Bill Text: HI SB1438 | 2023 | Regular Session | Amended

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Bill Title: Relating To The Office Of Consumer Protection.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2023-02-16 - Report adopted; Passed Second Reading, as amended (SD 1) and referred to CPN/JDC/WAM. [SB1438 Detail]

Download: Hawaii-2023-SB1438-Amended.html

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THE SENATE	S.B. NO.	1438
THIRTY-SECOND LEGISLATURE, 2023		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO THE OFFICE OF CONSUMER PROTECTION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

PART I

     SECTION 1.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

consumer protection

     §   -1  General purpose.  The public health, welfare, and interest require a strong and effective consumer protection program to protect the interests of both the consumer public and the legitimate business person.  Toward this end, a permanent office of consumer protection is created to coordinate the services offered to the consumer by various state and county agencies, together with private organizations, and to aid in the development of preventive and remedial programs affecting the interest of the consumer public.

     §   -2  Office of consumer protection; director.  There is created within the department of the attorney general an office of consumer protection.  The attorney general shall be the director of the office of consumer protection and may appoint an executive director of the office of consumer protection.  The executive director shall have been admitted to practice law before the supreme court of the State and shall be exempt from chapter 76.

     §   -3  Personnel.  (a)  The attorney general may appoint as staff members persons who have been admitted to practice law before the supreme court of the State without regard to chapter 76.  All other employees shall be appointed by the attorney general in accordance with chapter 76.

     (b)  The attorney general may, by contract, retain the services of special consumer protection attorneys for the prosecution of consumer-related matters.  The special consumer protection attorneys shall serve at the pleasure of the attorney general.  At the option of the attorney general, special consumer protection attorneys may be compensated on a fixed-price basis, an hourly rate basis, with or without a fixed cap, or through a contingent fee arrangement to be specified in the contract and payable out of all sums the special consumer protection attorney recovers for the State by judgment, order, assurance of voluntary compliance, or settlement.

     §   -4  Salary and duties of executive director; benefits.  The attorney general may define the executive director's powers and duties and fix the executive director's compensation.  The executive director and attorney staff members shall be entitled to participate in any employee benefit plan.

     §   -5  General functions, powers, and duties.  The executive director is designated the consumer counsel for the State and shall represent and protect the State, the respective counties, and the general public as consumers.  The executive director shall have the following functions, powers, and duties:

     (1)  Coordinate the consumer protection activities of all departments, divisions, and branches of state government, and of branches of the county government concerned with consumer protection;

     (2)  Assist, advise, and cooperate with federal, state, and local agencies and officials to protect and promote the interests of the consumer public;

     (3)  Conduct investigations, research, studies, and analysis of matters and take appropriate action affecting the interests of consumers;

     (4)  Study the operation of laws affecting consumers and recommend to the governor and the legislature, new laws and amendments of laws in the consumers' interest;

     (5)  Adopt, amend, or repeal rules pursuant to chapter 91 necessary for the purposes of this chapter, including rules that define with specificity acts or practices that are unfair or deceptive acts or practices in the conduct of any trade or commerce;

     (6)  Investigate reported or suspected violations of laws enacted and rules adopted for the purpose of consumer protection and shall enforce the laws and rules by bringing civil actions or proceedings;

     (7)  Organize and hold conferences on problems affecting consumers; and undertake activities to encourage business and industry to maintain high standards of honesty, fair business practices, and public responsibility in the production, promotion, and sale of consumer goods and services;

     (8)  Provide a central clearinghouse of information by collecting and compiling all consumer complaints and inquiries and making the collections and compilations available to the general public; provided that consumer complaints shall not be made available to the general public if the office of consumer protection is conducting an investigation or review of the complaints, the complaints are being used in connection with civil actions or proceedings initiated by the office of consumer protection, or the complaints have been referred to another state agency;

     (9)  Appear before governmental commissions, departments, and agencies to represent and be heard on behalf of consumers' interest;

    (10)  Contract with other county, state, or federal governmental agencies, with nonprofit social services societies, or with private nonprofit trade, professional, or business organizations for the performance of any of the functions of the office not involving the enforcement of rules for the purpose of consumer protection under this section, within the budget limitations for any period not exceeding a budget year; provided that the purposes and policies of this chapter are in no way diluted, abridged, misdirected, or destroyed; and

    (11)  Perform other acts as may be incidental to the exercise of the functions, powers, and duties set forth in this section, including but not limited to compensation of witnesses in amounts and for purposes as shall be prescribed by rules.

