Posted on: Tuesday, June 1, 2004

New law raises scrutiny of telemarketers

By Gordon Y. K. Pang
Advertiser Capitol Bureau

The state and the public will be better able to monitor telemarketers and other professional fund-raisers who are hired to solicit contributions for nonprofit organizations under a bill signed by Gov. Linda Lingle.

Act 93 aims at putting a magnifying glass on telemarketers and other professional fund-raisers who grab a large share of the contributions they have ostensibly raised for charity.

In one recent Hawai'i case investigated by the state attorney general's office, a charitable group saw its telemarketer raise more than $100,000, only to see nearly all of it return to the New York-based fund-raiser.

Deputy Attorney General Hugh Jones said it's difficult to grasp how often such abuses occur, since there are no registration requirements. The new law would require registration to help nonprofits hire more scrupulous fund-raisers.

Professional fund-raisers who get paid to collect contributions for nonprofits in Hawai'i also will have to report how much they raise and what they turn over to the charity.

"One of the problems with the current regulatory scheme is that there is no information available to the public about the percentage of their charitable donations that reach the charity they're trying to benefit," Jones said. "In most other states, you can log onto a state's Web site and find out how much of your dollar actually reaches a charity in your state."

While some fund-raisers work on an hourly basis, Jones said, most get paid a percentage of the money collected. The new law does not require that a certain percentage go to the charities. "It would require public disclosure so that donors can make their own educated decision," he said.

The new law, which Lingle signed Friday, won't take effect until July 1, 2005, to allow a division to be established within the attorney general's office.

Other consumer protection-related bills signed into law by Lingle:

• Act 91, protecting the public and the makers of prized Ni'ihau shell products. Ni'ihau shell necklaces, which sell for hundreds to thousands of dollars, are often duplicated or mixed with other shells and sold at a discount.
• Act 92, ensuring that Social Security numbers are exempt from disclosure in payroll records that are otherwise public. It also prohibits retail merchant club card issuers from requesting personal information in club card applications except for purposes of credit, check-cashing and check verification.
• Act 94, streamlining licensing and tightening regulation of private detectives and guards through the state Board of Private Detectives and Guards.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.