HB 6306

HOUSE BILL NO. 6306
A bill to amend 1976 PA 331, entitled
"Michigan consumer protection act,"
by amending the title and sections 2, 5, and 10 (MCL
445.902, 445.905, and 445.910), the title as amended by 2022 PA 153, section 2
as amended by 2018 PA 189, and section 5 as amended by 2020 PA 296, and by
adding sections 5a and 21a.
the people of the state of michigan enact:
TITLE
An act to prohibit certain methods, acts, and practices in
trade or commerce; to require the disclosure, maintenance, and verification of
certain information for consumer protection; to prescribe certain powers and
duties; to provide for certain remedies, damages, fines, and penalties; to provide for the
promulgation of rules; to provide for certain investigations; and to prescribe
penalties; and to create a
fund.
Sec. 2. (1) As used in this act:
(a) 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 that are not owned
nor or 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 in 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 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 that will enable the purchaser to derive income from
the business opportunity 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 any time before the date of sale to any time within 6
months after the date of sale.
(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) "Nonprofit organization" means an entity incorporated to
carry out any lawful purpose that does not involve pecuniary profit or gain for
the entity's directors, officers, shareholders, or members.
(d) (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.
(e) (d) "Person"
means an individual, corporation, limited liability company, trust,
partnership, incorporated or unincorporated association, or other legal entity.
(f) (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.
(g) "Small business" means a business concern incorporated or
doing business in this state, including an affiliate of the business concern,
that is independently owned and operated and that employs fewer than 250
full-time employees or that has gross annual sales of less than $6,000,000.00.
(h) (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.
(i) (g) "Trade
or commerce" means the conduct of a business providing, directly or indirectly, goods, property, or service services that are
primarily used by a nonprofit organization or
small business or for personal, family, or household purposes. and Trade or commerce 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, and includes the provision of goods, property, or services
for the purpose of enhancing an individual's education, income, or
employability. "Trade or commerce" Trade or commerce does not include the purchase or
sale of a franchise, as that term is defined in
section 2 of the franchise investment law, 1974 PA 269, MCL 445.1502, but does
include a pyramid promotional scheme, as that term is defined in section 2 of the pyramid
promotional scheme act, 2018 PA 186, MCL
445.2582.
(2) As used in this
act, "business opportunity" does not include a sale of a franchise, as that term is 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. 5. (1) 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 that is unlawful under section 3, and gives notice pursuant to required by 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
(2) An action under this section 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.
(3) The court in an action under this section may award costs to
the prevailing party. Except as otherwise provided
in this section,
(4) Subject to subsection (5), for each persistent and
knowing violation of section 3, the court in an action under this section may assess the
defendant a civil fine of not more than $25,000.00. For a violation of section 3(1)(kk), each performance or
production is a separate violation. For a violation of section 3l, the court may assess the defendant a civil fine of not more than
$1,000.00 per violation. Each day a violation of section 3l occurs counts as a separate violation.
(5) For a persistent and knowing violation of section 3 relating to an
advertisement, each of the following is considered a separate violation:
(a) Each person solicited by the defendant.
(b) Each advertisement distributed by the defendant.
(c) Each misrepresentation or deceptive statement contained in the
advertisement.
(d) Each time that the advertisement was received or was published,
broadcast, or otherwise disseminated by the defendant.
(6) (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 the 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.
(7) The notice under subsection (6) may be given to the person by
mail, postage prepaid, to his or her the person's usual place of business or, if the
person does not have a usual place of business, to his
or her the person's last known address,
or, 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.
(8) (3) A
prosecuting attorney or law enforcement officer receiving
that receives a 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 under 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 that the prosecuting attorney or law enforcement officer has
to the office of the attorney general.
(9) (4) A
person who that knowingly
violates the terms of an injunction, order, decree, or judgment issued under
this section shall forfeit and pay to the state a civil fine of not more than
$5,000.00 for each violation.
