S.B. 245 Enrolled

CONSUMER PROTECTION AMENDMENTS
2001 GENERAL SESSION
STATE OF UTAH
Sponsor: Mike Dmitrich
This act modifies the Commerce and Trade Code. The act amends the definition of a
deceptive act or practice by a supplier. The act amends the definition of an assisted
marketing plan. The act adjusts the bonding requirements for credit services organizations
and health spa facilities.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
13-11-4, as last amended by Chapter 21, Laws of Utah 1999
13-15-2, as last amended by Chapter 85, Laws of Utah 1995
13-21-3, as last amended by Chapter 124, Laws of Utah 1999
13-23-5, as last amended by Chapter 89, Laws of Utah 1995
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 13-11-4 is amended to read:
13-11-4. Deceptive act or practice by supplier.
(1) A deceptive act or practice by a supplier in connection with a consumer transaction
violates this chapter whether it occurs before, during, or after the transaction.
(2) Without limiting the scope of Subsection (1), a supplier commits a deceptive act or
practice if the supplier knowingly or intentionally:
(a) indicates that the subject of a consumer transaction has sponsorship, approval,
performance characteristics, accessories, uses, or benefits, if it has not;
(b) indicates that the subject of a consumer transaction is of a particular standard, quality,
grade, style, or model, if it is not;
(c) indicates that the subject of a consumer transaction is new, or unused, if it is not, or has
been used to an extent that is materially different from the fact;
(d) indicates that the subject of a consumer transaction is available to the consumer for a
reason that does not exist;

(e) indicates that the subject of a consumer transaction has been supplied in accordance with
a previous representation, if it has not;
(f) indicates that the subject of a consumer transaction will be supplied in greater quantity
than the supplier intends;
(g) indicates that replacement or repair is needed, if it is not;
(h) indicates that a specific price advantage exists, if it does not;
(i) indicates that the supplier has a sponsorship, approval, or affiliation the supplier does not
have;
(j) indicates that a consumer transaction involves or does not involve a warranty, a
disclaimer of warranties, particular warranty terms, or other rights, remedies, or obligations, if the
representation is false;
(k) indicates that the consumer will receive a rebate, discount, or other benefit as an
inducement for entering into a consumer transaction in return for giving the supplier the names of
prospective consumers or otherwise helping the supplier to enter into other consumer transactions,
if receipt of the benefit is contingent on an event occurring after the consumer enters into the
transaction;
(l) after receipt of payment for goods or services, fails to ship the goods or furnish the
services within the time advertised or otherwise represented or, if no specific time is advertised or
represented, fails to ship the goods or furnish the services within 30 days, unless within the
applicable time period the supplier provides the buyer with the option to either cancel the sales
agreement and receive a refund of all previous payments to the supplier or to extend the shipping
date to a specific date proposed by the supplier, but any refund shall be mailed or delivered to the
buyer within ten business days after the seller receives written notification from the buyer of the
buyer's right to cancel the sales agreement and receive the refund;
(m) fails to furnish a notice of the purchaser's right to cancel a direct solicitation sale within
three business days of the time of purchase if the sale is made other than at the supplier's established
place of business pursuant to the supplier's personal contact, whether through mail, electronic mail,
facsimile transmission, telephone, or [personal contact] any other form of direct solicitation and if

