Senate Bill No. 167-Committee on Commerce and Labor
(On Behalf of the Office of the Attorney General)
March 5, 1997
____________
Referred to Committee on Commerce and Labor
SUMMARY--Makes various changes to provisions governing trade practices. (BDR 52-611)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: No.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to trade practices; revising provisions governing the registration of, and the posting of security by, credit service organizations, organizations for buying goods or services at a discount, dance studios and health clubs; providing that certain activities related to the solicitation of charitable contributions constitute deceptive trade practices; authorizing the attorney general to issue subpoenas and make investigative demands for the purpose of investigating deceptive trade practices; providing penalties; revising the scope of persons who are required to register as sellers or salesmen in this state; requiring a seller who offers for sale information or opinions relating to sporting events and certain persons associated with such a seller to obtain a work card issued by the sheriff of the county in which the business of the seller is located; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
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Section 1 Chapter 598 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 8, inclusive, of this act.
Sec. 2 As used in sections 2 to 7, inclusive, of this act, unless the context otherwise requires:
1. "Commissioner" means the commissioner of the consumer affairs division of the department of business and industry.
2. "Division" means the consumer affairs division of the department of business and industry.
3. "Registrant" means a credit service organization, an organization for buying goods or services at a discount, a dance studio or a health club which is required to register and post security with the division pursuant to the provisions of this chapter.
Sec. 3 1. Each credit service organization, organization for buying goods or services at a discount, dance studio and health club regulated by the provisions of this chapter shall apply for registration on the form prescribed by the division.
2. At the time of application for registration, the applicant shall pay to the division an administrative fee of $25 and deposit the required security with the division.
3. Upon receipt of the security in the proper form and the payment of the administrative fee required by this section, the division shall issue a certificate of registration to the applicant. A certificate of registration is not transferable or assignable.
Sec. 4 1. Each registrant shall deposit with the division:
(a) A bond executed by a corporate surety approved by the commissioner and licensed to do business in this state;
(b) An irrevocable letter of credit for which the registrant is the obligor, issued by a bank whose deposits are federally insured; or
(c) A certificate of deposit in a federally insured financial institution doing business in this state, which may be withdrawn only on the order of the commissioner, except that the interest may accrue to the registrant.
2. The term of the bond, letter of credit or certificate of deposit, or any renewal thereof, must be not less than 1 year.
3. If the registrant deposits a bond, the registrant shall keep accurate records of the bond and the payments made on the premium. The records must be open to inspection by the division during business hours. The registrant shall notify the division not later than 30 days before the date of expiration of the bond and provide written proof of the renewal of the bond to the division.
4. The commissioner may reject any bond, letter of credit or certificate of deposit which fails to conform to the requirements of this chapter.
5. A registrant may change the form of security which he has deposited with the division. If the registrant changes the form of the security, the commissioner may retain for not more than 1 year any portion of the security previously deposited by the registrant as security for claims arising during the time the previous security was in effect.
6. If the amount of the deposited security falls below the amount required by this chapter for that security, the registrant shall be deemed not to be registered as required by section 3 of this act for the purposes of this chapter.
Sec. 5 1. The security required to be deposited by a registrant pursuant to section 4 of this act must be held in trust for consumers injured by the bankruptcy of the registrant or the registrant's breach of any agreement entered into in his capacity as a registrant.
2. A consumer so injured may bring and maintain an action in any court of competent jurisdiction to recover against the security.
3. The division may bring an action for interpleader against all claimants upon the security. If the division brings such an action, the division shall publish notice of the action at least once each week for 2 weeks in a newspaper of general circulation in the county in which the organization has its principal place of business. The division may deduct its costs of the action, including the costs of the publication of the notice, from the amount of the security. All claims against the security have equal priority. If the security is insufficient to pay all the claims in full, the claims must be paid pro rata. If the registrant has posted a bond with the division, the surety is then relieved of all liability under the bond.
4. The division may, in lieu of bringing an action for interpleader pursuant to subsection 3, conduct a hearing to determine the distribution of the security to claimants. The division shall adopt regulations to provide for adequate notice and the conduct of the hearing. If the registrant has posted a bond with the division, distribution pursuant to this subsection relieves the surety of all liability under the bond.
Sec. 6 1. If no claims have been filed against the security deposited with the division pursuant to section 4 of this act within 6 months after the registrant ceases to operate or his registration expires, whichever occurs later, the commissioner shall release the security to the registrant and shall not audit any claims filed against the security thereafter by consumers.
2. If one or more claims have been filed against the security within 6 months after the registrant ceases to operate or his registration expires, whichever occurs later, the proceeds must not be released to the registrant or distributed to any consumer earlier than 1 year after the registrant ceases to operate or his registration expires, whichever occurs later.
3. For the purposes of this section, the commissioner shall determine the date on which a registrant ceases to operate.
Sec. 7 Before advertising its services or conducting business in this state, an organization for buying goods or services at a discount must register pursuant to section 3 of this act and post security in the amount of $50,000 with the division pursuant to section 4 of this act. The security must be conditioned on compliance by the organization with the provisions of NRS 598.840 to 598.930, inclusive, and this section, and the terms of the contract with the buyer.
Sec. 8 1. A person, in planning, conducting or executing a solicitation for or on behalf of a charitable organization, shall not:
(a) Make any claim or representation concerning a contribution which directly, or by implication, has the capacity, tendency or effect of deceiving or misleading a person acting reasonably under the circumstances; or
(b) Omit any material fact deemed to be equivalent to a false, misleading or deceptive claim or representation if the omission, when considering what has been said or implied, has or would have the capacity, tendency or effect of deceiving or misleading a person acting reasonably under the circumstances.
2. Notwithstanding any other provisions of this chapter, the attorney general has primary jurisdiction to investigate and prosecute a violation of this section.
3. Except as otherwise provided in NRS 41.480 and 41.485, a violation of this section constitutes a deceptive trade practice for the purposes of NRS 598.0903 to 598.0999, inclusive.
4. As used in this section:
(a) "Charitable organization" means any person who, directly or indirectly, solicits contributions and who:
(1) The Secretary of the Treasury has determined to be tax exempt pursuant to the provisions of section 501(c)(3) of the Internal Revenue Code; or
(2) Is, or holds himself out to be, established for a charitable pur-pose.
The term does not include an organization which is established for and serving bona fide religious purposes.
(b) "Solicitation" means a request for a contribution to a charitable organization that is made by:
(1) Mail;
(2) Commercial carrier;
(3) Telephone, facsimile or other electronic device; or
(4) A face-to-face meeting.