(10) For the
purposes of this section, the court issuing that issues an injunction, order, decree, or judgment
shall retain jurisdiction, the cause shall must be continued, and the attorney general may
petition for recovery of a civil fine as provided by this section.
Sec. 5a. (1)
Subject to subsections (2), (3), and (4), a person that uses or has used a
method, act, or practice that targets an elder person or vulnerable adult in a
violation of this act or a related statute is subject to a civil fine of not
more than $25,000.00, unless the violation that targets an elder person or
vulnerable adult is persistent and knowing, in which case the person is subject
to a civil fine of not more than $50,000.00.
(2) For a violation of this act or a related statute by a person that involves
an advertisement that targets an elder person or vulnerable adult, each of the
following is considered as a separate violation:
(a) Each elder person or vulnerable adult solicited by the defendant.
(b) Each advertisement distributed by the defendant.
(c) Each misrepresentation or deceptive statement contained in the
advertisement.
(d) Each time that the advertisement was received or was published,
broadcast, or otherwise disseminated by the defendant.
(3) In determining the amount of the civil fine under subsection (1),
the court may consider any of the following:
(a) Whether the violation was made in good or bad faith.
(b) The injury to the public.
(c) The defendant's ability to pay.
(d) The public's interest in eliminating the benefits to the defendant
that were derived from the violation.
(e) The necessity of vindicating the authority of this state and the
strong need to defer any future violation.
(4) The civil fine described in subsection (1) is supplemental and
cumulative to any other civil fine or relief available under this act or any
other law of this state.
(5) As used in this section:
(a) "Elder person" means an individual who is 80 years of age
or older.
(b) "Related statute" means a law that indicates that a
violation of the law is a violation of this act.
(c) "Vulnerable adult" means any of the following:
(i) An individual
who is 18 years of age or older and who, because of age, developmental
disability, mental illness, or physical disability, requires supervision or
personal care or lacks the personal and social skills required to live
independently, whether or not the individual has been determined by a court to
be incapacitated.
(ii) An adult as
that term is defined in section 3 of the adult foster care facility licensing
act, 1979 PA 218, MCL 400.703.
(iii) An adult as
that term is defined in section 11 of the social welfare act, 1939 PA 280, MCL
400.11.
Sec. 10. (1) The attorney general may bring a class
action on behalf of persons residing in or injured in this state for the to recover actual
damages or $250.00, whichever is greater, for each class member, caused by any of the
following:
(a) A method, act,
or practice in trade or commerce defined as unlawful under section 3.
(b) A method, act,
or practice in trade or commerce declared to be unlawful under section 3 (1) 3(1) by a
final judgment of the circuit court or an appellate court of this state which that is
either reported officially or made available for public dissemination pursuant to under section
9 by the attorney general not less than 30 days before the method, act, or
practice on which the action is based occurs.
(c) A method, act,
or practice in trade or commerce declared by a circuit
court Circuit Court of appeals Appeals or
the supreme court Supreme
Court of the United States to be an unfair or deceptive act or practice
within the meaning of section 5(a)(1) of the federal trade commission act, 15 U.S.C. 45(a)(1), USC 45, in
a decision which that
affirms or directs the affirmance of a cease and desist order issued by
the federal trade commission Federal Trade Commission if the order is final within
the meaning of section 5(g) of the federal trade commission act, 15 U.S.C. 45(g), USC 45, and
which that is
officially reported not less than 30 days before the method, act, or practice
on which the action is based occurs. For purposes of this subdivision, a
method, act, or practice shall is not be deemed to be unfair
or deceptive within the meaning of section 5(a)(1) of the federal trade
commission act, 15 USC 45, solely because the
method, act, or practice is made unlawful by another federal statute law that
refers to or incorporates section 5(a)(1) of the federal trade commission act, 15 USC 45.
(2) On motion of
the attorney general and without bond in an action under this section, the court may make an appropriate order : to reimburse do 1 or more of
the following:
(a) Reimburse persons
who that have
suffered damages. ;
to carry
(b) Carry out a
transaction in accordance with the aggrieved persons' reasonable expectations. ; to strike
(c) Strike or
limit the application of unconscionable clauses of contracts to avoid an
unconscionable result. ; or to grant
(d) Grant other
appropriate relief.
