GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 959

Short Title:  Receptacles Used to Solicit.	(Public)

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Sponsors: Representatives McCombs; Allred, Hill, Kiser, Mitchell, and Owens.

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Referred to:  Judiciary II, if favorable, Appropriations.

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April 16, 1997

A BILL TO BE ENTITLED
AN ACT TO REQUIRE CHARITABLE ORGANIZATIONS THAT SOLICIT FUNDS BY OFFERING PRODUCTS FOR SALE IN RECEPTACLES TO PLACE A DISCLOSURE LABEL ON THE RECEPTACLES, TO ESTABLISH CERTAIN PROHIBITED ACTS WITH RESPECT TO THIS TYPE OF SOLICITATION, AND TO ESTABLISH APPROPRIATE PENALTIES FOR VIOLATIONS.
The General Assembly of North Carolina enacts:
Section 1.  The General Statutes are amended by adding a new Chapter to read:
"Chapter 131G.
"Soliciting Funds by Offering Products for Sale in Receptacles.
"§ 131G-1.  Definitions.
The following definitions apply in this Chapter:
(1)	'Charitable' has the same meaning as set forth in G.S. 131F-2.
(2)	'Charitable organization' has the same meaning as set forth in G.S. 131F-2.
(3)	'Receptacle' means a box, carton, package, receptacle, canister, jar, dispenser, or machine.
"§ 131G-2.  Disclosure label required on receptacles used to solicit funds.
(a)	Any charitable organization that solicits contributions by offering a product for sale or distribution for a charitable purpose in a public place when the product is in a receptacle used by that charitable organization or its agent, whether paid or not paid, shall place a printed or typed notice affixed to that receptacle that is legible, easily readable, conspicuously placed, and accessible to the public.   This notice shall contain information that informs the public of all of the following:
(1)	The name of the charitable organization, the purpose for which it is organized, the name under which it intends to solicit contributions, and the purpose for which the contributions will be used.
(2)	The name and either the address or telephone number of a representative to whom inquiries could be addressed under subsection (b) of this section.
(3)	A statement indicating what entity maintains, services, and collects from the receptacle.
(b)	The charitable organization shall disclose, upon request, the source from which a written financial statement may be obtained.  This source shall provide, within 14 days after the request, a financial statement that is in writing, that addresses the immediate past fiscal year, and that states: the purpose for which funds are raised, the total amount of all contributions raised, the total costs and expenses incurred in raising contributions, the total amount of contributions dedicated to the stated purpose or disbursed for the stated purpose, and whether the services of another person or organization have been contracted to conduct solicitation activities.
"§ 131G-3.  Prohibited acts.
It is unlawful for any person to:
(1)	Violate or fail to comply with the requirements of G.S. 131G-2.
(2)	Knowingly provide false or misleading information on the notice on the receptacle or in response to any request or investigation by the Department of Human Resources or the Attorney General.
(3)	Make misrepresentations or misleading statements to the effect that any other person sponsors or endorses the solicitation, approves of its purpose, or is connected therewith when that person has not given written consent to the use of that person's name.
(4)	Represent that a contribution is for or on behalf of a charitable organization, or to use any emblem, device, or printed matter belonging to or associated with a charitable organization, without first being authorized in writing to do so by the charitable organization.
(5)	Use a name, symbol, emblem, device, service mark, or statement so closely related or similar to that used by another charitable organization that the use would mislead the public.
(6)	Employ any device or scheme to defraud or to obtain a contribution by means of any deception, false pretense misrepresentation, or false promise.
(7)	Fail to provide complete and timely payment to a charitable organization of the proceeds from the sale of products used to solicit funds.
(8)	Fail to apply contributions in a manner substantially consistent with the solicitation.
"§ 131G-4.  Violation as deceptive or unfair trade practice.
Any person who commits an act or practice that violates any provision of this Chapter engages in an unfair trade practice in violation of G.S. 75-1.1.
"§ 131G-5.  Criminal penalties.
Except as otherwise provided in this Chapter and in addition to any administrative or civil penalties, any person who willfully and knowingly violates a provision of this Chapter commits a Class 1 misdemeanor.
"§ 131G-6.  Enforcement.
(a)	Investigation. – The Department of Human Resources may conduct an investigation of any person whenever there is an allegation or appearance, either upon complaint or otherwise, that a violation of this Chapter or of any order issued pursuant to this Chapter has occurred or is about to occur.
