House File 2142 - Introduced HOUSE FILE BY PALMER Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing for a private cause of action for certain 2 consumer fraud violations. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5242YH 82 5 rh/rj/14 PAG LIN 1 1 Section 1. NEW SECTION. 714F.1 TITLE. 1 2 This chapter shall be known and may be cited as the 1 3 "Private Remedy for Consumer Fraud Act". 1 4 Sec. 2. NEW SECTION. 714F.2 DEFINITIONS. 1 5 1. "Advertisement" means the same as defined in section 1 6 714.16. 1 7 2. "Consumer" means a natural person or the person's legal 1 8 representative. 1 9 3. "Consumer merchandise" means merchandise offered for 1 10 sale or lease, or sold or leased, primarily for personal, 1 11 family, or household purposes. 1 12 4. "Deception" means the same as defined in section 1 13 714.16. 1 14 5. "Merchandise" means the same as defined in section 1 15 714.16. 1 16 6. "Person" means the same as defined in section 714.16. 1 17 7. "Sale" means any sale or offer for sale of consumer 1 18 merchandise for cash or credit. 1 19 8. "Unfair practice" means the same as defined in section 1 20 714.16. 1 21 Sec. 3. NEW SECTION. 714F.3 PROHIBITED PRACTICES AND 1 22 ACTS. 1 23 1. A person shall not engage in an unfair practice, 1 24 deception, fraud, false pretense, false promise, or 1 25 misrepresentation, or the concealment, suppression, or 1 26 omission of a material fact with the intent that others rely 1 27 upon the concealment, suppression, or omission, in connection 1 28 with the advertisement, sale, or lease of consumer 1 29 merchandise, or the solicitation of contributions for 1 30 charitable purposes. Except in an action for the concealment, 1 31 suppression, or omission of a material fact with intent that 1 32 others rely on it, an action under this chapter shall not 1 33 require an allegation or proof of reliance, intent to deceive, 1 34 or that the person who engaged in an unlawful act had 1 35 knowledge of the falsity of the claim or ignorance of the 2 1 truth. 2 2 2. A person shall not engage in any practice or act that 2 3 is in violation of any of the following: 2 4 a. Section 321.69. 2 5 b. Chapter 516D. 2 6 c. Section 516E.5, 516E.9, or 516E.10. 2 7 d. Chapter 555A. 2 8 e. Section 714.16, subsection 2, paragraphs "b" through 2 9 "n". 2 10 f. Chapter 714A. 2 11 Sec. 4. NEW SECTION. 714F.4 EXCLUSIONS. 2 12 1. This chapter shall not apply to any of the following: 2 13 a. Advertising by a retailer for a product, other than a 2 14 drug or other product claiming to have a health=related 2 15 benefit or use, if the advertising is prepared by a supplier, 2 16 unless the retailer participated in the preparation of the 2 17 advertisement or knew or should have known that the 2 18 advertisement was deceptive, false, or misleading. 2 19 b. In connection with an advertisement that violates this 2 20 chapter, the newspaper, magazine, publication, or other print 2 21 media in which the advertisement appears, or the radio 2 22 station, television station, or other electronic media which 2 23 disseminates the advertisement if the newspaper, magazine, 2 24 publication, radio station, television station, or other print 2 25 or electronic media has no knowledge of the fraudulent intent, 2 26 design, or purpose of the advertiser at the time the 2 27 advertisement is accepted. 2 28 c. Any advertisement that complies with the statutes, 2 29 rules, and regulations of the federal trade commission. 2 30 2. "Material fact" as used in this chapter does not 2 31 include repairs of damage to or adjustments on or replacements 2 32 of parts with new parts of otherwise new merchandise if the 2 33 repairs, adjustments, or replacements are made to achieve 2 34 compliance with factory specifications and are made before 2 35 sale of the merchandise at retail and the actual cost of any 3 1 labor and parts charged to or performed by a retailer for any 3 2 such repairs, adjustments, and parts does not exceed three 3 3 hundred dollars or ten percent of the actual cost to a 3 4 retailer including freight of the merchandise, whichever is 3 5 less, providing that the seller posts in a conspicuous place 3 6 notice that repairs, adjustments, or replacements will be 3 7 disclosed upon request. The exclusion provided in this 3 8 subsection does not apply to the concealment, suppression, or 3 9 omission of a material fact if the purchaser requests 3 10 disclosure of any repair, adjustment, or replacement. 3 11 Sec. 5. NEW SECTION. 714F.5 PRIVATE CAUSE OF ACTION. 3 12 1. A consumer who suffers damage or injury as the result 3 13 of a prohibited practice or act in violation of this chapter 3 14 may bring an action at law to recover actual damages. The 3 15 court may order such equitable relief as it deems necessary to 3 16 protect the public from further violations, including 3 17 temporary and permanent injunctive relief. 3 18 2. If the court finds that a person has violated this 3 19 chapter, the court shall award to the consumer the costs of 3 20 the action and to the consumer's attorney reasonable fees. 3 21 Reasonable attorney fees shall be determined by the value of 3 22 the time reasonably expended by the attorney including but not 3 23 limited to consideration of the following factors: 3 24 a. The time and labor required. 3 25 b. The novelty and difficulty of the issues in the case. 3 26 c. The skills required to perform the legal services 3 27 properly. 3 28 d. The preclusion of other employment by the attorney due 3 29 to the attorney's acceptance of the case. 3 30 e. The customary fee. 3 31 f. Whether the fee is fixed or contingent. 3 32 g. The time limitations imposed by the client or the 3 33 circumstances of the case. 3 34 h. The amount of money involved in the case and the 3 35 results obtained. 4 1 i. The experience, reputation, and ability of the 4 2 attorney. 4 3 j. The undesirability of the case. 4 4 k. The nature and length of the professional relationship 4 5 between the attorney and the client. 