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H.B. 186

             1     

CONSUMER PROTECTION AMENDMENTS

             2     
2005 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Sheryl L. Allen

             5     
             6      LONG TITLE
             7      General Description:
             8          This bill modifies provisions of the Commerce and Trade Code administered by the
             9      Division of Consumer Protection.
             10      Highlighted Provisions:
             11          This bill:
             12          .    allows the Consumer Protection Education and Training Fund to earn interest;
             13          .    increases the amount that may remain in the Consumer Protection Education and
             14      Training Fund at the end of the fiscal year;
             15          .    requires a supplier to honor a warranty;
             16          .    requires that an organization be exempt or register before making a charitable
             17      solicitation that originates in Utah, is received in Utah, or is made through business
             18      operations in Utah;
             19          .    modifies the definition of a health spa for purposes of the Health Spa Services
             20      Protection Act;
             21          .    provides for payment of a fee by a health spa for failing to properly file a
             22      registration application or renewal;    
             23          .    clarifies that a health spa shall calculate its surety requirement based on all the spa's
             24      unexpired contracts;
             25          .    modifies the maximum distance from the original location to which a health spa
             26      may relocate in order to be exempt from certain requirements;
             27          .    allows the Division of Consumer Protection to pursue administrative orders and


             28      fines for violations of the Health Spa Services Protection Act;
             29          .    increases the maximum administrative fine in the Telephone and Facsimile
             30      Solicitation Act to $2,500;
             31          .    removes a criminal penalty from the Telephone and Facsimile Solicitation Act;
             32          .    prohibits a telephone solicitation to a person who has requested not to receive calls
             33      from that telephone solicitor;
             34          .    modifies exemptions within the Telephone and Facsimile Solicitation Act;
             35          .    modifies definitions within the Telephone Fraud Prevention Act;
             36          .    requires a telephone soliciting business to register if the business makes telephone
             37      solicitations that originate in Utah, or are received in Utah, or if the business
             38      conducts business operations in Utah;
             39          .    modifies penalties under the Telephone Fraud Prevention Act;
             40          .    requires a telephone solicitor to orally advise a buyer of the buyer's recision rights;
             41      and
             42          .    makes technical changes.
             43      Monies Appropriated in this Bill:
             44          None
             45      Other Special Clauses:
             46          This bill provides an immediate effective date.
             47      Utah Code Sections Affected:
             48      AMENDS:
             49          13-2-8, as last amended by Chapter 256, Laws of Utah 2002
             50          13-11-4, as last amended by Chapter 55, Laws of Utah 2004
             51          13-22-5, as last amended by Chapter 210, Laws of Utah 2001
             52          13-23-2, as last amended by Chapter 89, Laws of Utah 1995
             53          13-23-3, as last amended by Chapter 89, Laws of Utah 1995
             54          13-23-5, as last amended by Chapter 196, Laws of Utah 2001
             55          13-23-6, as last amended by Chapter 89, Laws of Utah 1995
             56          13-23-7, as last amended by Chapter 89, Laws of Utah 1995
             57          13-25a-105, as enacted by Chapter 26, Laws of Utah 1996
             58          13-25a-106, as last amended by Chapter 263, Laws of Utah 2003


             59          13-25a-111, as last amended by Chapter 263, Laws of Utah 2004
             60          13-26-2, as last amended by Chapter 55, Laws of Utah 2004
             61          13-26-3, as last amended by Chapter 122, Laws of Utah 2002
             62          13-26-8, as last amended by Chapter 26, Laws of Utah 1995
             63          13-26-11, as last amended by Chapter 77, Laws of Utah 1998
             64      ENACTS:
             65          13-25a-107.2, Utah Code Annotated 1953
             66     
             67      Be it enacted by the Legislature of the state of Utah:
             68          Section 1. Section 13-2-8 is amended to read:
             69           13-2-8. Consumer Protection Education and Training Fund.
             70          (1) There is created a restricted special revenue fund known as the "Consumer
             71      Protection Education and Training Fund."
             72          (2) (a) Unless otherwise provided by a chapter listed in Section 13-2-1 , all money not
             73      distributed as consumer restitution that is received by the division from administrative fines
             74      and settlements, from criminal restitution, or from civil damages, forfeitures, penalties, and
             75      settlements when the division receives the monies on its own behalf and not in a representative
             76      capacity, shall be deposited into the fund.
             77          (b) Any portion of the fund may be maintained in an interest-bearing account.
             78          (c) All interest earned on fund monies shall be deposited into the fund.
             79          (3) Notwithstanding Title 63, Chapter 38, Budgetary Procedures Act, the division may
             80      use the fund with the approval of the executive director of the Department of Commerce in a
             81      manner consistent with the duties of the division under this chapter for:
             82          (a) consumer protection education for members of the public;
             83          (b) equipment for and training of division personnel;
             84          (c) publication of consumer protection brochures, laws, policy statements, or other
             85      material relevant to the division's enforcement efforts; and
             86          (d) investigation and litigation undertaken by the division.
             87          (4) If the balance in the fund exceeds [$75,000] $100,000 at the close of any fiscal
             88      year, the excess shall be transferred to the General Fund.
             89          Section 2. Section 13-11-4 is amended to read:


