(REPRINTED WITH ADOPTED AMENDMENTS)

 

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.

                                 Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

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 100,000 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 100,000 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 as being available free of charge

3-16  with intent to require payment of undisclosed costs as a condition of

3-17  receiving the goods or services.

3-18    12.  Advertises under the guise of obtaining sales personnel when [in

3-19  fact] the purpose is to first sell or lease goods or services to the sales

3-20  personnel applicant.

3-21    [12.] 13. Makes false or misleading statements of fact concerning the

3-22  price of goods or services for sale or lease, or the reasons for, existence of

3-23  or amounts of price reductions.

3-24    [13.] 14. Fraudulently alters any contract, written estimate of repair,

3-25  written statement of charges or other document in connection with the sale

3-26  or lease of goods or services.

3-27    [14.] 15. Knowingly makes any other false representation in a

3-28  transaction.

3-29    Sec. 3.  NRS 598.0999 is hereby amended to read as follows:

3-30    598.0999  1.  A person who violates a court order or injunction issued

3-31  pursuant to NRS 598.0903 to [598.0997,] 598.0999, inclusive, upon a

3-32  complaint brought by the commissioner, the director, the district attorney

3-33  of any county of this state or the attorney general shall forfeit and pay to

3-34  the state general fund a civil penalty of not more than $10,000 for each

3-35  violation. For the purpose of this section, the court issuing the order or

3-36  injunction retains jurisdiction over the action or proceeding. Such civil

3-37  penalties are in addition to any other penalty or remedy available for the

3-38  enforcement of the provisions of NRS 598.0903 to [598.0997,] 598.0999,

3-39  inclusive.

3-40    2.  In any action brought pursuant to NRS 598.0903 to 598.0999,

3-41  inclusive, if the court finds that a person has willfully engaged in a

3-42  deceptive trade practice, the commissioner, the director, the district

3-43  attorney of any county in this state or the attorney general bringing the

3-44  action may recover a civil penalty not to exceed $2,500 for each violation.

3-45    3.  A natural person, firm, or any officer or managing agent of any

3-46  corporation or association who knowingly and willfully engages in a

3-47  deceptive trade practice : [, other than a deceptive trade practice described

3-48  in NRS 598.992:]

3-49    (a) For the first offense, is guilty of a misdemeanor.

4-1    (b) For the second offense, is guilty of a gross misdemeanor.

4-2    (c) For the third and all subsequent offenses, is guilty of a category D

4-3  felony and shall be punished as provided in NRS 193.130.

4-4    4.  Any offense which occurred within 10 years immediately preceding

4-5  the date of the principal offense or after the principal offense constitutes a

4-6  prior offense for the purposes of subsection 3 when evidenced by a

4-7  conviction, without regard to the sequence of the offenses and convictions.

4-8    5.  If a person violates any provision of NRS 598.0903 to 598.0999,

4-9  inclusive, 598.100 to 598.2801, inclusive, 598.281 to 598.289, inclusive,

4-10  or 598.840 to 598.966, inclusive, [or 598.992,] fails to comply with a

4-11  judgment or order of any court in this state concerning a violation of such a

4-12  provision, or fails to comply with an assurance of discontinuance or other

4-13  agreement concerning an alleged violation of such a provision, the

4-14  commissioner or the district attorney of any county may bring an action in

4-15  the name of the State of Nevada seeking:

4-16    (a) The suspension of the person’s privilege to conduct business within

4-17  this state; or

4-18    (b) If the defendant is a corporation, dissolution of the

4-19  corporation.

4-20  The court may grant or deny the relief sought or may order other

4-21  appropriate relief.

4-22    Sec. 4.  NRS 598.2806 is hereby amended to read as follows:

4-23    598.2806  1.  Each credit service organization, organization for

4-24  buying goods or services at a discount, dance studio and health club

4-25  regulated by the provisions of this chapter shall apply for registration on

4-26  the form prescribed by the division.

4-27    2.  At the time of application for registration, the applicant [shall] must

4-28  pay to the division an administrative fee of $25 and deposit the required

4-29  security with the division.

