Amended in Assembly June 23, 2015

Senate BillNo. 386


Introduced by Senator Allen

February 24, 2015


An act to amend Section 1770 of the Civil Code,begin insert and to add Chapter 3.6 (commencing with Section 870) to Division 4 of the Military and Veterans Code,end insert relating tobegin delete consumer end deletebegin deleteaffairs.end deletebegin insert unlawful business practices.end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 386, as amended, Allen. begin deleteConsumer affairs. end deletebegin insertUnlawful business practices.end insert

begin insert(1)end insertbegin insertend insert Existing law, the Consumer Legal Remedies Act, makes unlawful certain unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer, including, among other things, advertising or promoting any event, presentation, seminar, workshop, or other public gathering regarding veterans’ benefits or entitlements that does not include a specified statement. Existing law authorizes any consumer who suffers damages as a result of the use or employment by any person of a method, act, or practice declared to be unlawful, as described above, to bring an action against that person to recover or obtain damages, restitution, an order enjoining the methods, acts, or practice, or any other relief the court deems proper.

This bill would includebegin insert,end insert as an unlawful practice prohibited under the actbegin insert, advertising or offeringend insert for salebegin delete ofend delete a financial product or service that is illegal under state or federal law, including a cash payment for the assignment to a third party of the consumer’s right to receive future pension or veteran’s benefits.

begin insert

(2) Existing federal law prohibits payments of benefits due or to become due under any law administered by the United States Secretary of Veterans Affairs from being assignable. Under existing federal law, in any case where a beneficiary entitled to pension compensation enters into an agreement with another person under which agreement the other person acquires for consideration the right to receive the benefit by payment of a pension compensation, the agreement is deemed to be an assignment and is prohibited.

end insert
begin insert

Existing state law establishes a cause of action against any person who engages in an act of unfair competition, which includes any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising and any prohibited advertising act or practice.

end insert
begin insert

This bill would state that a violation of the aforementioned federal law constitutes an unlawful business practice.

end insert

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 1770 of the Civil Code is amended to
2read:

3

1770.  

(a) The following unfair methods of competition and
4unfair or deceptive acts or practices undertaken by any person in
5a transaction intended to result or which results in the sale or lease
6of goods or services to any consumer are unlawful:

7(1) Passing off goods or services as those of another.

8(2) Misrepresenting the source, sponsorship, approval, or
9certification of goods or services.

10(3) Misrepresenting the affiliation, connection, or association
11with, or certification by, another.

12(4) Using deceptive representations or designations of
13geographic origin in connection with goods or services.

14(5) Representing that goods or services have sponsorship,
15approval, characteristics, ingredients, uses, benefits, or quantities
16which they do not have or that a person has a sponsorship,
17approval, status, affiliation, or connection which he or she does
18not have.

P3    1(6) Representing that goods are original or new if they have
2deteriorated unreasonably or are altered, reconditioned, reclaimed,
3used, or secondhand.

4(7) Representing that goods or services are of a particular
5standard, quality, or grade, or that goods are of a particular style
6or model, if they are of another.

7(8) Disparaging the goods, services, or business of another by
8false or misleading representation of fact.

9(9) Advertising goods or services with intent not to sell them
10as advertised.

11(10) Advertising goods or services with intent not to supply
12reasonably expectable demand, unless the advertisement discloses
13a limitation of quantity.

14(11) Advertising furniture without clearly indicating that it is
15unassembled if that is the case.

16(12) Advertising the price of unassembled furniture without
17clearly indicating the assembled price of that furniture if the same
18furniture is available assembled from the seller.

19(13) Making false or misleading statements of fact concerning
20reasons for, existence of, or amounts of price reductions.

21(14) Representing that a transaction confers or involves rights,
22remedies, or obligations which it does not have or involve, or
23which are prohibited by law.

24(15) Representing that a part, replacement, or repair service is
25needed when it is not.

26(16) Representing that the subject of a transaction has been
27supplied in accordance with a previous representation when it has
28not.

29(17) Representing that the consumer will receive a rebate,
30discount, or other economic benefit, if the earning of the benefit
31is contingent on an event to occur subsequent to the consummation
32of the transaction.

33(18) Misrepresenting the authority of a salesperson,
34representative, or agent to negotiate the final terms of a transaction
35with a consumer.

36(19) Inserting an unconscionable provision in the contract.

