A.B. 627
Assembly Bill No. 627–Committee on Commerce and Labor
(On Behalf of Department of Business and
Industry—Consumer Affairs)
March 26, 2001
____________
Referred to Committee on Commerce and Labor
SUMMARY—Revises provisions relating to trade practices. (BDR 52‑554)
FISCAL NOTE: Effect on Local Government: Yes.
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EXPLANATION
– Matter in bolded italics is new; matter
between brackets [omitted material] is material to be omitted.
Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).
AN ACT relating to trade practices; expanding the definition of “deceptive trade practice” to include certain advertising practices relating to goods or services; revising the provisions governing certificates of registration issued to certain registrants by the consumer affairs division of the department of business and industry; requiring the renewal of those certificates of registration; increasing the amount of the security that certain dance studios and health clubs are required to deposit with the consumer affairs division; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section 1. Chapter 597 of NRS is hereby amended by adding thereto a
1-2 new section to read as follows:
1-3 1. In a county whose population is 400,000 or more, a person who:
1-4 (a) Is a licensee, owner or employee of a business entity that is
1-5 licensed to operate an adult cabaret, erotic dance establishment or adult
1-6 night club; and
1-7 (b) While performing duties associated with the business entity, pays
1-8 or offers to pay remuneration of any kind, including, without limitation,
1-9 cash or services, to the owner or driver of a taxicab, limousine or bus
1-10 containing 21 or fewer passengers, or to an agent of the owner or driver,
1-11 for taking or attempting to take a passenger to a location other than the
1-12 destination requested by the passenger,
1-13 is liable for a civil penalty as provided by subsection 2.
1-14 2. In any action brought pursuant to this section, if the court finds
1-15 that the licensee or owner of a business entity engaged in an act
2-1 described in subsection 1, or his employee engaged in an act described in
2-2 subsection 1, the licensee or owner is subject only to a civil penalty of:
2-3 (a) For the first violation, not less than $500 and not more than
2-4 $1,000;
2-5 (b) For the second violation, not less than $1,000 and not more than
2-6 $5,000; and
2-7 (c) For the third and subsequent violations, not less than $5,000 and
2-8 not more than $10,000.
2-9 3. If the violation of subsection 1 is the third or subsequent violation
2-10 and if:
2-11 (a) The violation was committed by the licensee or owner of the
2-12 business entity; or
2-13 (b) The violation was committed by an employee of the licensee or
2-14 owner, and the court determines that the licensee or owner knew or
2-15 should have known that the employee engaged in the act constituting the
2-16 violation,
2-17 the court may order, in writing, all applicable licensing authorities to
2-18 suspend the license of the business entity for a period of not more than 6
2-19 months.
2-20 4. Upon receiving an order from the court pursuant to subsection 3,
2-21 a licensing authority shall suspend the license of the licensee for the
2-22 period specified in the order.
2-23 5. An action for the enforcement of a civil penalty pursuant to this
2-24 section may be brought in any court of competent jurisdiction by the
2-25 district attorney of any county whose population is 400,000 or more, or
2-26 the attorney general.
2-27 6. As used in this section:
2-28 (a) “License” means a business license to operate an adult cabaret,
2-29 erotic dance establishment or adult night club.
2-30 (b) “Licensee” means the person to whom a license is issued.
2-31 (c) “Licensing authority” means a local government that licenses
2-32 adult cabarets, erotic dance establishments or adult night clubs.
2-33 Sec. 2. NRS 598.0915 is hereby amended to read as follows:
2-34 598.0915 A person engages in a “deceptive trade practice” if, in the
2-35 course of his business or occupation, he:
2-36 1. Knowingly passes off goods or services for sale or lease as those of
2-37 another[.] person.
2-38 2. Knowingly makes a false representation as to the source,
2-39 sponsorship, approval or certification of goods or services for sale or lease.
2-40 3. Knowingly makes a false representation as to affiliation, connection,
2-41 association with or certification by another[.] person.
2-42 4. Uses deceptive representations or designations of geographic origin
2-43 in connection with goods or services for sale or lease.
2-44 5. Knowingly makes a false representation as to the characteristics,
2-45 ingredients, uses, benefits, alterations or quantities of goods or services for
2-46 sale or lease or a false representation as to the sponsorship, approval,
2-47 status, affiliation or connection of a person therewith.
3-1 6. Represents that goods for sale or lease are original or new if he
3-2 knows or should know that they are deteriorated, altered, reconditioned,
3-3 reclaimed, used or secondhand.