The term includes solicitations which are made from a location within this state and solicitations which are made from a location outside of this state to persons located in this state.
Sec. 9 NRS 598.0925 is hereby amended to read as follows:
598.0925 1. Except as otherwise provided in this section, a person engages in a "deceptive trade practice" when , in the course of his business or occupation , he:
(a) Makes an assertion of scientific, clinical or quantifiable fact in an advertisement which would cause a reasonable person to believe that the assertion is true, unless, at the time the assertion is made, the person making it has possession of factually objective scientific, clinical or quantifiable evidence which substantiates the assertion; or
(b) Fails upon request of the commissioner or attorney general to produce within 6 working days the substantiating evidence in his possession at the time the assertion of scientific, clinical or quantifiable fact was made.
2. This section does not apply to general assertions of opinion as to quality, value or condition made without the intent to mislead another person.
Sec. 10 NRS 598.096 is hereby amended to read as follows:
598.096When the commissioner , [or the] director or attorney general has cause to believe that any person has engaged or is engaging in any deceptive trade practice, he may:
1. Request the person to file a statement or report in writing under oath or otherwise, on such forms as may be prescribed by the commissioner [or the director,] , director or attorney general, as to all facts and circumstances concerning the sale or advertisement of property by the person, and such other data and information as [he] the commissioner, director or attorney general may deem necessary.
2. Examine under oath any person in connection with the sale or advertisement of any property.
3. Examine any property or sample thereof, record, book, document, account or paper as he may deem necessary.
4. Make true copies, at the expense of the consumer affairs division of the department of business and industry, of any record, book, document, account or paper examined [, as provided in] pursuant to subsection 3 , [of this section,] which copies may be offered into evidence in lieu of the originals thereof in actions brought pursuant to NRS 598.097 and 598.0979.
5. Pursuant to an order of any district court, impound any sample of property which is material to the deceptive trade practice and retain the property in his possession until completion of all proceedings as provided in NRS 598.0903 to 598.0999, inclusive. An order may not be issued pursuant to this subsection unless [the commissioner or the] :
(a) The commissioner, director or attorney general, and the court give the accused full opportunity to be heard ; and [unless the commissioner or]
(b) The commissioner, director or attorney general proves by clear and convincing evidence that the business activities of the accused will not be impaired thereby.
Sec. 11 NRS 598.0963 is hereby amended to read as follows:
598.09631. Whenever the attorney general is requested in writing by the commissioner or the director to represent him in instituting a legal proceeding against a person who has engaged or is engaging in a deceptive trade practice, the attorney general may bring an action in the name of the State of Nevada against that person on behalf of the commissioner or director.
2. The attorney general may institute criminal proceedings to enforce the provisions of NRS 598.0903 to 598.0999, inclusive. The attorney general is not required to obtain leave of the court before instituting criminal proceedings pursuant to this subsection.
3. If the attorney general has reason to believe that a person has engaged or is engaging in a deceptive trade practice, the attorney general may bring an action in the name of the State of Nevada against that person to obtain a temporary restraining order, a preliminary or permanent injunction, or other appropriate relief.
4. If the attorney general has cause to believe that a person has engaged or is engaging in a deceptive trade practice, the attorney general may issue a subpoena to require the testimony of any person or the production of any documents, and may administer an oath or affirmation to any person providing such testimony. The subpoena must be served upon the person in the manner required for service of process in this state or by certified mail with return receipt requested. An employee of the attorney general may personally serve the subpoena.
Sec. 12 NRS 598.097 is hereby amended to read as follows:
598.097If any person fails to cooperate with any investigation, as provided in NRS 598.096, or if any person fails to obey a subpoena issued by the commissioner [or the director,] , director or attorney general pursuant to NRS 598.0963 or 598.0967, the commissioner , [or the] director or attorney general may apply to any district court for equitable relief. The application must state reasonable grounds showing that the relief is necessary to terminate or prevent a deceptive trade practice. If the court is satisfied of the reasonable grounds, the court may:
1. Grant injunctive relief restraining the sale or advertisement of any property by the person.
2. Require the attendance of or the production of documents by the person, or both.
3. Grant other relief necessary to compel compliance by the person.
Sec. 13 NRS 598.2825 is hereby amended to read as follows:
598.2825 1. [An organization shall not advertise its services or conduct business in this state unless it has filed an application for registration on a form prescribed by the division, and has received a certificate of registration from the division. A certificate of registration is not transferable or assignable.
2. The application for registration must be accompanied by a $25 fee and a bond in compliance with the requirements of NRS 598.285.
3.] Before advertising its services or conducting business in this state, an organization must register pursuant to section 3 of this act and deposit security in the amount of $100,000 with the division pursuant to section 4 of this act. The security must be conditioned on compliance by the organization with the provisions of NRS 598.282 to 598.286, inclusive, and the terms of its contracts with buyers.
2. If an organization has deposited the required security, a salesperson, agent or representative of the organization who sells its services is not required to deposit his own separate security. For the purposes of this subsection, a person is a salesman, agent or representative of an organization if:
(a) He does business under the same name as the organization; or
(b) The organization and the issuer of the security certify in writing that the security covers the salesperson, agent or representative.
3. The division shall adopt such regulations as it deems necessary to carry out the provisions of this section.
Sec. 14 NRS 598.283 is hereby amended to read as follows:
598.283 1. Before the execution of a contract between the buyer and an organization or before the receipt by the organization of any money or other valuable consideration, whichever occurs first, the organization [shall] must provide to the buyer, in writing:
(a) A statement:
(1) That the buyer has a right pursuant to 15 U.S.C. §§ 1681g and 1681h to receive disclosure of all information, except medical information, in any file on him maintained by a consumer credit reporting agency;
(2) That 15 U.S.C. § 1681j requires that this disclosure be made free to the buyer if he requests it within 30 days after receipt of notice of a denial of credit;
(3) Of the approximate cost to the buyer of receiving this disclosure when there has not been a denial of credit; and
(4) That the buyer has the right pursuant to 15 U.S.C. § 1681i to dispute the completeness or accuracy of any item contained in any file on him maintained by any consumer credit reporting agency.
(b) A detailed description of the services to be performed by the organization for the buyer and the total amount the buyer will become obligated to pay for the services.
(c) A statement that the buyer has a right to proceed against the [bond filed] security deposited with the division by the organization under the circumstances and in the manner set forth in [NRS 598.285.] sections 5 and 6 of this act. The statement provided pursuant to this paragraph must include the name and address of the [corporate surety executing the bond.] issuer of the security.
