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32-2197.17. Advertising and promotional requirements; telemarketing and promotional employees; presentations and tours, drawings and contests; commissioner's authority; disclosures

A. Within ten days after a request by the commissioner, the developer shall file with the commissioner a copy of any promotional and advertising material that will be used in connection with the sale, lease or use of timeshare interests. If filing is required, the commissioner shall approve or deny the use of any material within fifteen days of receiving all information and documents. If the commissioner denies the use of promotional and advertising material, specific grounds shall be set forth in writing. The commissioner may grant provisional approval for promotional and advertising material if the developer agrees to correct any deficiencies. Any proposed advertising not requested by the commissioner for review may be filed for review and approval by the commissioner.

B. Any advertising, communication or sales literature of any kind, including oral statements by salespeople or any other person, shall not contain:

1. Any untrue statement of material fact or any omission of material fact which would make such statements misleading in light of the circumstances under which such statements were made.

2. Any statement or representation that the timeshare interests are offered without risk or that loss is impossible.

3. Any statement or representation or pictorial presentation of proposed improvements or nonexistent scenes without clearly indicating that the improvements are proposed and the scenes do not exist.

C. All promotional and advertising material shall be consistent with the information contained in the notice of intention pursuant to section 32-2197.02 and the public report pursuant to section 32-2197.08 and shall clearly indicate that the material is being used to promote the sale, lease or use of an interest in a timeshare plan. An interest in a timeshare plan, vacation ownership plan, fractional ownership plan, vacation club or other term or terms may be approved by the commissioner on a case by case basis after the commissioner finds that such term or terms clearly disclose to prospective purchasers the nature of the timeshare interest being offered.

D. If it appears to the commissioner that any person is engaging or has engaged in advertising or promotional practices in violation of this article, the commissioner may hold a hearing as a contested case under title 41, chapter 6, article 10 and issue such order or orders as the commissioner deems necessary to protect the public interest, or the commissioner may bring an action in any court of competent jurisdiction against such person to enjoin that person from continuing such violation.

E. The commissioner may adopt such written guidelines as the commissioner deems necessary to protect the public interest and to assure that all advertising and promotional practices with respect to land subject to the provisions of this article are not false or misleading.

F. It is unlawful for any owner, developer, agent or employee of any timeshare plan or other person with intent directly or indirectly to sell or lease timeshare interests subject to the provisions of this article to authorize, use, direct or aid in any advertising, communication, sales literature or promotional practice which violates this section.

G. This section does not apply to the owner or publisher of a newspaper or magazine or to any other publication of printed matter in which such advertisement appears or to the owner or operator of a radio or television station which disseminates such advertisement if the owner, publisher or operator has no knowledge of the intent, design or purpose of the advertiser.

H. A telemarketing or any other promotional employee involved in activities whose primary duties are limited to soliciting initial interest, scheduling or confirming persons for appointments, handing out promotional literature or explaining promotional incentives and related duties is not required to hold a real estate license. To the extent that a telemarketing or any other promotional employee is engaged in soliciting interest in the actual purchase, lease or use of timeshare interests, the employee shall be employed and supervised by a real estate broker who is licensed in this state subject to the following:

1. Supervision of unlicensed telemarketing and other promotional employees shall be performed directly by a broker or a licensed real estate salesperson under the supervision of the broker.

2. An unlicensed employee in the course of the employee's duties shall not engage in discussions about any details or benefits of the property transaction being promoted, including dimensions of the property, contract terms, discounts, exchange benefits, price and financing.

3. The amount and manner in which an unlicensed employee is individually compensated may not be based, in whole or in part, on the completion of a timeshare transaction.

4. For the purposes of the supervision required under this subsection, a developer may:

(a) Operate its own promotional program and provide supervision of its unlicensed telemarketing or other promotional employees through its designated broker.

(b) Establish a branch office that is managed by a licensed real estate salesperson under the supervision of the developer's designated broker and who provides supervision of the developer's unlicensed telemarketing or other promotional employees.

