Brief ⁽¹⁾

SB 58, as amended, adds new language supplemental to the Kansas Consumer Protection Act; increases penalties for violations of the Charitable Organizations and Solicitations Act; and adds new penalties for violations of the Charitable Organizations and Solicitations Act committed against elderly or disabled persons. The bill prohibits any "supplier" to submit for payment a check, draft, or other form of negotiable instrument or payment order drawn on a persons checking, saving, or share account without the consumer's express authorization. The burden of proving the existence of an express authorization rests upon the supplier submitting an instrument for payment.

Services provided by a public utility or a wireless carrier as those two terms are defined in law are specifically exempted. Also, the provisions of the bill do not apply to the collection of a pre-existing debt.

"Express authorization" is defined as an express, affirmative act by a consumer clearly agreeing to the payment by check, draft, or other form of negotiable instrument or payment order drawn on a person's account.

"Supplier" is a term already defined in the Kansas Consumer Protection Act and includes a manufacturer, distributor, dealer, seller, lessor, assignor, or other person who, in the ordinary course of business, solicits, engages in, or enforces consumer transactions, whether or not dealing directly with the consumer.

The bill provides that financial institutions may decline to pay any check, draft, or other form of negotiable instrument or payment order submitted without proof of the consumer's express authorization.

The monetary penalty a violator of the Kansas Consumer Protection Act may be liable for to an aggrieved consumer is increased from not more than $5,000 to not more than $10,000 for each violation. Any supplier who willfully violates the terms of a court order issued pursuant to the act may be subject to a penalty increased from $10,000 to $20,000.

Also the penalties for violating the Charitable Organizations and Solicitations Act are increased to the same levels provided for violations of the Kansas Consumer Protection Act. If a person is found to have violated the Charitable Organizations and Solicitations Act and the violation is committed against elderly or disabled persons, the court may impose an additional penalty not to exceed $10,000 per violation. Several factors are included in the bill to assist the court in determining whether to impose the additional penalty. Finally, the bonding requirement for persons registering under the Charitable Organizations and Solicitations Act is deleted.

Background

Senator Lee, a proponent of SB 58, spoke of situations where suppliers had accessed a consumer's bank account without the consumer authorizing such a payment from the account. Consumers are surprised to discover upon a withdrawal being made that no signature is required for a draft to be taken from a consumer's account. With the exceptions specifically noted, and for payments made for existing and recurrent services, the bill places limitations on access to consumer accounts by suppliers.

The bill, as amended, is supported by the Kansas Attorney General, who enforces the Kansas Consumer Protection Act, and by the AARP, Sprint, Western Resources, and the Direct Marketing Association.

The House Committee of the Whole amendments incorporate in SB 58 the provisions of SB 20

The fiscal note prepared by the Division of the Budget indicates passage of the bill will have no fiscal effect.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi