Text: HSB00149 Text: HSB00151 Text: HSB00100 - HSB00199 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 9C.1, Code 1995, is amended to read as 1 2 follows: 1 3 9C.1 DEFINITIONS. 1 4The term "transient"Transient merchant" as usedherein1 5shall mean and includein this chapter includes every 1 6 merchant, whether an individual person, a firm, corporation, 1 7 partnership, or association, and whether owner, agent, bailee, 1 8 consignee, or employee, who shall bring or cause to be brought 1 9 within the state of Iowa any goods, wares, or merchandise of 1 10 any kind, nature, or description, with the intention of 1 11 temporarily or intermittently selling or offering to sell at 1 12 retail such goods, wares, or merchandise within the state of 1 13 Iowa.The term "transient"Transient merchant"shallalso 1 14mean and includeincludes every merchant, whether an 1 15 individual person, a firm, corporation, partnership, or an 1 16 association, who shall by itself, or by agent, consignee, or 1 17 employee temporarily or intermittently engage in or conduct at 1 18 one or more locations a business within the state of Iowa for 1 19 the sale at retail of any goods, wares, or merchandise of any 1 20 nature or description. A merchant engaging in business shall 1 21 be presumed to be temporarily or intermittently in business 1 22 unless it is the intention ofsuchthe merchant to remain 1 23 continuously in business at each location where the merchant 1 24 is engaged in business within the state of Iowa as a merchant 1 25 for a period of more than sixty days. The provisions of this 1 26 chapter shall not be construed to apply to persons selling at 1 27 wholesale to merchants,nor totransient vendors of drugs,nor1 28topersons running a huckster wagon, or selling or 1 29 distributing livestock feeds, fresh meats, fish, fruit, or 1 30 vegetables,nor toor persons selling their own work or 1 31 production either by themselves or employees. 1 32 "Merchandise" means as defined in section 714.16. 1 33 Sec. 2. Section 554.9402, subsection 2, unnumbered 1 34 paragraph 1, Code 1995, is amended to read as follows: 1 35 A financing statement which otherwise complies with 2 1 subsection 1 is sufficient when it is signed by the secured 2 2 party instead of the debtor ifita previously recorded 2 3 financing statement exists which was executed by the debtor in 2 4 favor of that secured party and if the financing statement 2 5 signed by the secured party is filed to perfect a security 2 6 interest in 2 7 Sec. 3. Section 714.16, subsection 4, paragraphs b and c, 2 8 Code 1995, are amended by striking the paragraphs and 2 9 inserting in lieu thereof the following: 2 10 b. Subject to paragraph "c", information, documents, 2 11 testimony, or other evidence provided the attorney general by 2 12 a person pursuant to subsection 3 and paragraph "a" of this 2 13 subsection, or provided by a person as evidence in any civil 2 14 action brought pursuant to this section, shall not be admitted 2 15 in evidence, or used in any manner whatsoever, in any criminal 2 16 prosecution or forfeiture proceeding against that person. If 2 17 a criminal prosecution or forfeiture proceeding is initiated 2 18 in a state court against a person who has provided information 2 19 pursuant to paragraph "c", the state shall have the burden of 2 20 proof that the information provided was not used in any manner 2 21 to further the criminal investigation, prosecution, or 2 22 forfeiture proceeding. 2 23 c. Paragraph "b" shall not apply unless the person has 2 24 first asserted a right against self-incrimination and the 2 25 attorney general has elected to provide the person with a 2 26 written statement that the information, documents, testimony, 2 27 or other evidence at issue are subject to paragraph "b". 2 28 After a person has been provided such written statement by the 2 29 attorney general, a claim of privilege against self- 2 30 incrimination is not a defense to any action or proceeding to 2 31 obtain the information, documents, testimony, or other 2 32 evidence. Nothing in this section limiting the use of 2 33 evidence in a criminal proceeding shall apply to any 2 34 prosecution or proceeding for perjury or contempt of court 2 35 committed in the course of the giving or production of the 3 1 information, documents, testimony, or other evidence. 3 2 Sec. 4. Section 714.16, subsections 5 and 6, Code 1995, 3 3 are amended to read as follows: 3 4 5. Service by the attorney general of any notice requiring 3 5 a person to file a statement or report, or of a subpoena upon 3 6 any person, shall be made personally within this state or by 3 7 certified mail to the last known place of business, residence, 3 8 or abode within this state of such person, but if such cannot 3 9 be obtained, substituted servicethereforof the notice or 3 10 subpoena may be made in any of the followingmannermanners: 3 11 a. Personal servicethereofof the notice or subpoena 3 12 without this state; or. 3 13 b. The mailingthereofof the notice or subpoena by 3 14registeredcertified mail to the last known place of business, 3 15 residence, or abode within or without this state of such 3 16 person for whom thesamenotice or subpoena is intended; or. 3 17 c. As to any person other than a natural person, in the 3 18 manner provided in the Rules of Civil Procedure as if a 3 19 petition had been filed; or. 3 20 d. Such service as a district court may direct in lieu of 3 21 personal service or service by certified mail within this 3 22 state. 3 23 6. If any person fails or refuses to file any statement or 3 24 report, or obey any subpoena issued by the attorney general, 3 25 the attorney general may, after notice, apply toathe Polk 3 26 county district court or the district court for the county in 3 27 which the person resides or is located and, after hearing 3 28thereof, request an order doing any of the following: 3 29 a. Granting injunctive relief, restraining the sale or 3 30 advertisement of any merchandise by such persons;. 3 31 b. Dissolving a corporation created by or under the laws 3 32 of this state or revoking or suspending the certificate of 3 33 authority to do business in this state of a foreign 3 34 corporation or revoking or suspending any other licenses, 3 35 permits, or certificates issued pursuant to law to such person 4 1 which are used to further the allegedly unlawful practice;4 2and. 4 3 c. Granting such other relief as may be required; until 4 4 the person files the statement or report, or obeys the 4 5 subpoena. 4 6 Sec. 5. Section 714.16, Code 1995, is amended by adding 4 7 the following new subsection: 4 8 NEW SUBSECTION. 15. The attorney general may bring an 4 9 action on behalf of the residents of this state, or as parens 4 10 patriae, under the federal telemarketing and consumer fraud 4 11 and abuse prevention Act, Pub. L. No. 103-297, and pursue any 4 12 and all enforcement options available under that Act. 4 13 Subsequent amendments to that Act which do not substantially 4 14 alter its structure and purpose shall not be construed to 4 15 affect the authority of the attorney general to pursue an 4 16 action pursuant to this section, except to the extent the 4 17 amendments specifically restrict the authority of the attorney 4 18 general. 4 19 Sec. 6. Section 714.16A, subsection 1, Code 1995, is 4 20 amended to read as follows: 4 21 1. If a person violates section 714.16, and the violation 4 22 is committed against an older person, in an action brought by 4 23 the attorney general, in addition to any other civil penalty, 4 24 the court may impose an additional civil penalty not to exceed 4 25 five thousand dollars for each such violation. Additionally, 4 26 the attorney general may accept a civil penalty as determined 4 27 by the attorney general in settlement of an investigation of a 4 28 violation of section 714.16, regardless of whether an action 4 29 has been filed pursuant to section 714.16. 4 30 A civil penalty imposed by a court or determined and 4 31 accepted by the attorney general pursuant to this section 4 32 shall be paid to the treasurer of state, who shall deposit the 4 33 money in the elderly victim fund, a separate fund created in 4 34 the state treasury and administered by the attorney general 4 35 for the investigation and prosecution of frauds against the 5 1 elderly. Notwithstanding section 8.33, any balance in the 5 2 fund on June 30 of any fiscal year shall not revert to the 5 3 general fund of the state. An award of reimbursement pursuant 5 4 to section 714.16 has priority over a civil penalty imposed by 5 5 the court pursuant to this subsection. 5 6 Sec. 7. Section 725.12, Code 1995, is amended by adding 5 7 the following new unnumbered paragraph: 5 8 NEW UNNUMBERED PARAGRAPH. A violation of this section is a 5 9 violation of section 714.16, subsection 2, paragraph "a". 5 10 EXPLANATION 5 11 This bill amends provisions relating to certain consumer 5 12 protections. 