             90           13-11-4. Deceptive act or practice by supplier.
             91          (1) A deceptive act or practice by a supplier in connection with a consumer transaction
             92      violates this chapter whether it occurs before, during, or after the transaction.
             93          (2) Without limiting the scope of Subsection (1), a supplier commits a deceptive act or
             94      practice if the supplier knowingly or intentionally:
             95          (a) indicates that the subject of a consumer transaction has sponsorship, approval,
             96      performance characteristics, accessories, uses, or benefits, if it has not;
             97          (b) indicates that the subject of a consumer transaction is of a particular standard,
             98      quality, grade, style, or model, if it is not;
             99          (c) indicates that the subject of a consumer transaction is new, or unused, if it is not, or
             100      has been used to an extent that is materially different from the fact;
             101          (d) indicates that the subject of a consumer transaction is available to the consumer for
             102      a reason that does not exist;
             103          (e) indicates that the subject of a consumer transaction has been supplied in accordance
             104      with a previous representation, if it has not;
             105          (f) indicates that the subject of a consumer transaction will be supplied in greater
             106      quantity than the supplier intends;
             107          (g) indicates that replacement or repair is needed, if it is not;
             108          (h) indicates that a specific price advantage exists, if it does not;
             109          (i) indicates that the supplier has a sponsorship, approval, or affiliation the supplier
             110      does not have;
             111          (j) (i) indicates that a consumer transaction involves or does not involve a warranty, a
             112      disclaimer of warranties, particular warranty terms, or other rights, remedies, or obligations, if
             113      the representation is false; or
             114          (ii) fails to honor a warranty or a particular warranty term;
             115          (k) indicates that the consumer will receive a rebate, discount, or other benefit as an
             116      inducement for entering into a consumer transaction in return for giving the supplier the names
             117      of prospective consumers or otherwise helping the supplier to enter into other consumer
             118      transactions, if receipt of the benefit is contingent on an event occurring after the consumer
             119      enters into the transaction;
             120          (l) after receipt of payment for goods or services, fails to ship the goods or furnish the


             121      services within the time advertised or otherwise represented or, if no specific time is advertised
             122      or represented, fails to ship the goods or furnish the services within 30 days, unless within the
             123      applicable time period the supplier provides the buyer with the option to [either]:
             124          (i) cancel the sales agreement and receive a refund of all previous payments to the
             125      supplier if the refund is mailed or delivered to the buyer within ten business days after the day
             126      on which the seller receives written notification from the buyer of the buyer's intent to cancel
             127      the sales agreement and receive the refund; or [to]
             128          (ii) extend the shipping date to a specific date proposed by the supplier[, but any refund
             129      shall be mailed or delivered to the buyer within ten business days after the seller receives
             130      written notification from the buyer of the buyer's right to cancel the sales agreement and
             131      receive the refund];
             132          (m) except as provided in Subsection (3)(b), fails to furnish a notice meeting the
             133      requirements of Subsection (3)(a) of the purchaser's right to cancel a direct solicitation sale
             134      within three business days of the time of purchase if:
             135          (i) the sale is made other than at the supplier's established place of business pursuant to
             136      the supplier's personal contact, whether through mail, electronic mail, facsimile transmission,
             137      telephone, or any other form of direct solicitation; and [if]
             138          (ii) the sale price exceeds $25[, unless the supplier's cancellation policy is
             139      communicated to the buyer and the policy offers greater rights to the buyer than this Subsection
             140      (2)(m), which notice shall be a conspicuous statement written in dark bold at least 12 point
             141      type, on the first page of the purchase documentation, and shall read as follows: "YOU, THE
             142      BUYER, MAY CANCEL THIS CONTRACT AT ANY TIME PRIOR TO MIDNIGHT OF
             143      THE THIRD BUSINESS DAY (or time period reflecting the supplier's cancellation policy but
             144      not less than three business days) AFTER THE DATE OF THE TRANSACTION OR
             145      RECEIPT OF THE PRODUCT, WHICHEVER IS LATER."];
             146          (n) promotes, offers, or grants participation in a pyramid scheme as defined under Title
             147      76, Chapter 6a, Pyramid Scheme Act;
             148          (o) represents that the funds or property conveyed in response to a charitable
             149      solicitation will be donated or used for a particular purpose or will be donated to or used by a
             150      particular organization, if the representation is false;
             151          (p) if a consumer indicates [his] the consumer's intention of making a claim for a motor


