REQUIRES TWO-THIRDS MAJORITY VOTE (§ 9)                 

                                                   (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; requiring certain sellers of travel to register and deposit security with the consumer affairs division; authorizing certain consumers to bring and maintain actions to recover against the security; providing for the release of the security within a certain period after the seller of travel ceases to operate; 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. (Deleted by amendment.)

1-2    Sec. 2.  Chapter 598 of NRS is hereby amended by adding thereto the

1-3  provisions set forth as sections 3 to 12, inclusive, of this act.

1-4    Sec. 3.  As used in sections 3 to 12, inclusive, of this act, unless the

1-5  context otherwise requires, the words and terms defined in sections 4 to

1-6  8, inclusive, of this act have the meanings ascribed to them in those

1-7  sections.

1-8    Sec. 4.  “Commissioner” means the commissioner of the consumer

1-9  affairs division of the department of business and industry.

1-10  Sec. 5.  “Division” means the consumer affairs division of the

1-11  department of business and industry.

1-12  Sec. 6.  “Seller of travel” means a person who offers for sale, directly

1-13  or indirectly, transportation by air, land, rail or water, travel services,

2-1  vacation certificates or any combination thereof, to a person or group of

2-2  persons for a fee, commission or other valuable consideration. The term:

2-3    1.  Includes any person who offers membership in a travel club or

2-4  any services related to travel for an advance fee or payment.

2-5    2.  Does not include:

2-6    (a) A hotel that provides or arranges travel services for its patrons or

2-7  guests; or

2-8    (b) A person who, for compensation, transports persons or property by

2-9  air, land, rail or water.

2-10  Sec. 7.  “Travel services” include, without limitation, short-term

2-11  leases of passenger cars, lodging, transfers, sight-seeing tours and any

2-12  other services that are related to travel by air, land, rail or water or any

2-13  other method of transportation.

2-14  Sec. 8.  “Vacation certificate” means any document received by a

2-15  person for consideration paid in advance which evidences that the holder

2-16  of the document is entitled to:

2-17  1.  Transportation by air, land, rail or water; or

2-18  2.  The use of lodging or other facilities for a specified

2-19  period,

2-20  during the period for which the certificate is valid.

2-21  Sec. 9.  1.  Before advertising its services or conducting business in

2-22  this state, a seller of travel must register with the division by:

2-23  (a) Submitting to the division an application for registration on a form

2-24  prescribed by the division;

2-25  (b) Paying to the division a fee of $25; and

2-26  (c) Depositing the security required pursuant to section 10 of this act,

2-27  if any, with the division.

2-28  2.  The division shall issue a certificate of registration to the seller of

2-29  travel upon receipt of:

2-30  (a) The security in the proper form if the seller of travel is required to

2-31  deposit security pursuant to section 10 of this act; and

2-32  (b) The payment of the fee required by this section.

2-33  3.  A certificate of registration:

2-34  (a) Is not transferable or assignable; and

2-35  (b) Expires 1 year after it is issued.

2-36  4.  A seller of travel must renew a certificate of registration issued

2-37  pursuant to this section before the certificate expires by:

2-38  (a) Submitting to the division an application for the renewal of the

2-39  certificate on a form prescribed by the division; and

2-40  (b) Paying to the division a fee of $25.

2-41  Sec. 10.  1.  Except as otherwise provided in subsection 8, each

2-42  seller of travel shall deposit with the division:

2-43  (a) A bond executed by a corporate surety approved by the

2-44  commissioner and licensed to do business in this state;

2-45  (b) An irrevocable letter of credit for which the seller of travel is the

2-46  obligor, issued by a bank whose deposits are federally insured; or

2-47  (c) A certificate of deposit in a financial institution which is doing

2-48  business in this state and which is federally insured or insured by a

2-49  private insurer approved pursuant to NRS 678.755. The certificate of

3-1  deposit may be withdrawn only on the order of the commissioner, except

3-2  that the interest may accrue to the seller of travel.