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the sale price exceeds $25, unless the supplier's cancellation policy is communicated to the buyer and
the policy offers greater rights to the buyer than this Subsection (2)(m), which notice shall be a
conspicuous statement written in dark bold at least 12 point type, on the first page of the purchase
documentation, and shall read as follows: "YOU, THE BUYER, MAY CANCEL THIS
CONTRACT AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY (or time
period reflecting the supplier's cancellation policy but not less than three business days) AFTER
THE DATE OF THE TRANSACTION OR RECEIPT OF THE PRODUCT, WHICHEVER IS
LATER.";
(n) promotes, offers, or grants participation in a pyramid scheme as defined under Title 76,
Chapter 6a, Pyramid Scheme Act;
(o) represents that the funds or property conveyed in response to a charitable solicitation will
be donated or used for a particular purpose or will be donated to or used by a particular organization,
if the representation is false; [or]
(p) if a consumer indicates his intention of making a claim for a motor vehicle repair against
his motor vehicle insurance policy:
(i) commences the repair without first giving the consumer oral and written notice of:
(A) the total estimated cost of the repair; and
(B) the total dollar amount the consumer is responsible to pay for the repair, which dollar
amount may not exceed the applicable deductible or other copay arrangement in the consumer's
insurance policy; or
(ii) requests or collects from a consumer an amount that exceeds the dollar amount a
consumer was initially told he was responsible to pay as an insurance deductible or other copay
arrangement for a motor vehicle repair under Subsection (2)(p)(i), even if that amount is less than
the full amount the motor vehicle insurance policy requires the insured to pay as a deductible or other
copay arrangement, unless:
(A) the consumer's insurance company denies that coverage exists for the repair, in which
case, the full amount of the repair may be charged and collected from the consumer; or
(B) the consumer misstates, before the repair is commenced, the amount of money the

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insurance policy requires the consumer to pay as a deductible or other copay arrangement, in which
case, the supplier may charge and collect from the consumer an amount that does not exceed the
amount the insurance policy requires the consumer to pay as a deductible or other copay
arrangement[.];
(q) includes in any contract, receipt, or other written documentation of a consumer
transaction, or any addendum to any contract, receipt, or other written documentation of a consumer
transaction, any confession of judgment or any waiver of any of the rights to which a consumer is
entitled under this chapter; or
(r) charges a consumer for a consumer transaction that has not previously been agreed to by
the consumer.
Section 2. Section 13-15-2 is amended to read:
13-15-2. Definitions.
As used in this chapter:
(1) (a) "Assisted marketing plan" means the sale or lease of any products, equipment,
supplies, or services that are sold to the purchaser upon payment of an initial required consideration
of $300 or more for the purpose of enabling the purchaser to start a business, and in which the seller
represents:
(i) that the seller will provide locations or assist the purchaser in finding locations for the
use or operation of vending machines, racks, display cases, or other similar devices, or currency
operated amusement machines or devices, on premises neither owned nor leased by the purchaser
or seller;
(ii) that the seller will purchase any or all products made, produced, fabricated, grown, or
modified by the purchaser, using in whole or in part the supplies, services, or chattels sold to the
purchaser;
(iii) that the seller will provide the purchaser with a guarantee that the purchaser will receive
income from the assisted marketing plan that exceeds the price paid for the assisted marketing plan,
or repurchase any of the products, equipment, supplies, or chattels supplied by the seller if the
purchaser is dissatisfied with the assisted marketing plan; or

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(iv) that upon payment by the purchaser of a fee or sum of money, which exceeds $300 to
the seller, the seller will provide a sales program or marketing program that will enable the purchaser
to derive income from the assisted marketing plan that exceeds the price paid for the marketing
plan[, but Subsection (1)(a)(iv) does not apply to the sale of a sales program or marketing program
made in conjunction with the licensing of a registered trademark or service mark].
(b) "Assisted marketing plan" does not include:
(i) the sale of an ongoing business when the owner of that business sells and intends to sell
only that one assisted marketing plan;
(ii) not-for-profit sale of sales demonstration equipment, materials, or samples for a total
price of $300 or less; or
(iii) the sale of a package franchise or a product franchise defined by and in compliance with
Federal Trade Commission rules governing franchise and business opportunity ventures[, if the seller
does not make any representation defined in Subsections (1)(a)(i), (ii), (iii), or (iv)].
(c) As used in Subsection (1)(a)(iii) "guarantee" means a written agreement, signed by the
purchaser and seller, disclosing the complete details and any limitations or exceptions of the
agreement.
(2) "Business opportunity" means an assisted marketing plan subject to this chapter.
(3) "Division" means the Division of Consumer Protection of the Department of Commerce.
(4) (a) "Initial required consideration" means the total amount a purchaser is obligated to pay
under the terms of the assisted marketing plan, either prior to or at the time of delivery of the
products, equipment, supplies, or services, or within six months of the commencement of operation
of the assisted marketing plan by the purchaser. If payment is over a period of time, "initial required
consideration" means the sum of the down payment and the total monthly payments.
(b) "Initial required consideration" does not mean the not-for-profit sale of sales
demonstration equipment, materials, or supplies for a total price of less than $300.
(5) "Person" means any natural person, corporation, partnership, organization, association,
trust, or any other legal entity.
(6) "Purchaser" means a person who becomes obligated to pay for an assisted marketing

