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H.B. 97






Chief Sponsor: Marie H. Poulson

Senate Sponsor: Wayne L. Niederhauser

             8      LONG TITLE
             9      General Description:
             10          This bill modifies provisions relating to deceptive practices involving consumers.
             11      Highlighted Provisions:
             12          This bill:
             13          .    provides that certain false expressions in an advertisement are deceptive acts or
             14      practices for purposes of the Utah Consumer Sales Practices Act and truth in
             15      advertising provisions.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          13-11-4, as last amended by Laws of Utah 2008, Chapter 232
             23          13-11a-3, as last amended by Laws of Utah 2009, Chapter 133
             25      Be it enacted by the Legislature of the state of Utah:
             26          Section 1. Section 13-11-4 is amended to read:
             27           13-11-4. Deceptive act or practice by supplier.

             28          (1) A deceptive act or practice by a supplier in connection with a consumer transaction
             29      violates this chapter whether it occurs before, during, or after the transaction.
             30          (2) Without limiting the scope of Subsection (1), a supplier commits a deceptive act or
             31      practice if the supplier knowingly or intentionally:
             32          (a) indicates that the subject of a consumer transaction has sponsorship, approval,
             33      performance characteristics, accessories, uses, or benefits, if it has not;
             34          (b) indicates that the subject of a consumer transaction is of a particular standard,
             35      quality, grade, style, or model, if it is not;
             36          (c) indicates that the subject of a consumer transaction is new, or unused, if it is not, or
             37      has been used to an extent that is materially different from the fact;
             38          (d) indicates that the subject of a consumer transaction is available to the consumer for
             39      a reason that does not exist[;], including any of the following reasons falsely used in an
             40      advertisement:
             41          (i) "going out of business";
             42          (ii) "bankruptcy sale";
             43          (iii) "lost our lease";
             44          (iv) "building coming down";
             45          (v) "forced out of business";
             46          (vi) "final days";
             47          (vii) "liquidation sale";
             48          (viii) "fire sale";
             49          (ix) "quitting business"; or
             50          (x) an expression similar to any of the expressions in Subsections (2)(d)(i) through
             51      (ix);
             52          (e) indicates that the subject of a consumer transaction has been supplied in accordance
             53      with a previous representation, if it has not;
             54          (f) indicates that the subject of a consumer transaction will be supplied in greater
             55      quantity than the supplier intends;
             56          (g) indicates that replacement or repair is needed, if it is not;
             57          (h) indicates that a specific price advantage exists, if it does not;
             58          (i) indicates that the supplier has a sponsorship, approval, or affiliation the supplier

             59      does not have;
             60          (j) (i) indicates that a consumer transaction involves or does not involve a warranty, a
             61      disclaimer of warranties, particular warranty terms, or other rights, remedies, or obligations, if
             62      the representation is false; or
             63          (ii) fails to honor a warranty or a particular warranty term;
             64          (k) indicates that the consumer will receive a rebate, discount, or other benefit as an
             65      inducement for entering into a consumer transaction in return for giving the supplier the names
             66      of prospective consumers or otherwise helping the supplier to enter into other consumer
             67      transactions, if receipt of the benefit is contingent on an event occurring after the consumer
             68      enters into the transaction;
             69          (l) after receipt of payment for goods or services, fails to ship the goods or furnish the
             70      services within the time advertised or otherwise represented or, if no specific time is advertised
             71      or represented, fails to ship the goods or furnish the services within 30 days, unless within the
             72      applicable time period the supplier provides the buyer with the option to:
             73          (i) cancel the sales agreement and receive a refund of all previous payments to the
             74      supplier if the refund is mailed or delivered to the buyer within 10 business days after the day
             75      on which the seller receives written notification from the buyer of the buyer's intent to cancel
             76      the sales agreement and receive the refund; or
             77          (ii) extend the shipping date to a specific date proposed by the supplier;
             78          (m) except as provided in Subsection (3)(b), fails to furnish a notice meeting the
             79      requirements of Subsection (3)(a) of the purchaser's right to cancel a direct solicitation sale
             80      within three business days of the time of purchase if:
             81          (i) the sale is made other than at the supplier's established place of business pursuant to
             82      the supplier's personal contact, whether through mail, electronic mail, facsimile transmission,
             83      telephone, or any other form of direct solicitation; and
             84          (ii) the sale price exceeds $25;
             85          (n) promotes, offers, or grants participation in a pyramid scheme as defined under Title
             86      76, Chapter 6a, Pyramid Scheme Act;
             87          (o) represents that the funds or property conveyed in response to a charitable
             88      solicitation will be donated or used for a particular purpose or will be donated to or used by a
             89      particular organization, if the representation is false;