     §   -6  Consumer advisory council.  There shall be a consumer advisory council consisting of eleven members who shall be appointed by the governor and serve at the governor's pleasure.  There shall be at least one member from each of the counties of the State.  The chairperson of the council shall be selected by the members.  Each member shall serve without compensation but shall be reimbursed for necessary expenses incurred while attending meetings and while in the discharge of the member's responsibilities.  The council shall assist the office of consumer protection and the executive director in an advisory capacity in carrying out the duties and functions of the office.

     §   -7  Cooperation with the office of consumer protection.  Each department, agency, officer, and employee of the State and of the counties shall cooperate with and assist the office of consumer protection in the performance of the functions, powers and duties of the office.

     §   -8  Powers and duties of other departments and agencies.  Nothing contained in this chapter shall be deemed to delegate or detract in any way from the functions, powers and duties prescribed by law for any other department or agency of the State, nor to interrupt or preclude the direct relationships of any department or agency or units of county government in the performance of its functions, powers, and duties.

     §   -9  Investigations.  The executive director in the course of the executive director's investigations may subpoena witnesses, examine them under oath, and require the production of books, papers, documents, or objects that the executive director deems relevant to the investigation.  Service of the subpoena may be made personally within the State; provided that if personal service cannot be obtained, substituted service may be made on any witness over whom the courts can exercise jurisdiction pursuant to chapter 634, in the following manner:

     (1)  Personal service outside the State;

     (2)  Mailing by registered or certified mail to the last known place of business, residence, or abode within or without the State of the person to be served;

     (3)  As to any person other than a natural person, in the manner provided in the Hawaii rules of civil procedure as if a complaint had been filed; or

     (4)  Service as the circuit court may direct in lieu of personal service within the State.

Upon application by the executive director, obedience to the subpoena may be enforced by the circuit courts of the State in the county where the person subpoenaed resides or is found in the same manner as a subpoena issued by the clerk of a circuit court.  If the person is a nonresident or has no principal place of business within the State, obedience to the subpoena may also be enforced by a circuit court of the State in the county where the subpoena was issued.  The executive director may conduct hearings in aid of any investigation or inquiry, and may prescribe forms and adopt rules as may be necessary in the interest of the consumer public.

     §   -10  Investigators, appointment and powers.  The attorney general shall appoint and commission one or more investigators as the exigencies of the public service may require.  Persons appointed and commissioned under this section shall have and may exercise all the powers and authority of a police officer or of a deputy sheriff in the service of process or in the service of subpoenas.

     §   -11  Assurance of voluntary compliance.  In lieu of instituting or continuing an investigation or action pursuant to section    -5(6), the executive director may accept written assurance of voluntary compliance from the person or persons suspected of violation.  The executive director shall obtain the agreement of the affected consumers where possible.  In no event shall the fact that a person who enters into an assurance of voluntary compliance be considered an admission of violation, nor shall written assurance constitute prima facie evidence of any violation.  The assurance may include a stipulation for reimbursement to some or all consumers who have been damaged by an alleged unlawful act or practice and payment of costs of investigation.  All assurances of voluntary compliance may be made a matter of public record.  A consumer need not accept restitution pursuant to the stipulation, but the consumer's stipulated agreement to the assurance or the consumer's acceptance and full performance of restitution shall bar recovery of any other damages in any action on account of the same acts or practices by the consumer against the person or persons making restitution.

     §   -12  Unlicensed acts; penalties.  (a)  Any person who furnishes commodities or services for which a license, registration, or certificate is required from the department of commerce and consumer affairs or any board or commission thereunder without having a license, registration, or certificate is engaged in an unlawful act or practice and shall be subject to the penalty provided in subsection (b).

     (b)  Any person who engages in an unlawful act or practice as provided in subsection (a) shall be fined not less than $500 nor more than $2,500 for each unlawful act or practice, which shall be collected in a civil suit brought by the office of consumer protection or the department of the attorney general.

     (c)  Any contract for the furnishing of commodities or services by an unlicensed, unregistered, or uncertificated person shall be void and shall prevent the person from recovering the contract price or the reasonable value thereof.

     §   -13  Restitution.  (a)  In any action brought by the attorney general, the court may include in its orders or judgments provisions as may be necessary to effect restitution.  Any person in whose favor restitution is ordered need not accept restitution; provided that the person's acceptance and full performance of restitution shall bar recovery by the person of any other damages in any action on account of the same acts or practices against the person making restitution.

     (b)  Whenever a corporation is ordered to pay restitution under subsection (a), the court hearing the action may include in its orders or judgments that the corporation and the individual directors, officers, or agents of the corporation who authorized, ordered, or had done, or participated in any of the unlawful acts and practices that caused, in whole or in part, injuries to any person, shall be jointly and severally liable for the payment of restitution.

     (c)  Whenever a domestic or foreign limited liability company is ordered to pay restitution under subsection (a), the court hearing the action may include in its orders or judgments that the limited liability company and the individual members, managers, or agents of the limited liability company who authorized, ordered, had done, or participated in any of the unlawful acts and practices that caused, in whole or in part, injuries to any person, shall be jointly and severally liable for the payment of restitution.

     (d)  The office of consumer protection may establish and maintain an account for purposes of holding and disbursing moneys received or recovered by it and that are due consumers as restitution.

     (e)  The executive director may assign to a consumer for collection that portion of any judgment awarding restitution to that consumer.

     (f)  If a person commits a violation of section 480-2 that is directed toward, targets, or injures an elder, the court, in addition to the restitution authorized by subsection (a), may award the elder an additional sum up to but not to exceed the amount of restitution ordered in subsection (a).  In determining the amount, if any, of an award under this subsection, the court shall consider the factors set forth in section 480-13.5.

     §   -14  Injunction.  The executive director or the office of consumer protection may bring civil proceedings to enjoin any violation of section    -13(a) or any other unlawful act or practice affecting consumers, trade, or commerce.

     §   -15  Appointment of receiver; powers; limitation.  (a)  If the executive director initiates any action in circuit court under this chapter against a person for allegedly engaging in unfair or deceptive acts or practices in violation of section 480-2, the court may appoint a receiver for the assets of the person upon application by the executive director and proof submitted at a hearing on the application that is sufficient to establish that:

     (1)  The person previously engaged in a pattern of unfair or deceptive acts or practices that resulted in substantial actual damages to consumers;

     (2)  The person is outside the State or is actually removing or about to remove self or property outside the State or is concealing self or property; or

     (3)  The appointment of a receiver is necessary to preserve the assets of the person for the benefit of consumers allegedly damaged by the person's unfair or deceptive acts or practices.

     (b)  Subject to the limitation in subsection (c), a receiver appointed by the court pursuant to subsection (a) may sue for, collect, receive, and take into possession all the goods and chattels, rights, credits, moneys, effects, lands, tenements, books, records, documents, papers, choses in action, bills, notes, and property of every description, including property that has been commingled that is owned by or owing to the defendant.  The receiver may sell, convey, or assign the property and hold or dispose of the proceeds thereof subject to the approval of the court.

     (c)  Prior to the judgment, the receiver shall exercise the powers enumerated in subsection (b) as may be necessary to preserve the assets of the defendant pending the judgment."

