SB-1125, As Passed House, December 13, 2006
March 9, 2006, Introduced by Senators SCOTT, CLARK-COLEMAN, JOHNSON, TOY, CLARKE, THOMAS, BARCIA, LELAND and HARDIMAN and referred to the Committee on Judiciary.
A bill to amend 1976 PA 331, entitled
"Michigan consumer protection act,"
by amending sections 2, 3, and 5 (MCL 445.902, 445.903, and
445.905), section 2 as amended by 1984 PA 91 and section 3 as
amended by 2004 PA 462.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. (1) As used in this act:
Subject to subsection (2),
opportunity" means the sale or lease of any products, equipment,
supplies, or services for the purpose of enabling the purchaser to
start a business, and in which the seller represents 1 or more of
(i) That the seller will provide locations or assist the
purchaser in finding locations for the use or operation of vending
machines, racks, display cases, or other similar devices, or
currency operated amusement machines or devices, on premises
neither owned nor leased by the purchaser or seller.
(ii) That the seller may, in the ordinary course of business,
purchase any or all products made, produced, fabricated, grown,
bred, or modified by the purchaser using whole or in part the
supplies, services, or chattels sold to the purchaser.
(iii) The seller guarantees that the purchaser will derive
from the business opportunity
exceeds the price
paid for the business opportunity; or that the seller will refund
all or part of the price paid for the business opportunity, or
repurchase any of the products, equipment, supplies, or chattels
supplied by the seller, if the purchaser is unsatisfied with the
business opportunity. As used in this subparagraph, "guarantee"
means a written or oral representation that would cause a
reasonable person in the purchaser's position to believe that
income is assured.
(iv) That the seller will provide a sales program or marketing
program which will enable the purchaser to derive income from the
exceeds the price paid for the
business opportunity. This subparagraph does not apply to the sale
of a marketing program made in conjunction with the licensing of a
federally registered trademark or a federally registered service
mark, or to the sale of a business opportunity for which the
purchaser pays less than $500.00 in total for the business
opportunity from anytime before the date of sale to anytime within
6 months after the date of sale.
opportunity, as used in this act, does not include the
sale of a franchise as defined in section 2 of Act No. 269 of the
Public Acts of 1974, being section 445.1502 of the Michigan Compiled
Laws, or the sale of an ongoing business if the owner of that
business sells and intends to sell only that single business opportunity.
(b) "Documentary material" includes the original or copy of a
book, record, report, memorandum, paper, communication, tabulation,
map, chart, photograph, mechanical transcription, or other tangible
document or recording, wherever situated.
(c) "Performing group" means a vocal or instrumental group
seeking to use the name of another group that has previously
released a commercial sound recording under that name.
"Person" means a natural person,
limited liability company, trust, partnership, incorporated or
unincorporated association, or other legal entity.
(e) "Recording group" means a vocal or instrumental group that
meets both of the following:
(i) At least 1 of the members of the group has previously
released a commercial sound recording under the group's name.
(ii) At least 1 of the members of the group has a legal right
to use the group's name, by virtue of use or operation under the
group's name without abandoning the name of or affiliation with the
(f) "Sound recording" means a work that results from the
fixation on a material object of a series of musical, spoken, or
other sounds regardless of the nature of the material object, such
as a disk, tape, or other phono-record, in which the sounds are
"Trade or commerce" means the conduct of a
providing goods, property, or service primarily for personal,
family, or household purposes and includes the advertising,
solicitation, offering for sale or rent, sale, lease, or
distribution of a service or property, tangible or intangible,
real, personal, or mixed, or any other article, or a business
opportunity. "Trade or commerce" does not include the purchase or
sale of a franchise, but does include pyramid and chain promotions,
as "franchise", "pyramid", and "chain promotions" are defined in
No. 269 of the Public Acts of 1974, being sections 445.1501 to 445.1545
of the Michigan Compiled Laws the franchise investment
law, 1974 PA 269, MCL 445.1501 to 445.1546.
(2) As used in this act, "business opportunity" does not
include a sale of a franchise as defined in section 2 of the
franchise investment law, 1974 PA 269, MCL 445.1502, or the sale of
an ongoing business if the owner of the business sells and intends
to sell only that single business opportunity.
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
(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
(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
(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
(o) Causing a probability of confusion or of misunderstanding
as to the terms or conditions of credit if credit is extended in a
(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
(z) Charging the consumer a price that is grossly in excess of
the price at which similar property or services are sold.
(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
(cc) Failing to reveal facts that are material to the
transaction in light of representations of fact made in a positive
(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
(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
(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
Senate Bill No. 1125 as amended June 8, 2006
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>>
by virtue of use or operation under the <<RECORDING>> group's name
abandoned the name or affiliation with the <<RECORDING>> group.
(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.
(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
(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.
the attorney general has probable cause
to believe that a person has engaged, is engaging, or is about to
in a method, act, or practice
to section 3, and
notice given in
accordance with this section, the attorney general may bring an
action in accordance with principles of equity to restrain the
defendant by temporary or permanent injunction from engaging in the
method, act, or practice. The action may be brought in the circuit
court of the county where the defendant is established or conducts
business or, if the defendant is not established in this state, in
the circuit court of Ingham county. The court may award costs to
the prevailing party. For persistent and knowing violation of
3 the court may assess the defendant a civil
of not more than $25,000.00. For a violation of section 3(1)(kk),
each performance or production is a separate violation.
(2) Unless waived by the court on good cause shown not less
than 10 days before the commencement of an action under this
section, the attorney general shall notify the person of his or her
intended action and give the person an opportunity to cease and
desist from the alleged unlawful method, act, or practice or to
confer with the attorney general in person, by counsel, or by other
representative as to the proposed action before the proposed filing
date. The notice may be given the person by mail, postage prepaid,
to his or her usual place of business or, if the person does not
have a usual place of business, to his or her last known address,
respect to if the person is a corporation, only to a
resident agent who is designated to receive service of process or
to an officer of the corporation.
(3) A prosecuting attorney or law enforcement officer
receiving notice of an alleged violation of this act, or of a
violation of an injunction, order, decree, or judgment issued in an
action brought pursuant to this section, or of an assurance under
this act, shall immediately forward written notice of the violation
together with any information he or she may have to the office of
the attorney general.
(4) A person who knowingly violates the terms of an
injunction, order, decree, or judgment issued pursuant to this
shall forfeit and pay to the state a civil
of not more than $5,000.00 for each violation. For the purposes of
this section, the court issuing an injunction, order, decree, or
judgment shall retain jurisdiction, the cause shall be continued,
and the attorney general may petition for recovery of a civil
fine as provided by this section.