             152      vehicle repair against [his] the consumer's motor vehicle insurance policy:
             153          (i) commences the repair without first giving the consumer oral and written notice of:
             154          (A) the total estimated cost of the repair; and
             155          (B) the total dollar amount the consumer is responsible to pay for the repair, which
             156      dollar amount may not exceed the applicable deductible or other copay arrangement in the
             157      consumer's insurance policy; or
             158          (ii) requests or collects from a consumer an amount that exceeds the dollar amount a
             159      consumer was initially told [he] the consumer was responsible to pay as an insurance
             160      deductible or other copay arrangement for a motor vehicle repair under Subsection (2)(p)(i),
             161      even if that amount is less than the full amount the motor vehicle insurance policy requires the
             162      insured to pay as a deductible or other copay arrangement, unless:
             163          (A) the consumer's insurance company denies that coverage exists for the repair, in
             164      which case, the full amount of the repair may be charged and collected from the consumer; or
             165          (B) the consumer misstates, before the repair is commenced, the amount of money the
             166      insurance policy requires the consumer to pay as a deductible or other copay arrangement, in
             167      which case, the supplier may charge and collect from the consumer an amount that does not
             168      exceed the amount the insurance policy requires the consumer to pay as a deductible or other
             169      copay arrangement;
             170          (q) includes in any contract, receipt, or other written documentation of a consumer
             171      transaction, or any addendum to any contract, receipt, or other written documentation of a
             172      consumer transaction, any confession of judgment or any waiver of any of the rights to which a
             173      consumer is entitled under this chapter;
             174          (r) charges a consumer for a consumer transaction that has not previously been agreed
             175      to by the consumer; or
             176          (s) solicits or enters into a consumer transaction with a person who lacks the mental
             177      ability to comprehend the nature and consequences of:
             178          (i) the consumer transaction; or
             179          (ii) the person's ability to benefit from the consumer transaction.
             180          (3) (a) The notice required by Subsection (2)(m) shall:
             181          (i) be a conspicuous statement written in dark bold with at least 12 point type on the
             182      first page of the purchase documentation; and


             183          (ii) read as follows: "YOU, THE BUYER, MAY CANCEL THIS CONTRACT AT
             184      ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY (or time period
             185      reflecting the supplier's cancellation policy but not less than three business days) AFTER THE
             186      DATE OF THE TRANSACTION OR RECEIPT OF THE PRODUCT, WHICHEVER IS
             187      LATER".
             188          (b) A supplier is exempt from the requirements of Subsection (2)(m) if the supplier's
             189      cancellation policy:
             190          (i) is communicated to the buyer; and
             191          (ii) offers greater rights to the buyer than Subsection (2)(m).
             192          Section 3. Section 13-22-5 is amended to read:
             193           13-22-5. Registration required.
             194          (1) (a) It is unlawful for any organization [that is not] to engage in an activity described
             195      in Subsection (1)(b) unless the organization is:
             196          (i) exempt under Section 13-22-8 [to knowingly solicit, request, promote, advertise, or
             197      sponsor the solicitation in this state of any contribution for a charitable purpose, unless the
             198      organization is]; or
             199          (ii) registered with the division in accordance with this chapter.
             200          (b) Unless an organization meets the requirements of Subsection (1)(a), the
             201      organization may not knowingly solicit, request, promote, advertise, or sponsor a charitable
             202      solicitation if the charitable solicitation:
             203          (i) originates in Utah;
             204          (ii) is received in Utah; or
             205          (iii) is caused to be made through business operations in Utah.
             206          (2) Subsection (1) does not prohibit an organization from receiving an unsolicited
             207      contribution.
             208          (3) It is unlawful for any professional fund raiser to knowingly solicit, request,
             209      promote, advertise, or sponsor the solicitation in this state of any contribution for a charitable
             210      organization, whether or not the charitable organization is exempt under Section 13-22-8 ,
             211      unless the professional fund raiser and any nonexempt charitable organization that is benefitted
             212      are registered with the division.
             213          (4) It is unlawful for any professional fund raising counsel or consultant to knowingly