(3) The court
after a hearing in an action under this section may
appoint a receiver or order sequestration of the defendant's assets if it
appears to the satisfaction of the court that the defendant threatens or is
about to remove, conceal, or dispose of his the assets to the detriment of members of the class.
(4) (3) If
at any stage of the proceedings in an action under
this section the court requires that notice be sent to the class, the
attorney general may petition the court to require the defendant to bear the
cost of the notice.
(5) In
determining under subsection (4) whether to
impose the cost on the defendant or the state, the court shall consider the
probability that the attorney general will succeed on the merits of the action.
(6) (4) If
the a defendant
in an action under this section shows by a
preponderance of the evidence that a violation of this act resulted from a bona
fide error notwithstanding the maintenance of procedures reasonably adapted to
avoid the error, the amount of recovery shall must be limited to actual damages.
(7) (5) An action shall not be brought by the The attorney general shall
not bring an action under this section more than 6 years after the
occurrence of the method, act, or practice which that is the subject of the action nor or more than 1
year after the last payment in a transaction involving the method, act, or
practice which that
is the subject of the action, whichever period of time ends on a later
date.
Sec. 21a. (1) The
consumer protection and antitrust revolving enforcement and education fund is
created in the state treasury.
(2) The state treasurer shall deposit attorney fees, costs, and proceeds
in accordance with subsection (3) and may deposit damages, restitution, and
refunds in accordance with subsection (4) and money or assets received from any
other source into the fund.
(3) Except as otherwise directed by a court or agreed to by the parties,
attorney fees, costs, and proceeds must be deposited into the fund as follows:
(a) If the attorney fees, costs, and proceeds total less than
$500,000.00, an amount equal to 100% of the total.
(b) If the attorney fees, costs, and proceeds total between $500,000.00
and $1,000,000.00, an amount equal to 50% of the total.
(c) If the attorney fees, costs, and proceeds total more than
$1,000,000.00, an amount equal to 10% of the total.
(4) Except as otherwise directed by a court or agreed to by the parties,
both of the following damages, restitution, or refunds must be deposited into
the fund as follows:
(a) Any de minimus amount of damages, restitution, or refunds.
(b) Any amount of the damages, restitution, or refunds that relate to
persons that could not be identified by the department of attorney general.
(5) The state treasurer shall direct the investment of money in the fund
and credit interest and earnings from investments in the fund.
(6) Money in the fund at the close of the fiscal year remains in the
fund and does not lapse to the general fund.
(7) The department of attorney general is the administrator of the fund
for audits of the fund.
(8) The department of attorney general shall expend money from the fund
on appropriation to do 1 or more of the following:
(a) Fund positions and pay expenses related to the enforcement of any of
the following:
(i) This act.
(ii) A law relating
to anticompetitive conduct within trade or commerce.
(iii) A law with a
purpose of protecting charitable gifts or charitable assets.
(b) Educate the public regarding consumer protection matters, as
determined by the attorney general.
(9) As used in this section:
(a) "Attorney fees, costs, and proceeds" means attorney fees,
costs, and proceeds obtained by the department of attorney general from a
designated action.
(b) "Damages, restitution, or refunds" means damages,
restitution, or refunds obtained by the attorney general from a designated
action.
(c) "Designated action" means a judgment, settlement,
compromise, or assurance of discontinuance or voluntary compliance, or other
agreement relating to any of the following:
(i) An alleged
violation of this act or any other law with a purpose of protecting persons
against fraudulent or other unfair or deceptive trade practices.
(ii) Any alleged
anticompetitive conduct within trade or commerce.
(iii) An alleged
violation of law with a purpose of protecting charitable gifts or charitable
assets.
(d) "Fund" means the consumer protection and antitrust
revolving enforcement and education fund.