3-3    2.  The term of the bond, letter of credit or certificate of deposit, or

3-4  any renewal thereof, must be not less than 1 year.

3-5    3.  The amount of the bond, letter of credit or certificate of deposit, or

3-6  any renewal thereof, must be $50,000.

3-7    4.  If the seller of travel deposits a bond, the seller of travel shall keep

3-8  accurate records of the bond and the payments made on the premium.

3-9  The records must be open to inspection by the division during business

3-10  hours. The seller of travel shall notify the division not later than 30 days

3-11  before the date of expiration of the bond and provide written proof of the

3-12  renewal of the bond to the division.

3-13  5.  The commissioner may reject any bond, letter of credit or

3-14  certificate of deposit that fails to comply with the requirements of this

3-15  chapter.

3-16  6.  A seller of travel may change the form of security that he has

3-17  deposited with the division. If the seller of travel changes the form of the

3-18  security, the commissioner may retain for not more than 1 year any

3-19  portion of the security previously deposited by the seller of travel as

3-20  security for claims arising during the time the previous security was in

3-21  effect.

3-22  7.  If the amount of the deposited security falls below the amount

3-23  required by this chapter for that security, the seller of travel shall be

3-24  deemed not to be registered as required by section 9 of this act for the

3-25  purposes of this chapter.

3-26  8.  The provisions of this section do not apply to a seller of travel who

3-27  is accredited by and appointed as an agent of the Airlines Reporting

3-28  Corporation.

3-29  Sec. 11.  1.  The security required to be deposited by a seller of

3-30  travel pursuant to section 10 of this act must be held in trust for

3-31  consumers injured as a result of:

3-32  (a) Any act of fraud or misrepresentation by the seller of travel acting

3-33  in his capacity as a seller of travel;

3-34  (b) The bankruptcy of the seller of travel; or

3-35  (c) The breach of any contract entered into by the seller of travel in

3-36  his capacity as a seller of travel.

3-37  2.  A consumer so injured may bring and maintain an action in any

3-38  court of competent jurisdiction to recover against the security.

3-39  3.  The division may bring an action for interpleader against all

3-40  claimants upon the security. If the division brings such an action, the

3-41  division shall publish notice of the action at least once each week for 2

3-42  weeks in a newspaper of general circulation in the county in which the

3-43  seller of travel has its principal place of business. The division may

3-44  deduct its costs of the action, including the costs of the publication of the

3-45  notice, from the amount of the security. All claims against the security

3-46  have equal priority. If the security is insufficient to pay all the claims in

3-47  full, the claims must be paid pro rata. If the seller of travel has posted a

3-48  bond with the division, the surety is then relieved of all liability under the

3-49  bond.

4-1    4.  The division may, in lieu of bringing an action for interpleader

4-2  pursuant to subsection 3, conduct a hearing to determine the distribution

4-3  of the security to claimants. The division shall adopt regulations to

4-4  provide for adequate notice and the conduct of the hearing. If the seller

4-5  of travel has posted a bond with the division, distribution pursuant to this

4-6  subsection relieves the surety of all liability under the bond.

4-7    5.  If the security is sufficient to pay all claims against the security in

4-8  full, the division may deduct from the amount of the security, the cost of

4-9  any investigation or hearing it conducted to determine the distribution of

4-10  the security.

4-11  Sec. 12.  1.  If no claims have been filed against the security

4-12  deposited with the division pursuant to section 10 of this act within 6

4-13  months after the seller of travel ceases to operate or his registration

4-14  expires, whichever occurs later, the commissioner shall release the

4-15  security to the seller of travel and shall not audit any claims filed against

4-16  the security thereafter by consumers.

4-17  2.  If one or more claims have been filed against the security within 6

4-18  months after the seller of travel ceases to operate or his registration

4-19  expires, whichever occurs later, the proceeds must not be released to the

4-20  seller of travel or distributed to any consumer earlier than 1 year after

4-21  the seller of travel ceases to operate or his registration expires, whichever

4-22  occurs later.

