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THIRD READING
Bill No: AB 1581
Author: Wieckowski (D), et al.
Amended: 4/26/12 in Assembly
Vote: 21
AB 1581
SENATE BUSINESS, PROF. & ECON. DEV. COMM.: 6-1, 6/11/12
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Wyland
NOES: Strickland
NO VOTE RECORDED: Negrete McLeod, Vargas
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 60-11, 5/3/12 - See last page for vote
SUBJECT: Advertising: business location representations: floral businesses
SOURCE: Author
DIGEST: This bill makes it an infraction for a provider or vendor of floral or ornamental products or services, as defined, to misrepresent the geographic location of its business, as specified.
ANALYSIS:
Existing law, the Business and Professions Code:
1. Regulates advertising, generally, and makes it unlawful for any person, firm, corporation or association, or any employee to make any statement in any advertising which is untrue or misleading, and which is known or, in the exercise of reasonable care, should be known to be untrue or
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Page 2 misleading. (Business and Professions Code (BPC) Section17500)
2. Provides that unfair competition includes any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and other prohibited acts, as specified. (BPC
Section 17200)
3. Provides that violation of the provisions above is a misdemeanor, and that remedies for violations are cumulative to each other and to other applicable remedies. (BPC Section 17534 and 17534.5)
4. Provides for injunctive relief, as specified, for a violation of the above statutes. (BPC Section 17535 et seq. and 17203 et seq.)
Existing law, the Civil Code:
1. Provides, among other things, that using deceptive representations or designations of geographical origin in connection with goods or services in a consumer transaction and misrepresenting the source, sponsorship, approval, or certification of goods and services are unlawful as unfair methods of competition and unfair or deceptive acts or practices.
(Civil Code (CIV) Section 1770)
2. Provides various remedies and penalties, as specified, for a violation of the above statutes, including injunctive relief, civil and/or criminal penalties, actual and punitive damages, and attorney’s fees. (CIV
Section 1780 et seq.)
This bill:
1. Makes it an infraction for a provider or vendor of floral or ornamental products or services to misrepresent the geographic location of its business by either:
A. Listing a local telephone number in any advertisement or listing, unless the advertisement or listing identifies the true physical address, including the city, of the provider’s or vendor’s business.
B. Listing a fictitious business name or an assumed business name in any advertisement or listing if both of the following are met:
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(1) The name of the business misrepresents the provider’s or vendor’s geographic location;
(2) The advertisement or listing does not identify the true physical address, including the city and state, of the provider’s or vendor’s business.
2. Provides that a violation of these provisions is an infraction, punishable by a fine of up to $250.
3. Specifies that the bill’s provisions does not create or impose a duty or obligation on a person other than a vendor or provider of floral or ornamental products and services.
4. Exempts from the bill’s provisions:
A. A publisher of a telephone directory or other publication or a provider of a directory assistance service publishing or providing information about another business.
B. An Internet Web site that aggregates and provides information about other businesses.
C. An owner or publisher of a print advertising medium providing information about other businesses.
D. An Internet service provider.
E. An Internet service that displays or distributes advertisements for other businesses.
5. Defines the following terms for purposes of the provisions above:
A. “Floral or ornamental products or services” to mean floral arrangements, cut flowers, bouquets, potted plants, balloons, floral designs, and related products and services.
B. “Local telephone number” to mean a specific telephone number
(area code and prefix) assigned for the purpose of completing local calls between a calling party or station and any other party or station within a designated exchange or all of its designated local calling
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Page 4 areas. The term does not include long distance telephone numbers or any toll-free telephone numbers listed in a local telephone directory.
Background
Existing law generally prohibits and provides remedies for misleading or fraudulent advertising practices. Proponents of this bill and the four previous bills on this issue have argued that the flower industry has been targeted by telemarketers using misleading sales practices. They contend that out-of-state businesses adopt local sounding names, and then list a local telephone number in an effort to mislead consumers into believing that the business is a local operation. The local telephone number is then automatically transferred to a distant location, and the business in fact has no local presence. Proponents have suggested that while there is nothing wrong with non-local telemarketing of florist services, the consumer should be aware that the presumed local small business does not in fact have a local physical presence.
Consumers may wish to patronize local establishments. For a variety of reasons, many consumers desire to patronize local businesses. Many consumers desire to support the local economy in the area in which they live. Others wish to have a physical location to visit in the event that problems arise in the delivery of telephonically ordered goods or services.
Still others may simply desire to patronize a small business rather than a much larger national organization. Listing and advertising local names and telephone numbers can seriously interfere with these interests.