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plan.
(7) "Registered trademark" or "service mark" means a trademark, trade name, or service
mark registered with the United States Patent and Trademark Office, or Utah, or the state of
incorporation if a corporation.
(8) "Seller" means a person who sells or offers to sell an assisted marketing plan.
Section 3. Section 13-21-3 is amended to read:
13-21-3. Credit services organizations -- Prohibitions.
(1) A credit services organization, its salespersons, agents, and representatives, and
independent contractors who sell or attempt to sell the services of a credit services organization may
not do any of the following:
(a) conduct any business regulated by this chapter without first:
(i) securing a certificate of registration from the division; and
(ii) unless exempted under Section 13-21-4 , posting a bond, letter of credit, or certificate of
deposit with the division in the amount of $100,000;
(b) make a false statement, or fail to state a material fact, in connection with an application
for registration with the division;
(c) charge or receive any money or other valuable consideration prior to full and complete
performance of the services the credit services organization has agreed to perform for the buyer
[unless the credit services organization meets the requirements of Subsection (1)(a)(ii)];
(d) dispute or challenge, or assist a person in disputing or challenging an entry in a credit
report prepared by a consumer reporting agency without a factual basis for believing and obtaining
a written statement for each entry from the person stating that that person believes that the entry
contains a material error or omission, outdated information, inaccurate information, or unverifiable
information;
(e) charge or receive any money or other valuable consideration solely for referral of the
buyer to a retail seller who will or may extend credit to the buyer, if the credit that is or will be
extended to the buyer is upon substantially the same terms as those available to the general public;
(f) make, or counsel or advise any buyer to make, any statement that is untrue or misleading

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and that is known, or that by the exercise of reasonable care should be known, to be untrue or
misleading, to a credit reporting agency or to any person who has extended credit to a buyer or to
whom a buyer is applying for an extension of credit, with respect to a buyer's creditworthiness, credit
standing, or credit capacity;
(g) make or use any untrue or misleading representations in the offer or sale of the services
of a credit services organization or engage, directly or indirectly, in any act, practice, or course of
business that operates or would operate as fraud or deception upon any person in connection with
the offer or sale of the services of a credit services organization; and
(h) transact any business as a credit services organization, as defined in Section 13-21-2 ,
without first having registered with the division by paying an annual fee set pursuant to Section
63-38-3.2 and filing proof that it has obtained a bond or letter of credit as required by Subsection (1).
(2) (a) A bond, letter of credit from a Utah depository, or certificate of deposit posted with
the division shall be used to cover the losses of any person arising from a violation of this chapter
by the posting credit services organization. A bond, letter of credit, or certificate of deposit may also
be used to satisfy administrative fines and civil damages arising from any enforcement action against
the posting credit service organization.
(b) A bond, letter of credit, or certificate of deposit shall remain in force:
(i) until replaced by a bond, letter of credit, or certificate of deposit of identical or superior
coverage; or
(ii) for one year after the credit servicing organization notifies the division in writing that
it has ceased all activities regulated by this chapter.
Section 4. Section 13-23-5 is amended to read:
13-23-5. Registration -- Bond, letter of credit, or certificate of deposit required --
Penalties.
(1) (a) (i) It is unlawful for any health spa facility to operate in this state unless the facility
is registered with the division.
(ii) Registration is effective for one year. If the health spa facility renews its registration,
the registration shall be renewed at least 30 days prior to its expiration.

