Unique Oregon Law on Wire Service Commissions

CHR

CHR

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Nov 28, 2002
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Ran across an article about a proposed law in Oregon that limits the amount of commissions wire services can charge filling florists. House Bill 2212 passed a 37-23 vote in the Oregon House of Representatives and is on it's way to the state Senate.

You can read more about the law here.

It's a novel approach and basically cuts out the profits of order gathering by limiting commissions to just 5% for selling agents and 7% for wire services. The florist who helped get the law going says she's received a lot of flack about it - and I'm not surprised - especially with FSI and an FTD call center being located right in the state. Local florists who send orders out of town would also have their commissions reduced so you know large sending shops will vehemently opposed the bill.

The legislation is said to have a positive impact in Oregon:
In Oregon, the bill, if passed, is expected to create more than 500 jobs and generate about $1.5 million in revenue, she said. Furthermore, customers would no longer be deceived about where their delivery charge money is going, she said.
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Would love to know how the backers arrived at that figure - because it's compelling.

Cutting off the profits (and sources of rebate dollars) is a whole new approach to go after OGs, yet I'm puzzled how a state can legislate commission schedules between private business parties.

You can bet the Senate will be inundated with lobbyists from the major WSs so I'm not going to hold my breath on this one. Still - it will be fun to watch.

Do you think this bill has a chance of passing? Would you urge your local state representatives to support a measure like this?
 
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With any other state, I would say this measure has no chance. Since it is Oregon, gee, you never really know. Seems like it's a state full of mavericks.

On the surface, this seems like a great way to even the playing field ~ then again ~ some thought communism was too.

I'm not calling her a communist, but this type of thinking is a slippery slope. However much I despise ogs on a personal and professional level, they are businesses who share our free enterprise system. The ONLY time I condone government stepping in is when it is a monopoly business and only then if they have shown a tendency toward gouging because they can.

Now, if she were getting the wire services to agree to this changed fee schedule I would be more impressed because that would mean that they were actually cognizant of the problem and willing to do something about the monster that they created in allowing og activity.

In my opinion, it does nothing to recognize the very real service/delivery fee the ogs charge. Getting 15% more per order filled still means that the filling florist will, in theory, receive an additional $7.50 for a $50 order. They still have to take their delivery out of it, and the og still gets their service fee, which is really the larger chunk of change. At 20%, they get $10, at 5%, they get $2.50. But their service charge is $15-$18 that they keep 100% of.

Unless the wire services step up with a mea culpa and change it themselves <roll eyeballs and snort> this measure will just prolong the slow but ultimate death of many shops.

jmo
 
I can not see how that law can pass its not an area that goverment typically gets involved in. Its not like a uitlity were a public service board is involved to help protect the customers. But it is good news that another staate is reconizing that there is something going on here that is not right.
 
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I don't see it passing nor do I necessarily think it should. However, it will bring the issue more awareness and educate a few more on how it all works-for that, I commend them.
 
Even if it did pass, I don't see any enforcement. State house rep friend of mine told me, why pass a bill that can't be enforced. I don't see a State Business Division using it's subpoena powers for statements.................But it is a new approach.
 
My thoughts on this are that government is starting to realize how much money they are losing via the internet as a whole between lost local jobs, lost sales tax and lost business taxes to closed businesses, however they have no idea how to police it and are just going to start trying things...I think this is good because doing something and far better than not doing anything...I don't think it will work but it is creative..and I think it will make the og's have to raise their service fees so much to make up that they would be seen as the charletons that they are...People will still pay it because they have so much time and info invested in the order at the time of finding out the service charge, but some people will back out at that point...we can only see...
 
I tend to agree with the socialist nature of this idea and that it won't have legs long term or in any other jurisdiction. They seem to be tackling the wrong issue and going after legitimate business, rather than policing the false advertising.

These companies have every right to enter into a contract with florists to fill orders at 70% of the retail value and provide rebates etc to the one's who gathered the order.

There is nothing illegal about order gathering, and nothing wrong with making a profit at it.

On the other hand, the other half of the equation is tax collection, which is something I fully support. I bet the commission part will die and a new tax law will come out of this.
 
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CHR said:
Oregon doesn't have a state sales tax so I doubt the issue will shift there.
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which just MAY become the alienating issue,,,imagine being an OG being faced with HAVING to pay taxes on ALL outgoing orders, that are NOT filled in Oregon??
 