5 13 Section 9C.1 is amended to define "merchandise" which is 5 14 sold by transient merchants as the same as provided for in 5 15 section 714.16, subsection 1. 5 16 Section 554.9402, which relates to financing statements 5 17 under the uniform commercial code, is amended to provide that 5 18 a financing statement which is signed by the secured party 5 19 instead of the debtor and is otherwise sufficient under the 5 20 section, is sufficient only if there exists a previously 5 21 recorded financing statement executed by the debtor in favor 5 22 of the secured party. 5 23 Section 714.16, subsection 4, is amended by striking 5 24 current paragraphs "b" and "c", which provide limited immunity 5 25 from criminal prosecution to a person providing information in 5 26 a civil action brought by the attorney general under section 5 27 714.16, and rewriting those paragraphs to provide that such 5 28 immunity shall not arise unless the person providing the 5 29 information has first asserted a right against self- 5 30 incrimination and the attorney general provides a written 5 31 statement that information provided by the person will not be 5 32 used in a subsequent criminal action. 5 33 Section 714.16, subsection 5, is amended to provide that 5 34 the notice requiring a person to file a statement or report, 5 35 or of a subpoena, which currently must be made personally when 6 1 made within this state, may now also be made by certified mail 6 2 to the last known place of business, residence, or abode of 6 3 the person within the state. Certified mail is defined in 6 4 Code section 618.15. Section 714.16, subsection 6, is amended 6 5 to provide that the attorney general may commence an action 6 6 under section 714.16 against a person who fails to respond to 6 7 a subpoena or other formal investigation request of the 6 8 attorney general in the Polk county district court, as well as 6 9 the district court in the county in which the person resides 6 10 or is located. 6 11 Section 714.16 is amended by adding a new subsection which 6 12 provides that the attorney general may bring an action on 6 13 behalf of the residents of this state under the federal 6 14 Telemarketing and Consumer Fraud and Abuse Prevention Act. 6 15 Section 714.16A is amended to provide that the attorney 6 16 general may establish and accept a settlement amount related 6 17 to an investigation of a consumer fraud allegedly committed 6 18 against an older person which does not proceed to court. 6 19 Section 725.12, which relates to illegal lotteries, is 6 20 amended to provide that a violation of that section is also a 6 21 violation of section 714.16, subsection 2, paragraph "a" 6 22 relating to fraudulent and deceptive advertising. 6 23 BACKGROUND STATEMENT 6 24 SUBMITTED BY THE AGENCY 6 25 The bill contains amendments to several laws to provide 6 26 greater protection for consumers and to improve enforcement of 6 27 such laws by the office of the attorney general. 6 28 Section 1 of the bill amends section 9C.1 of the law 6 29 pertaining to sales in this state by transient merchants to 6 30 broaden the definition of "merchandise" under the chapter to 6 31 be that used in the Consumer Fraud Act. Courts have held that 6 32 current chapter 9C does not apply to transients who perform 6 33 work on houses and other buildings in Iowa when they do not 6 34 purchase in this state the products they use in performing the 6 35 work. This interpretation of the word "merchandise" has 7 1 permitted out-of-state scam artists who come to Iowa for a 7 2 short period of time and scam consumers to avoid prosecution 7 3 under this chapter. Such scams include barn painting or house 7 4 painting scams, where the consumer invests significant sums 7 5 only to have the worker do little or no work and flee the 7 6 county or the state. The amendment will provide greater 7 7 protection for consumers by ensuring that transient merchants 7 8 who come into Iowa and perform work are subject to the 7 9 requirements of the chapter. 7 10 Section 2 amends the uniform commercial Code, chapter 554, 7 11 by providing that financing statements do not comply with the 7 12 provisions of section 554.9402, subsection 2, unless the 7 13 debtor has executed a prior recorded financing statement in 7 14 favor of the secured party. This amendment is necessary in 7 15 that the current section is subject to abuse by those who 7 16 execute and file such statements as secured parties on behalf 7 17 of supposed debtors when, in fact, no contracts of 7 18 indebtedness are in existence. Under the current law, parties 7 19 have harassed those with whom they have disagreements by, for 7 20 example, using such financing statements to cloud titles to 7 21 real and personal property owned by the supposed debtor. 