             214      plan, manage, advise, counsel, consult, or prepare material for, or with respect to, the
             215      solicitation in this state of a contribution for a charitable organization, whether or not the
             216      charitable organization is exempt under Section 13-22-8 , unless the professional fund raising
             217      counsel or consultant and any nonexempt charitable organization that is benefitted are
             218      registered with the division.
             219          Section 4. Section 13-23-2 is amended to read:
             220           13-23-2. Definitions.
             221          As used in this chapter:
             222          (1) "Consumer" means a purchaser of health spa services for valuable consideration.
             223          (2) "Division" means the Division of Consumer Protection.
             224          (3) (a) "Health spa" means any person, partnership, joint venture, corporation,
             225      association, or other entity that, for a charge or fee, provides as one of its primary purposes
             226      services or facilities that are purported to assist patrons to improve their physical condition or
             227      appearance through [change in weight, weight control, treatment, dieting,]:
             228          (i) aerobic conditioning[,];
             229          (ii) strength training[,];
             230          (iii) fitness training;
             231          (iv) yoga training;
             232          (v) pilates training; or
             233          (vi) other exercise. [It]
             234          (b) "Health spa" includes any establishment designated [as a "reducing salon,"]:
             235          (i) as a "health spa[,]";
             236          (ii) as a "spa[,]";
             237          (iii) as an "exercise gym[,]";
             238          (iv) as a "health studio[,]";
             239          (v) as a "health club[,]";
             240          (vi) as a "personal training facility";
             241          (vii) as a "yoga facility";
             242          (viii) as a "pilates facility"; or [by]
             243          (ix) with any other similar terms.
             244          [(b)] (c) "Health spa" does not include:


             245          (i) any facility operated by a licensed physician at which the physician engages in the
             246      practice of medicine;
             247          (ii) any facility operated by a health care provider, hospital, intermediate care facility,
             248      or skilled nursing care facility;
             249          (iii) any public or private school, college, or university;
             250          (iv) any facility owned or operated by the state or its political subdivisions; or
             251          (v) any facility owned or operated by the United States or its political subdivisions.
             252          (4) "Health spa services" means any service provided by a health spa, including athletic
             253      facilities, equipment, and instruction.
             254          Section 5. Section 13-23-3 is amended to read:
             255           13-23-3. Contracts for health spa services.
             256          (1) Any contract for the sale of health spa services shall be in writing. The written
             257      contract shall constitute the entire agreement between the consumer and the health spa.
             258          (2) The health spa shall provide the consumer with a fully completed copy of the
             259      contract required by Subsection (1) at the time of its execution. The copy shall show:
             260          (a) the date of the transaction;
             261          (b) the name and address of the health spa; and
             262          (c) the name, address, and telephone number of the consumer.
             263          (3) (a) A contract may not have a term in excess of 36 months, but the contract may
             264      provide that the consumer may exercise an option to renew the term after its expiration.
             265          (b) Except for a lifetime membership sold prior to May 1, 1995, a health spa may not
             266      offer a lifetime membership.
             267          (4) The contract or an attachment to it shall clearly state any rules of the health spa that
             268      apply to:
             269          (a) the consumer's use of its facilities and services; and
             270          (b) cancellation and refund policies of the health spa.
             271          (5) The contract shall specify which equipment or facility of the health spa:
             272          (a) is omitted from the contract's coverage; or [which]
             273          (b) may be changed at the health spa's discretion.
             274          (6) The contract shall clearly state that the consumer has a three-day [recision right
             275      provided in Section 13-23-4 .] period after the day on which the contract is executed to rescind


             276      the contract.
             277          Section 6. Section 13-23-5 is amended to read:
             278           13-23-5. Registration -- Bond, letter of credit, or certificate of deposit required --
             279      Penalties.
             280          (1) (a) (i) It is unlawful for any health spa facility to operate in this state unless the
             281      facility is registered with the division.
             282          (ii) Registration is effective for one year. If the health spa facility renews its
             283      registration, the registration shall be renewed at least 30 days prior to its expiration.
             284          (iii) The division shall provide by rule for the form, content, application process, and
             285      renewal process of the registration.
             286          (b) Each health spa registering in this state shall designate a registered agent for
             287      receiving service of process. The registered agent shall be reasonably available from 8 a.m.
             288      until 5 p.m. during normal working days.
             289          (c) The division shall charge and collect a fee for registration under guidelines
             290      provided in Section 63-38-3.2 .
             291          (d) If an applicant fails to file a registration application or renewal by the due date, or
             292      files an incomplete registration application or renewal, the applicant shall pay a fee of $25 for
             293      each month or part of a month after the date on which the registration application or renewal
             294      were due to be filed, in addition to the registration fee described in Subsection (1)(c).
             295          (2) (a) Each health spa shall obtain and maintain:
             296          (i) a performance bond issued by a surety authorized to transact surety business in this
             297      state;
             298          (ii) an irrevocable letter of credit issued by a financial institution authorized to do
             299      business in this state; or
             300          (iii) a certificate of deposit.
             301          (b) The bond, letter of credit, or certificate of deposit shall be payable to the division
             302      for the benefit of any consumer who incurs damages as the result of:
             303          (i) the health spa's violation of this chapter; or
             304          (ii) [as the result of] the health spa's going out of business or relocating and failing to
             305      offer an alternate location within ten miles.
             306          (c) (i) The division may recover from the bond, letter of credit, or certificate of deposit