             90          (p) if a consumer indicates the consumer's intention of making a claim for a motor
             91      vehicle repair against the consumer's motor vehicle insurance policy:
             92          (i) commences the repair without first giving the consumer oral and written notice of:
             93          (A) the total estimated cost of the repair; and
             94          (B) the total dollar amount the consumer is responsible to pay for the repair, which
             95      dollar amount may not exceed the applicable deductible or other copay arrangement in the
             96      consumer's insurance policy; or
             97          (ii) requests or collects from a consumer an amount that exceeds the dollar amount a
             98      consumer was initially told the consumer was responsible to pay as an insurance deductible or
             99      other copay arrangement for a motor vehicle repair under Subsection (2)(p)(i), even if that
             100      amount is less than the full amount the motor vehicle insurance policy requires the insured to
             101      pay as a deductible or other copay arrangement, unless:
             102          (A) the consumer's insurance company denies that coverage exists for the repair, in
             103      which case, the full amount of the repair may be charged and collected from the consumer; or
             104          (B) the consumer misstates, before the repair is commenced, the amount of money the
             105      insurance policy requires the consumer to pay as a deductible or other copay arrangement, in
             106      which case, the supplier may charge and collect from the consumer an amount that does not
             107      exceed the amount the insurance policy requires the consumer to pay as a deductible or other
             108      copay arrangement;
             109          (q) includes in any contract, receipt, or other written documentation of a consumer
             110      transaction, or any addendum to any contract, receipt, or other written documentation of a
             111      consumer transaction, any confession of judgment or any waiver of any of the rights to which a
             112      consumer is entitled under this chapter;
             113          (r) charges a consumer for a consumer transaction that has not previously been agreed
             114      to by the consumer;
             115          (s) solicits or enters into a consumer transaction with a person who lacks the mental
             116      ability to comprehend the nature and consequences of:
             117          (i) the consumer transaction; or
             118          (ii) the person's ability to benefit from the consumer transaction;
             119          (t) solicits for the sale of a product or service by providing a consumer with an
             120      unsolicited check or negotiable instrument the presentment or negotiation of which obligates

             121      the consumer to purchase a product or service, unless the supplier is:
             122          (i) a depository institution under Section 7-1-103 ;
             123          (ii) an affiliate of a depository institution; or
             124          (iii) an entity regulated under Title 7, Financial Institutions Act;
             125          (u) sends an unsolicited mailing to a person that appears to be a billing, statement, or
             126      request for payment for a product or service the person has not ordered or used, or that implies
             127      that the mailing requests payment for an ongoing product or service the person has not received
             128      or requested;
             129          (v) issues a gift certificate, instrument, or other record in exchange for payment to
             130      provide the bearer, upon presentation, goods or services in a specified amount without printing
             131      in a readable manner on the gift certificate, instrument, packaging, or record any expiration
             132      date or information concerning a fee to be charged and deducted from the balance of the gift
             133      certificate, instrument, or other record; or
             134          (w) misrepresents the geographical origin or location of the supplier's business in
             135      connection with the sale of cut flowers, flower arrangements, or floral products.
             136          (3) (a) The notice required by Subsection (2)(m) shall:
             137          (i) be a conspicuous statement written in dark bold with at least 12 point type on the
             138      first page of the purchase documentation; and
             139          (ii) read as follows: "YOU, THE BUYER, MAY CANCEL THIS CONTRACT AT
             140      ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY (or time period
             141      reflecting the supplier's cancellation policy but not less than three business days) AFTER THE
             143      LATER".
             144          (b) A supplier is exempt from the requirements of Subsection (2)(m) if the supplier's
             145      cancellation policy:
             146          (i) is communicated to the buyer; and
             147          (ii) offers greater rights to the buyer than Subsection (2)(m).
             148          (4) (a) A gift certificate, instrument, or other record that does not print an expiration
             149      date in accordance with Subsection (2)(v) does not expire.
             150          (b) A gift certificate, instrument, or other record that does not include printed
             151      information concerning a fee to be charged and deducted from the balance of the gift

