Advance-Fee Talent Services
In the late 1990s, the District Attorneys in Los Angeles decided to clean up the entertainment industry. In addition to enforcing the existing talent agency laws, Deputy District Attorney Mark Lambert reportedly wrote a new law to supplement the Talent Agencies Act to deal with scams and loopholes which were not caught in that Act.
In the November 1999 issue of Entertainment Law Reporter, under "NEW LEGISLATION & REGULATIONS" (Vol. 21, No. 6), it was reported:
It was officially drafted by (then) Assemblywoman (now Senator) Sheila Kuehl in 1999, and, after being signed by California Governor Gray Davis, officially became law on January 1, 2000.
Sheila Kuehl was previously known as Sheila James, a child and teen actress, best known as Zelda Gilroy on "The Many Loves of Dobie Gillis," one of America's most popular television series from the late 1950s. She broke into television playing a tomboy on "The Stu Erwin Show," a sitcom that ran from 1950-1955. The following year Kuehl got her big break with the role of Zelda Gilroy in the widely popular series about American teenagers.
The idea of becoming a model or an actor is of course widely popular with American teenagers today, especially in California, the entertainment capital of America, or indeed the world, and the scam artists have preyed on them. Familiar with this, and having personal experience and success in the entertainment industry, Sheila Kuehl was led to edit and promote Attorney Mark Lambert's drafted legislation, which became Assembly Bill 884.
Sheila Kuehl said the law was designed to protect talent from "unscrupulous scam artists." CNN reported the story under the headline "California passes kid actors bill," but the law is not only for kids and actors but also aspiring models of any age. No part of the law makes any reference to age.
As the Entertainment Law Reporter noted:
The California State Senate described AB 884 (Kuehl-D) as consumerism legislation for "Advance-fee talent agencies," but this is technically impossible, because a talent agency in California by definition cannot charge advance fees under the existing legislation, the Talent Agencies Act.
AB 884 supplemented the Act for agencies with a law for services. The California State Senate summarized it by saying it "regulates advance-fee talent services, including the contents of contracts with artists, and the posting of surety bond" (Chapter 626, Statutes of 1999).
When Assembly Bill 884 was signed, it became Labor Code 1701 and was called the "Advance-Fee Talent Service" law.
The Advance-Fee Talent Service (Labor Code 1701) is modeled on the Talent Agencies Act (Labor Code 1700).
Similarities Between Talent Agencies Act and Advance-Fee Talent Service Law
Labor Code 1700 is the Talent Agencies Act.
They closely resemble each other in several ways, including registering or listing artists in a database, and photos. These are two of the most popular modeling scams, which is why they were outlawed not only in the TAA, but also the AFTS. Look how similar the two labor codes are:
Talent Agencies Act
(b) As used in this chapter, "registration fee" means any charge made, or attempted to be made, to an artist for any of the following purposes:
(1) Registering or listing an applicant for employment in the entertainment industry.
(2) Letter writing.
(3) Photographs, film strips, video tapes, or other reproductions of the applicant.
(4) Costumes for the applicant.
(5) Any activity of a like nature.
Advance-Fee Talent Services Law
(e) Charge or attempt to charge, directly or indirectly, an artist for registering or listing the artist for employment in the entertainment industry or as a customer of the advance-fee talent service.
(f) Charge or attempt to charge, directly or indirectly, an artist for creating or providing photographs, filmstrips, videotapes, audition tapes, demonstration reels, or other reproductions of the artist, casting or talent brochures, or other promotional materials for the artist.
Included in the similarities between the two codes is the requirement of a $10,000 bond. This is essentially an insurance policy for the aspiring models and talent. If the scam company fails to meet its financial obligations, disappears, or declares bankruptcy, victims of the scam can access through the State that $10,000.
While both the talent agency and a talent service must pay the same advance fee of $10,000 before they open their doors for business, an advance-fee talent service does not require a license, whereas the talent agency does.
Still, the regulations for advance-fee talent services are very strict. There is a significantly long list of the types of services which are banned, and there are very specific contract requirements. In addition, penalties for violations are severe; the person responsible for the violations can be arrested and go to jail.