37(20) Advertising that a product is being offered at a specific
38price plus a specific percentage of that price unless (A) the total
39price is set forth in the advertisement, which may include, but is
40not limited to, shelf tags, displays, and media advertising, in a size
P4    1larger than any other price in that advertisement, and (B) the
2specific price plus a specific percentage of that price represents a
3markup from the seller’s costs or from the wholesale price of the
4product. This subdivision shall not apply to in-store advertising
5by businesses which are open only to members or cooperative
6organizations organized pursuant to Division 3 (commencing with
7Section 12000) of Title 1 of the Corporations Code where more
8than 50 percent of purchases are made at the specific price set forth
9in the advertisement.

10(21) Selling or leasing goods in violation of Chapter 4
11(commencing with Section 1797.8) of Title 1.7.

12(22) (A) Disseminating an unsolicited prerecorded message by
13telephone without an unrecorded, natural voice first informing the
14person answering the telephone of the name of the caller or the
15organization being represented, and either the address or the
16telephone number of the caller, and without obtaining the consent
17of that person to listen to the prerecorded message.

18(B) This subdivision does not apply to a message disseminated
19to a business associate, customer, or other person having an
20established relationship with the person or organization making
21the call, to a call for the purpose of collecting an existing
22obligation, or to any call generated at the request of the recipient.

23(23) begin insert(A)end insertbegin insertend insert The home solicitation, as defined in subdivision (h)
24of Section 1761, of a consumer who is a senior citizen where a
25loan is made encumbering the primary residence of that consumer
26for the purposes of paying for home improvements and where the
27transaction is part of a pattern or practice in violation of either
28subsection (h) or (i) of Section 1639 of Title 15 of the United States
29Code or paragraphs (1), (2), andbegin delete (4),end deletebegin insert (4)end insert of subdivision (a) of
30Section 226.34 of Title 12 of the Code of Federal Regulations.

31begin insert(B)end insertbegin insertend insert A third party shall not be liable under this subdivision unless
32begin delete (A)end deletebegin insert (1)end insert there was an agency relationship between the party who
33engaged in home solicitation and the third party orbegin delete (B)end deletebegin insert (2)end insert the third
34party had actual knowledge of, or participated in, the unfair or
35deceptive transaction. A third party who is a holder in due course
36under a home solicitation transaction shall not be liable under this
37subdivision.

38(24) (A) Charging or receiving an unreasonable fee to prepare,
39aid, or advise any prospective applicant, applicant, or recipient in
40the procurement, maintenance, or securing of public social services.

P5    1(B) For purposes of this paragraph, the following definitions
2shall apply:

3(i) “Public social services” means those activities and functions
4of state and local government administered or supervised by the
5State Department of Health Care Services, the State Department
6of Public Health, or the State Department of Social Services, and
7involved in providing aid or services, or both, including health
8care services, and medical assistance, to those persons who,
9because of their economic circumstances or social condition, are
10in need of that aid or those services and may benefit from them.

11(ii) “Public social services” also includes activities and functions
12administered or supervised by the United States Department of
13Veterans Affairs or the California Department of Veterans Affairs
14involved in providing aid or services, or both, to veterans, including
15pension benefits.

16(iii) “Unreasonable fee” means a fee that is exorbitant and
17disproportionate to the services performed. Factors to be
18considered, when appropriate, in determining the reasonableness
19of a fee, are based on the circumstances existing at the time of the
20service and shall include, but not be limited to, all of the following:

21(I) The time and effort required.

22(II) The novelty and difficulty of the services.

23(III) The skill required to perform the services.

24(IV) The nature and length of the professional relationship.

25(V) The experience, reputation, and ability of the person
26providing the services.

27(C) This paragraph shall not apply to attorneys licensed to
28 practice law in California, who are subject to the California Rules
29of Professional Conduct and to the mandatory fee arbitration
30provisions of Article 13 (commencing with Section 6200) of
31Chapter 4 of Division 3 of the Business and Professions Code,
32when the fees charged or received are for providing representation
33in administrative agency appeal proceedings or court proceedings
34for purposes of procuring, maintaining, or securing public social
35services on behalf of a person or group of persons.

36(25) (A) Advertising or promoting any event, presentation,
37seminar, workshop, or other public gathering regarding veterans’
38benefits or entitlements that does not include the following
39statement in the same type size and font as the term “veteran” or
40any variation of that term:

P6    1(i) “I am not authorized to file an initial application for Veterans’
2Aid and Attendance benefits on your behalf, or to represent you
3before the Board of Veterans’ Appeals within the United States
4Department of Veterans Affairs in any proceeding on any matter,
5including an application for such benefits. It would be illegal for
6me to accept a fee for preparing that application on your behalf.”
7The requirements of this clause do not apply to a person licensed
8to act as an agent or attorney in proceedings before the Agency of
9Original Jurisdiction and the Board of Veterans’ Appeals within
10the United States Department of Veterans Affairs when that person
11is offering those services at the advertised event.