             152      certificate, instrument, or other record is not subject to the charging and deduction of the fee.
             153          (c) Subsections (2)(v) and (4)(b) do not apply to a gift certificate, instrument, or other
             154      record useable at multiple, unaffiliated sellers of goods or services if an expiration date is
             155      printed on the gift certificate, instrument, or other record.
             156          Section 2. Section 13-11a-3 is amended to read:
             157           13-11a-3. Deceptive trade practices enumerated -- Records to be kept -- Defenses.
             158          (1) Deceptive trade practices occur when, in the course of a person's business,
             159      vocation, or occupation that person:
             160          (a) passes off goods or services as those of another;
             161          (b) causes likelihood of confusion or of misunderstanding as to the source,
             162      sponsorship, approval, or certification of goods or services;
             163          (c) causes likelihood of confusion or of misunderstanding as to affiliation, connection,
             164      association with, or certification by another;
             165          (d) uses deceptive representations or designations of geographic origin in connection
             166      with goods or services;
             167          (e) represents that goods or services have sponsorship, approval, characteristics,
             168      ingredients, uses, benefits, or qualities that they do not have or that a person has a sponsorship,
             169      approval, status, affiliation, or connection that the person does not have;
             170          (f) represents that goods are original or new if they are deteriorated, altered,
             171      reconditioned, reclaimed, used, or second-hand;
             172          (g) represents that goods or services are of a particular standard, quality, or grade, or
             173      that goods are of a particular style or model, if they are of another;
             174          (h) disparages the goods, services, or business of another by false or misleading
             175      representation of fact;
             176          (i) advertises goods or services or the price of goods and services with intent not to sell
             177      them as advertised;
             178          (j) advertises goods or services with intent not to supply a reasonable expectable public
             179      demand, unless:
             180          (i) the advertisement clearly and conspicuously discloses a limitation of quantity; or
             181          (ii) the person issues rainchecks for the advertised goods or services;
             182          (k) makes false or misleading statements of fact concerning the reasons for, existence

             183      of, or amounts of price reductions[;], including the false use of any of the following
             184      expressions in an advertisement:
             185          (i) "going out of business";
             186          (ii) "bankruptcy sale";
             187          (iii) "lost our lease";
             188          (iv) "building coming down";
             189          (v) "forced out of business";
             190          (vi) "final days";
             191          (vii) "liquidation sale";
             192          (viii) "fire sale";
             193          (ix) "quitting business"; or
             194          (x) an expression similar to any of the expressions in Subsections (1)(k)(i) through
             195      (ix);
             196          (l) makes a comparison between the person's own sale or discount price and a
             197      competitor's nondiscounted price without clearly and conspicuously disclosing that fact;
             198          (m) without clearly and conspicuously disclosing the date of the price assessment
             199      makes a price comparison with the goods of another based upon a price assessment performed
             200      more than seven days prior to the date of the advertisement or uses in an advertisement the
             201      results of a price assessment performed more than seven days prior to the date of the
             202      advertisement without disclosing, in a print ad, the date of the price assessment, or in a radio or
             203      television ad, the time frame of the price assessment;
             204          (n) advertises or uses in a price assessment or comparison a price that is not that
             205      person's own unless this fact is:
             206          (i) clearly and conspicuously disclosed; and
             207          (ii) the representation of the price is accurate;
             208          (o) represents as independent an audit, accounting, price assessment, or comparison of
             209      prices of goods or services, when the audit, accounting, price assessment, or comparison is not
             210      independent;
             211          (p) represents, in an advertisement of a reduction from the supplier's own prices, that
             212      the reduction is from a regular price, when the former price is not a regular price as defined in
             213      Subsection 13-11a-2 (14);

