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FTC RELEASE: MARCH 1, 1994 COMMUNITY ASSOCIATION MANAGERS' PROFESSIONAL GROUP TO SETTLE FTC CHARGES OVER CLIENT SOLICITATION RESTRICTIONS The Community Associations Institute (CAI), whose members manage condominium and other homeowners' associations, has agreed to settle Federal Trade Commission charges that provisions in its codes of ethics restricted competition among its members to soli- cit clients, in violation of federal antitrust laws. The settlement would prohibit the Alexandria, Virginia-based CAI from interfering in any way with the truthful advertising and solicitation efforts of its members in the future, and require it to remove any code of ethics provisions inconsistent with this prohibition. CAI is a voluntary association whose members include professionals who offer their services as managers of residential community associations. CAI confers the title of Professional Community Association Manager (PCAM) on those who meet certain educational and experience standards. According to the FTC complaint detailing the allegations in this case, until June 1993, CAI interpreted its PCAM code of ethics to prohibit its PCAM members from sending unsolicited mailings to homeowner and condominium associations quoting prices or otherwise seeking their business. CAI allegedly issued warning letters to managers who its investigations showed had violated these provisions. The code also required PCAMs to notify other professional managers of any contacts the PCAMs made with the other managers' clients (calling this a "professional courtesy"). Moreover, the complaint alleges, CAI circulated a task force report containing guidelines that declared it unethical to engage in certain truthful, nondeceptive advertising designed to attract an association away from its current manager. The guidelines also declared it unethical to give price quotes to prospective clients before being selected to bid, and to offer free, non-management services (such as insurance and landscaping) as marketing incentives. Finally, according to the complaint, local chapters of CAI have discouraged members from soliciting clients. The challenged conduct allegedly deprived customers of truthful information for comparing professional residential community association managers, and unreasonably restrained competition among those managers, the FTC charged. The proposed consent agreement to settle these allegations, announced today for public comment, would prohibit CAI from restricting truthful, nondeceptive advertising or solicitation by its members. For example, CAI could not interfere with members' general mailings to condominium or homeowner associations, solicitations targeting specific associations, telephone or personal calls designed to attract current clients of another manager, unsolicited price quotes or offering of free services. Further, CAI would be prohibited from inducing or encouraging others to take action that would violate the order. The settlement also would require CAI to remove from its code of ethics any provisions inconsistent with the consent agreement's prohibitions, and to make the changes known by publishing the revised code and the FTC order in Community Management and Common Ground, two CAI publications, and by notifying local chapters and PCAMs. In addition, CAI would be required to deny recertification to any local chapter that refuses to certify that it will ensure compliance with the new bylaws, and to cease affiliation for one year with any chapter that CAI learns is violating the order. The Commission vote to announce the proposed consent agree- ment for public comment was 5-0. It will be published in the Federal Register shortly and will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580. NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000. Copies of the complaint and proposed consent agreement, as well as an analysis of the agreement to assist the public in commenting, are available from the FTC's Public Reference Branch, Room 130, at the above address; 202-326-2222; TTY for the hearing impaired 202-326-2502. MEDIA CONTACT: Bonnie Jansen, Office of Public Affairs 202-326-2161 STAFF CONTACT: Michael D. McNeely, Bureau of Competition 202-326-2904 |
AHRC Warning:
ALSO...Watch Pending Legislation- AB555 ...it is the newest vendor attempt in California to get around FTC regulations.
California's Fair Political Practice Act forbids anyone from influencing the legislature to pass laws that results in financial gain to them.
If you do not live in California check your state's Conflict of Interest laws.
State of California
Conflicts of Interest/Form 700 Statement of Economic Interests
"Assets and income of public officials which may be materially affected by their official actions should be disclosed and in appropriate circumstances the officials should be disqualified from acting in order that conflicts of interest may be avoided."
Gov. Code Section 81002(c)
"No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest."
Gov. Code Section 87100
The Political Reform Act prevents conflicts of interest in two ways -- disclosure and disqualification. (See Gov. Code Sections 87100-87350.)
Disclosure
The purpose of financial disclosure is to alert public officials to personal interests that might be affected while they are performing their official duties, i.e., making governmental decisions. Disclosure also helps inform the public about potential conflicts of interest.
Public officials at every level of state and local government must disclose their personal financial interests. Elected officials, judges, and high-ranking appointed officials generally have the most comprehensive disclosure requirements. (Gov. Code Section 87200.) These include disclosure of:
* Investments in business entities (e.g., stock holdings, owning a business, a partnership)
* Interests in real estate (real property)
* Sources of personal income, including gifts and loans
* Positions of management or employment with business entities
For most other officials, including employees of state and local government agencies, it is up to the agencies that employ them to decide what their disclosure requirements are. Each state and local agency must adopt a conflict of interest code tailoring the disclosure requirements for each position within the agency to the types of governmental decisions a person holding that position would make. For example, an employee who approves contracts for goods or services purchased by her agency should not be required to disclose real estate interests, but should be required to disclose investments in and income from individuals and entities that supply equipment, materials, or services to the agency. (Gov. Code Sections 87301 and 87302.)
Unpaid members of boards and commissions and consultants to state and local government agencies also may be required to disclose their personal financial interests if they make or participate in making governmental decisions that could affect their private financial interests.
Disclosure is made on a form called a "statement of economic interests" (Form 700). The form must be filed each year. Filed forms are public documents that must be made available to anyone who requests them.
Disqualification
If a public official has a conflict of interest, the official may be required to disqualify himself or herself from making or participating in a governmental decision, or using his or her official position to influence or attempt to influence a governmental decision.
To determine whether an official has a conflict of interest many factors must be analyzed. For example, is it reasonably foreseeable that the official's interest will be affected by a particular decision? Will the decision have a significant monetary impact on the financial interest or is the impact minimal? Will the decision affect the official's interest differently than members of the general public? Is the official even making a governmental decision?
In many cases, an official will need guidance from the Commission or an attorney to determine whether disqualification is required.
Note: Although they are required to file statements of economic interests, judges and court commissioners are not subject to the Act's disqualification provisions.
Campaign Contributions
In most cases, the receipt of campaign contributions is not the basis for disqualification by a public official. However, certain public officials who make decisions in proceedings involving licenses, permits, or other entitlements for use (e.g., planning commissioners, board members of joint powers authorities and other regional governing or planning agencies, and members of other state and local boards and commissions) are subject to the restrictions of Gov. Code Section 84308. Section 84308 prohibits solicitation or receipt of campaign contributions from parties, participants, or their agents, in proceedings involving licenses, permits, or other entitlements for use. The law also requires an official's disqualification in those proceedings if the official has received campaign contributions of $250 or more from a party or participant within the 12 months preceding the decision. Finally, Section 84308 requires disclosure of such campaign contributions.
Elected state officers, judges, and members of local government agencies who are directly elected by the voters (e.g., board of supervisors, city council, school board) are exempt from Section 84308 when they are acting as members of the agency to which they are elected. However, if one of these individuals is also a voting member of another nonexempt body, such as a joint powers agency or regional planning agency, he or she is covered by the law with respect to license, permit or other entitlement for use proceedings before the nonexempt body. For example, if three city councilmembers and two county supervisors sit on a city-county joint powers authority, Section 84308 applies to the license, permit or other entitlement for use proceedings before the joint powers authority because they officials were not elected directly to the authority. It does not apply to the officials when they are voting on matters before the city council or board of supervisors.
State of California FPPC.
American Homeowners Resource Center
P.O. Box 97 * San Juan Capistrano
California 92693
Phone: (949) 366-2125 * E-mail:ahrc@ahrc.com
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