12(ii) The statement in clause (i) shall also be disseminated, both
13orally and in writing, at the beginning of any event, presentation,
14seminar, workshop, or public gathering regarding veterans’ benefits
15or entitlements.

16(B) Advertising or promoting any event, presentation, seminar,
17workshop, or other public gathering regarding veterans’ benefits
18or entitlements which is not sponsored by, or affiliated with, the
19United States Department of Veterans Affairs, the California
20Department of Veterans Affairs, or any other congressionally
21chartered or recognized organization of honorably discharged
22members of the Armed Forces of the United States, or any of their
23auxiliaries that does not include the following statement, in the
24same type size and font as the term “veteran” or the variation of
25that term:


27“This event is not sponsored by, or affiliated with, the United
28States Department of Veterans Affairs, the California Department
29of Veterans Affairs, or any other congressionally chartered or
30recognized organization of honorably discharged members of the
31Armed Forces of the United States, or any of their auxiliaries.
32None of the insurance products promoted at this sales event are
33endorsed by those organizations, all of which offer free advice to
34veterans about how to qualify and apply for benefits.”


36(i) The statement in this subparagraph shall be disseminated,
37both orally and in writing, at the beginning of any event,
38presentation, seminar, workshop, or public gathering regarding
39veterans’ benefits or entitlements.

P7    1(ii) The requirements of this subparagraph shall not apply in a
2case where the United States Department of Veterans Affairs, the
3California Department of Veterans Affairs, or other congressionally
4chartered or recognized organization of honorably discharged
5members of the Armed Forces of the United States, or any of their
6auxiliaries have granted written permission to the advertiser or
7promoter for the use of its name, symbol, or insignia to advertise
8or promote the event, presentation, seminar, workshop, or other
9public gathering.

10(26) Advertising or offering for sale a financial product that is
11illegal under state or federal law, including any cash payment for
12the assignment to a third party of the consumer’s right to receive
13future pension or veteran’s benefits.

14(27) Representing that a product is made in California by using
15a Made in California label created pursuant to Section 12098.10
16of the Government Code, unless the product complies with Section
1712098.10 of the Government Code.

18(b) (1) It is an unfair or deceptive act or practice for a mortgage
19broker or lender, directly or indirectly, to use a home improvement
20contractor to negotiate the terms of any loan that is secured,
21whether in whole or in part, by the residence of the borrower and
22which is used to finance a home improvement contract or any
23portion of a home improvement contract. For purposes of this
24subdivision, “mortgage broker or lender” includes a finance lender
25licensed pursuant to the California Finance Lenders Law (Division
269 (commencing with Section 22000) of the Financial Code), a
27residential mortgage lender licensed pursuant to the California
28Residential Mortgage Lending Act (Division 20 (commencing
29with Section 50000) of the Financial Code), or a real estate broker
30licensed under the Real Estate Law (Division 4 (commencing with
31Section 10000) of the Business and Professions Code).

32(2) This section shall not be construed to either authorize or
33prohibit a home improvement contractor from referring a consumer
34to a mortgage broker or lender by this subdivision. However, a
35home improvement contractor may refer a consumer to a mortgage
36lender or broker if that referral does not violate Section 7157 of
37the Business and Professions Code or any other law. A mortgage
38 lender or broker may purchase an executed home improvement
39contract if that purchase does not violate Section 7157 of the
40Business and Professions Code or any other law. Nothing in this
P8    1paragraph shall have any effect on the application of Chapter 1
2(commencing with Section 1801) of Title 2 to a home improvement
3transaction or the financing of a home improvement transaction.

4begin insert

begin insertSEC. 2.end insert  

end insert

begin insertChapter 3.6 (commencing with Section 870) is added
5to Division 4 of the end insert
begin insertMilitary and Veterans Codeend insertbegin insert, to read:end insert

begin insert

6 

7Chapter  begin insert3.6.end insert Nonassignability of Veterans’ Benefits
8

 

9

begin insert870.end insert  

A violation of Section 5301 of Title 38 of the United States
10Code, prohibiting a beneficiary entitled to pension compensation
11under any law administered by the United States Secretary of
12Veterans Affairs from entering into an assignment agreement with
13another person where the other person acquires for consideration
14the right to receive the benefit by payment of a pension, shall
15constitute an unlawful business practice within the meaning of
16Section 17200 of the Business and Professions Code.

end insert


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