SSB 3086 (LSB 6574XC (1) 91)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON TECHNOLOGY BILL BY CHAIRPERSON McCLINTOCK)

A BILL FOR

An Act relating to consumer fraud and unlawful practices, including digital financial asset transaction kiosks, and providing civil penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 533C.1004, subsection 10, paragraphs a and b, Code 2026, are amended to read as follows:
   a.  If the attorney general has reasonable belief that an operator is in violation of this section, the attorney general has the sole authority to bring civil action to provide for all of the following:
   (1)  Enjoin further violations by the operator.
   (2)  Enforce compliance with this section.
   (3)  Civil penalties in an amount not more than ten thousand dollars for each violation of this section.
   (4)  Other remedies permitted under law A violation of this section is an unlawful practice under section 714.16.
   b.  If Notwithstanding the civil penalty limit under section 714.16, subsection 7, paragraph “b”, if the attorney general has reasonable belief that a person is in violation of an injunction issued under this subsection section 714.16, subsection 2, paragraph “t”, the attorney general has the sole authority to bring a civil action to provide for a civil penalties penalty for violation of the injunction in an amount not more than one hundred thousand dollars.
    Sec. 2.  Section 714.16, subsection 2, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  t.  It shall be an unlawful practice for a person to violate section 533C.1004.
    Sec. 3.  Section 714.16, subsection 7, Code 2026, is amended to read as follows:
   7.  a.  A civil action pursuant to this section shall be by equitable proceedings. If it appears to the attorney general that a person has engaged in, is engaging in, or is about to engage in a practice declared to be unlawful by this section, the attorney general may seek and obtain in an action in a district court a temporary restraining order, preliminary injunction, or permanent injunction prohibiting the person from continuing the practice or engaging in the practice or doing an act in furtherance of the practice. The court may make orders or judgments as necessary to prevent the use or employment by a person of any prohibited practices, or which are necessary to restore to any person in interest any moneys or property, real or personal, which have been acquired by means of a practice declared to be unlawful by this section, including the appointment of a receiver in cases of substantial and willful violation of this section. If a person has acquired moneys or property by any means declared to be unlawful by this section and if the cost of administering reimbursement outweighs the benefit to consumers or consumers entitled to the reimbursement cannot be located through reasonable efforts, the court may order disgorgement of moneys or property acquired by the person by awarding the moneys or property to the state to be used by the attorney general for the administration and implementation of this section. Except in an action for the concealment, suppression, or omission of a material fact with intent that others rely upon it, it is not necessary in an action for reimbursement or an injunction, to allege or to prove reliance, damages, intent to deceive, or that the person who engaged in an unlawful act had knowledge of the falsity of the claim or ignorance of the truth. A claim for reimbursement may be proved by any competent evidence, including evidence that would be appropriate in a class action.
   b.  In addition to the remedies otherwise provided for in this subsection, the attorney general may request and the court may impose a civil penalty not to exceed forty thousand dollars per violation against a person found by the court to have engaged in a method, act, or practice declared unlawful under this section; provided, however, a course of conduct shall not be considered to be separate and different violations merely because the conduct is repeated to more than one person. In addition, on the motion of the attorney general or its own motion, the court may impose a civil penalty of not more than five thousand dollars for each day of intentional violation of a temporary restraining order, preliminary injunction, or permanent injunction issued under authority of this section. A penalty imposed pursuant to this subsection is in addition to any penalty imposed pursuant to section 537.6113. Civil penalties ordered pursuant to this subsection shall be paid to the treasurer of state to be deposited in the general fund of the state.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to consumer fraud and unlawful practices, including digital financial asset transaction kiosks, and provides civil penalties.
   The bill strikes existing enforcement and civil penalty provisions that authorize the attorney general to bring civil actions, seek injunctions and civil penalties, and enforce compliance for violations of Code section 533C.1004 (digital financial asset transaction kiosks). Instead, the bill provides that a violation of Code section 533C.1004 constitutes an unlawful practice under Code section 714.16 (consumer frauds), and subjects such violations to the remedies and enforcement provisions available under that section.
   The bill specifies that, notwithstanding the civil penalty limits in Code section 714.16, if the attorney general has reasonable belief that a person is in violation of an injunction issued under Code section 714.16, the attorney general may bring a civil action to seek a civil penalty of up to $100,000 for a violation of the injunction.
   Under current law, the attorney general may request and the court may impose a civil penalty not to exceed $40,000 per violation for unlawful methods, acts, or practices under Code section 714.16, but a course of conduct affecting more than one person is not treated as separate violations. The bill strikes this limitation regarding the treatment of a course of conduct affecting more than one person.