3-4 7. Represents that goods or services for sale or lease are of a particular
3-5 standard, quality or grade, or that such goods are of a particular style or
3-6 model, if he knows or should know that they are of another[.] standard,
3-7 quality, grade, style or model.
3-8 8. Disparages the goods, services or business of another person by
3-9 false or misleading representation of fact.
3-10 9. Advertises goods or services with intent not to sell or lease them as
3-11 advertised.
3-12 10. Advertises goods or services for sale or lease with intent not to
3-13 supply reasonably expectable public demand, unless the advertisement
3-14 discloses a limitation of quantity.
3-15 11. Advertises goods or services for sale or lease at wholesale prices
3-16 with intent to sell or lease the goods or services to the general public.
3-17 12. Advertises goods or services as being available free of charge
3-18 with intent to require payment of undisclosed costs as a condition of
3-19 receiving the goods or services.
3-20 13. Advertises under the guise of obtaining sales personnel when [in
3-21 fact] the purpose is to first sell or lease goods or services to the sales
3-22 personnel applicant.
3-23 [12.] 14. Makes false or misleading statements of fact concerning the
3-24 price of goods or services for sale or lease, or the reasons for, existence of
3-25 or amounts of price reductions.
3-26 [13.] 15. Fraudulently alters any contract, written estimate of repair,
3-27 written statement of charges or other document in connection with the sale
3-28 or lease of goods or services.
3-29 [14.] 16. Knowingly makes any other false representation in a
3-30 transaction.
3-31 Sec. 3. NRS 598.0999 is hereby amended to read as follows:
3-32 598.0999 1. A person who violates a court order or injunction issued
3-33 pursuant to NRS 598.0903 to [598.0997,] 598.0999, inclusive, upon a
3-34 complaint brought by the commissioner, the director, the district attorney
3-35 of any county of this state or the attorney general shall forfeit and pay to
3-36 the state general fund a civil penalty of not more than $10,000 for each
3-37 violation. For the purpose of this section, the court issuing the order or
3-38 injunction retains jurisdiction over the action or proceeding. Such civil
3-39 penalties are in addition to any other penalty or remedy available for the
3-40 enforcement of the provisions of NRS 598.0903 to [598.0997,] 598.0999,
3-41 inclusive.
3-42 2. In any action brought pursuant to NRS 598.0903 to 598.0999,
3-43 inclusive, if the court finds that a person has willfully engaged in a
3-44 deceptive trade practice, the commissioner, the director, the district
3-45 attorney of any county in this state or the attorney general bringing the
3-46 action may recover a civil penalty not to exceed $2,500 for each violation.
3-47 3. A natural person, firm, or any officer or managing agent of any
3-48 corporation or association who knowingly and willfully engages in a
4-1 deceptive trade practice : [, other than a deceptive trade practice described
4-2 in NRS 598.992:]
4-3 (a) For the first offense, is guilty of a misdemeanor.
4-4 (b) For the second offense, is guilty of a gross misdemeanor.
4-5 (c) For the third and all subsequent offenses, is guilty of a category D
4-6 felony and shall be punished as provided in NRS 193.130.
4-7 4. Any offense which occurred within 10 years immediately preceding
4-8 the date of the principal offense or after the principal offense constitutes a
4-9 prior offense for the purposes of subsection 3 when evidenced by a
4-10 conviction, without regard to the sequence of the offenses and convictions.
4-11 5. If a person violates any provision of NRS 598.0903 to 598.0999,
4-12 inclusive, 598.100 to 598.2801, inclusive, 598.281 to 598.289, inclusive,
4-13 or 598.840 to 598.966, inclusive, [or 598.992,] fails to comply with a
4-14 judgment or order of any court in this state concerning a violation of such a
4-15 provision, or fails to comply with an assurance of discontinuance or other
4-16 agreement concerning an alleged violation of such a provision, the
4-17 commissioner or the district attorney of any county may bring an action in
4-18 the name of the State of Nevada seeking:
4-19 (a) The suspension of the person’s privilege to conduct business within
4-20 this state; or
4-21 (b) If the
defendant is a corporation, dissolution of the
corporation.
4-22 The court may grant or deny the relief sought or may order other
4-23 appropriate relief.
