HB-6250, As Passed House, September 17, 2008

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 6250

 

 

 

 

 

 

 

 

 

 

 

 

     [A bill to amend 1976 PA 331, entitled

 

"Michigan consumer protection act,"

 

by amending sections 3, 4, 7, and 8 (MCL 445.903, 445.904, 445.907, and

 

445.908), section 3 as amended by 2008 PA 211 and section 4 as amended by

 

2003 PA 216.]

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3. (1) Unfair, unconscionable, or deceptive methods,

 

acts, or practices in the conduct of trade or commerce are unlawful

 

and are defined as follows:

 

     (a) Causing a probability of confusion or misunderstanding as

 

to the source, sponsorship, approval, or certification of goods or

 

services.

 

     (b) Using deceptive representations or deceptive designations

 

of geographic origin in connection with goods or services.

 


     (c) Representing that goods or services have sponsorship,

 

approval, characteristics, ingredients, uses, benefits, or

 

quantities that they do not have or that a person has sponsorship,

 

approval, status, affiliation, or connection that he or she does

 

not have.

 

     (d) Representing that goods are new if they are deteriorated,

 

altered, reconditioned, used, or secondhand.

 

     (e) Representing that goods or services are of a particular

 

standard, quality, or grade, or that goods are of a particular

 

style or model, if they are of another.

 

     (f) Disparaging the goods, services, business, or reputation

 

of another by false or misleading representation of fact.

 

     (g) Advertising or representing goods or services with intent

 

not to dispose of those goods or services as advertised or

 

represented.

 

     (h) Advertising goods or services with intent not to supply

 

reasonably expectable public demand, unless the advertisement

 

discloses a limitation of quantity in immediate conjunction with

 

the advertised goods or services.

 

     (i) Making false or misleading statements of fact concerning

 

the reasons for, existence of, or amounts of price reductions.

 

     (j) Representing that a part, replacement, or repair service

 

is needed when it is not.

 

     (k) Representing to a party to whom goods or services are

 

supplied that the goods or services are being supplied in response

 

to a request made by or on behalf of the party, when they are not.

 

     (l) Misrepresenting that because of some defect in a consumer's

 


home the health, safety, or lives of the consumer or his or her

 

family are in danger if the product or services are not purchased,

 

when in fact the defect does not exist or the product or services

 

would not remove the danger.

 

     (m) Causing a probability of confusion or of misunderstanding

 

with respect to the authority of a salesperson, representative, or

 

agent to negotiate the final terms of a transaction.

 

     (n) Causing a probability of confusion or of misunderstanding

 

as to the legal rights, obligations, or remedies of a party to a

 

transaction.

 

     (o) Causing a probability of confusion or of misunderstanding

 

as to the terms or conditions of credit if credit is extended in a

 

transaction.

 

     (p) Disclaiming or limiting the implied warranty of

 

merchantability and fitness for use, unless a disclaimer is clearly

 

and conspicuously disclosed.

 

     (q) Representing or implying that the subject of a consumer

 

transaction will be provided promptly, or at a specified time, or

 

within a reasonable time, if the merchant knows or has reason to

 

know it will not be so provided.

 

     (r) Representing that a consumer will receive goods or

 

services "free" or "without charge", or using words of similar

 

import in the representation, without clearly and conspicuously

 

disclosing with equal prominence in immediate conjunction with the

 

use of those words the conditions, terms, or prerequisites to the

 

use or retention of the goods or services advertised.

 

     (s) Failing to reveal a material fact, the omission of which

 


tends to mislead or deceive the consumer, and which fact could not

 

reasonably be known by the consumer.

 

     (t) Entering into a consumer transaction in which the consumer

 

waives or purports to waive a right, benefit, or immunity provided

 

by law, unless the waiver is clearly stated and the consumer has

 

specifically consented to it.

 

     (u) Failing, in a consumer transaction that is rescinded,

 

canceled, or otherwise terminated in accordance with the terms of

 

an agreement, advertisement, representation, or provision of law,

 

to promptly restore to the person or persons entitled to it a

 

deposit, down payment, or other payment, or in the case of property

 

traded in but not available, the greater of the agreed value or the

 

fair market value of the property, or to cancel within a specified

 

time or an otherwise reasonable time an acquired security interest.

 

     (v) Taking or arranging for the consumer to sign an

 

acknowledgment, certificate, or other writing affirming acceptance,

 

delivery, compliance with a requirement of law, or other

 

performance, if the merchant knows or has reason to know that the

 

statement is not true.

 

     (w) Representing that a consumer will receive a rebate,

 

discount, or other benefit as an inducement for entering into a

 

transaction, if the benefit is contingent on an event to occur

 

subsequent to the consummation of the transaction.