Labor Code 1701 is Chapter 4.5 of the California Labor Code and has six Articles:
While this Labor Code is still fairly new, it was already revised. Sheila Kuehl admitted there was an unintentional drafting error resulting in a overly broad definition of an advance-fee talent service, which meant some people like modeling photographers were an advance-fee talent service, and therefore would require posting a $10,000 bond.
An Editor's note in the Entertainment Law Reporter picked up on the problem before the law was enacted:
It was not what the California legislature actually intended, so the California Senate therefore announced AB 2860 (Kuehl-D), legislation for talent services which "Narrows the definition of an advance-fee talent service" (Chapter 878, Statutes of 2000).
The Association of Talent Agents reported:
The new law did not totally delete the above activities from regulation; it simply deleted them from the "Definition" section of the regulation, as opposed to the list of "Prohibited Acts."
The "Definition" section (Article 1) at 1701-1701.2 now reads:
The "Prohibited Acts" section (Article 5) at 1701.12 still reads:
Even though the error was corrected, and the definition adjusted, the prohibited acts, which include fees for photos, remained the same, because they were the core of the Bill and the primary target of the original legislation.
The intent was to prohibit the scams by unscrupulous individuals who simply tried to get around the Talent Agencies Act by saying they were "not a talent agency," and therefore were not subject to regulation.
The AFTS law effectively stops anyone or any business from applying the cliché disclaimer "We are not a talent agency." That statement has now lost virtually all its legal relevance. It does not mean the talent service is not doing something illegal, and it does not prevent the company or its leader(s) from being prosecuted.
The first four sections of Labor Code 1701.12 target fraud. An advance-fee talent service, or its agent or employee, may not do any of the following:
The following sections forbid specific types of services which have been common modeling and talent scams, including registration fees, modeling photography scams, advertising fees, modeling seminars and modeling schools:
The last two sections address the conspiracy modeling scams such as split-fee photography scams where scam agencies in the past referred aspiring models to one photographer with whom they had a secret business relationship. It could include commissions for scouts and schools which are secretly paid to talk aspiring models into attending expensive modeling conventions.
Whereas the preceding entertainment industry Labor Code for talent agencies gave original jurisdiction regarding Talent Agencies Act violations to the Division of Labor Standards Enforcement of the California Labor Commission, violations of the AFTS labor code can be dealt with by a District Attorney.
There have already been a few cases where Californians were indicted for violations of the Advance-Fee Talent Services Labor Code.
On February 28, 2003, the Morgan Hill Times reported ("DA files complaint against modeling agency") the Santa Clara County District Attorney's Office filed a criminal complaint against Mary Reyes Valencia, also known as Reje Valencia and Maria Lopez, "charging her with four counts of grand theft and 18 counts of violations of the Advance-Fee Talent Service law."
Mercury News reported the same story ("Police say model agency illegally took fees," February 14, 2003):
The report went on to say the Advance-Fee Talent Service law was "designed to deal with businesses that accept money up front for services that are to be provided later," according to Deputy District Attorney Robin Wakshull.
The news reports did not spell out exactly what offenses resulted in the "18 counts of violations of the Advance-Fee Talent Service law." The alleged "four counts of grand theft" presumably relate to the money paid in advance for photos by those who "did not receive photos after the photo session" or "never received a photo session."
Although there may have been violations of the Talent Agencies Act, the DA did not specify there were any violations of this sort, perhaps to keep the issue under their jurisdiction, not the DLSE.
The Remedies section (Article 6) of the AFTS Labor Code at 1701.15 provides: "The Attorney General, any district attorney, or any city attorney may institute an action for a violation of this chapter."
The reported claims by the aspiring models they were led to believe Models International would get them work, because the company pretended it was a talent agency, appears to be a violation of Labor Code 1701.12 (d) which says an advance-fee talent company cannot "make any false promise or representation, by choice of name or otherwise, that the advance-fee talent service is a talent agency or will procure or attempt to procure employment or engagements for the artist as an artist."
Initial indications are the defendant violated Labor Code 1701.12 (f) which says a talent company cannot "charge or attempt to charge, directly or indirectly, an artist for creating or providing photographs."