4-23  3.  For the purposes of this section, the commissioner shall determine

4-24  the date on which a seller of travel ceases to operate.

4-25  Sec. 13.  NRS 598.0915 is hereby amended to read as follows:

4-26  598.0915  A person engages in a “deceptive trade practice” if, in the

4-27  course of his business or occupation, he:

4-28  1.  Knowingly passes off goods or services for sale or lease as those of

4-29  another[.] person.

4-30  2.  Knowingly makes a false representation as to the source,

4-31  sponsorship, approval or certification of goods or services for sale or lease.

4-32  3.  Knowingly makes a false representation as to affiliation, connection,

4-33  association with or certification by another[.] person.

4-34  4.  Uses deceptive representations or designations of geographic origin

4-35  in connection with goods or services for sale or lease.

4-36  5.  Knowingly makes a false representation as to the characteristics,

4-37  ingredients, uses, benefits, alterations or quantities of goods or services for

4-38  sale or lease or a false representation as to the sponsorship, approval,

4-39  status, affiliation or connection of a person therewith.

4-40  6.  Represents that goods for sale or lease are original or new if he

4-41  knows or should know that they are deteriorated, altered, reconditioned,

4-42  reclaimed, used or secondhand.

4-43  7.  Represents that goods or services for sale or lease are of a particular

4-44  standard, quality or grade, or that such goods are of a particular style or

4-45  model, if he knows or should know that they are of another[.] standard,

4-46  quality, grade, style or model.

4-47  8.  Disparages the goods, services or business of another person by

4-48  false or misleading representation of fact.

5-1    9.  Advertises goods or services with intent not to sell or lease them as

5-2  advertised.

5-3    10.  Advertises goods or services for sale or lease with intent not to

5-4  supply reasonably expectable public demand, unless the advertisement

5-5  discloses a limitation of quantity.

5-6    11.  Advertises goods or services as being available free of charge

5-7  with intent to require payment of undisclosed costs as a condition of

5-8  receiving the goods or services.

5-9    12.  Advertises under the guise of obtaining sales personnel when [in

5-10  fact] the purpose is to first sell or lease goods or services to the sales

5-11  personnel applicant.

5-12  [12.] 13. Makes false or misleading statements of fact concerning the

5-13  price of goods or services for sale or lease, or the reasons for, existence of

5-14  or amounts of price reductions.

5-15  [13.] 14. Fraudulently alters any contract, written estimate of repair,

5-16  written statement of charges or other document in connection with the sale

5-17  or lease of goods or services.

5-18  [14.] 15. Knowingly makes any other false representation in a

5-19  transaction.

5-20  [15.] 16. Knowingly falsifies an application for credit relating to a

5-21  retail installment transaction, as defined in NRS 97.115.

5-22  Sec. 14.  NRS 598.0999 is hereby amended to read as follows:

5-23      598.0999  1.  A person who violates a court order or injunction

5-24  issued pursuant to the provisions of NRS 598.0903 to 598.0999, inclusive,

5-25  and section 1 of [this act] Assembly Bill No. 337 of this session upon a

5-26  complaint brought by the commissioner, the director, the district attorney

5-27  of any county of this state or the attorney general shall forfeit and pay to

5-28  the state general fund a civil penalty of not more than $10,000 for each

5-29  violation. For the purpose of this section, the court issuing the order or

5-30  injunction retains jurisdiction over the action or proceeding. Such civil

5-31  penalties are in addition to any other penalty or remedy available for the

5-32  enforcement of the provisions of NRS 598.0903 to 598.0999, inclusive,

5-33  and section 1 of [this act.] Assembly Bill No. 337 of this session.

5-34  2.  In any action brought pursuant to the provisions of NRS 598.0903 to

5-35  598.0999, inclusive, and section 1 of [this act,] Assembly Bill No. 337 of

5-36  this session, if the court finds that a person has willfully engaged in a

5-37  deceptive trade practice, the commissioner, the director, the district

5-38  attorney of any county in this state or the attorney general bringing the

5-39  action may recover a civil penalty not to exceed $2,500 for each violation.