 

     (x) Taking advantage of the consumer's inability reasonably to

 

protect his or her interests by reason of disability, illiteracy,

 

or inability to understand the language of an agreement presented

 

by the other party to the transaction who knows or reasonably

 


should know of the consumer's inability.

 

     (y) Gross discrepancies between the oral representations of

 

the seller and the written agreement covering the same transaction

 

or failure of the other party to the transaction to provide the

 

promised benefits.

 

     (z) Charging the consumer a price that is grossly in excess of

 

the price at which similar property or services are sold. It is

 

prima facie evidence that a price violates this subdivision if

 

either of the following applies:

 

     (i) The amount charged represents a gross disparity between the

 

price of the property or service that is the subject of the

 

transaction and the average price at which that property or service

 

was rented, leased, sold, or provided in the usual course of

 

business during the preceding 30 days, and the increase in the

 

amount charged is not attributable to additional costs incurred in

 

connection with the rental, lease, or sale of the property or with

 

providing the service or attributable to national or international

 

market trends.

 

     (ii) The amount charged grossly exceeds the average price at

 

which the same or a similar property or service was readily

 

obtainable in the trade area during the preceding 30 days, and the

 

increase in the amount charged is not attributable to additional

 

costs incurred in connection with the rental, lease, or sale of the

 

property or with providing the service or attributable to national

 

or international market trends.

 

     (aa) Causing coercion and duress as the result of the time and

 

nature of a sales presentation.

 


     (bb) Making a representation of fact or statement of fact

 

material to the transaction such that a person reasonably believes

 

the represented or suggested state of affairs to be other than it

 

actually is.

 

     (cc) Failing to reveal facts that are material to the

 

transaction in light of representations of fact made in a positive

 

manner.

 

     (dd) Subject to subdivision (ee), representations by the

 

manufacturer of a product or package that the product or package is

 

1 or more of the following:

 

     (i) Except as provided in subparagraph (ii), recycled,

 

recyclable, degradable, or is of a certain recycled content, in

 

violation of guides for the use of environmental marketing claims,

 

16 CFR part 260.

 

     (ii) For container holding devices regulated under part 163 of

 

the natural resources and environmental protection act, 1994 PA

 

451, MCL 324.16301 to 324.16303, representations by a manufacturer

 

that the container holding device is degradable contrary to the

 

definition provided in that act.

 

     (ee) Representing that a product or package is degradable,

 

biodegradable, or photodegradable unless it can be substantiated by

 

evidence that the product or package will completely decompose into

 

elements found in nature within a reasonably short period of time

 

after consumers use the product and dispose of the product or the

 

package in a landfill or composting facility, as appropriate.

 

     (ff) Offering a consumer a prize if in order to claim the

 

prize the consumer is required to submit to a sales presentation,

 


unless a written disclosure is given to the consumer at the time

 

the consumer is notified of the prize and the written disclosure

 

meets all of the following requirements:

 

     (i) Is written or printed in a bold type that is not smaller

 

than 10-point.

 

     (ii) Fully describes the prize, including its cash value, won

 

by the consumer.

 

     (iii) Contains all the terms and conditions for claiming the

 

prize, including a statement that the consumer is required to

 

submit to a sales presentation.

 

     (iv) Fully describes the product, real estate, investment,

 

service, membership, or other item that is or will be offered for

 

sale, including the price of the least expensive item and the most

 

expensive item.

 

     (gg) Violating 1971 PA 227, MCL 445.111 to 445.117, in

 

connection with a home solicitation sale or telephone solicitation,

 

including, but not limited to, having an independent courier

 

service or other third party pick up a consumer's payment on a home

 

solicitation sale during the period the consumer is entitled to

 

cancel the sale.

 

     (hh) Except as provided in subsection (3), requiring a

 

consumer to disclose his or her social security number as a

 

condition to selling or leasing goods or providing a service to the

 

consumer, unless any of the following apply:

 

     (i) The selling, leasing, providing, terms of payment, or

 

transaction includes an application for or an extension of credit

 

to the consumer.

 


     (ii) The disclosure is required or authorized by applicable

 

state or federal statute, rule, or regulation.

 

     (iii) The disclosure is requested by a person to obtain a

 

consumer report for a permissible purpose described in section 604

 

of the fair credit reporting act, 15 USC 1681b.

 

     (iv) The disclosure is requested by a landlord, lessor, or

 

property manager to obtain a background check of the individual in

 

conjunction with the rent or leasing of real property.