Some random thoughts...
It's been a long time since I was in a high school civics class, but it seems to me that this would fall under interstate commerce, which would mean that the feds could regulate it, but not individual states. If this proposal were to become law, I could see the order gatherers moving (even more) to skimming. Maybe they can't collect a 20% commission, but they can send a $50 order through for $40. It would all be in how they show it in their books. FTD Domestic Retrans does this now. If you give them an order going to a town with no service, they grab 20% on the way by. Send them an order for $50 and, if they find a florist to fill it, they say it's a $40 order. Is it that different from collecting a delivery charge that is only passed on to the the filling florist if the filling florist asks for it? It wasn't a commission, just money that was skimmed, and we know how often that happens. It was always against the rules for the florists, but now that there are no rules, it's OK for those who make the rules to do whatever they want. And who's holding the bag if the customer claims they didn't get their money's worth? The filling florist!
 
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My thoughts on this are that government is starting to realize how much money they are losing via the internet as a whole between lost local jobs
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The thought process on ths bill is amazing. Why waist time and money going after the way OG go after the orders.

This bill is not just going after our industry this is something that could effect all types of OG online.

I want to say that there is some mystical powers at work right now. What a freakin awesome idea.

"Sure Amazon you can continue to be in business but you only get 5%."

I love it!!!
 
Tom said:
I could see the order gatherers moving (even more) to skimming. Maybe they can't collect a 20% commission, but they can send a $50 order through for $40. It would all be in how they show it in their books. FTD Domestic Retrans does this now. If you give them an order going to a town with no service, they grab 20% on the way by. Send them an order for $50 and, if they find a florist to fill it, they say it's a $40 order. Is it that different from collecting a delivery charge that is only passed on to the the filling florist if the filling florist asks for it?
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Good point.

There is also nothing wrong with "skimming" as we call it and it happens in many other business this way. I'll start another thread on that.
 
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Word just in....

The bill has passed both the House and Senate and is awaiting the Governor's signature.

Yes, I'm shocked and pretty darn pleased. Congratulations to the grass roots florists of Oregon. Let's hope they can get to the Governor before you-know-who does. Who's the Governor's florist? Maybe he/she will put in a good word.

Here's a brief story about the way the vote came down from the Oregon Statesman Journal:

Just a brief quote:
Big companies rely on local florists to fill orders for them in distant towns. Komp said these interstate companies then take as much as 20 percent of the price paid by consumers in exchange for a service that costs the companies little or no money.
Verger said it was "an unethical charge."


"Philosophically, I do not believe we should interfere in the marketplace," Verger said. "But I was convinced I needed to vote yes because I do not believe in charging people for things you do not do."
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Wow. Actually, the 20% is more like 45-50% of a consumer's total spend. FTD.com's 'take' on a $40 Mother's Day Order ($61.00 with the sending fee) was 33.80 ($21 sending fee + 27% ($10.80) + $2.00 'receiving fee'). That 55.4% of the total order value. Hit a shop with reciprocity fees and the percetage is even worse.

All I can say is 'Go Oregon!'
 
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Whoa, that is unbelievable.

I surely do wish they had their numbers right. Little do they know the 20% quoted is considered a fair commission by the majority of florists across the nation. Just imagine what they might have done if they knew the real numbers involved.

So IIRC, this measure caps the commission at 5%. It will be extremely interesting to see if the og's will then raise their "service/delivery" fee if the order is going to Oregon. I doubt the Oregon legislation really understands exactly who they are dealing with in terms of "unethical" practices.

Oh, I just can hardly wait! :)
 
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Good news indeed, if the Governor signs and then, if the state "polices" it.

But a question: FTD has a unit/call center in Oregon, I believe. Does the law that has passed their state body require a (floral) business, regardless of size and purpose in the state to implement it on any of their wire/commission transactions and, therefore, mean FTD has to implement it across their network?
 
Simon Says said:
Good news indeed, if the Governor signs and then, if the state "polices" it.

But a question: FTD has a unit/call center in Oregon, I believe. Does the law that has passed their state body require a (floral) business, regardless of size and purpose in the state to implement it on any of their wire/commission transactions and, therefore, mean FTD has to implement it across their network?
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I'm certain that FTD does NOT "falsely" represent itself as being in "your hometown"......
 
Little do they know the 20% quoted is considered a fair commission by the majority of florists across the nation.
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Maybe by the florist that are still barely in business.

What about the ones that have already gone out of business?

And who came up with this number in the first place?
 
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