             307      the costs of collecting and distributing funds under this section, up to 10% of the face value of
             308      the bond, letter of credit, or certificate of deposit but only if the consumers have fully recovered
             309      their damages first.
             310          (ii) The total liability of the issuer of the bond, letter of credit, or certificate of deposit
             311      may not exceed the amount of the bond, letter of credit, or certificate of deposit.
             312          (iii) The health spa shall maintain a bond, letter of credit, or certificate of deposit in
             313      force for one year after it notifies the division in writing that it has ceased all activities
             314      regulated by this chapter.
             315          (d) A health spa providing services at more than one location shall comply with the
             316      requirements of Subsection (2)(a) for each separate location.
             317          (e) The division may impose a fine against a health spa that fails to comply with the
             318      requirements of Subsection (2)(a) of up to $100 per day that the health spa remains out of
             319      compliance. All penalties received shall be deposited into the Consumer Protection Education
             320      and Training Fund created in Section 13-2-8 .
             321          (3) (a) The minimum principal amount of the bond, letter of credit, or certificate of
             322      credit required under Subsection (2) shall be based on the number of unexpired contracts for
             323      health spa services to which the health spa is a party, in accordance with the following
             324      schedule:
             325      Principal Amount of                     Number of Contracts
             326      Bond, Letter of Credit,                
             327      or Certificate of Deposit                
             328          $15,000                                500 or fewer
             329           35,000                                501 to 1,500
             330           50,000                                1,500 to 3,000
             331           75,000                                3,001 or more
             332          (b) A health spa that is not exempt under Section 13-23-6 shall comply with
             333      Subsection (3)(a) with respect to all of the health spa's unexpired contracts for health spa
             334      services, regardless of whether a portion of those contracts satisfy the criteria in Section
             335      13-23-6 .
             336          (4) Each health spa shall obtain the bond, letter of credit, or certificate of deposit and
             337      furnish a certified copy of the bond, letter of credit, or certificate of deposit to the division prior


             338      to selling, offering or attempting to sell, soliciting the sale of, or becoming a party to any
             339      contract to provide health spa services. A health spa is considered to be in compliance with
             340      this section only if the proof provided to the division shows that the bond, letter of credit, or
             341      certificate of credit is current.
             342          (5) Each health spa shall:
             343          (a) maintain accurate records of the bond, letter of credit, or certificate of credit and of
             344      any payments made, due, or to become due to the issuer; and [shall]
             345          (b) open the records to inspection by the division at any time during normal business
             346      hours.
             347          (6) If a health spa changes ownership, ceases operation, discontinues facilities, or
             348      relocates and fails to offer an alternate location within [ten] five miles within 30 days after its
             349      closing, the health spa is subject to the requirements of this section as if it were a new health
             350      spa coming into being at the time the health spa changed ownership. The former owner may
             351      not release, cancel, or terminate the owner's liability under any bond, letter of credit, or
             352      certificate of deposit previously filed with the division, unless:
             353          (a) the new owner has filed a new bond, letter of credit, or certificate of deposit for the
             354      benefit of consumers covered under the previous owner's bond, letter of credit, or certificate of
             355      deposit; or
             356          (b) the former owner has refunded all unearned payments to consumers.
             357          (7) If a health spa ceases operation or relocates and fails to offer an alternative location
             358      within [ten] five miles, the health spa shall provide the division with 45 days prior notice.
             359          Section 7. Section 13-23-6 is amended to read:
             360           13-23-6. Exemptions from bond, letter of credit, or certificate of deposit
             361      requirement.
             362          A health spa [which] that offers no paid-in-full membership, but only memberships
             363      paid for by installment contracts is exempt from the application of Section 13-23-5 if:
             364          (1) each contract contains the following clause: "If this health spa ceases operation and
             365      fails to offer an alternate location within [ten] five miles, no further payments under this
             366      contract shall be due to anyone, including any purchaser of any note associated with or
             367      contained in this contract.";
             368          (2) all payments due under each contract, including down payments, enrollment fees,