 

     (v) The disclosure is requested from an individual to effect,

 

administer or enforce a specific telephonic or other electronic

 

consumer transaction that is not made in person but is requested or

 

authorized by the individual if it is to be used solely to confirm

 

the identity of the individual through a fraud prevention service

 

database. The consumer good or service shall still be provided to

 

the consumer upon verification of his or her identity if he or she

 

refuses to provide his or her social security number but provides

 

other information or documentation that can be used by the person

 

to verify his or her identity. The person may inform the consumer

 

that verification through other means than use of the social

 

security number may cause a delay in providing the service or good

 

to the consumer.

 

     (ii) If a credit card or debit card is used for payment in a

 

consumer transaction, issuing or delivering a receipt to the

 

consumer that displays any part of the expiration date of the card

 

or more than the last 4 digits of the consumer's account number.

 

This subdivision does not apply if the only receipt issued in a

 

consumer transaction is a credit card or debit card receipt on

 


which the account number or expiration date is handwritten,

 

mechanically imprinted, or photocopied. This subdivision applies to

 

any consumer transaction that occurs on or after March 1, 2005,

 

except that if a credit or debit card receipt is printed in a

 

consumer transaction by an electronic device, this subdivision

 

applies to any consumer transaction that occurs using that device

 

only after 1 of the following dates, as applicable:

 

     (i) If the electronic device is placed in service after March

 

1, 2005, July 1, 2005 or the date the device is placed in service,

 

whichever is later.

 

     (ii) If the electronic device is in service on or before March

 

1, 2005, July 1, 2006.

 

     (jj) Violating section 11 of the identity theft protection

 

act, 2004 PA 452, MCL 445.71.

 

     (kk) Advertising or conducting a live musical performance or

 

production in this state through the use of a false, deceptive, or

 

misleading affiliation, connection, or association between a

 

performing group and a recording group. This subdivision does not

 

apply if any of the following are met:

 

     (i) The performing group is the authorized registrant and owner

 

of a federal service mark for that group registered in the United

 

States patent and trademark office.

 

     (ii) At least 1 member of the performing group was a member of

 

the recording group and has a legal right to use the recording

 

group's name, by virtue of use or operation under the recording

 

group's name without having abandoned the name or affiliation with

 

the recording group.

 


House Bill No. 6250 (H-1) as amended September 17, 2008  (1 of 2)

     (iii) The live musical performance or production is identified

 

in all advertising and promotion as a salute or tribute and the

 

name of the vocal or instrumental group performing is not so

 

closely related or similar to that used by the recording group that

 

it would tend to confuse or mislead the public.

 

     (iv) The advertising does not relate to a live musical

 

performance or production taking place in this state.

 

     (v) The performance or production is expressly authorized by

 

the recording group.

 

     (ll) Violating section 3e, 3f, or 3g.

 

     (2) The attorney general may promulgate rules to implement

 

this act under the administrative procedures act of 1969, 1969 PA

 

306, MCL 24.201 to 24.328. The rules shall not create an additional

 

unfair trade practice not already enumerated by this section.

 

However, to assure national uniformity, rules shall not be

 

promulgated to implement subsection (1)(dd) or (ee).

 

     (3) Subsection (1)(hh) does not apply to either of the

 

following:

 

     (a) Providing a service related to the administration of

 

health-related or dental-related benefits or services to patients,

 

including provider contracting or credentialing. This subdivision

 

is intended to limit the application of subsection (1)(hh) and is

 

not intended to imply that this act would otherwise apply to

 

health-related or dental-related benefits.

 

     (b) An employer providing benefits or services to an employee.

     [(4) In furtherance of subsection (1)(z), the public service commission shall review motor fuel prices in this state on a quarterly basis and determine the average cost of each component of the retail price of motor fuel, including, but not limited to, state and federal taxes, wholesale motor fuel prices, and delivery, distribution, and other expenses related to motor fuel. The commission shall publish the average cost of each component of motor fuel on the commission's internet website.

     Sec. 4. (1) This act does not apply to either of the following:

     (a) A transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States. However, the existence of a rule or statute or the grant of a license that regulates or authorizes a general transaction of a person engaged in trade or commerce in this state does not exempt that person from this subdivision.

     (b) An act done by the a publisher, owner, agent, or employee of a newspaper, periodical, directory, radio or television station, or other communications medium in the publication or dissemination of an advertisement unless the publisher, owner, agent, or employee knows or, under the circumstances, reasonably should know of the false, misleading, or deceptive character of the advertisement or has a direct financial interest in the sale or distribution of the advertised goods, property, or service.