7 22 Legitimate creditors should not object to the amendment in 7 23 that they will have access to documents evidencing 7 24 indebtedness which have been duly executed by their 7 25 customer/debtors prior to the issuance of loan proceeds. 7 26 Section 3 removes the current provisions in the consumer 7 27 fraud Act, section 714.16, regarding immunity for persons who 7 28 are required to testify or provide information to the attorney 7 29 general concerning investigations for violations of the Act 7 30 and replaces them with provisions stating that such immunity 7 31 only applies when the person required to provide information 7 32 has asserted a right against self-incrimination and has 7 33 received a written notice from the attorney general that the 7 34 information will not be used in a criminal prosecution of the 7 35 person. The amendment will permit the attorney general to 8 1 investigate deceptive or unfair practices under the authority 8 2 of the consumer fraud Act, without automatically forfeiting 8 3 the option to proceed criminally if the latter appears 8 4 warranted. The amendment still protects the rights of those 8 5 who may be subject to an investigation under the Act by 8 6 providing immunity consistent with constitutional 8 7 requirements. 8 8 Section 4 will allow the attorney general to serve 8 9 subpoenas and other investigative documents under the consumer 8 10 fraud Act in this state by certified mail. This will save 8 11 money for the state as current law requires personal service 8 12 within the state but permits the use of registered mail 8 13 outside the state. It is unnecessary to draw distinctions 8 14 between in-state and out-of-state respondents. In addition, 8 15 the attorney general pays significant sums every year to law 8 16 enforcement and private process servers for personal service 8 17 of these documents. Service by certified mail is much less 8 18 costly. 8 19 Section 4 permits the attorney general to file actions 8 20 under the consumer fraud Act in Polk county against those who 8 21 fail to respond to attorney general subpoenas or other formal 8 22 investigation requests or to file such actions in the county 8 23 in which the person resides or is located. Under current law, 8 24 the attorney general must bring actions in the district where 8 25 the defendant is located, even though the subpoena probably 8 26 required an appearance or the production of materials in Polk 8 27 county. Thus, because of cost and time factors, current law 8 28 discourages the attorney general from filing such actions. 8 29 Thus, the amendment will strengthen the attorney general's 8 30 capacity to protect consumers. 8 31 Regarding section 5, the Telemarketing and Consumer Fraud 8 32 and Abuse Prevention Act was signed into law by the President 8 33 of the United States in August of 1994. The law provides that 8 34 the federal trade commission is to adopt rules defining and 8 35 prohibiting deceptive and abusive telemarketing practices by 9 1 August of 1995, and grants state attorneys general the 9 2 authority to enforce those rules through actions in federal 9 3 court. 9 4 The federal grant of authority provides: "Whenever an 9 5 attorney general of any State has reason to believe that the 9 6 interests of the residents of that State have been or are 9 7 being threatened or adversely affected because any person has 9 8 engaged or is engaging in a pattern or practice of 9 9 telemarketing which violates any rule of the Commission ..., 9 10 the State, as parens patriae, may bring a civil action on 9 11 behalf of its residents in an appropriate district court of 9 12 the United States to enjoin such telemarketing, to enforce 9 13 compliance with such rule of the Commission, to obtain 9 14 damages, restitution or other compensation on behalf of 9 15 residents of such State, or to obtain such further and other 9 16 relief as the court may deem appropriate." 