4-30    3.  Upon receipt of the security in the proper form and the payment of

4-31  the administrative fee required by this section, the division shall issue a

4-32  certificate of registration to the applicant. A certificate of registration [is] :

4-33    (a) Is not transferable or assignable[.] ; and

4-34    (b) Expires 1 year after it is issued.

4-35    4.  A registrant must renew a certificate of registration issued

4-36  pursuant to this section before the certificate expires by submitting to the

4-37  division an application for the renewal of the certificate on a form

4-38  prescribed by the division.

4-39    Sec. 5.  NRS 598.2808 is hereby amended to read as follows:

4-40    598.2808  1.  The security required to be deposited by a registrant

4-41  pursuant to NRS 598.2807 must be held in trust for consumers injured by

4-42  the bankruptcy of the registrant or the registrant’s breach of any agreement

4-43  entered into in his capacity as a registrant.

4-44    2.  A consumer so injured may bring and maintain an action in any

4-45  court of competent jurisdiction to recover against the security.

4-46    3.  The division may bring an action for interpleader against all

4-47  claimants upon the security. If the division brings such an action, the

4-48  division shall publish notice of the action at least once each week for 2

4-49  weeks in a newspaper of general circulation in the county in which the

5-1  organization has its principal place of business. The division may deduct its

5-2  costs of the action, including the costs of the publication of the notice, from

5-3  the amount of the security. All claims against the security have equal

5-4  priority. If the security is insufficient to pay all the claims in full, the

5-5  claims must be paid pro rata. If the registrant has posted a bond with the

5-6  division, the surety is then relieved of all liability under the bond.

5-7    4.  The division may, in lieu of bringing an action for interpleader

5-8  pursuant to subsection 3, conduct a hearing to determine the distribution of

5-9  the security to claimants. The division shall adopt regulations to provide

5-10  for adequate notice and the conduct of the hearing. If the registrant has

5-11  posted a bond with the division, distribution pursuant to this subsection

5-12  relieves the surety of all liability under the bond.

5-13    5.  If the security is sufficient to pay all claims against the security in

5-14  full, the division may deduct from the amount of the security, the cost of

5-15  any investigation or hearing it conducted to determine the distribution of

5-16  the security.

5-17    Sec. 6.  NRS 598.946 is hereby amended to read as follows:

5-18    598.946  1.  [Except as otherwise provided in subsection 5, before]

5-19  Before advertising its services or conducting business in this state, the

5-20  owner of a dance studio or a health club must register pursuant to NRS

5-21  598.2806 and 598.944 and deposit security with the division pursuant to

5-22  NRS 598.2807. The security must be conditioned on compliance by the

5-23  owner with the provisions of NRS 598.940 to 598.966, inclusive, and the

5-24  terms of the contract with a buyer.

5-25    2.  Except as otherwise provided in subsection 3, the amount of the

5-26  security to be deposited must be:

5-27    (a) Ten thousand dollars, if the dance studio or health club has less than

5-28  400 members;

5-29    (b) Fifteen thousand dollars, if the dance studio or health club has 400

5-30  members or more but less than 800 members;

5-31    (c) Twenty thousand dollars, if the dance studio or health club has 800

5-32  members or more but less than 1,200 members;

5-33    (d) Twenty-five thousand dollars, if the dance studio or health club has

5-34  1,200 members or more but less than 1,500 members;

5-35    (e) Thirty-five thousand dollars, if the dance studio or health club has

5-36  1,500 members or more but less than 4,000 members; [and]

5-37    (f) Fifty thousand dollars, if the dance studio or health club has 4,000

5-38  members or more but less than 25,000 members[.] ; and

5-39    (g) Two hundred and fifty thousand dollars, if the dance studio or

5-40  health club has 25,000 or more members.

5-41    3.  If a dance studio or health club conducts any pre-sale of dance

5-42  lessons, the use of facilities or other services, the amount of the security

5-43  required by this section is $100,000[.] unless a greater amount is

5-44  required pursuant to paragraph (g) of subsection 2.

5-45    4.  A dance studio or health club shall report to the division on a

5-46  quarterly basis the size of its membership and shall, on the basis of any

5-47  change in the size of that membership, adjust accordingly the amount of

5-48  the security deposited with the division.