     SECTION 2.  Chapter 487, Hawaii Revised Statues, is repealed.

     SECTION 3.  All rights, powers, functions, and duties of the department of commerce and consumer affairs relating to the office of consumer protection are transferred to the department of the attorney general.

     SECTION 4.  All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

     All employees who occupy civil service positions and whose functions are transferred to the department of the attorney general by this Act shall retain their permanent or temporary civil service status.  Employees shall be transferred without loss of salary, seniority, retention points, prior service credit, any vacation and sick leave credits previously earned, and other rights, benefits, and privileges, in accordance with state personnel laws and this Act; provided that the employees possess the minimum qualifications and public employment requirements for the class or position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

     Any employee who, prior to this Act, is exempt from civil service and is transferred as a consequence of this Act may continue to retain the employee's exempt status, but shall not be appointed to a civil service position because of this Act.  An exempt employee who is transferred by this Act shall not suffer any loss of prior service credit, any vacation and sick leave credits previously earned, or other employee benefits or privileges as a consequence of this Act; provided that the employees meet legal and public employment requirements for the position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable employment and compensation laws.  The attorney general may prescribe the duties and qualifications of the exempt employees and fix their salaries without regard to chapter 76, Hawaii Revised Statutes.

     SECTION 5.  All council members serving on the consumer advisory council on the day prior to the effective date of this Act shall continue as members of the council and their terms shall be unaffected by this Act.

     SECTION 6.  All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of commerce and consumer affairs, its agencies, divisions, or offices relating to the office of consumer protection as determined by both the department of commerce and consumer affairs and the office of consumer protection, which is transferred to the department of the attorney general shall be transferred with the functions to which they relate.

     SECTION 7.  All rules, policies, procedures, guidelines, and other material adopted or developed by the office of consumer protection to implement provisions of chapter 487, Hawaii Revised Statutes, that are made applicable to the office of consumer protection established by this Act, shall remain in full force and effect until amended or repealed by the office of consumer protection established by this Act pursuant to chapter 91, Hawaii Revised Statutes.

     SECTION 8.  All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the office of consumer protection transferred or placed for administrative purposes within the department of the attorney general shall remain in full force and effect.

     SECTION 9.  All relocation cost or expenses associated with transferring the office of consumer protection to the department of the attorney general shall be borne by the appropriations allocation to the office of consumer protection or the department of the attorney general with no liabilities or liens arising from such relocation activity accruing to the department of commerce and consumer affairs.

     SECTION 10.  All privileges and benefits as provided by the department of commerce and consumer affairs, including parking, that are currently enjoyed by the office of consumer protection shall be forfeited and returned to the providing department upon transfer of the office of consumer protection to the department of the attorney general.

     SECTION 11.  There shall be a transition period to facilitate the transfer of the office of consumer protection from the department of commerce and consumer affairs to the department of the attorney general.  The year following July 1, 2023, shall serve as a transition period, in which the state agencies affected by this Act shall assist the executive director in implementing the transfer under this Act.  Once the transfer is completed, the department of the attorney general shall provide public notice that the transfer is completed in a printed publication or electronic format that is accessible statewide.

     SECTION 12.  The provisions of this Act are to be liberally construed to effectuate its purpose.

     SECTION 13.  All acts passed by the legislature during the regular session of 2023, whether enacted before or after the effective date of this Act, shall be amended to conform to this Act unless the acts specifically provide that this Act is being amended.