     (2) Except for the purposes of an action filed by a person under section 11, this act does not apply to or create a cause of action for an unfair, unconscionable, or deceptive method, act, or practice that is made unlawful by any of the following:

     (a) The banking code of 1999, 1999 PA 276, MCL 487.11101 to 487.15105.

     (b) 1939 PA 3, MCL 460.1 to 460.10cc.

     (c) The motor carrier act, 1933 PA 254, MCL 475.1 to 479.43.

     (d) The savings bank act, 1996 PA 354, MCL 487.3101 to 487.3804.

     (e) The credit union act, 2003 PA 215, MCL 490.101 to 490.601.

     (3) This act does not apply to or create a cause of action for an unfair, unconscionable, or deceptive method, act, or practice that is made unlawful by chapter 20 of the insurance code of 1956, 1956 PA 218, MCL 500.2001 to 500.2093.

     (4) The burden of proving an exemption from this act is upon the person claiming the exemption.]

     Sec. 7. (1) Upon the ex parte application of the attorney

 

general to the circuit court in the county where the defendant is


established or conducts business or, if the defendant is not

 

established in this state, in Ingham county, the circuit court, if

 

it finds probable cause to believe a person has engaged, is

 

engaging, or is about to engage in a method, act, or practice which

 

is unlawful under this act, may, after an ex parte hearing, issue a

 

subpoena compelling a person to appear before the attorney general

 

and answer under oath questions relating to an alleged violation of

 

this act. A person served with a subpoena may be accompanied by

 

counsel when he appears before the attorney general. The subpoena

 

may compel a person to produce the books, records, papers,

 

documents, or things relating to an alleged violation of this act.

 

During the examination of documentary material under the subpoena,

 

the court may require a person having knowledge of the documentary

 

material or the matters contained therein to attend and give

 

testimony under oath or acknowledgment with respect to the

 

documentary material.

 

     (2) The subpoena shall include the notice of the time, place,

 

and cause of the taking of testimony, the examination, or the

 

attendance and shall allow not less than 10 days before the date of

 

the taking of testimony or examination, unless for good cause shown

 

the court shortens that period of time.

 

     (3) Service of the notice shall be in the manner provided and

 

subject to the provisions that apply to service of process upon a

 

defendant in a civil action commenced in the circuit court.

 

     (4) The notice shall:

 

     (a) State the time and place for the taking of testimony or

 

the examination and the name and address of the person to be

 


examined. If the name is not known, the notice shall give a general

 

description sufficient to identify the person or the particular

 

class or group to which the person belongs.

 

     (b) State a reference to this section and the general subject

 

matter under investigation.

 

     (c) Describe the documentary material to be produced with

 

reasonable specificity so as to indicate fairly the material

 

demanded.

 

     (d) Prescribe a return date within which the documentary

 

material shall be produced.

 

     (e) Identify the members of the attorney general's staff to

 

whom the documentary material shall be made available for

 

inspection and copying.

 

     (5) At any time before the date specified in the notice, upon

 

motion for good cause shown, the court may extend the reporting

 

date or modify or set aside the notice and subpoena.

 

     (6) The documentary material or other information obtained by

 

the attorney general pursuant to an investigation under this

 

section shall be confidential records of the office of the attorney

 

general and shall not be available for public inspection or copying

 

or divulged to any person except as provided in this section. The

 

attorney general may disclose documentary material or other

 

information as follows:

 

     (a) To other law enforcement officials.

 

     (b) In connection with an enforcement action brought pursuant

 

to this act.

 

     (c) Upon order of the court, to a party in a private action

 


brought pursuant to this act.

 

     (7) A person who discloses information designated confidential

 

by this section, except as permitted by subsection (6) or under

 

court order, is guilty of a misdemeanor and may be fined not more

 

than $2,500.00, or imprisoned for not more than 1 year, or both.

 

     (1) If the attorney general has reasonable cause to believe

 

that a person has information or is in possession, custody, or

 

control of any document or other tangible object relevant to an

 

investigation for violation of this act, the attorney general may

 

serve on the person, before bringing any action in the circuit

 

court, a written demand to appear and be examined under oath, and

 

to produce the document or object for inspection and copying. The

 

demand must meet all of the following:

 

     (a) Be served on the person in the manner required for service

 

of process in this state.

 

     (b) Describe the nature of the conduct constituting the

 

violation under investigation.

 

     (c) Describe the document or object with sufficient

 

definiteness to permit it to be fairly identified.

 

     (d) If demanded, contain a copy of the written

 

interrogatories.

 

     (e) Prescribe a reasonable time at which the person must

 

appear to testify, within which to answer the written

 

interrogatories, and within which the document or object must be

 

produced, and advise the person that objections to or reasons for

 

not complying with the demand may be filed with the attorney

 

general on or before that time.

