credit report, limiting the service fees attached to many gift cards, and restricting the proliferation of bulk unsolicited commercial e-mail and other forms of unsolicited communication, including facsimile, mail and mobile communications.
CHAPTERS OF 2003
|A.2525||McLaughlin||Prohibits the use of prize boxes as a means of collecting authorization to change a consumer's gas or electric supplier. Chapter 318 of the Laws of 2003.|
|A.5150-A||Pheffer||Prohibits businesses from printing the full credit or debit card numbers as well as expiration dates on receipts that are electronically created. Chapter 499 of the Laws of 2003.|
|A.5218||Lentol||Expands the "lemon law" protections to consumers purchasing motorcycles. Chapter 485 of the Laws of 2003.|
|A.6921-C||Pheffer||Prohibits the sale of dietary supplements containing ephedra. Chapter 385 of the Laws of 2003.|
|A.8986||Klein||Authorizes the transfer of phone numbers to the federal Do-Not-Call registry. Chapter 124 of the Laws of 2002.|
|A.9063||Pheffer||Extends consumer protections for individual's purchasing pre-need funeral services. Chapter 105 of the laws of 2003.|
2003 BILLS PASSED BY THE ASSEMBLY
|A.128||Markey||Would prohibit the sale of utility knives or box cutters to minors.|
|A.193||Morelle||Would require that rented clothing be cleaned prior to re-rental.|
|A.204||Cahill||Would require phone companies that provide potential customers with unsolicited services to also provide a toll-free customer service contact number.|
|A.245||Lentol||Would prohibit the imposition of service charges on credit card customers because they do not carry a monthly balance on their account.|
|A.351||Greene||Would prohibit the charging of consumers for unordered or unrequested goods and services.|
|A.354||Greene||Would prohibit the offer of a free estimate in advertisements unless that estimate is to be provided in writing at no additional charge.|
|A.532||Greene||Would prohibit the offer of a free estimate in advertisements unless that estimate is to be provided in writing at no additional charge.|
|A.586||Cook||Would require persons offering diet and weight loss services to disclose certain information regarding the effects of diet and weight loss.|
|A.637||Brodsky||Would require that computers sold with remanufactured parts disclose that information.|
|A.1061||Weisenberg||Would require that sunscreen be labeled with both an expiration date and storage instructions.|
|A.2003||Pheffer||Would make permanent provisions of Chapter 557 of the laws of 2001, dealing with pre-need funeral services.|
|A.2266||Magee||Would prohibit the sending of unsolicited facsimiles to an individual or business if no prior business relationship has been established.|
|A.2485||Tokasz||Would prohibit the sale of laser pointers to minors.|
|A.2837||Kaufman||Would allow consumers to prohibit their credit card companies from selling, leasing, renting, or in other ways disseminating their personal information.|
|A.4244||Englebright||Would establish rules and regulations for the labeling of food intended for off premises consumption.|
|A.5074||Pheffer||Would require that car seats be labeled with information regarding compatibility with automobiles.|
|A.5148||Pheffer||Would require that credit card companies disclose that consumers are not required to enter into agreements for additional credit card protection and insurance.|
|A.5153||Pheffer||Would prohibit the sale or lease of a consumer's electronic mail address without the affirmative consent of the consumer.|
|A.5158||Pheffer||Would authorize the filing of a class action lawsuit in anti-trust cases.|
|A.6232||Sanders||Would expand the existing wheelchair warranties to include all wheelchairs.|
|A.6528||Kaufman||Would permit the award of reasonable transportation costs, attorney's fees, and other costs associated with a disabled individual attending arbitration for disputes regarding their motorized wheelchair.|
|A.7212||Levy||Would require that for-profit organizations soliciting donations in collection bins disclose that these donations will go to a for-profit entity.|
|A.8372||Peoples||Would increase the civil penalty for certain unlawful deceptive acts and practices from $500 to $5,000.|
2003 SUMMARY OF ACTION ON ALL BILLS REFERRED TO THE ASSEMBLY COMMITTEE ON CONSUMER AFFAIRS AND PROTECTION
|Final Disposition of Bills||Assembly Bills||Senate Bills||Total|
|Bills Reported With or Without Amendment|
|To Floor; Not Returning to Committee||3||1||3|
|To Floor; Recommitted and Died||0||0||0|
|To Ways and Means||0||0||0|
|Bills Having Committee Reference Changed|
|To Cities Committee||1||0||1|
|Senate Bills Substituted or Recalled|
|Bills Defeated in Committee||0||0||0|
|Bills Never Reported, Held in Committee||206||7||213|
|Bills Never Reported, Died in Committee||0||0||0|
|Bills Having Enacting Clause Stricken||0||0||0|
|Motions to Discharge Lost||0||0||0|
|Total Bills in Committee||254||11||265|
|Total Number of Committee Meetings Held||8|