(c) Pursuant to a written promotion agreement:

(i) Contract with an unlicensed telemarketer or any other promoter if the agreement requires the developer's designated broker to provide supervision of the telemarketer's or promoter's unlicensed telemarketing or other promotional employees.

(ii) Contract with a telemarketer or any other promoter who is licensed as a broker in this state if the agreement requires the designated broker of the telemarketer or other promoter to provide supervision of unlicensed telemarketing or other promotional employees.

5. The commissioner may exempt from the supervision requirements of this section a timeshare developer that is not based in this state and that desires to conduct telemarketing solicitations of residents of this state or a developer that is based in this state but that desires to use the services of a telemarketer that is not located in this state to conduct telemarketing solicitations of residents of this state on written application containing information about the developer, the timeshare plan and the marketing procedures that will be used. The commissioner may grant such an exemption on a showing that supervision equivalent to that required under this section exists. If the developer does not adhere to the marketing procedures submitted with its application for exemption or if there is any material change in the information submitted with the application, the exemption may be denied or revoked.

I. A timeshare developer may hold a drawing or contest to solicit interest in or promote timeshare interests if all of the following requirements are met:

1. The timeshare plan has in effect a current public report.

2. The developer is not the subject of an ongoing investigation by the commissioner, unless the commissioner in the commissioner's discretion gives written permission to the developer to hold a drawing or contest.

3. The extent to which the drawing or contest is limited in time and scope and the geographic location in which eligible recipients reside are fully disclosed.

4. The estimated odds of winning and all other material terms of the drawing or contest are fully disclosed to all participants.

5. No fee is charged to any person who participates in a drawing or contest.

6. No participant in a drawing or contest, as a condition of participation, is required to attend a timeshare sales presentation or take a site tour.

7. The developer is in compliance with all applicable federal, state and local laws involving drawings or contests.

8. The developer is responsible at all times for the lawful and proper conduct of any drawing or contest.

9. The developer submits the details of the drawing or contest, including the method of awarding any prize, to the department for review and approval at least thirty days before the drawing or contest is offered.

J. A premium may be given to persons who visit timeshare properties or who attend a timeshare presentation. No person is required to attend any presentation or tour for longer than one hundred twenty minutes to receive the premium. The developer shall make complete and clear written disclosure that minimally includes detailed information about any premium offered as an incentive, including its estimated retail value and any conditions that must be met or limitations that apply to receive the premium, and about the one hundred twenty minute limit placed on a site tour or sales presentation to each timeshare prospect before any presentation or tour.

K. A developer or a representative of a developer conducting timeshare presentations or tours may offer a timeshare prospect a redemption certificate in return for participation in a presentation or tour if all of the following requirements are met:

1. If for any reason the goods or services are not provided in the time frame stated in or are not as represented in the redemption certificate and the recipient provides proof of timely satisfaction of all conditions and requirements for redemption, the developer does the following:

(a) Within fifteen days of receipt of notice from the timeshare prospect of the proven nonreceipt of the goods or services, provides the promised goods or services or a reasonable substitute of equal or greater value.

(b) If unable to provide the goods or services or a reasonable substitute within the fifteen day period, immediately pays the redemption certificate recipient an amount equal to the estimated retail value of the premium as advertised in the certificate promotional material or, if the value was not advertised, pays the estimated retail value of the premium.

2. All advertising and offers referring to redemption certificates shall clearly and conspicuously set forth any terms, conditions, restrictions or limitations governing the use of the certificates.

L. The disclosure required by subsection C of this section shall be provided as part of the initial advertising promotion contact with a prospective purchaser. Any other disclosures required pursuant to this section shall be provided before the prospective purchaser is required to pay any money or attend a sales presentation pursuant to the advertising promotion. The disclosures shall be given to each prospective purchaser on only one piece of advertising for each advertising promotion, including advertising promotions that consist of multiple related pieces. If advertising promotions are approved as multiple related pieces, the advertising promotion must be used in that form. If the advertising promotion contains terms and conditions the disclosures required in this section shall be included on any piece containing these terms and conditions. Repetitive filings of the same advertising material are not required.