5-40  The court in any such action may, in addition to any other relief or

5-41  reimbursement, award reasonable attorney’s fees and costs.

5-42  3.  A natural person, firm, or any officer or managing agent of any

5-43  corporation or association who knowingly and willfully engages in a

5-44  deceptive trade practice : [, other than a deceptive trade practice described

5-45  in NRS 598.992:]

5-46  (a) For the first offense, is guilty of a misdemeanor.

5-47  (b) For the second offense, is guilty of a gross misdemeanor.

6-1    (c) For the third and all subsequent offenses, is guilty of a category D

6-2  felony and shall be punished as provided in NRS 193.130.

6-3    4.  Any offense which occurred within 10 years immediately preceding

6-4  the date of the principal offense or after the principal offense constitutes a

6-5  prior offense for the purposes of subsection 3 when evidenced by a

6-6  conviction, without regard to the sequence of the offenses and convictions.

6-7    5.  If a person violates any provision of NRS 598.0903 to 598.0999,

6-8  inclusive, and section 1 of [this act,] Assembly Bill No. 337 of this session,

6-9  598.100 to 598.2801, inclusive, 598.281 to 598.289, inclusive, 598.840 to

6-10  598.966, inclusive, or [598.992,] sections 3 to 12, inclusive, of this act,

6-11  fails to comply with a judgment or order of any court in this state

6-12  concerning a violation of such a provision, or fails to comply with an

6-13  assurance of discontinuance or other agreement concerning an alleged

6-14  violation of such a provision, the commissioner or the district attorney of

6-15  any county may bring an action in the name of the State of Nevada

6-16  seeking:

6-17  (a) The suspension of the person’s privilege to conduct business within

6-18  this state; or

6-19  (b) If the defendant is a corporation, dissolution of the

6-20  corporation.

6-21  The court may grant or deny the relief sought or may order other

6-22  appropriate relief.

6-23  Sec. 15.  NRS 598.2806 is hereby amended to read as follows:

6-24  598.2806  1.  Each credit service organization, organization for

6-25  buying goods or services at a discount, dance studio and health club

6-26  regulated by the provisions of this chapter shall apply for registration on

6-27  the form prescribed by the division.

6-28  2.  At the time of application for registration, the applicant [shall] must

6-29  pay to the division an administrative fee of $25 and deposit the required

6-30  security with the division.

6-31  3.  Upon receipt of the security in the proper form and the payment of

6-32  the administrative fee required by this section, the division shall issue a

6-33  certificate of registration to the applicant. A certificate of registration [is] :

6-34  (a) Is not transferable or assignable[.] ; and

6-35  (b) Expires 1 year after it is issued.

6-36  4.  A registrant must renew a certificate of registration issued

6-37  pursuant to this section before the certificate expires by submitting to the

6-38  division an application for the renewal of the certificate on a form

6-39  prescribed by the division.

6-40  Sec. 16.  NRS 598.2808 is hereby amended to read as follows:

6-41  598.2808  1.  The security required to be deposited by a registrant

6-42  pursuant to NRS 598.2807 must be held in trust for consumers injured by

6-43  the bankruptcy of the registrant or the registrant’s breach of any agreement

6-44  entered into in his capacity as a registrant.

6-45  2.  A consumer so injured may bring and maintain an action in any

6-46  court of competent jurisdiction to recover against the security.

6-47  3.  The division may bring an action for interpleader against all

6-48  claimants upon the security. If the division brings such an action, the

6-49  division shall publish notice of the action at least once each week for 2

7-1  weeks in a newspaper of general circulation in the county in which the

7-2  organization has its principal place of business. The division may deduct its

7-3  costs of the action, including the costs of the publication of the notice, from

7-4  the amount of the security. All claims against the security have equal

7-5  priority. If the security is insufficient to pay all the claims in full, the

7-6  claims must be paid pro rata. If the registrant has posted a bond with the

7-7  division, the surety is then relieved of all liability under the bond.