9 17 The reference to "parens patriae" was surely not intended 9 18 by congress to limit in any way the ability of all attorneys 9 19 general to take advantage of the enforcement powers provided 9 20 by the Act, and should not be interpreted as any such 9 21 limitation. Nevertheless, a defendant in an action brought by 9 22 the Iowa attorney general under the federal Act might 9 23 challenge the authority of the attorney general to bring the 9 24 action, arguing that to bring the action "as parens patriae" a 9 25 state attorney general must have general parens patriae 9 26 authority under state law, and that the attorney general lacks 9 27 such general authority. See State ex rel. Turner v. Iowa 9 28 State Highway Com'n, 186 N.W.2d 141, 146 (Iowa 1971) ("[T]he 9 29 Attorney General of this State is not clothed with common-law 9 30 powers", and is confined to the powers granted by the 9 31 legislature.). 9 32 Such an argument might fail for two reasons. First, Iowa 9 33 Code section 13.2, subsection 2, imposes upon the attorney 9 34 general the duty to "[p]rosecute and defend in any ... court 9 35 or tribunal, all actions and proceedings, civil or criminal, 10 1 in which the state may be a party or interested, when, in the 10 2 attorney general's judgment, the interest of the state 10 3 requires such action...". This express grant of authority 10 4 should suffice to permit the attorney general to enforce the 10 5 federal Act. 10 6 Second, the federal Act will probably be interpreted as 10 7 providing all authority necessary for each state to pursue the 10 8 remedies set forth in the Act, without regard to any given 10 9 state's position on the extent of its attorney general's 10 10 parens patriae authority. 10 11 Nevertheless, in light of the federal law's express 10 12 reference to a state acting "as parens patriae," the 10 13 possibility remains that the power of the attorney general to 10 14 proceed in the absence of established parens patriae authority 10 15 might be successfully challenged. Therefore, the more prudent 10 16 course is to remove any doubt about the authority of the Iowa 10 17 attorney general to prosecute actions under the federal Act. 10 18 This amendment achieves that result. 10 19 The amendment also provides that later amendments to the 10 20 federal Act which do not substantially alter the structure and 10 21 purpose of the Act will not affect the attorney general's 10 22 enforcement authority. Without this provision, if congress 10 23 later amends the Act, for example by expressly granting 10 24 additional enforcement powers to state attorneys general, a 10 25 defendant in an action brought by the Iowa attorney general in 10 26 federal court might argue that the grant of authority embodied 10 27 in this amendment was limited to enforcing the federal Act as 10 28 it existed at the time the Act was enacted, and that the Iowa 10 29 attorney general lacks enforcement authority under an amended 10 30 version of the federal law. This provision makes clear that 10 31 unless amendments go to the heart of the federal Act by 10 32 changing its structure and purpose or by directly limiting the 10 33 authority of the attorney general, the attorney general will 10 34 have continuing authority to enforce the Act. 10 35 Section 6 amends section 714.16A, which permits the 11 1 attorney general to obtain an additional $5,000 civil penalty 11 2 in actions under the consumer fraud Act where the victims are 11 3 aged 65 or older. The amendment provides greater flexibility 11 4 to the law by permitting the penalties to be paid in 11 5 nonjudicial settlements with the attorney general. Thus, the 11 6 amendment fosters a reduction of burden on the state court 11 7 system. 11 8 Section 7 amends the lottery statute to provide that 11 9 violations of the lottery law, section 725.12, are also 11 10 violations of the consumer fraud Act, section 714.16. Iowans 11 11 are often subject to deceptive and misleading telephone and 11 12 mail solicitations offering opportunities to compete in 11 13 supposed contests in exchange for fees. These mailings and 11 14 phone calls violate the lottery statute, yet, due to a court 11 15 decision, the attorney general is unable to bring an action 11 16 under the consumer fraud Act against the offenders for 11 17 violating the lottery statute. This amendment will permit the 11 18 attorney general to file such an action. 11 19 LSB 1170DP 76 11 20 mj/jw/5.1
Text: HSB00149 Text: HSB00151 Text: HSB00100 - HSB00199 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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