LEGISLATIVE FISCAL ESTIMATE TO
[First Reprint]
ASSEMBLY, No. 2360
STATE OF NEW JERSEY
DATED: DECEMBER 3, 1996
Assembly Bill No. 2360 (1R) of 1996 requires certain commercial telephone solicitors conducting sales from New Jersey or directed to New Jersey residents to annually register with the Division of Consumer Affairs in the Department of Law and Public Safety. The bill establishes standards which solicitors must follow regarding disclosure and the provision of written contracts in effecting sales. The bill also requires the solicitor to provide a bond of not less than $50,000 to cover damages or losses suffered by consumers as a result of violations of the bill’s provisions.
The bill exempts certain classes of commercial telephone solicitors from its provisions. These include, among others, licensed real estate salespersons, licensed security brokers, registered charitable solicitors, representatives of supervised financial institutions, catalog sales agents, and magazine publishers and agents.
The bill authorizes the division to refuse to issue or renew, or to suspend or revoke the registration of any person who violates the bill’s provisions. The bill also makes violators of this bill subject to the provisions of the consumer fraud law, P.L.1960, c.39 (C.56:8-1 et seq.). The bill also authorizes the division to assess registration fees sufficient to defray its administrative expenses.
The division estimates that approximately 4,200 commercial telemarketing companies operate in New Jersey, based on an estimate by the American Association of Retired Persons (AARP) of 140,0000 telemarketers nationwide. After adjusting for the exemptions in the bill, the division estimates that 2,500 telemarketing companies would be subject to the provisions of the bill. The AARP estimates that as many as 10 percent of telemarketers may engage in fraudulent practices.
Based on the estimated universe of 2,500 telemarketing companies, the division places the cost of implementing this bill at $247,000 in the first year following enactment. Included in this estimate are salary and fringe benefit costs of $118,000 for two clerks, one investigator and the part-time services of an executive assistant. Also included in this estimate are $8,000 for materials and supplies, $2,000 for data processing, $92,000 for legal services, $7,000 for postage, $2,000 for telephone, $1,000 for travel, $2,000 for maintenance and fixed charges, $10,000 for data processing, and $5,000 for other equipment. Assuming an annual inflation rate of approximately five percent in the second and third year for salaries and deducting certain one-time equipment costs, the division estimates the bill's second and third year costs at $244,000 and $251,000, respectively.
Therefore, if the division’s estimates of 2,500 registrants is accurate, an annual fee of about $100 per registrant would be needed to cover the division’s administrative costs.
The Office of Legislative Services (OLS) finds the division’s cost estimate reasonable but finds its estimate of potential registrants too low. If the AARP estimate of 140,000 telemarketing firms is approximately correct, it would appear likely that more than three percent of telemarketers (the division’s estimate) are based in New Jersey or solicit the States's residents. Information is not available on which to base an estimate the actual number of affected telemarketing or the number exempted under this bill. OLS further observes that a larger number of registrants might allow the division to achieve economies of scale which might reduce the annual fees per telemarketer to some extent. Fines and penalties levied on violators of the Consumer Fraud Act will also help to defray the division’s expenses.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67.