7-8    4.  The division may, in lieu of bringing an action for interpleader

7-9  pursuant to subsection 3, conduct a hearing to determine the distribution of

7-10  the security to claimants. The division shall adopt regulations to provide

7-11  for adequate notice and the conduct of the hearing. If the registrant has

7-12  posted a bond with the division, distribution pursuant to this subsection

7-13  relieves the surety of all liability under the bond.

7-14  5.  If the security is sufficient to pay all claims against the security in

7-15  full, the division may deduct from the amount of the security, the cost of

7-16  any investigation or hearing it conducted to determine the distribution of

7-17  the security.

7-18  Sec. 17.  NRS 598.946 is hereby amended to read as follows:

7-19  598.946  1.  Except as otherwise provided in subsection 5, before

7-20  advertising its services or conducting business in this state, the owner of a

7-21  dance studio or a health club must register pursuant to NRS 598.2806 and

7-22  598.944 and deposit security with the division pursuant to NRS 598.2807.

7-23  The security must [be] :

7-24  (a) Be conditioned on compliance by the owner with the provisions of

7-25  NRS 598.940 to 598.966, inclusive, and the terms of the contract with a

7-26  buyer [.] ; and

7-27  (b) Remain on deposit with the division until the release of the

7-28  security is authorized or required pursuant to NRS 598.2809, except that

7-29  the dance studio or health club may change the form of the security as

7-30  provided in NRS 598.2807.

7-31  2.  Except as otherwise provided in subsection 3, the amount of the

7-32  security to be deposited must be:

7-33  (a) Ten thousand dollars, if the dance studio or health club has less than

7-34  400 members;

7-35  (b) Fifteen thousand dollars, if the dance studio or health club has 400

7-36  members or more but less than 800 members;

7-37  (c) Twenty thousand dollars, if the dance studio or health club has 800

7-38  members or more but less than 1,200 members;

7-39  (d) Twenty-five thousand dollars, if the dance studio or health club has

7-40  1,200 members or more but less than 1,500 members;

7-41  (e) Thirty-five thousand dollars, if the dance studio or health club has

7-42  1,500 members or more but less than 4,000 members; [and]

7-43  (f) Fifty thousand dollars, if the dance studio or health club has 4,000

7-44  members or more but less than 25,000 members[.] ; and

7-45  (g) Two hundred and fifty thousand dollars, if the dance studio or

7-46  health club has 25,000 or more members.

7-47  3.  If a dance studio or health club conducts any pre-sale of dance

7-48  lessons, the use of facilities or other services, the amount of the security

8-1  required by this section is $100,000[.] unless a greater amount is

8-2  required pursuant to paragraph (g) of subsection 2.

8-3    4.  A dance studio or health club shall report to the division on a

8-4  quarterly basis the size of its membership and shall, on the basis of any

8-5  change in the size of that membership, adjust accordingly the amount of

8-6  the security deposited with the division.

8-7    5.  [If a dance studio or health club has actively conducted business for

8-8  not less than 4 consecutive years and has not changed ownership or, in the

8-9  case of a corporation, not more than 25 percent of its authorized shares

8-10  have been transferred, it is not required to deposit security with the division

8-11  pursuant to NRS 598.2807.] If , on October 1, 2001, a dance studio or

8-12  health club [does not deposit such security, it shall] has not deposited

8-13  security with the division pursuant to NRS 598.2807 because it was not

8-14  required to do so pursuant to this section, the dance studio or health

8-15  club:

8-16  (a) Is not required to deposit security with the division pursuant to

8-17  NRS 598.2807; and

8-18  (b) Shall obtain a written acknowledgment from each member and

8-19  prominently post a notice on its premises stating that no security for

8-20  refunds or reimbursement has been deposited with the State of Nevada.

8-21  Sec. 18.  NRS 598.992 is hereby repealed.