             214          (q) advertises a price comparison or the result of a price assessment or comparison that
             215      uses, in any way, an identified competitor's price without clearly and conspicuously disclosing
             216      the identity of the price assessor and any relationship between the price assessor and the
             217      supplier;
             218          (r) makes a price comparison between a category of the supplier's goods and the same
             219      category of the goods of another, without randomly selecting the individual goods or services
             220      upon whose prices the comparison is based;
             221          (s) makes a comparison between similar but nonidentical goods or services unless the
             222      nonidentical goods or services are of essentially similar quality to the advertised goods or
             223      services or the dissimilar aspects are clearly and conspicuously disclosed in the advertisements;
             224      or
             225          (t) engages in any other conduct which similarly creates a likelihood of confusion or of
             226      misunderstanding.
             227          (2) (a) For purposes of Subsection (1)(i), if a specific advertised price will be in effect
             228      for less than one week from the advertisement date, the advertisement must clearly and
             229      conspicuously disclose the specific time period during which the price will be in effect.
             230          (b) For purposes of Subsection (1)(n), with respect to the price of a competitor, the
             231      price must be one at which the competitor offered the goods or services for sale in the product
             232      area at the time of the price assessment, and must not be an isolated price.
             233          (c) For purposes of Subsection (1)(o), an audit, accounting, price assessment, or
             234      comparison shall be independent if the price assessor randomly selects the goods to be
             235      compared, and the time and place of the comparison, and no agreement or understanding exists
             236      between the supplier and the price assessor that could cause the results of the assessment to be
             237      fraudulent or deceptive. The independence of an audit, accounting, or price comparison is not
             238      invalidated merely because the advertiser pays a fee for the audit, accounting, or price
             239      comparison, but is invalidated if the audit, accounting, or price comparison is done by a full or
             240      part-time employee of the advertiser.
             241          (d) Examples of a disclosure that complies with Subsection (1)(q) are:
             242          (i) "Price assessment performed by Store Z";
             243          (ii) "Price assessment performed by a certified public accounting firm"; or
             244          (iii) "Price assessment performed by employee of Store Y".

             245          (e) For the purposes of Subsection (1)(r), goods or services are randomly selected when
             246      the supplier has no advance knowledge of what goods and services will be surveyed by the
             247      price assessor, and when the supplier certifies its lack of advance knowledge by an affidavit to
             248      be retained in the supplier's records for one year.
             249          (f) (i) It is prima facie evidence of compliance with Subsection (1)(s) if:
             250          (A) the goods compared are substantially the same size; and
             251          (B) the goods compared are of substantially the same quality, which may include
             252      similar models of competing brands of goods, or goods made of substantially the same
             253      materials and made with substantially the same workmanship.
             254          (ii) It is prima facie evidence of a deceptive comparison under this section when the
             255      prices of brand name goods and generic goods are compared.
             256          (3) Any supplier who makes a comparison with a competitor's price in advertising shall
             257      maintain for a period of one year records that disclose the factual basis for such price
             258      comparisons and from which the validity of such claim can be established.
             259          (4) It is a defense to any claim of false or deceptive price representations under this
             260      chapter that a person:
             261          (a) has no knowledge that the represented price is not genuine; and
             262          (b) has made reasonable efforts to determine whether the represented price is genuine.
             263          (5) Subsections (1)(m) and (q) do not apply to price comparisons made in catalogs in
             264      which a supplier compares the price of a single item of its goods or services with those of
             265      another.
             266          (6) To prevail in an action under this chapter, a complainant need not prove
             267      competition between the parties or actual confusion or misunderstanding.
             268          (7) This chapter does not affect unfair trade practices otherwise actionable at common
             269      law or under other statutes of this state.

Legislative Review Note
    as of 1-13-10 4:17 PM

Office of Legislative Research and General Counsel

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