4-24 Sec. 4. NRS 598.2806 is hereby amended to read as follows:
4-25 598.2806 1. Each credit service organization, organization for
4-26 buying goods or services at a discount, dance studio and health club
4-27 regulated by the provisions of this chapter shall apply for registration on
4-28 the form prescribed by the division.
4-29 2. At the time of application for registration, the applicant [shall] must
4-30 pay to the division an administrative fee of $25 and deposit the required
4-31 security with the division.
4-32 3. Upon receipt of the security in the proper form and the payment of
4-33 the administrative fee required by this section, the division shall issue a
4-34 certificate of registration to the applicant. A certificate of registration [is] :
4-35 (a) Is not transferable or assignable[.] ; and
4-36 (b) Expires 1 year after it is issued.
4-37 4. A registrant must renew a certificate of registration issued
4-38 pursuant to this section before the certificate expires by submitting to the
4-39 division an application for the renewal of the certificate on a form
4-40 prescribed by the division.
4-41 Sec. 5. NRS 598.2808 is hereby amended to read as follows:
4-42 598.2808 1. The security required to be deposited by a registrant
4-43 pursuant to NRS 598.2807 must be held in trust for consumers injured by
4-44 the bankruptcy of the registrant or the registrant’s breach of any agreement
4-45 entered into in his capacity as a registrant.
4-46 2. A consumer so injured may bring and maintain an action in any
4-47 court of competent jurisdiction to recover against the security.
5-1 3. The division may bring an action for interpleader against all
5-2 claimants upon the security. If the division brings such an action, the
5-3 division shall publish notice of the action at least once each week for 2
5-4 weeks in a newspaper of general circulation in the county in which the
5-5 organization has its principal place of business. The division may deduct its
5-6 costs of the action, including the costs of the publication of the notice, from
5-7 the amount of the security. All claims against the security have equal
5-8 priority. If the security is insufficient to pay all the claims in full, the
5-9 claims must be paid pro rata. If the registrant has posted a bond with the
5-10 division, the surety is then relieved of all liability under the bond.
5-11 4. The division may, in lieu of bringing an action for interpleader
5-12 pursuant to subsection 3, conduct a hearing to determine the distribution of
5-13 the security to claimants. The division shall adopt regulations to provide
5-14 for adequate notice and the conduct of the hearing. If the registrant has
5-15 posted a bond with the division, distribution pursuant to this subsection
5-16 relieves the surety of all liability under the bond.
5-17 5. If the security is sufficient to pay all claims against the security in
5-18 full, the division may deduct from the amount of the security, the cost of
5-19 any investigation or hearing it conducted to determine the distribution of
5-20 the security.
5-21 Sec. 6. NRS 598.946 is hereby amended to read as follows:
5-22 598.946 1. [Except as otherwise provided in subsection 5, before]
5-23 Before advertising its services or conducting business in this state, the
5-24 owner of a dance studio or a health club must register pursuant to NRS
5-25 598.2806 and 598.944 and deposit security with the division pursuant to
5-26 NRS 598.2807. The security must be conditioned on compliance by the
5-27 owner with the provisions of NRS 598.940 to 598.966, inclusive, and the
5-28 terms of the contract with a buyer.
5-29 2. Except as otherwise provided in subsection 3, the amount of the
5-30 security to be deposited must be:
5-31 (a) Ten thousand dollars, if the dance studio or health club has less than
5-32 400 members;
5-33 (b) Fifteen thousand dollars, if the dance studio or health club has 400
5-34 members or more but less than 800 members;
5-35 (c) Twenty thousand dollars, if the dance studio or health club has 800
5-36 members or more but less than 1,200 members;
5-37 (d) Twenty-five thousand dollars, if the dance studio or health club has
5-38 1,200 members or more but less than 1,500 members;
5-39 (e) Thirty-five thousand dollars, if the dance studio or health club has
5-40 1,500 members or more but less than 4,000 members; [and]
5-41 (f) Fifty thousand dollars, if the dance studio or health club has 4,000
5-42 members or more but less than 25,000 members[.] ; and
5-43 (g) Two hundred and fifty thousand dollars, if the dance studio or
5-44 health club has 25,000 or more members.
5-45 3. If a dance studio or health club conducts any pre-sale of dance
5-46 lessons, the use of facilities or other services, the amount of the security
5-47 required by this section is $100,000[.] unless a greater amount is
5-48 required pursuant to paragraph (g) of subsection 2.
6-1 4. A dance studio or health club shall report to the division on a
6-2 quarterly basis the size of its membership and shall, on the basis of any
6-3 change in the size of that membership, adjust accordingly the amount of
6-4 the security deposited with the division.