8-22  Sec. 19.  1.  Notwithstanding the provisions of section 15 of this act,

8-23  a registrant that:

8-24  (a) Is doing business in this state; and

8-25  (b) Has a certificate of registration that was issued by the division

8-26  pursuant to NRS 598.2806 before October 1, 2000,

8-27  must submit to the division an application for the renewal of the certificate

8-28  of registration on a form prescribed by the division not later than

8-29  October 1, 2001.

8-30  2.  A registrant that:

8-31  (a) Is doing business in this state; and

8-32  (b) Has a certificate of registration that was issued by the division

8-33  pursuant to NRS 598.2806 on or after October 1, 2000,

8-34  must submit to the division an application for the renewal of the certificate

8-35  of registration on a form prescribed by the division not later than 1 year

8-36  after the certificate of registration was issued by the division.

8-37  3.  As used in this section, “registrant” has the meaning ascribed to it in

8-38  NRS 598.2805.

8-39  Sec. 20.  1.  This section, sections 1 to 12, inclusive, and 14 to 19,

8-40  inclusive, of this act become effective on October 1, 2001.

8-41  2.  Section 13 of this act becomes effective at 12:01 a.m. on

8-42  October 1, 2001.

 

9-1  TEXT OF REPEALED SECTION

 

9-2    598.992  Adult cabarets, erotic dance establishments and adult

9-3   night clubs in certain counties: Attempting to divert specified

9-4   passengers to unrequested destination constitutes deceptive trade

9-5   practice; penalties; suspension of license.

9-6    1.  In a county whose population is 400,000 or more, a person who:

9-7    (a) Is a licensee, owner or employee of a business entity that is licensed

9-8   to operate an adult cabaret, erotic dance establishment or adult night club;

9-9   and

9-10    (b) While performing duties associated with the business entity, pays or

9-11   offers to pay remuneration of any kind, including, without limitation, cash

9-12   or services, to the owner or driver of a taxicab, limousine or bus

9-13   containing 21 or fewer passengers, or to an agent of the owner or driver,

9-14   for taking or attempting to take a passenger to a location other than the

9-15   destination requested by the passenger,

9-16  commits a deceptive trade practice for purposes of NRS 598.0903 to

9-17   598.0999, inclusive.

9-18    2.  In any action brought pursuant to NRS 598.0903 to 598.0999,

9-19   inclusive, if the court finds the licensee or owner of a business entity

9-20   engaged in a deceptive trade practice described in subsection 1, or his

9-21   employee engaged in a deceptive trade practice described in subsection 1,

9-22   the licensee or owner is subject only to a civil penalty of:

9-23    (a) For the first violation, not less than $500 and not more than $1,000;

9-24    (b) For the second violation, not less than $1,000 and not more than

9-25   $5,000; and

9-26    (c) For the third and subsequent violations, not less than $5,000 and not

9-27   more than $10,000.

9-28    3.  If the violation of subsection 1 is the third or greater violation and

9-29   if:

9-30    (a) The violation was committed by the licensee or owner of the

9-31   business entity; or

9-32    (b) The violation was committed by an employee of the licensee or

9-33   owner, and the director determines that the licensee or owner knew or

9-34   should have known that the employee engaged in the act constituting the

9-35   violation,

9-36  the director shall order, in writing, all applicable licensing authorities to

9-37   suspend the license of the business entity for a period of not more than 6

9-38   months.

9-39    4.  Upon receiving an order from the director pursuant to subsection 3,

9-40   a licensing authority shall suspend the license of the licensee for the period

9-41   specified in the order.

9-42    5.  As used in this section:

9-43    (a) “License” means a business license to operate an adult cabaret,

9-44   erotic dance establishment or adult night club.

10-1    (b) “Licensee” means the person to whom a license is issued.

10-2    (c) “Licensing authority” means a local government that licenses adult

10-3   cabarets, erotic dance establishments or adult night clubs.

 

10-4  H