SB-1125, As Passed Senate, June 13, 2006

SENATE BILL No. 1125

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:

     (a)  "Business  Subject to subsection (2), "business

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

the following:

     (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

income from the business opportunity  which  that 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

business opportunity  which  that 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.

     Business 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.

(d)  (c) "Person" means a natural person, corporation,

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

group.

     (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

embodied.

(g)  (d) "Trade or commerce" means the conduct of a business

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

Act 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

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.

     (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

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>>

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.

     (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

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.

     Sec. 5. (1)  When  If the attorney general has probable cause

to believe that a person has engaged, is engaging, or is about to

engage in a method, act, or practice  which  that is unlawful

pursuant to section 3, and  upon  gives 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

section 3 the court may assess the defendant a civil  penalty  fine

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,

or,  with 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

section shall forfeit and pay to the state a civil  penalty  fine

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

penalty  fine as provided by this section.