4 6 l. Damage awards in similar cases. 4 7 3. In order to recover damages, a claim under this section 4 8 shall be proved by a preponderance of the evidence. 4 9 4. If the finder of fact finds that a prohibited practice 4 10 or act in violation of this chapter constitutes willful 4 11 disregard for the rights or safety of another, in addition to 4 12 an award of actual damages, statutory damages up to three 4 13 times the amount of actual damages may be awarded to a 4 14 prevailing consumer. 4 15 5. This section shall not affect a consumer's right to 4 16 seek relief under any other theory of law. 4 17 Sec. 6. NEW SECTION. 714F.6 ATTORNEY GENERAL 4 18 NOTIFICATION. 4 19 1. A party filing a petition, counterclaim, 4 20 cross=petition, or pleading in intervention alleging a 4 21 violation under this chapter, within seven days following the 4 22 date of filing such pleading, shall provide a copy to the 4 23 attorney general and, within seven days following entry of any 4 24 final judgment in the action, shall provide a copy of the 4 25 judgment to the attorney general. This subsection shall not 4 26 apply to small claims actions, except as provided in 4 27 subsection 2. 4 28 2. A party appealing to district court a small claims 4 29 order or judgment involving an issue raised under this 4 30 chapter, within seven days of providing notice of the appeal, 4 31 shall notify the attorney general in writing and provide a 4 32 copy of the pleading raising the issue and a copy of the small 4 33 claims court order or judgment. 4 34 3. A party appealing an order or judgment involving an 4 35 issue raised under this chapter, within seven days following 5 1 the date such notice of appeal is filed with the court, shall 5 2 notify the attorney general in writing and provide a copy of 5 3 the pleading raising the issue and a copy of the court order 5 4 or judgment being appealed. 5 5 4. Upon timely application to the court in which an action 5 6 involving an issue raised under this chapter is pending, the 5 7 attorney general may intervene as a party at any time or may 5 8 be heard at any time. The attorney general's failure to 5 9 intervene shall not preclude the attorney general from 5 10 bringing a separate enforcement action. 5 11 5. All copies of pleadings, orders, judgments, and notices 5 12 required by this section to be sent to the attorney general 5 13 shall be sent by certified mail unless the attorney general 5 14 has previously been provided such copies of pleadings, orders, 5 15 judgments, or notices in the same action by certified mail, in 5 16 which case subsequent mailings may be made by regular mail. 5 17 Failure to provide the required mailings to the attorney 5 18 general shall not be grounds for dismissal of an action under 5 19 this chapter, but shall be grounds for a subsequent action by 5 20 the attorney general to vacate or modify the judgment. 5 21 EXPLANATION 5 22 This bill creates a private remedy for certain consumer 5 23 fraud Act violations. 5 24 The bill creates a private cause of action for consumer 5 25 fraud violations. The bill provides that a consumer who 5 26 suffers damage or injury as a result of a prohibited practice 5 27 or act declared to violate the bill may bring an action at law 5 28 to recover actual damages, and may seek court protection from 5 29 further violations, including temporary and permanent 5 30 injunctive relief. In addition, a prevailing consumer in such 5 31 an action shall be awarded costs and reasonable attorney fees 5 32 to be determined by the value of time reasonably expended by 5 33 the attorney including but not limited to certain factors as 5 34 specified in the bill. In addition, if the finder of fact 5 35 finds that a prohibited practice or act in violation of the 6 1 bill constitutes willful disregard for the rights or safety of 6 2 another, in addition to an award of actual damages, statutory 6 3 damages up to three times the amount of actual damages may be 6 4 awarded to a prevailing consumer. 6 5 The bill defines a prohibited practice or act to include an 6 6 unfair practice, deception, fraud, false pretense, false 6 7 promise, or misrepresentation, or the concealment, 6 8 suppression, or omission of a material fact with the intent 6 9 that others rely on the concealment, suppression, or omission, 6 10 in connection with the advertisement, sale, or lease of 6 11 consumer merchandise, or the solicitation of contributions for 6 12 charitable purposes. 6 13 The bill does not apply to certain advertising by a 6 14 retailer for a product unless the retailer participated in the 6 15 preparation of the advertisement or knew or should have known 6 16 that the advertisement was deceptive or misleading, print 6 17 media in which the advertisement appears or electronic media 6 18 which disseminates the advertisement if the print or 6 19 electronic media has no knowledge of the fraudulent intent, 6 20 design, or purpose of the advertiser at the time the 6 21 advertisement is accepted, and any advertisement that complies 6 22 with the statutes, rules, and regulations of the federal trade 6 23 commission. 6 24 The bill authorizes the attorney general to oversee private 6 25 consumer fraud actions, including small claims court actions, 6 26 by requiring a party filing a petition, counterclaim, 6 27 cross=petition, or pleading in intervention alleging a 6 28 violation under the bill to provide a copy of the relevant 6 29 documents, including judgments and notices of appeal, to the 6 30 attorney general. In addition, the attorney general may 6 31 intervene as a party in a private consumer fraud action at any 6 32 time, or may be heard in such an action at any time. 6 33 The bill provides that failure to provide all mailings of 6 34 petitions, orders, judgments, and notices of appeal to the 6 35 attorney general shall not be grounds for dismissal, but shall 7 1 be grounds for a subsequent action by the attorney general to 7 2 vacate or modify the judgment. 7 3 LSB 5242YH 82 7 4 rh/rj/14.2