(d) A statement that the buyer may cancel a contract for the services of an organization within 5 days after its execution by written notice mailed or delivered to the organization.
(e) A statement identifying the availability of any nonprofit association which provides services similar to those offered by the organization. The statement provided pursuant to this paragraph must include the association's telephone number, including the association's national toll-free telephone number, if any.
2. The written information provided pursuant to subsection 1 must be printed in at least 10-point bold type and must include the following statement or a similar statement approved by the division:
RIGHTS OF CONSUMERS REGARDING CREDIT FILES
PURSUANT TO STATE AND FEDERAL LAW
You have the right to obtain a copy of your credit file from a consumer credit reporting agency. There is no fee if, within the past 30 days, you have been turned down for credit, employment or insurance because of information in your credit report. The consumer credit reporting agency is obligated to provide someone to help you interpret the information in your credit file.
You have a right to dispute inaccurate information by contacting the consumer credit reporting agency directly. However, neither you nor any credit service organization has the right to have accurate, current and verifiable information removed from your credit report. Generally, under the Fair Credit Reporting Act, the consumer credit reporting agency is obligated to remove accurate, negative information from your report only if it is more than 7 years old and bankruptcy information can be reported for 10 years. If you have notified a credit reporting agency that you dispute the accuracy of information in your credit file, the consumer credit reporting agency is obligated to make an investigation and modify or remove inaccurate information. The consumer credit reporting agency may not charge a fee for this service. Any relevant information and copies of all documents you have concerning the disputed information should be given to the consumer credit reporting agency. If the investigation does not resolve the dispute to your satisfaction, you may send a brief statement to the consumer credit reporting agency to keep in your credit file, explaining why you think the information in the credit file is inaccurate. The consumer credit reporting agency is obligated to include your statement or a summary of your statement about disputed information in any report it issues about you.
RIGHTS OF CONSUMERS REGARDING
CANCELLATION OF A CONTRACT
You have a right to give written notice of your intent to cancel a contract with a credit service organization for any reason within 5 working days from the date you signed it. If for any reason you do cancel a contract during this time, you do not owe any money. You have a right to sue a credit service organization if it misleads you.
3. The organization shall retain a copy of the written information it provides pursuant to the requirements of subsections 1 and 2 for not less than 2 years.
Sec. 15 NRS 598.289 is hereby amended to read as follows:
598.289 1. The provisions of NRS 598.282 to 598.287, inclusive, are not exclusive and do not relieve the parties or the contracts subject thereto from compliance with any other applicable provision of law.
2. The remedies provided in NRS [598.285,] 598.286 and 598.287 for violation of any provision of NRS 598.282 to 598.286, inclusive, are in addition to any other procedures or remedies for any violation or conduct provided for in any other law.
3. Any violation of NRS 598.282 to 598.286, inclusive, constitutes a deceptive trade practice for the purposes of NRS 598.0903 to 598.0999, inclusive.
Sec. 16 NRS 598.840 is hereby amended to read as follows:
598.840 As used in NRS 598.840 to 598.930, inclusive, and section 7 of this act, unless the context otherwise requires:
1. "Business day" means any calendar day except Sunday, or the following business holidays: New Year's Day, Martin Luther King, Jr.'s Birthday, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Nevada Day, Veterans' Day, Thanksgiving Day and Christmas Day.
2. "Buyer" means a person who purchases by contract a membership in an organization for buying goods or services at a discount.
3. "Commissioner" means the commissioner of the consumer affairs division of the department of business and industry.
4. "Organization for buying goods or services at a discount" or "organization" means a person who, for a consideration, provides or claims to provide a buyer with the ability to purchase goods or services at a price which is represented to be lower than the price generally charged in the area.
Sec. 17 NRS 598.875 is hereby amended to read as follows:
598.875 Each contract for membership in an organization must:
1. Be in writing, legible and have all spaces filled in before the buyer signs it;
2. Be in the language in which the sales presentation was given;
3. Contain the addresses of the buyer and the organization;
4. Be given to the buyer when he signs it;
5. Disclose that the security required by [NRS 598.850] section 4 of this act has been obtained and deposited with the commissioner;
6. Specify the term of the membership of the buyer, which may not be measured by the buyer's life; and
7. Clearly specify the buyer's right to cancel the contract pursuant to NRS 598.885.
Sec. 18 NRS 598.930 is hereby amended to read as follows:
598.930 1. The remedies, duties and prohibitions of NRS 598.840 to 598.930, inclusive, and section 7 of this act, are not exclusive and are in addition to any other remedies provided by law.
2. Any violation of NRS [598.850] 598.855 to 598.900, inclusive, constitutes a deceptive trade practice for the purposes of NRS 598.0903 to 598.0999, inclusive.
Sec. 19 NRS 598.944 is hereby amended to read as follows:
598.944 1. Each owner of a dance studio or health club shall register with the division [,] pursuant to section 3 of this act, listing the full name and address of the studio or club and any other description of its facilities or activities the division requires.
2. At least one member of the governing body of the dance studio or health club must live in the county where the studio or club is located. He is the agent of the studio or club and its owner for receipt of process served.
Sec. 20 NRS 598.946 is hereby amended to read as follows:
598.946 1. Except as otherwise provided in subsection [11, before contracting with a buyer,] 5, before advertising its services or conducting business in this state, the owner of a dance studio or a health club [shall deposit with the division:
(a) A bond executed by a corporate surety approved by the commissioner and licensed to do business in this state;
(b) An irrevocable letter of credit of which the owner of the dance studio or health club is the obligor and issued by a bank whose deposits are federally insured; or
(c) A certificate of deposit in a federally insured financial institution that may be withdrawn only on the order of the commissioner, except that the interest may accrue to the owner,] must register pursuant to NRS 598.944 and section 3 of this act, and deposit security with the division pursuant to section 4 of this act. The security must be conditioned on compliance by the owner with the provisions of NRS 598.940 to 598.966, inclusive, and the terms of the contract with a buyer.
2. Except as otherwise provided in subsection [9,] 3, the amount of the [bond, letter of credit or certificate of deposit] security to be deposited must be:
(a) Ten thousand dollars, if the dance studio or health club has less than 400 members;
(b) Fifteen thousand dollars, if the dance studio or health club has 400 members or more but less than 800 members;
(c) Twenty thousand dollars, if the dance studio or health club has 800 members or more but less than 1,200 members;
(d) Twenty-five thousand dollars, if the dance studio or health club has 1,200 members or more but less than 1,500 members;
(e) Thirty-five thousand dollars, if the dance studio or health club has 1,500 members or more but less than 4,000 members; and
(f) Fifty thousand dollars, if the dance studio or health club has 4,000 or more members.