6-1    5.  If , on July 1, 2001, a dance studio or health club has actively

6-2  conducted business for not less than 4 consecutive years and has not

6-3  changed ownership or, in the case of a corporation, not more than 25

6-4  percent of its authorized shares have been transferred, it is not required to

6-5  deposit security with the division pursuant to NRS 598.2807. If a dance

6-6  studio or health club does not deposit such security, it shall obtain a written

6-7  acknowledgment from each member and prominently post a notice on its

6-8  premises stating that no security for refunds or reimbursement has been

6-9  deposited with the State of Nevada.

6-10    Sec. 7.  NRS 598.992 is hereby repealed.

6-11    Sec. 8.  1.  Notwithstanding the provisions of section 4 of this act, a

6-12  registrant that:

6-13    (a) Is doing business in this state; and

6-14    (b) Has a certificate of registration that was issued by the division

6-15  pursuant to NRS 598.2806 before October 1, 2000,

6-16  must submit to the division an application for the renewal of the certificate

6-17  of registration on a form prescribed by the division not later than

6-18  October 1, 2001.

6-19    2.  A registrant that:

6-20    (a) Is doing business in this state; and

6-21    (b) Has a certificate of registration that was issued by the division

6-22  pursuant to NRS 598.2806 on or after October 1, 2000,

6-23  must submit to the division an application for the renewal of the certificate

6-24  of registration on a form prescribed by the division not later than 1 year

6-25  after the certificate of registration was issued by the division.

6-26    3.  As used in this section, “registrant” has the meaning ascribed to it in

6-27  NRS 598.2805.

6-28    Sec. 9.  This act becomes effective on July 1, 2001.

 

6-29  TEXT OF REPEALED SECTION

 

6-30    598.992  Adult cabarets, erotic dance establishments and adult

6-31  night clubs in certain counties: Attempting to divert specified

6-32  passengers to unrequested destination constitutes deceptive trade

6-33  practice; penalties; suspension of license.

6-34    1.  In a county whose population is 400,000 or more, a person who:

6-35    (a) Is a licensee, owner or employee of a business entity that is licensed

6-36  to operate an adult cabaret, erotic dance establishment or adult night club;

6-37  and

6-38    (b) While performing duties associated with the business entity, pays or

6-39  offers to pay remuneration of any kind, including, without limitation, cash

6-40  or services, to the owner or driver of a taxicab, limousine or bus containing

6-41  21 or fewer passengers, or to an agent of the owner or driver, for taking or

6-42  attempting to take a passenger to a location other than the destination

6-43  requested by the passenger,

7-1  commits a deceptive trade practice for purposes of NRS 598.0903 to

7-2  598.0999, inclusive.

7-3    2.  In any action brought pursuant to NRS 598.0903 to 598.0999,

7-4  inclusive, if the court finds the licensee or owner of a business entity

7-5  engaged in a deceptive trade practice described in subsection 1, or his

7-6  employee engaged in a deceptive trade practice described in subsection 1,

7-7  the licensee or owner is subject only to a civil penalty of:

7-8    (a) For the first violation, not less than $500 and not more than $1,000;

7-9    (b) For the second violation, not less than $1,000 and not more than

7-10  $5,000; and

7-11    (c) For the third and subsequent violations, not less than $5,000 and not

7-12  more than $10,000.

7-13    3.  If the violation of subsection 1 is the third or greater violation and

7-14  if:

7-15    (a) The violation was committed by the licensee or owner of the

7-16  business entity; or

7-17    (b) The violation was committed by an employee of the licensee or

7-18  owner, and the director determines that the licensee or owner knew or

7-19  should have known that the employee engaged in the act constituting the

7-20  violation,

7-21  the director shall order, in writing, all applicable licensing authorities to

7-22  suspend the license of the business entity for a period of not more than 6

7-23  months.

7-24    4.  Upon receiving an order from the director pursuant to subsection 3,

7-25  a licensing authority shall suspend the license of the licensee for the period

7-26  specified in the order.

7-27    5.  As used in this section:

7-28    (a) “License” means a business license to operate an adult cabaret,

7-29  erotic dance establishment or adult night club.

7-30    (b) “Licensee” means the person to whom a license is issued.

7-31    (c) “Licensing authority” means a local government that licenses adult

7-32  cabarets, erotic dance establishments or adult night clubs.

 

7-33  H