             369      membership fees, or any other payments to the health spa, are in equal monthly installments
             370      spread over the entire term of the contract; and
             371          (3) the term of each contract is clearly stated and is not capable of being extended.
             372          Section 8. Section 13-23-7 is amended to read:
             373           13-23-7. Enforcement -- Costs and attorney's fees -- Penalties.
             374          (1) The division may, on behalf of any consumer or on its own behalf, file an action for
             375      injunctive relief, damages, or both to enforce this chapter. In addition to any relief granted, the
             376      division is entitled to an award for reasonable attorney's fees, court costs, and reasonable
             377      investigative expenses.
             378          (2) (a) A person who willfully violates any provision of this chapter, either by failing to
             379      comply with any requirement or by doing any act prohibited in this chapter, is guilty of a class
             380      B misdemeanor. Each day the violation is committed or permitted to continue constitutes a
             381      separate punishable offense.
             382          (b) In the case of a second offense, the person is guilty of a class A misdemeanor.
             383          (c) In the case of three or more offenses, the person is guilty of a third degree felony.
             384          (3) (a) In addition to any other penalty available under this chapter, a person who
             385      violates this chapter is subject to:
             386          (i) a cease and desist order; and
             387          (ii) an administrative fine of up to $2,500 for each separate violation that is not a
             388      violation described in Subsection 13-23-5 (2)(e).
             389          (b) All administrative fines collected under this chapter shall be deposited in the
             390      Consumer Protection Education and Training Fund created in Section 13-2-8 .
             391          Section 9. Section 13-25a-105 is amended to read:
             392           13-25a-105. Penalties -- Administrative and criminal.
             393          (1) Any person who violates this chapter is subject to:
             394          (a) a cease and desist order; and
             395          (b) an administrative fine of not less than $100 or more than [$1,000] $2,500 for each
             396      separate violation.
             397          (2) All administrative fines collected under this chapter shall be deposited in the
             398      Consumer Protection Education and Training Fund created in Section 13-2-8 .
             399          [(3) Any person who intentionally violates this chapter is guilty of a class


             400      A misdemeanor and may be fined up to $2,500. A person intentionally violates this chapter if
             401      the violation occurs after the division, attorney general, or a district or county attorney notifies
             402      the person by certified mail that he is in violation of this chapter.]
             403          Section 10. Section 13-25a-106 is amended to read:
             404           13-25a-106. Enforcement.
             405          (1) The division shall investigate and assess administrative fines for violations of this
             406      chapter.
             407          (2) (a) Upon referral from the division, the attorney general or any district or county
             408      attorney may:
             409          (i) bring an action for temporary or permanent injunctive or other relief in any court of
             410      competent jurisdiction for any violation of this chapter[. The court may,];
             411          (ii) upon entry of final judgment, award restitution when appropriate to any person
             412      suffering loss because of a violation of this part if proof of loss is submitted to the satisfaction
             413      of the court; or
             414          [(ii)] (iii) bring an action in any court of competent jurisdiction for the collection of
             415      penalties authorized under Subsection 13-25a-105 (1)[; or].
             416          [(iii) bring an action under Subsection 13-25a-105 (3).]
             417          (b) In an action under Subsection (2)(a), the attorney general or any district or county
             418      attorney may recover costs, including investigative costs and attorney fees, from any violator of
             419      this chapter.
             420          Section 11. Section 13-25a-107.2 is enacted to read:
             421          13-25a-107.2. Requests to a specific telephone solicitor.
             422          A telephone solicitor may not make or cause to be made a telephone solicitation to a
             423      person who has informed the telephone solicitor, either in writing or orally, that the person
             424      does not wish to receive a telephone call from the telephone solicitor.
             425          Section 12. Section 13-25a-111 is amended to read:
             426           13-25a-111. Exemptions.
             427          Notwithstanding any other provision of this chapter, [the provisions of] Sections
             428      13-25a-103 and 13-25a-108 do not apply to:
             429          (1) a telephone call made [by or on behalf of a charitable organization] for a charitable
             430      purpose as defined in Section 13-22-2 ; [or]