3. [Except as otherwise provided in subsection 11, any buyer who is injured because of breach of contract or bankruptcy may bring and maintain an action to recover against the bond, letter of credit or certificate of deposit.
4. Except as otherwise provided in subsection 11, the liability of the surety does not exceed the amount of the bond regardless of the number of claims filed or the aggregate amount claimed. If the amount claimed exceeds the amount of the bond, the surety shall deposit the amount of the bond with the division.
5. The division may bring an action for interpleader against all claimants upon the security. If it does so, the division must publish notice of the action at least once each week for 2 weeks in a newspaper of general circulation in the county where the organization has its principal place of business. The division is entitled to deduct its costs of the action, including publication costs, from the amount of the security. Claims against the security have equal priority. If the security is insufficient to pay the claims in full, they must be paid pro rata. In the case of a bond, the surety is then relieved of all liability under the bond.
6. The division may, in lieu of bringing an action for interpleader pursuant to subsection 5, conduct a hearing to determine the distribution of the security to claimants. The division shall adopt regulations to provide for adequate notice and the conduct of the hearing. Distribution pursuant to this subsection relieves the surety of all liability under the bond.
7. Except as otherwise provided in subsection 11, the dance studio or health club shall maintain the bond in full force while it is doing business and shall keep accurate records of the bond and the payments made on the premium. These records must be open to inspection by the division during business hours. It shall notify the division no later than 30 days before the date of expiration of the bond and provide written proof of the renewal of the bond to the division.
8. Except as otherwise provided in subsection 11, the division may apply for injunctive relief to require the dance studio or health club to register or to deposit and maintain the security required by subsection 1.
9.] If a dance studio or health club conducts any pre-sale of dance lessons, the use of facilities or other services, the amount of the [bond] security required by [subsection 2 must be $100,000.
10.] this section is $100,000.
4. A dance studio or health club shall report to the division on a quarterly basis the size of its membership and shall, on the basis of any change in the size of that membership, adjust accordingly the amount of the [bond, certificate of deposit or letter of credit] security deposited with the division.
[11.] 5. If a dance studio or health club has actively conducted business for not less than 4 consecutive years and has not changed ownership or, in the case of a corporation, not more than 25 percent of its authorized shares have been transferred, it is not required to deposit [a bond, letter of credit or certificate of deposit] security with the division pursuant to [subsection 1.] section 4 of this act. If a dance studio or health club does not deposit [a bond, letter of credit or certificate of deposit,] such security, it shall obtain a written acknowledgment from each member and prominently post a notice on its premises stating that no security for refunds or reimbursement has been deposited with the State of Nevada.
Sec. 21 NRS 598.948 is hereby amended to read as follows:
598.948 Each contract between the buyer and the dance studio or health club must:
1. Be in writing, legible and have all spaces filled in before the buyer signs it;
2. Be in the language in which the sales presentation was given;
3. Contain the addresses of the buyer and the studio or club;
4. Be given to the buyer when he signs it;
5. Disclose whether security has been obtained and deposited with the division pursuant to [NRS 598.946;] section 4 of this act;
6. Specify the term of membership of the buyer, which must not be measured by the life of the buyer;
7. Clearly specify the right of the buyer to cancel the contract pursuant to NRS 598.950;
8. Not contain a clause by which the contract is automatically renewed; and
9. Specify the number of lessons and the cost of each lesson, if the contract is for dance lessons.
Sec. 21.3. Chapter 599B of NRS is hereby amended by adding thereto a new section to read as follows:
1. Each applicant for registration as a seller who intends to offer for sale information or opinions relating to sporting events must obtain a work card issued pursuant to subsection 3 by the sheriff of the county in which the business of the applicant is located.
2. Each principal officer, director, trustee, shareholder and employee of a seller who offers for sale information or opinions relating to sporting events, or an owner or partner of such a seller, must obtain a work card issued pursuant to subsection 3 by the sheriff of the county in which the business of the seller is located that authorizes his association with the seller.
3. The sheriff of a county shall issue a work card to a seller who intends to offer for sale information or opinions relating to sporting events, or a principal officer, director, trustee, shareholder or employee of such a seller, who complies with the requirements established by the sheriff for the issuance of such a card. A work card issued pursuant to this section must be renewed each year.
4. If the sheriff of a county requires an applicant for a work card to submit a set of his fingerprints with his application, the sheriff may submit the fingerprints to the central repository for Nevada records of criminal history and to the Federal Bureau of Investigation to determine the criminal history of the applicant.
Sec. 21.5. NRS 599B.010 is hereby amended to read as follows:
599B.010As used in this chapter, unless the context otherwise requires:
1. "Chance promotion" means any plan in which premiums are distributed by random or chance selection.
2. "Commissioner" means the commissioner of consumer affairs.
3. "Consumer" means a person who is solicited by a seller or salesman.
4. "Division" means the consumer affairs division of the department of business and industry.
5. "Donation" means a promise, grant or pledge of money, credit, property, financial assistance or other thing of value given in response to a solicitation by telephone, including, but not limited to, a payment or promise to pay in consideration for a performance, event or sale of goods or services. The term does not include volunteer services, government grants or contracts or a payment by members of any organization of membership fees, dues, fines or assessments or for services rendered by the organization to those persons, if:
(a) The fees, dues, fines, assessments or services confer a bona fide right, privilege, professional standing, honor or other direct benefit upon the member; and
(b) Membership in the organization is not conferred solely in consideration for making a donation in response to a solicitation.
6. "Goods or services" means any property, tangible or intangible, real, personal or mixed, and any other article, commodity or thing of value.
7. "Premium" includes any prize, bonus, award, gift or any other similar inducement or incentive to purchase.
8. "Recovery service" means a business or other practice whereby a person represents or implies that he will, for a fee, recover any amount of money that a consumer has provided to a seller or salesman pursuant to a solicitation governed by the provisions of this chapter.
9. "Salesman" means any person:
(a) Employed or authorized by a seller to sell, or to attempt to sell, goods or services by telephone;
(b) Retained by a seller to provide consulting services relating to the management or operation of the seller's business; or
(c) Who communicates on behalf of a seller with a consumer:
(1) In the course of a solicitation by telephone; or
(2) For the purpose of verifying, changing or confirming an order,
except that a person is not a salesman if his only function is to identify a consumer by name only and he immediately refers the consumer to a salesman.