PART II

     SECTION 14.  Section 26-9, Hawaii Revised Statutes, is amended by amending subsection (h) to read as follows:

     "(h)  The director may appoint a complaints and enforcement officer not subject to chapter 76 who shall facilitate the receipt, arbitration, investigation, prosecution, and hearing of complaints regarding any person who furnishes commodities, services, or real estate for which a license, registration, or certificate is required from the department or any board, commission, or regulatory program thereunder.  [In representing the State in bringing any action to enjoin unlicensed, unregistered, or uncertified activities, the department of commerce and consumer affairs' attorneys shall be empowered to exercise all authority granted to the attorney general and to the director of the office of consumer protection under sections 487-12, 487-14, 480-3.1, 480-15, 480-15.1, 480-20(c), and 480-22, as these sections now exist and as they subsequently may be amended.]  The [attorneys also] department of commerce and consumer affairs shall be empowered to exercise all authority granted to the attorney general and to the responsible attorneys of the various counties under section 92F-13 in all cases involving documents and records within the custody or control of the regulated industries complaints office."

     SECTION 15.  Section 290-11, Hawaii Revised Statutes, is amended by amending subsection (g) to read as follows:

     "(g)  Any person who violates any provision of this section shall be deemed to have:

     (1)  Engaged in an unfair or deceptive act or practice in the conduct of any trade or commerce within the meaning of section 480-2 and subject to penalties and remedies under chapter 480; and

     (2)  Furnished services without a license within the meaning of section [487-13]    -12 and subject to penalties and remedies under chapter [487.]    ."

     SECTION 16.  Section 291C-165.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The towing company shall determine the name of the lien holder and the last registered owner of the vehicle from the department of transportation or the county department of finance.  The lien holder and the registered owner shall be notified by the towing company in writing at the address on record with the department of transportation or with the county department of finance by registered or certified mail of the location of the vehicle, together with a description of the vehicle, within a reasonable period not to exceed twenty days following the tow.  The notice shall state:

     (1)  The maximum towing charges and fees allowed by law;

     (2)  The telephone number of the county finance department that arranged for or authorized the tow; and

     (3)  That if the vehicle is not recovered within thirty days after the mailing of the notice, the vehicle shall be deemed abandoned and will be sold or disposed of as junk.

Any towing company engaged in towing pursuant to this section shall comply with the requirements of section 291C-135.  When the vehicle is recovered after the tow by the last registered owner or lien holder, the party recovering the vehicle shall pay the tow and storage charges [which] that shall not exceed the charges as provided by section 290-11(b) or the rates agreed upon with the respective counties, whichever is lower, except that tow operators may charge additional reasonable amounts for excavating vehicles from off-road locations; provided that if the notice required by this section was not sent within twenty days after the tow, neither the last registered owner nor the lien holder shall be required to pay the tow and storage charges.  No notice shall be sent to a legal or last registered owner or any person with any unrecorded interest in the vehicle whose name or address cannot be determined.  Any person who violates any provision of this section shall be deemed to have:

     (1)  Engaged in an unfair or deceptive act or practice in the conduct of any trade or commerce within the meaning of section 480-2 and subject to the penalties and remedies of chapter 480; and

     (2)  Furnished services without a license within the meaning of section [487-13]    -12 and subject to penalties and remedies under chapter [487.]    ."

     SECTION 17.  Section 466-5, Hawaii Revised Statutes, is amended by amending subsection (l) to read as follows:

     "(l)  Failure to renew a license on or before December 31 of every odd-numbered year, shall constitute a forfeiture of license.  Continued practice in public accountancy without renewing or restoring a license and permit shall constitute unlicensed activity.  Any person engaged in unlicensed activity shall be subject to sections 466-9, 466-11, [487-13,]    -12, and 26-9."

     SECTION 18.  Section 466-7, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e) Failure to submit the required fees, continuing education hours, or other requirements for renewal as specified in this section by December 31 of every odd-numbered year, shall constitute forfeiture of the permit.  Continued performance in the practice of public accountancy without a permit shall constitute unlicensed activity and the individual or firm shall be subject to sections 466-9, 466-11, [487-13,]    -12, and 26‑9."

     SECTION 19.  Section 476-31, Hawaii Revised Statutes, is amended to read as follows:

     "§476-31  Attorney general, executive director of [[]the office of[]] consumer protection, or prosecutor to enforce chapter.  The attorney general, the executive director of the office of consumer protection, or the prosecuting attorney may bring an action in the name of the State against any person to restrain and prevent any violation of this chapter."

     SECTION 20.  Section 480-2, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  No person other than a consumer, the attorney general or the executive director of the office of consumer protection may bring an action based upon unfair or deceptive acts or practices declared unlawful by this section."

     SECTION 21.  Section 480-3.1, Hawaii Revised Statutes, is amended to read as follows:

     "§480-3.1  Civil penalty.  Any person, firm, company, association, or corporation violating any of the provisions of section 480-2 shall be fined a sum of not less than $500 nor more than $10,000 for each violation, which sum shall be collected in a civil action brought by the attorney general or the executive director of the office of consumer protection on behalf of the State.  The penalties provided in this section are cumulative to the remedies or penalties available under all other laws of the State.  Each day that a violation of section 480-2 occurs shall be a separate violation."

     SECTION 22.  Section 480-14, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:

     "(b)  The attorney general of the State shall be authorized to bring a class action for indirect purchasers asserting claims under this chapter.  The attorney general or the executive director of the office of consumer protection may bring a class action on behalf of consumers based on unfair or deceptive acts or practices declared unlawful by section 480-2.  Actions brought under this subsection shall be brought as parens patriae on behalf of natural persons residing in the State to secure threefold damages for injuries sustained by the natural persons to their property by reason of any violation of this chapter.

     (c)  If judgment is in favor of the State or any of its political subdivisions or governmental agencies under any provision of this chapter, the attorney general or the executive director of the office of consumer protection shall be awarded reasonable attorney's fees together with the cost of suit; provided that in any class action lawsuit brought by the attorney general on behalf of indirect purchasers, the attorney general shall in addition be awarded an amount commensurate with expenses reasonably expected to be expended in distribution of damages to the indirect purchasers."

     SECTION 23.  Section 480-15, Hawaii Revised Statutes, is amended to read as follows:

     "§480-15  Injunction by attorney general or the executive director of the office of consumer protection.  The attorney general may bring proceedings to enjoin any violation of this chapter; provided that the executive director of the office of consumer protection may also bring proceedings to enjoin any violation of section 480-2."

     SECTION 24.  Section 480-15.1, Hawaii Revised Statutes, is amended to read as follows:

     "§480-15.1  Penalty.  Any person, firm, company, association, or corporation violating an injunctive order to cease and desist from violating any provisions of this chapter shall be fined by a sum not less than $500 nor more than $10,000, which sum shall be collected in a civil action brought by the attorney general or the executive director of the office of consumer protection on behalf of the State.  Each separate violation of any such order shall be a separate offense, except that in the case of a violation through continuing failure or neglect to obey a final order of the court, each day of [continuance of such] continuing failure shall constitute a separate offense."

     SECTION 25.  Section 480-20, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  The executive director of the office of consumer protection shall have concurrent jurisdiction with the attorney general to enforce the civil provisions of this chapter with regard to violations of section 480-2."

     SECTION 26.  Section 481F-8, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  In civil actions brought under this section by the attorney general, the office of consumer protection, or any county prosecuting attorney, the court may include in its orders or judgments [such] provisions as may be necessary to effect restitution in accordance with section [487-14.]    -13."

     SECTION 27.  Section 487A-3, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§487A-3[]]  Attorney general or executive director of [[]the office of[]] consumer protection to enforce chapter.  The attorney general or the executive director of the office of consumer protection may bring an action in the name of the State against any person to restrain and prevent any violation of this chapter."

     SECTION 28.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 29.  This Act shall take effect on July 1, 2112.

 

 

Report Title:

Office of Consumer Protection; Department of Commerce and Consumer Protection; Department of the Attorney General; Transfer

 

Description:

Transfers the Office of Consumer Protection from the Department of Commerce and Consumer Protection to the Department of the Attorney General.  Effective 7/1/2112.  (SD1)

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.