             431          (2) a charitable solicitation as defined in Section 13-22-2 ; or
             432          [(2)] (3) a person [that] who holds a license or registration:
             433          (a) under Title 31A, Insurance Code;
             434          (b) issued by the Division of Real Estate established in Section 61-2-5 ; or
             435          (c) issued by the National Association of Securities Dealers.
             436          Section 13. Section 13-26-2 is amended to read:
             437           13-26-2. Definitions.
             438          As used in this chapter, unless the context otherwise requires:
             439          (1) "Continuity plan" means a shipment, with the prior express consent of the buyer, at
             440      regular intervals of similar special-interest products. A continuity plan is distinguished from a
             441      subscription arrangement by no binding commitment period or purchase amount.
             442          (2) "Division" means the Division of Consumer Protection.
             443          (3) "Fictitious personal name" means a name other than an individual's true name. An
             444      "individual's true name" is the name taken at birth unless changed by operation of law or by
             445      civil action.
             446          (4) "Material statement" or "material fact" means information that a person of ordinary
             447      intelligence or prudence would consider important in deciding whether or not to accept an offer
             448      extended through a telephone solicitation.
             449          (5) "Premium" means a gift, bonus, prize, award, certificate, or other document by
             450      which a prospective purchaser is given a right, chance, or privilege to purchase or receive
             451      goods or services with a stated or represented value of $25 or more as an inducement to a
             452      prospective purchaser to purchase other goods or services.
             453          (6) "Subscription arrangements," "standing order arrangements," "supplements," and
             454      "series arrangements" mean products or services provided, with the prior express request or
             455      consent of the buyer, for a specified period of time at a price dependent on the duration of
             456      service and to complement an initial purchase.
             457          (7) (a) "Telephone solicitation," "sale," "selling," or "solicitation of sale" means:
             458          (i) a sale or solicitation of goods or services in which:
             459          (A) (I) the seller solicits the sale over the telephone;
             460          (II) the purchaser's agreement to purchase is made over the telephone; and
             461          (III) the purchaser, over the telephone, pays for or agrees to commit to payment for


             462      goods or services prior to or upon receipt by the purchaser of the goods or services;
             463          (B) the solicitor, not exempt under Section 13-26-4 , induces a prospective purchaser
             464      over the telephone, to make and keep an appointment that directly results in the purchase of
             465      goods or services by the purchaser that would not have occurred without the telephone
             466      solicitation and inducement by the solicitor;
             467          (C) the seller offers or promises a premium to a prospective purchaser if:
             468          (I) the seller induces the prospective purchaser to initiate a telephone contact with the
             469      telephone soliciting business; and
             470          (II) the resulting solicitation meets the requirements of Subsection (7)(a); or
             471          (D) the solicitor solicits a charitable donation involving the exchange of any premium,
             472      prize, gift, ticket, subscription, or other benefit in connection with any appeal made for a
             473      charitable purpose by an organization that is not otherwise exempt under Subsection
             474      13-26-4 (2)(b)(iv); or
             475          (ii) a telephone solicitation as defined in Section 13-25a-102 .
             476          (b) A solicitation of sale or telephone solicitation is considered complete when made,
             477      whether or not the person receiving the solicitation agrees to the sale or to make a charitable
             478      donation.
             479          (8) "Telephone soliciting business" means a sole proprietorship, partnership, limited
             480      liability company, corporation, or other association of individuals engaged in a common effort
             481      to [solicit sales regulated under this chapter] conduct telephone solicitations.
             482          (9) "Telephone solicitor" or "solicitor" means a person, partnership, limited liability
             483      company, corporation, or other entity that:
             484          [(a) makes, places, or receives telephone calls for the purpose of selling or solicitation
             485      of sales as defined in Subsection (7) over the telephone, whether the calls originate in Utah or
             486      are received in Utah; or]
             487          [(b) is defined as a telephone solicitor in Section 13-25a-102 .]
             488          (a) makes a telephone solicitation; or
             489          (b) causes a telephone solicitation to be made.
             490          Section 14. Section 13-26-3 is amended to read:
             491           13-26-3. Registration and bond required.
             492          (1) (a) Each telephone soliciting business [engaging in telephone solicitation or sales in


             493      this state] shall register annually with the [Division of Consumer Protection prior to doing or
             494      continuing to do business in this state] division before engaging in telephone solicitations if:
             495          (i) the telephone soliciting business engages in telephone solicitations that:
             496          (A) originate in Utah; or
             497          (B) are received in Utah; or
             498          (ii) the telephone soliciting business conducts any business operations in Utah.
             499          (b) The registration form shall designate an agent residing in this state who is
             500      authorized by the telephone soliciting business to receive service of process in any action
             501      brought by this state or a resident of this state.
             502          (c) If a telephone soliciting business fails to designate an agent to receive service or
             503      fails to appoint a successor to the agent[,]:
             504          (i) the business' application for an initial or renewal registration shall be denied[,]; and
             505          (ii) any current registration shall be suspended until an agent is designated.
             506          (2) The division may impose an annual registration fee set pursuant to Section
             507      63-38-3.2 .
             508          (3) (a) Each telephone soliciting business engaging in telephone solicitation or sales in
             509      this state shall obtain and maintain the following security:
             510          (i) a performance bond issued by a surety authorized to transact surety business in this
             511      state;
             512          (ii) an irrevocable letter of credit issued by a financial institution authorized to do
             513      business in this state; or
             514          (iii) a certificate of deposit held in this state in a depository institution regulated by the
             515      Department of Financial Institutions.
             516          (b) The bond, letter of credit, or certificate of deposit shall be payable to the division
             517      for the benefit of any consumer who incurs damages as the result of any telephone solicitation
             518      or sales violation of this chapter.
             519          (c) The division may recover from the bond, letter of credit, or certificate of deposit
             520      investigative costs, attorneys' fees, and other costs of collecting and distributing funds under
             521      this section and the costs of promoting consumer education, but only if the consumer has first
             522      recovered full damages.
             523          (d) A telephone soliciting business shall keep a bond, certificate of deposit, or letter of