10. Except as otherwise provided in subsection 11, "seller" means any person who, on his own behalf, causes or attempts to cause a solicitation by telephone to be made through the use of one or more salesmen or any automated dialing announcing device under any of the following circumstances:
(a) The person initiates contact by telephone with a consumer and represents or implies:
(1) That a consumer who buys one or more goods or services will receive additional goods or services, whether or not of the same type as purchased, without further cost, except for actual postage or common carrier charges;
(2) That a consumer will or has a chance or opportunity to receive a premium;
(3) That the items for sale are gold, silver or other precious metals, diamonds, rubies, sapphires or other precious stones, or any interest in oil, gas or mineral fields, wells or exploration sites or any other investment opportunity;
(4) That the product offered for sale is information or opinions relating to sporting events;
(5) That the product offered for sale [are] is the services of a recovery service; or
(6) That the consumer will receive a premium or goods or services if he makes a donation;
(b) The solicitation by telephone is made by the person in response to inquiries from a consumer generated by a notification or communication sent or delivered to the consumer that represents or implies:
(1) That the consumer has been in any manner specially selected to receive the notification or communication or the offer contained in the notification or communication;
(2) That the consumer will receive a premium if the recipient calls the person;
(3) That if the consumer buys one or more goods or services from the person, the consumer will also receive additional or other goods or services, whether or not the same type as purchased, without further cost or at a cost that the person represents or implies is less than the regular price of the goods or services;
(4) That the product offered for sale [are] is the services of a recovery service; or
(5) That the consumer will receive a premium or goods or services if he makes a donation; or
(c) The solicitation by telephone is made by the person in response to inquiries generated by advertisements that represent or imply that the person is offering to sell any:
(1) Gold, silver or other metals, including coins, diamonds, rubies, sapphires or other stones, coal or other minerals or any interest in oil, gas or other mineral fields, wells or exploration sites, or any other investment opportunity;
(2) Information or opinions relating to sporting events; or
(3) Services of a recovery service.
11. "Seller" does not include:
(a) A person licensed pursuant to chapter 90 of NRS when soliciting offers, sales or purchases within the scope of his license.
(b) A person licensed pursuant to chapter 119A, 119B, 624, 645 or 696A of NRS when soliciting sales within the scope of his license.
(c) A person licensed as an insurance broker, agent or solicitor when soliciting sales within the scope of his license.
(d) Any solicitation of sales made by the publisher of a newspaper or magazine or by an agent of the publisher pursuant to a written agreement between the agent and publisher.
(e) A broadcaster soliciting sales who is licensed by any state or federal authority, if the solicitation is within the scope of the broadcaster's license.
(f) A person who solicits a donation from a consumer when:
(1) The person represents or implies that the consumer will receive a premium or goods or services with an aggregated fair market value of 2 percent of the donation or $50, whichever is less; or
(2) The consumer provides a donation of $50 or less in response to the solicitation.
(g) A charitable organization which is registered or approved to conduct a lottery pursuant to chapter 462 of NRS.
(h) A public utility or motor carrier which is regulated pursuant to chapter 704 or 706 of NRS, or by an affiliate of such a utility or motor carrier, if the solicitation is within the scope of its certificate or license.
(i) A utility which is regulated pursuant to chapter 710 of NRS, or by an affiliate of such a utility.
(j) A person soliciting the sale of books, recordings, video cassettes , software for computer systems or similar items through [an] :
(1) An organization whose method of sales is governed by the [regulations of the Federal Trade Commission] provisions of Part 425 of Title 16 of the Code of Federal Regulations relating to the use of negative option plans by sellers in commerce [, including the] ;
(2) The use of continuity plans, subscription arrangements, arrangements for standing orders, supplements, and series arrangements [under] pursuant to which the person periodically ships merchandise to a consumer who has consented in advance to receive the merchandise on a periodic basis and has the opportunity to review the merchandise for at least 10 days and return it for a full refund within 30 days after it is received [.] ; or
(3) An arrangement pursuant to which the person ships merchandise to a consumer who has consented in advance to receive the merchandise and has the opportunity to review the merchandise for at least 10 days and return it for a full refund within 30 days after it is received.
(k) A person who solicits sales by periodically publishing and delivering a catalog to consumers if the catalog:
(1) Contains a written description or illustration of each item offered for sale and the price of each item;
(2) Includes the business address of the person;
(3) Includes at least [100] 24 pages of written material and illustrations;
(4) Is distributed in more than one state; and
(5) Has an annual circulation by mailing of not less than 250,000.
(l) A person soliciting without the intent to complete and who does not complete, the sales transaction by telephone but completes the sales transaction at a later face-to-face meeting between the solicitor and the consumer, if the person, after soliciting a sale by telephone, does not cause another person to collect the payment from or deliver any goods or services purchased to the consumer.
(m) Any commercial bank, bank holding company, subsidiary or affiliate of a bank holding company, trust company, savings and loan association, credit union, industrial loan company, personal property broker, consumer finance lender, commercial finance lender, or insurer subject to regulation by an official or agency of this state or of the United States, if the solicitation is within the scope of the certificate or license held by the entity.
(n) A person holding a certificate of authority issued pursuant to chapter 452 of NRS when soliciting sales within the scope of the certificate.
(o) A person licensed pursuant to chapter 689 of NRS when soliciting sales within the scope of his license.
(p) A person soliciting the sale of services provided by a community antenna television company subject to regulation pursuant to chapter 711 of NRS.
(q) A person soliciting the sale of agricultural products, if the solicitation is not intended to and does not result in a sale of more than $100 [.] that is to be delivered to one address. As used in this paragraph, "agricultural products" has the meaning ascribed to it in NRS 587.290.
(r) A person who has been operating, for at least 2 years, a retail business establishment under the same name as that used in connection with the solicitation of sales by telephone if, on a continuing basis:
(1) Goods are displayed and offered for sale or services are offered for sale and provided at the person's business establishment; and
(2) At least 50 percent of the person's business involves the buyer obtaining such goods or services at the person's business establishment.
(s) A person soliciting only the sale of telephone answering services to be provided by the person or his employer.
(t) A person soliciting a transaction regulated by the Commodity Futures Trading Commission, if:
(1) The person is registered with or temporarily licensed by the Commission to conduct that activity pursuant to the Commodity Exchange Act (7 U.S.C. §§ 1 et seq.); and
(2) The registration or license has not expired or been suspended or revoked.
(u) A person who contracts for the maintenance or repair of goods previously purchased from the person:
(1) Making the solicitation; or
(2) On whose behalf the solicitation is made.
(v) A person to whom a nonrestricted gaming license, which is current and valid, has been issued pursuant to chapter 463 of NRS when soliciting sales within the scope of his license.
(w) A person who solicits a previous customer of the business on whose behalf the call is made if the person making the call:
(1) Does not offer the customer any premium in connection with the sale;
(2) Is not selling an investment or an opportunity for an investment that is not registered with any state or federal authority; and
(3) Is not regularly engaged in telephone sales.
(x) A person who solicits the sale of livestock.
(y) An issuer [or wholly owned subsidiary of an issuer] which has a [security] class of securities that is listed on the New York Stock Exchange [.] , the American Stock Exchange or the National Market System of the National Association of Securities Dealers Automated Quotation System.
(z) A subsidiary of an issuer that qualifies for exemption pursuant to paragraph (y) if at least 60 percent of the voting power of the shares of the subsidiary is owned by the issuer.
Sec. 21.6. NRS 599B.090 is hereby amended to read as follows:
599B.0901. An applicant for registration as a seller must submit to the division, in such form as it prescribes, a written application for registration. The application must:
(a) Set forth the name of the applicant, including each name under which he intends to do business;
(b) Set forth the name of any parent or affiliated entity that:
(1) Will engage in a business or other transaction with the consumer relating to any sale or donation solicited by the applicant; or
(2) Accepts responsibility for any statement or act of the applicant relating to any sale or donation solicited by the applicant;
(c) Set forth the complete street address of each location, designating the principal location, from which the applicant will be doing business;
(d) Contain a list of all telephone numbers to be used by the applicant, with the address where each telephone using these numbers will be located;
(e) Set forth the name and address of each:
(1) Principal officer, director, trustee, shareholder, owner or partner of the applicant, and of each other person responsible for the management of the business of the applicant;
(2) Person responsible for a location from which the applicant will do business; and
(3) Salesman to be employed by the applicant;
(f) Be accompanied by a copy of any:
(1) Script, outline or presentation the applicant will require a salesman to use when soliciting or, if no such document is used, a statement to that effect;
(2) Sales or donation information or literature to be provided by the applicant to a salesman, or of which the applicant will inform the salesman; and
(3) Sales or donation information or literature to be provided by the applicant to a consumer in connection with any solicitation;
(g) If the applicant is a corporation, be signed by an officer of the corporation; and
(h) If the applicant is a natural person, be completed personally by the applicant.
2. Any material submitted pursuant to paragraph (f) of subsection 1 is submitted for the records of the division and not for the approval of the division.
3. The information provided pursuant to paragraph (f) of subsection 1 by an applicant for registration as a seller is confidential and may only be released to a law enforcement agency, to a court of competent jurisdiction or by order of a court of competent jurisdiction.
4. If the applicant is other than a natural person, or if any parent or affiliated entity is identified pursuant to paragraph (b) of subsection 1, the applicant must, for itself and any such entity, identify its place of organization and:
(a) In the case of a partnership, provide a copy of any written partnership agreement; or
(b) In the case of a corporation, provide a copy of its articles of incorporation and bylaws.
5. An application filed pursuant to this section must be verified and accompanied by:
(a) A bond, letter of credit or certificate of deposit satisfying the requirements of NRS 599B.100;
(b) A fee for registration in the amount of $6,000; [and]
(c) If subsection 6 applies, the additional bond, letter of credit or certificate of deposit and the additional fee required by that subsection [.] ; and
(d) If the applicant intends to offer for sale information or opinions relating to sporting events, a copy of:
(1) The work card issued to the seller pursuant to subsection 1 of section 21.3 of this act; and
(2) The work cards of any other persons associated with the seller who are required to obtain work cards pursuant to subsection 2 of section 21.3 of this act.
6. If an applicant intends to do business under any assumed or fictitious name, he must, for each such name:
(a) File an additional bond, letter of credit or certificate of deposit satisfying the requirements of NRS 599B.100; and
(b) Pay an additional fee for registration in the amount of $6,000.
Sec. 21.7. NRS 599B.140 is hereby amended to read as follows:
599B.1401. Each person registered pursuant to the provisions of this chapter must renew his registration annually by [paying] :
(a) Paying the fee for registration [and submitting] ;
(b) Submitting to the division the application required by NRS 599B.090 or 599B.120, whichever applies [.] ; and
(c) If the person is a seller who offers for sale information or opinions relating to sporting events, submitting to the division a copy of the work card obtained by:
(1) The seller pursuant to subsection 1 of section 21.3 of this act; and
(2) Each principal officer, director, trustee, shareholder, employee, owner and partner of the seller pursuant to subsection 2 of section 21.3 of this act.
2. Registration expires on the anniversary of the issuance of the registration. A registrant who wishes to renew his registration must do so on or before the date his registration expires.
3. For the purposes of NRS 599B.080, a person who fails to renew his registration within the time required by this section is not registered pursuant to this chapter.
4. Except as otherwise provided in NRS 599B.160, if any material change in the information submitted for registration occurs before the date for renewal, a registrant shall submit that information to the division within 10 days after the registrant obtains knowledge of the change.
Sec. 21.8. Section 7 of Senate Bill No. 345 of this session is hereby amended to read as follows:
Sec. 7. NRS 599B.010 is hereby amended to read as follows:
599B.010
As used in this chapter, unless the context otherwise requires:
1. "Chance promotion" means any plan in which premiums are distributed by random or chance selection.
2. "Commissioner" means the commissioner of consumer affairs.
3. "Consumer" means a person who is solicited by a seller or salesman.
4. "Division" means the consumer affairs division of the department of business and industry.
5. "Donation" means a promise, grant or pledge of money, credit, property, financial assistance or other thing of value given in response to a solicitation by telephone, including, but not limited to, a payment or promise to pay in consideration for a performance, event or sale of goods or services. The term does not include volunteer services, government grants or contracts or a payment by members of any organization of membership fees, dues, fines or assessments or for services rendered by the organization to those persons, if:
(a) The fees, dues, fines, assessments or services confer a bona fide right, privilege, professional standing, honor or other direct benefit upon the member; and
(b) Membership in the organization is not conferred solely in consideration for making a donation in response to a solicitation.
6. "Goods or services" means any property, tangible or intangible, real, personal or mixed, and any other article, commodity or thing of value.
7. "Premium" includes any prize, bonus, award, gift or any other similar inducement or incentive to purchase.
8. "Recovery service" means a business or other practice whereby a person represents or implies that he will, for a fee, recover any amount of money that a consumer has provided to a seller or salesman pursuant to a solicitation governed by the provisions of this chapter.
9. "Salesman" means any person:
(a) Employed or authorized by a seller to sell, or to attempt to sell, goods or services by telephone;
(b) Retained by a seller to provide consulting services relating to the management or operation of the seller's business; or
(c) Who communicates on behalf of a seller with a consumer:
(1) In the course of a solicitation by telephone; or
(2) For the purpose of verifying, changing or confirming an order,
except that a person is not a salesman if his only function is to identify a consumer by name only and he immediately refers the consumer to a salesman.
10. Except as otherwise provided in subsection 11, "seller" means any person who, on his own behalf, causes or attempts to cause a solicitation by telephone to be made through the use of one or more salesmen or any automated dialing announcing device under any of the following circumstances:
(a) The person initiates contact by telephone with a consumer and represents or implies:
(1) That a consumer who buys one or more goods or services will receive additional goods or services, whether or not of the same type as purchased, without further cost, except for actual postage or common carrier charges;
(2) That a consumer will or has a chance or opportunity to receive a premium;
(3) That the items for sale are gold, silver or other precious metals, diamonds, rubies, sapphires or other precious stones, or any interest in oil, gas or mineral fields, wells or exploration sites or any other investment opportunity;
(4) That the product offered for sale is information or opinions relating to sporting events;
(5) That the product offered for sale is the services of a recovery service; or
(6) That the consumer will receive a premium or goods or services if he makes a donation;
(b) The solicitation by telephone is made by the person in response to inquiries from a consumer generated by a notification or communication sent or delivered to the consumer that represents or implies:
(1) That the consumer has been in any manner specially selected to receive the notification or communication or the offer contained in the notification or communication;
(2) That the consumer will receive a premium if the recipient calls the person;
(3) That if the consumer buys one or more goods or services from the person, the consumer will also receive additional or other goods or services, whether or not the same type as purchased, without further cost or at a cost that the person represents or implies is less than the regular price of the goods or services;
(4) That the product offered for sale is the services of a recovery service; or
(5) That the consumer will receive a premium or goods or services if he makes a donation; or
(c) The solicitation by telephone is made by the person in response to inquiries generated by advertisements that represent or imply that the person is offering to sell any:
(1) Gold, silver or other metals, including coins, diamonds, rubies, sapphires or other stones, coal or other minerals or any interest in oil, gas or other mineral fields, wells or exploration sites, or any other investment opportunity;
(2) Information or opinions relating to sporting events; or
(3) Services of a recovery service.
11. "Seller" does not include:
(a) A person licensed pursuant to chapter 90 of NRS when soliciting offers, sales or purchases within the scope of his license.
(b) A person licensed pursuant to chapter 119A, 119B, 624, 645 or 696A of NRS when soliciting sales within the scope of his license.
(c) A person licensed as an insurance broker, agent or solicitor when soliciting sales within the scope of his license.
(d) Any solicitation of sales made by the publisher of a newspaper or magazine or by an agent of the publisher pursuant to a written agreement between the agent and publisher.
(e) A broadcaster soliciting sales who is licensed by any state or federal authority, if the solicitation is within the scope of the broadcaster's license.
(f) A person who solicits a donation from a consumer when:
(1) The person represents or implies that the consumer will receive a premium or goods or services with an aggregated fair market value of 2 percent of the donation or $50, whichever is less; or
(2) The consumer provides a donation of $50 or less in response to the solicitation.
(g) A charitable organization which is registered or approved to conduct a lottery pursuant to chapter 462 of NRS.
(h) A public utility or motor carrier which is regulated pursuant to chapter 704 or 706 of NRS, or by an affiliate of such a utility or motor carrier, if the solicitation is within the scope of its certificate or license.
(i) A utility which is regulated pursuant to chapter 710 of NRS, or by an affiliate of such a utility.
(j) A person soliciting the sale of books, recordings, video cassettes, software for computer systems or similar items through:
(1) An organization whose method of sales is governed by the provisions of Part 425 of Title 16 of the Code of Federal Regulations relating to the use of negative option plans by sellers in commerce;
(2) The use of continuity plans, subscription arrangements, arrangements for standing orders, supplements, and series arrangements pursuant to which the person periodically ships merchandise to a consumer who has consented in advance to receive the merchandise on a periodic basis and has the opportunity to review the merchandise for at least 10 days and return it for a full refund within 30 days after it is received; or
(3) An arrangement pursuant to which the person ships merchandise to a consumer who has consented in advance to receive the merchandise and has the opportunity to review the merchandise for at least 10 days and return it for a full refund within 30 days after it is received.
(k) A person who solicits sales by periodically publishing and delivering a catalog to consumers if the catalog:
(1) Contains a written description or illustration of each item offered for sale and the price of each item;
(2) Includes the business address of the person;
(3) Includes at least 24 pages of written material and illustrations;
(4) Is distributed in more than one state; and
(5) Has an annual circulation by mailing of not less than 250,000.
(l) A person soliciting without the intent to complete and who does not complete, the sales transaction by telephone but completes the sales transaction at a later face-to-face meeting between the solicitor and the consumer, if the person, after soliciting a sale by telephone, does not cause another person to collect the payment from or deliver any goods or services purchased to the consumer.
(m) Any commercial bank, bank holding company, subsidiary or affiliate of a bank holding company, trust company, savings and loan association, credit union, industrial loan company, personal property broker, consumer finance lender, commercial finance lender, or insurer subject to regulation by an official or agency of this state or of the United States, if the solicitation is within the scope of the certificate or license held by the entity.
(n) A person holding a certificate of authority issued pursuant to chapter 452 of NRS when soliciting sales within the scope of the certificate.
(o) A person licensed pursuant to chapter 689 of NRS when soliciting sales within the scope of his license.
(p) A person soliciting the sale of services provided by a community antenna television company subject to regulation pursuant to chapter 711 of NRS.
(q) A person soliciting the sale of agricultural products, if the solicitation is not intended to and does not result in a sale of more than $100 that is to be delivered to one address. As used in this paragraph, "agricultural products" has the meaning ascribed to it in NRS 587.290.