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(iii) The division shall provide by rule for the form, content, application process, and renewal
process of the registration.
(b) Each health spa registering in this state shall designate a registered agent for receiving
service of process. The registered agent shall be reasonably available from 8 a.m. until 5 p.m. during
normal working days.
(c) The division shall charge and collect a fee for registration under guidelines provided in
Section 63-38-3.2 .
(2) (a) Each health spa shall obtain and maintain:
(i) a performance bond issued by a surety authorized to transact surety business in this state;
(ii) an irrevocable letter of credit issued by a financial institution authorized to do business
in this state; or
(iii) a certificate of deposit.
(b) The bond, letter of credit, or certificate of deposit shall be payable to the division for the
benefit of any consumer who incurs damages as the result of:
(i) the health spa's violation of this chapter; or
(ii) as the result of the health spa's going out of business or relocating and failing to offer an
alternate location within ten miles.
(c) The division may recover from the bond, letter of credit, or certificate of deposit the costs
of collecting and distributing funds under this section, up to 10% of the face value of the bond, letter
of credit, or certificate of deposit but only if the consumers have fully recovered their damages first.
The total liability of the issuer of the bond, letter of credit, or certificate of deposit may not exceed
the amount of the bond, letter of credit, or certificate of deposit. The health spa shall maintain a
bond, letter of credit, or certificate of deposit in force for one year after it notifies the division in
writing that it has ceased all activities regulated by this chapter.
(d) A health spa providing services at more than one location shall comply with the
requirements of Subsection (2)(a) for each separate location.
(e) The division may impose a fine against a health spa that fails to comply with the
requirements of Subsection (2)(a) of up to $100 per day that the health spa remains out of

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compliance. All penalties received shall be deposited into the Consumer Protection Education and
Training Fund created in Section 13-2-8 .
(3) The minimum principal amount of the bond, letter of credit, or certificate of credit
required under Subsection (2) shall be based on the number of unexpired contracts for health spa
services to which the health spa is a party, in accordance with the following schedule:
Principal Amount of Number of Contracts
Bond, Letter of Credit, [with an Unexpired Term]
or Certificate of Deposit [Exceeding 90 Days]
$15,000 500 or fewer
35,000 501 to 1,500
50,000 1,500 to 3,000
75,000 3,001 or more
(4) Each health spa shall obtain the bond, letter of credit, or certificate of deposit and furnish
a certified copy of the bond, letter of credit, or certificate of deposit to the division prior to selling,
offering or attempting to sell, soliciting the sale of, or becoming a party to any contract to provide
health spa services. A health spa is considered to be in compliance with this section only if the proof
provided to the division shows that the bond, letter of credit, or certificate of credit is current.
(5) Each health spa shall maintain accurate records of the bond, letter of credit, or certificate
of credit and of any payments made, due, or to become due to the issuer and shall open the records
to inspection by the division at any time during normal business hours.
(6) If a health spa changes ownership, ceases operation, discontinues facilities, or relocates
and fails to offer an alternate location within ten miles within 30 days after its closing, the health spa
is subject to the requirements of this section as if it were a new health spa coming into being at the
time the health spa changed ownership. The former owner may not release, cancel, or terminate the
owner's liability under any bond, letter of credit, or certificate of deposit previously filed with the
division, unless:
(a) the new owner has filed a new bond, letter of credit, or certificate of deposit for the
benefit of consumers covered under the previous owner's bond, letter of credit, or certificate of

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deposit; or
(b) the former owner has refunded all unearned payments to consumers.
(7) If a health spa ceases operation or relocates and fails to offer an alternative location
within ten miles, the health spa shall provide the division with 45 days prior notice.

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