The third obvious offence the company made was a violation of Labor Code 1701.12 (h) which says an AFTS cannot "charge or attempt to charge, directly or indirectly, an artist for providing lessons, coaching, or similar training for the artist."
The whole operation of Models International looks much like a typical modeling school scam and a modeling photography scam. These are the most common types of modeling scams, but Labor Code 1701 completely shuts them down.
There really are not very many services for which a talent company can charge aspiring models in advance, essentially about four. But the most obvious two are modeling schools and modeling photos. Unfortunately, however, it is not particularly difficult to convince young people or their parents to pay in advance for either of these, and to pay thousands of dollars for them.
The other two types of talent services besides modeling schools and modeling photos which a talent company can effectively charge aspiring models in advance with minimal persuasion are modeling conventions and online comp cards. These two are very similar. The basic idea of both is exactly the same: exposure. Online comp cards function as a modeling convention whose purpose is to present potential models to successful modeling agents.
But is it illegal for a talent company to charge residents of California in advance for the talent service of modeling conventions and online comp cards?
A reading of the AFTS Labor Code prompted the writing of the following letter to a California talent company which was charging upfront fees to aspiring models for their internet promotion service.
March 9, 2003
Not too long ago, I was asked if [Talent Company] is a scam. Then I decided to take a closer look at your company's business purpose and business model. So I visited your website at [Talent Company].com.
On your legal web page, you said, in a Section 20, entitled, "Advance Fee Talent Service":
"[Talent Company] is an advance-fee talent service as defined in section 1701 of the California Labor Code."
The California Labor Code, Section 1701.12, says, "An advance-fee talent service, or its agent or employee, may not do any of the following:
Your website, [Talent Company].com, clearly defines the purpose of your business is promotion for models: "[Talent Company] offers the ultimate in exposure to the modeling industry via its online model database."
Section 1701.12 (e) of the Labor Code bans registering or listing talent. Obviously they are talking about a database. You called your website a database.
For this model promotion using photographs on your website database, the website says you charge an advance monthly fee: $19.95 for "Amateur" and $40.00 for "Pro," plus a "Setup Fee."
Section (f) of the Labor Code says you cannot charge or attempt to charge, directly or indirectly, an artist for creating or providing photographs. But your website does exactly that. You charge people for promotional photographs.
If there was any doubt, the Labor Code clarifies the issue, saying you cannot charge for "other reproductions of the artist," or "other promotional materials for the artist."
How could your business model which displays digital reproductions of the artists as promotional photographs in an online database therefore not be a clear violation of the California Labor Code?
Is [Talent Company] bonded in the State of California as required by the Labor Code?
The California Labor Commission issued a statement recently saying a company very much like yours (online photo database promotion) is violating the State Labor Code.
How exactly is your company different from [Talent Company] whose big buzzword is "exposure"?
The AFTS law was passed, as noted earlier, in 2000. For several years before the law was passed, the internet had been viable for commerce, and some companies or individuals had already charged consumers for putting their pictures on the internet for "exposure" or to be "discovered."
But since the law was passed in 2000, any model or talent promotion company which has charged advance fees to consumers in California for promoting them with photos online, as a talent manager, has been breaking the law.
More than likely, most all of the people doing business online are not aware they are breaking the law. Since they are not in California, are not very involved in the entertainment or modeling industry, and the law was not communicated widely at the time or since it was passed, they are probably unaware their business is illegal for one state.
This of course raises the issue of jurisdiction. Apparently the overriding issue is where the contract is signed. If the contract is signed in California, the company must abide by, and is subject to, the laws of California.
It is not clear what, if any, advance-fee talent service companies can stay in business with a viable and legal business model in the State of California. When you take away photos, schools, etc., everything banned by the State, what is left? What is there to offer aspiring models and actors which they need or want?
For those who are willing to try, for the surety bond they have to pony up $10,000 -- money they may never see again -- and then create contracts according to very strict regulations.
First and foremost, there must be an agreement or contract in writing. Labor Code 1701.4: "Every contract or agreement between an artist and an advance-fee talent service for an advance fee shall be in writing."
For those unfamiliar with upfront fee scams, legal contracts in California offer a final warning, and intuitively offer directions in case the service company turns out to be another scam: