S.B. 147

1

DIVISION OF CONSUMER PROTECTION
2 AMENDMENTS
3 2006 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Dan R. Eastman
6 House Sponsor: Roger E. Barrus
7
8 LONG TITLE
9 General Description:
10 This bill addresses various provisions administered by the Division of Consumer
11 Protection.
12 Highlighted Provisions:
13 This bill:
14 . increases the maximum amount of an administrative fine under Title 13, Chapter
15 15, Business Opportunity Disclosure Act;
16 . expands the definition of a credit services organization under Title 13, Chapter 21,
17 Credit Services Organizations Act;
18 . increases the maximum amount of an administrative fine under Title 13, Chapter
19 21, Credit Services Organizations Act;
20 . narrows the definition of a health spa under Title 13, Chapter 23, Health Spa
21 Services Protection Act;
22 . clarifies an exemption from bond requirements under Title 13, Chapter 23, Health
23 Spa Services Protection Act;
24 . eliminates references limiting an exemption from Title 13, Chapter 34, Utah
25 Postsecondary Proprietary School Act, to Utah schools;
26 . clarifies an exemption under Title 13, Chapter 34, Utah Postsecondary Proprietary
27 School Act, for aviation training; and

28 . makes technical changes.
29 Monies Appropriated in this Bill:
30 None
31 Other Special Clauses:
32 This bill provides an immediate effective date.
33 Utah Code Sections Affected:
34 AMENDS:
35 13-15-6, as last amended by Chapter 85, Laws of Utah 1995
36 13-21-2, as last amended by Chapter 55, Laws of Utah 2004
37 13-21-8, as last amended by Chapter 83, Laws of Utah 1995
38 13-23-2, as last amended by Chapter 18, Laws of Utah 2005
39 13-23-6, as last amended by Chapter 18, Laws of Utah 2005
40 13-34-105, as last amended by Chapter 242, Laws of Utah 2005
41 REPEALS:
42 13-25a-110, as enacted by Chapter 263, Laws of Utah 2003
43
44 Be it enacted by the Legislature of the state of Utah:
45 Section 1. Section 13-15-6 is amended to read:
46 13-15-6. Failure to file disclosures -- Relief where seller fails to comply with
47 chapter -- Relief where division granted judgment or injunction -- Administrative fines.
48 (1) If a seller fails to file the disclosures required under Section 13-15-4 , or fails after
49 demand by the division to file the disclosure within 15 days, the division, consistent with
50 Section 13-2-5 , shall begin adjudicative proceedings and shall issue a cease and desist order.
51 (2) Any purchaser of a business opportunity from a seller who does not comply with
52 this chapter is entitled, in an appropriate court of competent jurisdiction, to rescission of the
53 contract, to an award of a reasonable attorney's fee and costs of court in an action to enforce the
54 right of rescission, and to the amount of actual damages or $2,000, whichever is greater.
55 (3) In the event the division is granted judgment or injunctive relief in an appropriate
56 court of competent jurisdiction, the division, in addition to any other relief, is entitled to an
57 award of reasonable attorney's fees, costs of court, and investigative fees.
58 (4) (a) In addition to other penalties under this chapter, and to its other enforcement

59 powers under Title 13, Chapter 2, Division of Consumer Protection, the division director may
60 impose an administrative fine of up to [$1,000] $2,500 for each violation of this chapter.
61 (b) All money received through administrative fines imposed under this section shall
62 be deposited in the Consumer Protection Education and Training Fund created by Section
63 13-2-8 .
64 Section 2. Section 13-21-2 is amended to read:
65 13-21-2. Definitions -- Exemptions.
66 As used in this chapter:
67 (1) "Buyer" means an individual who is solicited to purchase or who purchases the
68 services of a credit services organization.
69 (2) "Credit reporting agency" means a person [that] who, for a monetary fee, dues, or
70 on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of
71 assembling or evaluating consumer credit information or other information on consumers for
72 the purpose of furnishing consumer reports to third persons.
73 (3) (a) "Credit services organization" means a person who, with respect to the
74 extension of credit by others, sells, provides, or performs, or represents that the person can or
75 will sell, provide, or perform, in return for the payment of money or other valuable
76 consideration any of the following services:
77 (i) improving a buyer's credit record, history, or rating;
78 (ii) obtaining an extension of credit for a buyer;
79 (iii) providing advice, assistance, instruction, or instructional materials to a buyer with
80 regard to either Subsection (3)(a)(i) or (ii);
81 (iv) providing debt reduction or debt management plans;
82 (v) [represent] representing itself or its employee as a debt professional or credit
83 counselor; or
84 (vi) [negotiate] negotiating with a buyer's creditor.
85 (b) "Credit services organization" does not include:
86 (i) a person authorized to make loans or extensions of credit under the laws of this state
87 or the United States who is subject to regulation and supervision by this state or the United
88 States and who derives at least 35% of the person's income from making loans and extensions
89 of credit;

90 (ii) a depository institution:
91 (A) as defined in Section 7-1-103 ; or
92 (B) that is regulated or supervised by the Federal Deposit Insurance Corporation and
93 the National Credit Union Association;
94 (iii) a person licensed as a real estate broker by this state if the person is acting within
95 the course and scope of that license;
96 (iv) a person licensed to practice law in this state if:
97 (A) the person renders the services described in Subsection (3)(a) within the course and
98 scope of the person's practice as an attorney; and
99 (B) the services described in Subsection (3)(a) are incidental to the person's practice as
100 an attorney;
101 (v) a broker-dealer registered with the Securities and Exchange Commission or the
102 Commodity Futures Trading Commission if the broker-dealer is acting within the course and
103 scope of that regulation; or
104 (vi) a credit reporting agency if the services described in Subsection (3)(a) are
105 incidental to the credit reporting agency's services.
106 (4) "Extension of credit" means the right to defer payment of debt or to incur debt and
107 defer its payment, offered or granted primarily for personal, family, or household purposes.
108 Section 3. Section 13-21-8 is amended to read:
109 13-21-8. Burden of proving exception -- Penalties -- Court's criminal and
110 equitable jurisdiction -- Prosecution.
111 (1) (a) Any waiver by a buyer of any part of this chapter is void.
112 (b) Any attempt by a credit services organization to have a buyer waive rights given by
113 this chapter is a violation of this chapter.
114 (2) In any proceeding involving this chapter, the burden of proving an exemption or an
115 exception from a definition is upon the person claiming the exemption or exception.
116 (3) (a) Any person who violates this chapter is guilty of a class A misdemeanor.
117 (b) Any district court of this state has jurisdiction to restrain and enjoin the violation of
118 this chapter.
119 (4) The attorney general, any county attorney, any district attorney, or any city attorney
120 may prosecute misdemeanor actions or institute injunctive or civil proceedings, or both, under

121 this chapter.
122 (5) The remedies, duties, prohibitions, and penalties of this chapter are not exclusive
123 and are in addition to all other causes of action, remedies, and penalties provided by law.
124 (6) (a) In addition to other penalties under this section, the division director may issue a
125 cease and desist order and impose an administrative fine of up to [$1,000] $2,500 for each
126 violation of this chapter.
127 (b) All money received through administrative fines imposed under this section shall
128 be deposited in the Consumer Protection Education and Training Fund created by Section
129 13-2-8 .
130 Section 4. Section 13-23-2 is amended to read:
131 13-23-2. Definitions.
132 As used in this chapter:
133 (1) "Consumer" means a purchaser of health spa services for valuable consideration.
134 (2) "Division" means the Division of Consumer Protection.
135 (3) (a) "Health spa" means any person, partnership, joint venture, corporation,
136 association, or other entity that, for a charge or fee, provides as one of its primary purposes
137 services or facilities that are purported to assist patrons to improve their physical condition or
138 appearance through:
139 (i) aerobic conditioning;
140 (ii) strength training;
141 (iii) fitness training;
142 (iv) yoga training;
143 (v) pilates training; or
144 (vi) other exercise.
145 (b) "Health spa" includes any establishment designated:
146 (i) as a "health spa";
147 (ii) as a "spa";
148 (iii) as an "exercise gym";
149 (iv) as a "health studio";
150 (v) as a "health club";
151 (vi) as a "personal training facility";

152 (vii) as a "yoga facility";
153 (viii) as a "pilates facility"; or
154 (ix) with any other similar terms.
155 (c) "Health spa" does not include:
156 (i) any facility operated by a licensed physician at which the physician engages in the
157 practice of medicine;
158 (ii) any facility operated by a [health care provider,] hospital, intermediate care facility,
159 or skilled nursing care facility;
160 (iii) any public or private school, college, or university;
161 (iv) any facility owned or operated by the state or its political subdivisions; [or]
162 (v) any facility owned or operated by the United States or its political subdivisions[.];
163 or
164 (vi) instruction offered by an individual if:
165 (A) the individual offering the instruction does not utilize another individual as an
166 employee or independent contractor; and
167 (B) a patron is not granted the use of a facility containing exercise equipment.
168 (4) "Health spa services" means any service provided by a health spa, including athletic
169 facilities, equipment, and instruction.
170 Section 5. Section 13-23-6 is amended to read:
171 13-23-6. Exemptions from bond, letter of credit, or certificate of deposit
172 requirement.
173 A health spa that offers no paid-in-full membership, but only memberships paid for by
174 installment contracts is exempt from the application of [Section] Subsections 13-23-5 (2)
175 through (5) if:
176 (1) each contract contains the following clause: "If this health spa ceases operation and
177 fails to offer an alternate location within five miles, no further payments under this contract
178 shall be due to anyone, including any purchaser of any note associated with or contained in this
179 contract.";
180 (2) all payments due under each contract, including down payments, enrollment fees,
181 membership fees, or any other payments to the health spa, are in equal monthly installments
182 spread over the entire term of the contract; and

183 (3) the term of each contract is clearly stated and is not capable of being extended.
184 Section 6. Section 13-34-105 is amended to read:
185 13-34-105. Exempted institutions.
186 (1) This chapter does not apply to the following institutions:
187 (a) a Utah institution directly supported, to a substantial degree, with funds provided
188 by:
189 (i) the state;
190 (ii) a local school district; or
191 (iii) other Utah governmental subdivision;
192 (b) an institution that offers instruction exclusively at or below the 12th grade level;
193 (c) a lawful enterprise that offers only professional review programs, such as C.P.A.
194 and bar examination review and preparation courses;
195 (d) a [Utah] private, postsecondary educational institution that is owned, controlled,
196 operated, or maintained by a bona fide church or religious denomination, which is exempted
197 from property taxation under the laws of this state;
198 (e) subject to Subsection (3), a [Utah] school or institution that is accredited by a
199 regional or national accrediting agency recognized by the United States Department of
200 Education;
201 (f) subject to Subsection (4), a business organization, trade or professional association,
202 fraternal society, or labor union that:
203 (i) sponsors or conducts courses of instruction or study predominantly for bona fide
204 employees or members; and
205 (ii) does not, in advertising, describe itself as a school;
206 (g) an institution that exclusively offers general education courses or instruction solely
207 remedial, avocational, nonvocational, or recreational in nature, that does not:
208 (i) advertise occupation objectives; or
209 (ii) grant educational credentials;
210 (h) an institution that offers only workshops or seminars:
211 (i) lasting no longer than three calendar days; and
212 (ii) for which academic credit is not awarded;
213 (i) an institution that offers programs:

214 (i) in barbering, cosmetology, real estate, or insurance[, or flying]; and
215 (ii) that are regulated and approved by a state or federal governmental agency; [and]
216 (j) an education provider certified by the Division of Real Estate under Section
217 61-2c-103 [.];
218 (k) an institution that offers aviation training if the institution:
219 (i) (A) is approved under Part 141, Federal Aviation Regulations, 14 C.F.R. Chapter
220 141; or
221 (B) provides aviation training under Part 61, Federal Aviation Regulations, 14 C.F.R.
222 Chapter 61; and
223 (ii) exclusively offers aviation training that a student fully receives within 24 hours
224 after the student pays any tuition, fee, or other charge for the aviation training; and
225 (l) an institution that provides emergency medical services training if all of the
226 institution's instructors, course coordinators, and courses are approved by the Department of
227 Health.
228 (2) (a) If available evidence suggests that an exempt institution under this section is not
229 in compliance with the standards of registration under this chapter and applicable division
230 rules, the division shall contact the institution and, if appropriate, the state or federal
231 government agency to request corrective action.
232 (b) Subsection (2)(a) does not apply to an institution exempted under Subsection (1)(e).
233 (3) An institution, branch, extension, or facility operating within the state that is
234 affiliated with an institution operating in another state must be separately approved by the
235 affiliate's regional or national accrediting agency to qualify for the exemption described in
236 Subsection (1)(e).
237 (4) For purposes of Subsection (1)(f), a business organization, trade or professional
238 association, fraternal society, or labor union is considered to be conducting the course
239 predominantly for bona fide employees or members if it hires a majority of the persons who:
240 (a) successfully complete its course of instruction or study with a reasonable degree of
241 proficiency; and
242 (b) apply for employment with that same entity.
243 Section 7. Repealer.
244 This bill repeals:

245 Section 13-25a-110, Advisory group.
246 Section 8. Effective date.
247 If approved by two-thirds of all the members elected to each house, this bill takes effect
248 upon approval by the governor, or the day following the constitutional time limit of Utah
249 Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
250 the date of veto override.




Legislative Review Note
as of 12-13-05 10:12 AM

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