6-5 5. If , on July 1, 2001, a dance studio or health club has actively
6-6 conducted business for not less than 4 consecutive years and has not
6-7 changed ownership or, in the case of a corporation, not more than 25
6-8 percent of its authorized shares have been transferred, it is not required to
6-9 deposit security with the division pursuant to NRS 598.2807. If a dance
6-10 studio or health club does not deposit such security, it shall obtain a written
6-11 acknowledgment from each member and prominently post a notice on its
6-12 premises stating that no security for refunds or reimbursement has been
6-13 deposited with the State of Nevada.
6-14 Sec. 7. NRS 598.992 is hereby repealed.
6-15 Sec. 8. 1. Notwithstanding the provisions of section 4 of this act, a
6-16 registrant that:
6-17 (a) Is doing business in this state; and
6-18 (b) Has a certificate of registration that was issued by the division
6-19 pursuant to NRS 598.2806 before October 1, 2000,
6-20 must submit to the division an application for the renewal of the certificate
6-21 of registration on a form prescribed by the division
not later than
October 1, 2001.
6-22 2. A registrant that:
6-23 (a) Is doing business in this state; and
6-24 (b) Has a certificate of registration that was issued by the division
6-25 pursuant to NRS 598.2806 on or after October 1, 2000,
6-26 must submit to the division an application for the renewal of the certificate
6-27 of registration on a form prescribed by the division not later than 1 year
6-28 after the certificate of registration was issued by the division.
6-29 3. As used in this section, “registrant” has the meaning ascribed to it in
6-30 NRS 598.2805.
6-31 Sec. 9. This act becomes effective on July 1, 2001.
6-32 TEXT OF REPEALED SECTION
6-33 598.992 Adult cabarets, erotic dance establishments and adult
6-34 night clubs in certain counties: Attempting to divert specified
6-35 passengers to unrequested destination constitutes deceptive trade
6-36 practice; penalties; suspension of license.
6-37 1. In a county whose population is 400,000 or more, a person who:
6-38 (a) Is a licensee, owner or employee of a business entity that is licensed
6-39 to operate an adult cabaret, erotic dance establishment or adult night club;
6-40 and
6-41 (b) While performing duties associated with the business entity, pays or
6-42 offers to pay remuneration of any kind, including, without limitation, cash
6-43 or services, to the owner or driver of a taxicab, limousine or bus
6-44 containing
7-1 21 or fewer passengers, or to an agent of the owner or driver, for taking or
7-2 attempting to take a passenger to a location other than the destination
7-3 requested by the passenger,
7-4 commits a deceptive trade practice for purposes of NRS 598.0903 to
7-5 598.0999, inclusive.
7-6 2. In any action brought pursuant to NRS 598.0903 to 598.0999,
7-7 inclusive, if the court finds the licensee or owner of a business entity
7-8 engaged in a deceptive trade practice described in subsection 1, or his
7-9 employee engaged in a deceptive trade practice described in subsection 1,
7-10 the licensee or owner is subject only to a civil penalty of:
7-11 (a) For the first violation, not less than $500 and not more than $1,000;
7-12 (b) For the second violation, not less than $1,000 and not more than
7-13 $5,000; and
7-14 (c) For the third and subsequent violations, not less than $5,000 and not
7-15 more than $10,000.
7-16 3. If the violation of subsection 1 is the third or greater violation and
7-17 if:
7-18 (a) The violation was committed by the licensee or owner of the
7-19 business entity; or
7-20 (b) The violation was committed by an employee of the licensee or
7-21 owner, and the director determines that the licensee or owner knew or
7-22 should have known that the employee engaged in the act constituting the
7-23 violation,
7-24 the director shall order, in writing, all applicable licensing authorities to
7-25 suspend the license of the business entity for a period of not more than 6
7-26 months.
7-27 4. Upon receiving an order from the director pursuant to subsection 3,
7-28 a licensing authority shall suspend the license of the licensee for the period
7-29 specified in the order.
7-30 5. As used in this section:
7-31 (a) “License” means a business license to operate an adult cabaret,
7-32 erotic dance establishment or adult night club.
7-33 (b) “Licensee” means the person to whom a license is issued.
7-34 (c) “Licensing authority” means a local government that licenses adult
7-35 cabarets, erotic dance establishments or adult night clubs.
7-36 H