(b)	Subpoena Power. – The Department may issue and serve subpoenas and subpoenas duces tecum to compel the attendance of witnesses and the production of all books, accounts, records, and other documents and materials relevant to an examination or investigation.  The Department, or its duly authorized representative, may administer oaths and affirmations to any person.
(c)	Court Action. – In the event of substantial noncompliance with a subpoena or subpoena duces tecum issued or caused to be issued by the Department, the Department may petition the superior court of the county in which the person subpoenaed resides or has the principal place of business for an order requiring the subpoenaed person to appear and testify and to produce any books, accounts, records, and other documents as are specified in the subpoena duces tecum.  The court may grant injunctive relief restraining the person from collecting contributions and any other relief, including the restraint by injunction or appointment of a receiver, or any transfer, pledge, assignment, or other disposition of the person's assets, or any concealment, alteration, destruction, or other disposition of subpoenaed books, accounts, records, or other documents and materials as the court deems appropriate, until the person or organization has fully complied with the subpoena or subpoena duces tecum and the Department has completed its investigation or examination.  Costs incurred by the Department to obtain an order granting, in whole or in part, a petition for enforcement of a subpoena or subpoena duces tecum shall be taxed against the subpoenaed person and failure to comply with the order shall be contempt of court.
(d)	Violations. – The Department may enter an order imposing one or more of the penalties set forth in subsection (e) of this section if the Department finds that a charitable organization, or its officers, agents, directors, or employees have engaged in any of the prohibited acts set forth in G.S. 131G-3.
(e)	Penalties. – The Department of Human Resources may enter an order that does either or both of the following:
(1)	Imposes an administrative penalty not to exceed one thousand dollars ($1,000) for each act or omission that constitutes a violation of this Chapter or of an order issued pursuant to this Chapter.
(2)	Issues a cease and desist order that directs that the person cease and desist specified fund-raising activities.
(f)	Procedures. – Except as otherwise provided in this section, the administrative proceedings that could result in the entry of an order imposing any of the penalties specified in subsection (e) of this section are governed by Chapter 150B of the General Statutes.
(g)	Disposition of Penalties. – Penalties collected by the Department of Human Resources under subsection (e) of this section shall be credited to the General Fund as nontax revenue.
"§ 131G-7.  Civil remedies and enforcement.
(a)	Civil Remedies. – In addition to other remedies, the Attorney General may bring a civil action in superior court to enforce this Chapter. Upon a finding that any person has violated this Chapter, a court may issue any necessary order or enter a judgment, including a temporary or permanent injunction, a declaratory judgment, the appointment of a master or receiver, the sequestration of assets, the distribution of contributions in accordance with the charitable purpose expressed in the notice on the receptacle, the reimbursement of the Department of Human Resources for attorneys' fees and costs, including investigative costs, and any other equitable relief the court finds appropriate. Upon a finding that any person has violated any provision of this Chapter, a court may enter an order imposing a civil penalty in an amount not to exceed ten thousand dollars ($10,000) per violation.
(b)	Attorney General. – The Attorney General may conduct any investigation necessary to bring a civil action under this section, including administering oaths and affirmations, subpoenaing witnesses or material, and collecting evidence.
(c)	Voluntary Compliance. – The Attorney General may terminate an investigation or an action upon acceptance of a person's written assurance of voluntary compliance with this Chapter. Acceptance of an assurance may be conditioned on commitment to reimburse donors or to take other appropriate corrective action. An assurance is not evidence of a prior violation of any of this Chapter. Unless an assurance has been rescinded by agreement of the parties or voided by a court for good cause, subsequent failure to comply with the terms of an assurance is prima facie evidence of a violation of this Chapter.
"§ 131G-8.  Exemptions.
This Chapter does not apply to any charitable organization that generates less than five hundred dollars ($500.00) per calendar year from all sources for any charitable purpose or purposes combined.  No charitable organization shall be liable under this act to place a disclosure label on any receptacle that generates less than one hundred dollars ($100.00) gross per year.”
Section 2.  This act becomes effective January 1, 1998.