Federal Trade Commission (FTC) Consumer Alert. In April 1998, the FTC issued a consumer alert regarding absentee, “long-distance” florists that mislead consumers into believing they are local florists but are not:
Flowers are a great way to celebrate a birthday, cheer up a sick friend, or simply brighten someone’s day. Your local florist is just a phone call away, or so you think. Some unscrupulous telemarketing firms are posing as local florists, charging you higher fees and taking business away from legitimate florists in your town.
Here’s how the deception works: A telemarketer takes out a bogus listing in the white pages of your telephone directory. The company may use your town’s name in its own to make you believe it’s local. Or, name
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Page 5 of a legitimate local florist may be listed with a different local phone number.
When you call, you’re unknowingly forwarded to an out-of-town telemarketing operation. The telemarketer takes your order and credit card information for payment, and forwards your order to an area florist.
The telemarketer pockets a processing fee and usually a percentage of the sale as well. You don’t realize you’ve been scammed until you get higher than expected charges from an out-of-town company on your credit card statement, or learn that the flowers weren’t delivered as ordered, or were never delivered at all.
Following the FTC’s consumer alert, Congress adopted a concurrent resolution resolving that the FTC should exercise its broad authority “to investigate businesses that are engaging in the deceptive advertising practice of misrepresenting their geographic location in telephone listings, Internet advertisements, and other advertising media.” (H. Con. Res. 318, 105th
Congress, 2d Session, August 1998)
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 6/25/12)
A to Z Wholesale Floral & Supply (Santa Anna)
Baron Paper Company Inc. (Oceanside)
Blooms and Bears (Irvine)
California Association of Nurseries and Garden Centers
California Small Business Association
California State Floral Association
Calla Company (Moss Landing)
Conroy’s Flowers (Mission Viejo)
Designs Unique (San Marcos)
Forget Me Not Flowers and Gifts (Walnut Creek)
Fremont Chamber of Commerce
Fremont Flowers (Fremont)
From the Garden Enterprises (Tustin)
Grass Valley Florist (Grass Valley)
Hart Floral (Modesto)
Hayward Chamber of Commerce
Jasmine Creek (El Cajon)
Kings Flowers (Fullerton)
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Kitayama Brother Wholesale (Hayward)
Lizio Inc. (Ontario)
Milpitas Chamber of Commerce
Mission Hills (San Diego)
Monarch Florist (Mission Viejo)
National Federation of Small and Independent Business
Overend Designs (Laguna Hills)
Palos Verdes Florist (Rolling Hills Estates)
San Leandro Chamber of Commerce
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Simi Valley Chamber of Commerce
Society of American Florists
Sweet Peas Floral Design (Stockton)
Tempel’s of Carmel Florist (Carmel)
The Garden Gate Florist (Yuba City)
Walnut Creek Florist (Walnut Creek)
ARGUMENTS IN SUPPORT: According to the author:
At its core, this bill is about combating consumer deception. Local consumers are misled when orders are routed to non-local business locations because fees and commissions are usually taken out of the order price.
These non-local fees and commissions are not normally paid when the consumer places a floral order directly with a truly local florist, as intended. Ironically, oftentimes the non-local telemarketer who falsely represents himself as a local florist simply re-routes the order to a truly local florist for processing. In these cases, the consumer paid a higher price, and received less value, while the local florist was subjected to sharing their profit with an unnecessary and non-local third party.
The consumer has the right to know and choose when he wants his floral dollars and sales taxes to leave his local community and state. This will provide interested consumers relevant information about the location of a floral retail business and prevent unscrupulous floral retailers from parasitical advertising activities on existing community based local flower shops.
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ASSEMBLY FLOOR : 60-11, 5/3/12
AB 1581
Page 7
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill,
Block, Blumenfield, Bradford, Brownley, Buchanan, Butler, Charles
Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Cook, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Galgiani, Garrick, Gordon, Gorell,
Halderman, Hayashi, Hill, Huber, Hueso, Huffman, Jeffries, Knight,
Lara, Bonnie Lowenthal, Ma, Mendoza, Miller, Mitchell, Monning,
Nestande, Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Silva,
Skinner, Solorio, Swanson, Torres, Wieckowski, Yamada, John A. Pérez
NOES: Donnelly, Beth Gaines, Gatto, Grove, Hagman, Logue, Mansoor,
Morrell, Nielsen, Valadao, Wagner
NO VOTE RECORDED: Bonilla, Fletcher, Furutani, Hall, Harkey, Roger
Hernández, Jones, Smyth, Williams
JJA:m 6/25/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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