(r) A person who has been operating, for at least 2 years, a retail business establishment under the same name as that used in connection with the solicitation of sales by telephone if, on a continuing basis:
(1) Goods are displayed and offered for sale or services are offered for sale and provided at the person's business establishment; and
(2) At least 50 percent of the person's business involves the buyer obtaining such goods or services at the person's business establishment.
(s) A person soliciting only the sale of telephone answering services to be provided by the person or his employer.
(t) A person soliciting a transaction regulated by the Commodity Futures Trading Commission, if:
(1) The person is registered with or temporarily licensed by the Commission to conduct that activity pursuant to the Commodity Exchange Act (7 U.S.C. §§ 1 et seq.); and
(2) The registration or license has not expired or been suspended or revoked.
(u) A person who contracts for the maintenance or repair of goods previously purchased from the person:
(1) Making the solicitation; or
(2) On whose behalf the solicitation is made.
(v) A person to whom a license to operate an information service or a nonrestricted gaming license, which is current and valid, has been issued pursuant to chapter 463 of NRS when soliciting sales within the scope of his license.
(w) A person who solicits a previous customer of the business on whose behalf the call is made if the person making the call:
(1) Does not offer the customer any premium in connection with the sale;
(2) Is not selling an investment or an opportunity for an investment that is not registered with any state or federal authority; and
(3) Is not regularly engaged in telephone sales.
(x) A person who solicits the sale of livestock.
(y) An issuer which has a class of securities that is listed on the New York Stock Exchange, the American Stock Exchange or the National Market System of the National Association of Securities Dealers Automated Quotation System.
(z) A subsidiary of an issuer that qualifies for exemption pursuant to paragraph (y) if at least 60 percent of the voting power of the shares of the subsidiary is owned by the issuer.
Sec. 22 NRS 598.285 and 598.850 are hereby repealed.
Sec. 23 The provisions of section 8 of this act apply only to a solicitation for or on behalf of a charitable organization which occurs on or after July 1, 1997.
Sec. 24 The provisions of subsection 1 of NRS 354.599 do not apply to any additional expenses of a local government that are related to the provisions of this act.
Sec. 24.5 The amendatory provisions of sections 21.3, 21.6 and 21.7 of this act apply to a person who submits an application for registration as a seller pursuant to NRS 599B.090, or renews his registration, on or after July 1, 1997.
Sec. 25 This act becomes effective on July 1, 1997.
TEXT OF REPEALED SECTIONS
598.285Bond: Amount; actions; liability of surety; enforcement by division.
1. An organization shall obtain and deposit with the division a bond executed by a corporate surety approved by the commissioner and licensed to do business in this state.
2. The amount of the bond must be $100,000, and the bond must be conditioned on compliance by the owner with the provisions of NRS 598.282 to 598.286, inclusive, and the terms of the contract with a buyer.
3. A buyer who is injured because of breach of contract or bankruptcy may bring and maintain an action to recover against the bond.
4. The liability of the surety does not exceed the amount of the bond regardless of the number of claims filed or the aggregate amount claimed. If the amount claimed exceeds the amount of the bond, the surety shall deposit the amount of the bond with the division.
5. The division may bring an action for interpleader against all claimants upon the bond. If it does so, the division must publish notice of the action at least once each week for 2 weeks in a newspaper of general circulation in the county where the organization has its principal place of business. The division is entitled to deduct its costs of the action, including publication costs, from the amount of the bond. Claims against the bond have equal priority. If the bond is insufficient to pay the claims in full, they must be paid pro rata. The surety is then relieved of all liability under the bond.
6. The division may, in lieu of bringing an action for interpleader pursuant to subsection 5, conduct a hearing to determine the distribution of the bond to claimants. The division shall adopt regulations to provide for adequate notice and the conduct of the hearing. Distribution pursuant to this subsection relieves the surety of all liability under the bond.
7. The organization shall maintain the bond in full force while it is doing business and for not less than 2 years after the organization ceases doing business in this state. The organization shall keep accurate records of the bond and the payments made on the premium. These records must be open to inspection by the division during business hours. It shall notify the division no later than 30 days before the date of expiration of the bond and provide written proof of the renewal of the bond to the division.
8. The division may apply for injunctive relief to require the organization to register or to deposit and maintain the bond required by this section.
598.850Security required; action for interpleader against claimants; hearing; records.
1. Each organization shall deposit with the commissioner:
(a) A bond executed by a corporate surety approved by the commissioner and licensed to do business in this state;
(b) An irrevocable letter of credit of which the organization is the obligor and issued by a bank whose deposits are federally insured; or
(c) A certificate of deposit in a federally insured financial institution, doing business in this state, which may be withdrawn only on the order of the commissioner, except that interest may accrue to the organization.
2. The amount of the bond, letter of credit or certificate of deposit must be $50,000, and it must be conditioned on compliance by the owner with the provisions of NRS 598.840 to 598.930, inclusive, and the terms of the contract with the buyer. Any buyer who is injured because of a breach of contract or bankruptcy may bring and maintain an action to recover against the bond, letter of credit or certificate of deposit.
3. The liability of the surety does not exceed the amount of the bond regardless of the number of claims filed or the aggregate amount claimed, and does not include treble damages allowed by NRS 598.920. If the amount claimed exceeds the amount of the bond, the surety shall deposit the amount of the bond with the commissioner.
4. The consumer affairs division of the department of business and industry may bring an action for interpleader against all claimants upon the security. If it does so, the division must publish notice of the action at least once each week for 2 weeks in a newspaper of general circulation in the county where the organization has its principal place of business. The consumer affairs division is entitled to deduct its costs of the action, including publication costs, from the amount of the security. Claims against the security have equal priority. If the security is insufficient to pay the claims in full, they must be paid pro rata. In the case of a bond, the surety is then relieved of all liability under the bond.
5. The consumer affairs division may, in lieu of bringing an action for interpleader pursuant to subsection 4, conduct a hearing to determine the distribution of the security to claimants. The consumer affairs division shall adopt regulations to provide for adequate notice and the conduct of the hearing. Distribution pursuant to this subsection relieves the surety of all liability under the bond.
6. The organization shall maintain the bond in full force while it is doing business and shall keep accurate records of the bond and the payments made on the premium. The records must be open to inspection by the consumer affairs division of the department of business and industry during business hours. The organization shall notify the commissioner no later than 30 days before the date of expiration of the bond and provide written proof of the renewal of the bond to the commissioner.
7. The commissioner may apply for injunctive relief to require the organization to deposit and maintain the security required by this section.