Senate Study Bill 3086 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON TECHNOLOGY BILL BY CHAIRPERSON McCLINTOCK) A BILL FOR An Act relating to consumer fraud and unlawful practices, 1 including digital financial asset transaction kiosks, and 2 providing civil penalties. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 6574XC (1) 91 lh/jh

S.F. _____ Section 1. Section 533C.1004, subsection 10, paragraphs a 1 and b, Code 2026, are amended to read as follows: 2 a. If the attorney general has reasonable belief that an 3 operator is in violation of this section , the attorney general 4 has the sole authority to bring civil action to provide for all 5 of the following: 6 (1) Enjoin further violations by the operator. 7 (2) Enforce compliance with this section . 8 (3) Civil penalties in an amount not more than ten thousand 9 dollars for each violation of this section . 10 (4) Other remedies permitted under law A violation of this 11 section is an unlawful practice under section 714.16 . 12 b. If Notwithstanding the civil penalty limit under 13 section 714.16, subsection 7, paragraph “b” , if the attorney 14 general has reasonable belief that a person is in violation 15 of an injunction issued under this subsection section 714.16, 16 subsection 2, paragraph “t” , the attorney general has the 17 sole authority to bring a civil action to provide for a civil 18 penalties penalty for violation of the injunction in an amount 19 not more than one hundred thousand dollars. 20 Sec. 2. Section 714.16, subsection 2, Code 2026, is amended 21 by adding the following new paragraph: 22 NEW PARAGRAPH . t. It shall be an unlawful practice for a 23 person to violate section 533C.1004. 24 Sec. 3. Section 714.16, subsection 7, Code 2026, is amended 25 to read as follows: 26 7. a. A civil action pursuant to this section shall be by 27 equitable proceedings. If it appears to the attorney general 28 that a person has engaged in, is engaging in, or is about to 29 engage in a practice declared to be unlawful by this section , 30 the attorney general may seek and obtain in an action in a 31 district court a temporary restraining order, preliminary 32 injunction, or permanent injunction prohibiting the person from 33 continuing the practice or engaging in the practice or doing an 34 act in furtherance of the practice. The court may make orders 35 -1- LSB 6574XC (1) 91 lh/jh 1/ 3

S.F. _____ or judgments as necessary to prevent the use or employment by 1 a person of any prohibited practices, or which are necessary 2 to restore to any person in interest any moneys or property, 3 real or personal, which have been acquired by means of a 4 practice declared to be unlawful by this section , including the 5 appointment of a receiver in cases of substantial and willful 6 violation of this section . If a person has acquired moneys or 7 property by any means declared to be unlawful by this section 8 and if the cost of administering reimbursement outweighs the 9 benefit to consumers or consumers entitled to the reimbursement 10 cannot be located through reasonable efforts, the court may 11 order disgorgement of moneys or property acquired by the person 12 by awarding the moneys or property to the state to be used by 13 the attorney general for the administration and implementation 14 of this section . Except in an action for the concealment, 15 suppression, or omission of a material fact with intent that 16 others rely upon it, it is not necessary in an action for 17 reimbursement or an injunction, to allege or to prove reliance, 18 damages, intent to deceive, or that the person who engaged 19 in an unlawful act had knowledge of the falsity of the claim 20 or ignorance of the truth. A claim for reimbursement may be 21 proved by any competent evidence, including evidence that would 22 be appropriate in a class action. 23 b. In addition to the remedies otherwise provided for in 24 this subsection , the attorney general may request and the 25 court may impose a civil penalty not to exceed forty thousand 26 dollars per violation against a person found by the court to 27 have engaged in a method, act, or practice declared unlawful 28 under this section ; provided, however, a course of conduct 29 shall not be considered to be separate and different violations 30 merely because the conduct is repeated to more than one person . 31 In addition, on the motion of the attorney general or its own 32 motion, the court may impose a civil penalty of not more than 33 five thousand dollars for each day of intentional violation 34 of a temporary restraining order, preliminary injunction, or 35 -2- LSB 6574XC (1) 91 lh/jh 2/ 3

S.F. _____ permanent injunction issued under authority of this section . 1 A penalty imposed pursuant to this subsection is in addition 2 to any penalty imposed pursuant to section 537.6113 . Civil 3 penalties ordered pursuant to this subsection shall be paid to 4 the treasurer of state to be deposited in the general fund of 5 the state. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill relates to consumer fraud and unlawful practices, 10 including digital financial asset transaction kiosks, and 11 provides civil penalties. 12 The bill strikes existing enforcement and civil penalty 13 provisions that authorize the attorney general to bring civil 14 actions, seek injunctions and civil penalties, and enforce 15 compliance for violations of Code section 533C.1004 (digital 16 financial asset transaction kiosks). Instead, the bill 17 provides that a violation of Code section 533C.1004 constitutes 18 an unlawful practice under Code section 714.16 (consumer 19 frauds), and subjects such violations to the remedies and 20 enforcement provisions available under that section. 21 The bill specifies that, notwithstanding the civil penalty 22 limits in Code section 714.16, if the attorney general 23 has reasonable belief that a person is in violation of an 24 injunction issued under Code section 714.16, the attorney 25 general may bring a civil action to seek a civil penalty of up 26 to $100,000 for a violation of the injunction. 27 Under current law, the attorney general may request and the 28 court may impose a civil penalty not to exceed $40,000 per 29 violation for unlawful methods, acts, or practices under Code 30 section 714.16, but a course of conduct affecting more than one 31 person is not treated as separate violations. The bill strikes 32 this limitation regarding the treatment of a course of conduct 33 affecting more than one person. 34 -3- LSB 6574XC (1) 91 lh/jh 3/ 3