             524      credit in force for one year after it notifies the division in writing that it has ceased all activities
             525      regulated by this chapter.
             526          (e) The amount to be posted in the form of a bond, irrevocable letter of credit, or
             527      certificate of deposit shall be:
             528          (i) $25,000 if:
             529          (A) neither the telephone soliciting business nor any affiliated person has violated this
             530      chapter within three years preceding the date of the application; and
             531          (B) the telephone soliciting business has fewer than ten employees;
             532          (ii) $50,000 if:
             533          (A) neither the telephone soliciting business nor any affiliated person has violated this
             534      chapter within three years preceding the date of the application; and
             535          (B) the telephone soliciting business has ten or more employees; or
             536          (iii) $75,000 if the telephone soliciting business or any affiliated person has violated
             537      this chapter within three years preceding the date of the application.
             538          (f) For purposes of Subsection (3)(e) an "affiliated person" means a contractor,
             539      director, employee, officer, owner, or partner of the telephone soliciting business.
             540          (4) The division may establish by rule the registration requirements for telephone
             541      soliciting businesses under the terms of Title 63, Chapter 46a, Utah Administrative
             542      Rulemaking Act. An administrative proceeding conducted by the division under this chapter
             543      shall comply with the requirements of Title 63, Chapter 46b, Administrative Procedures Act.
             544          (5) The division director may revoke a registration under this section for any violation
             545      of this chapter.
             546          Section 15. Section 13-26-8 is amended to read:
             547           13-26-8. Penalties.
             548          (1) (a) Any telephone soliciting business or any person associated with a telephone
             549      soliciting business, including [but not limited to] solicitors, salespersons, agents,
             550      representatives of a solicitor, or independent contractor, who violates this chapter as a first
             551      offense is guilty of a class B misdemeanor.
             552          (b) In the case of a second offense, the person is guilty of a class A misdemeanor.
             553          (c) In the case of three or more offenses, the person is guilty of a third degree felony.
             554          (d) In addition to other penalties under this [subsection] Subsection (1), the division


             555      director may issue a cease and desist order and impose an administrative fine of up to [$1,000]
             556      $2,500 for each violation of this chapter. All money received through administrative fines
             557      imposed under this section shall be deposited in the Consumer Protection Education and
             558      Training Fund created by Section 13-2-8 .
             559          (2) Any telephone soliciting business or any person associated with a telephone
             560      soliciting business, including [but not limited to] solicitors, salespersons, agents,
             561      representatives of a solicitor, or independent contractors, who violates any provision of this
             562      chapter shall be subject to a civil penalty in a court of competent jurisdiction not exceeding
             563      [$2,000] $2,500 for each unlawful transaction.
             564          Section 16. Section 13-26-11 is amended to read:
             565           13-26-11. Prohibited practices.
             566          (1) It is unlawful for any solicitor:
             567          (a) to solicit prospective purchasers on behalf of a telephone soliciting business that is
             568      not registered with the division or exempt from registration under this chapter;
             569          (b) to use a fictitious personal name in connection with a telephone solicitation;
             570          (c) to make or cause to be made any untrue material statement, or fail to disclose a
             571      material fact necessary to make any statement made not misleading, whether in connection
             572      with a telephone solicitation or a filing with the division;
             573          (d) to make or authorize the making of any misrepresentation about its compliance
             574      with this chapter to any prospective or actual purchaser; [or]
             575          (e) to fail to refund within 30 days any amount due a purchaser who exercises the right
             576      to cancel under Section 13-26-5 [.]; or
             577          (f) to fail to orally advise a purchaser of the purchaser's right to cancel under Section
             578      13-26-5 .
             579          (2) It is unlawful for any telephone soliciting business:
             580          (a) to cause or permit any solicitor to violate any provision of this chapter; or
             581          (b) to use inmates in telephone soliciting operations where inmates have access to
             582      personal data about an individual sufficient to physically locate or contact that individual, such
             583      as names, addresses, telephone numbers, Social Security numbers, credit card information, or
             584      physical descriptions.
             585          Section 17. Effective date.


             586          If approved by two-thirds of all the members elected to each house, this bill takes effect
             587      upon approval by the governor, or the day following the constitutional time limit of Utah
             588      Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
             589      the date of veto override.




Legislative Review Note
    as of 12-20-04 2:48 PM


Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel


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