 


     (f) Specify a place for the taking of testimony or for

 

production and designate the person who shall be custodian of the

 

document or object.

 

     (g) Contain a copy of subsection (2).

 

     (2) If a person objects to or otherwise fails to comply with

 

the written demand served upon him or her under subsection (1), the

 

attorney general may file a petition to enforce the demand in the

 

circuit court of the county in this state in which the person

 

resides, in which the person maintains a principal place of

 

business, or in which the person conducts business or in the

 

circuit court of Ingham county if the person is not a resident of

 

this state or does not maintain a principal office or conduct

 

business in this state. The attorney general shall serve notice of

 

the hearing on the petition and a copy of all pleadings on the

 

person, who may appear in opposition. If the court finds that the

 

demand is proper, that there is reasonable cause to believe that

 

there may have been or is presently occurring a violation of this

 

act, and that the information sought or document or object demanded

 

is relevant to the investigation, the court shall order the person

 

to comply with the demand, subject to any modification prescribed

 

by the court. Upon motion by the person and for good cause shown,

 

the court may make any further order in the proceedings that

 

justice requires to protect the person from unreasonable annoyance,

 

embarrassment, oppression, burden, or expense.

 

     (3) The attorney general shall keep any procedure, testimony

 

taken, or material produced pursuant to a demand under subsection

 

(1) confidential before bringing an action against a person under

 


this act for the violation under investigation, unless

 

confidentiality is waived by the person being investigated and the

 

person who has testified, answered interrogatories, or produced

 

material or disclosure is authorized by the court.

 

     Sec. 8. (1) A person upon whom a notice on which a written

 

demand is served pursuant to under section 7 shall comply with the

 

terms of the notice demand unless otherwise provided by the

 

directed by an order of the circuit court.

 

     (2) A person who that does any of the following shall be

 

assessed a civil penalty is subject to a civil fine of not more

 

than $5,000.00: .

 

     (a) Knowingly and without good cause fails to appear when

 

served with a notice written demand under section 7 or to comply

 

with that demand.

 

     (b) Knowingly avoids, evades, or prevents compliance, in whole

 

or in part, with an investigation, including the removal from any

 

place, concealment, destruction, mutilation, alteration, or

 

falsification of documentary material in the possession, custody,

 

or control of a person subject to the notice a written demand under

 

section 7.

 

     (c) Knowingly conceals relevant information.

 

     (3) The If a person violates this section, the attorney

 

general may file a petition in the circuit court of the county in

 

which the person is established, resides, maintains a principal

 

office, or conducts business or, if the person is not established

 

does not reside, maintain a principal office, or conduct business

 

in this state, in the circuit court of Ingham county for an order

 


House Bill No. 6250 (H-1) as amended September 17, 2008

to enforce compliance with a subpoena or this section.

 

     (4) A violation of a final order entered pursuant to this

 

section shall be punished as under subsection (3) or section 7(2)

 

is considered civil contempt.

 

     (5) (4) Upon the petition of the attorney general, the a

 

circuit court may enjoin a person from doing business in this state

 

if the person persistently and knowingly evades or prevents

 

compliance with an injunction issued pursuant to under this act.

     [Enacting section 1.  (1) Contrary to the Michigan Supreme Court's

 ruling in Smith v Globe Life Ins. Co., 460 Mich 446 (1999), it is the intent of the legislature that the phrase "specifically authorized" as used in section 4(1)(a) of the Michigan consumer protection act, 1976 PA 331, MCL 445.904, was and is intended to narrowly limit the exemption. 

     (2) It is the intent of the legislature that the phrase "specifically authorized" as used in section 4(1)(a) of the Michigan consumer protection act, 1976 PA 331, MCL 445.904, does not mean "generally authorized".  It is the intent of the legislature that the exemption provided in section 4(1)(a) of that act is much more limited, applying only if a challenged conduct is specifically authorized by law or by a governmental regulatory board or officer.  The language of the exemption was and is intended to apply to protect a person engaged in trade or business from potential liability under the Michigan consumer protection act, 1976 PA 331, MCL 445.901 to 445.922, when its challenged conduct, not the general transaction, is specifically authorized by law or by a governmental regulatory board or officer.

     (3) It is the intent of the legislature to restore the exemption established in section 4(1)(a) of the Michigan consumer protection act, 1976 PA 331, MCL 445.904, to its original construction in Attorney General v Diamond Mortgage Co., 414 Mich 603, 617 (1982), that a license is not specific authority for all the conduct and transactions of the licensee's business.]