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F I S C A L I M P A C T R E P O R T

SPONSOR Barreras

ORIGINAL DATE

LAST UPDATED

2-24-07

3-2-07 HB 766/aHCPAC

SHORT TITLE Clarify Unfair Practices Act Applicability

SB

ANALYST Aubel/Ortiz

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Public Regulatory Commission (PRC)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of HCPAC Amendment

House Consumer and Public Affairs Committee amendment to House Bill 766 struck language

that included the

use deceptive representations or designations of geographic origin of goods or services

as a deceptive trade practice.

Synopsis of Original Bill

House Bill 766 expands the definitions under the Unfair Practices Act to include unfair

purchases, as follows:

•

“trade" is expanded beyond the current definition of advertising, offering for sale or

distribution to include the purchasing

of any services;

•

“unfair or deceptive trade practice" is expanded beyond the current definition a false or

misleading oral or written statement, visual description or other representation of any kind

knowingly made in connection with the sale, lease, rental or loan of goods or services to

include the purchase

of goods or services; and

House Bill 766/aHCPAC – Page

2

•

the concept of “practice" is expanded beyond the current definition of a trade or commerce

to include the person’s occupation, vocation.

SIGNIFICANT ISSUES

According to the AGO, each of the 50 states, plus the District of Columbia, Puerto Rico and

Guam, have enacted an unfair trade practices act aimed at preventing consumer deception and

abuse in the marketplace. Most state statutes, including New Mexico, are patterned after the

Federal Trade Commission (FTC) Act which prohibits unfair or deceptive acts or practices. And

like the FTC Act, New Mexico’s Unfair Practices Act also extends its protections to businesses

which, like consumers, may be targets of unfair and deceptive business practices, scams and

schemes.

The AGO also notes that the modern concept of “deception," largely based on court

interpretations of the FTC Act, does not require proof of actual deception. As a result, most state

unfair trade practices statutes, including New Mexico’s, provide more flexible remedies for

consumer abuse than was previously available under the common law, thereby enabling the law

to apply to new forms of abusive schemes in almost all types of consumer transactions. Most, if

not all, of these same remedies are extended to businesses as well.

The concept of being a business under the Act is expanded under the bill from “trade or

commerce" to include the person’s occupation or vocation, which would appear to expand the

concept beyond an established business to any activity that could be construed as a consistent

effort relating to providing goods or services.

By providing a series of options such as mediation, the Act encourages and provides remedies

for consumers and businesses to resolve their own disputes without proceeding to litigation or

charges. If these efforts fail, the Act provides for a series of remedies, depending on the severity

of the breach. For example, it provides for:

.

the Director to take action on behalf of disadvantaged or vulnerable consumers,

including an action where the unfair practice occurred outside Saskatchewan;

.

voluntary agreements for compliance between a supplier and the Director;

.

the court to order restitution; and

.

an application by the Director to the court for an injunction.

OTHER SUBSTANTIVE ISSUES

The AGO explains that consumers are often at a disadvantage in many a negotiated transaction,

lacking the knowledge or expertise that a commercial seller of a particular good may have.

Hence, as written, the UPA largely extends its protections to (consumer) purchasers against

sellers, to include the right to bring suit against sellers who engage in unfair, deceptive or

unconscionable trade practices. Plaintiffs who prevail against a seller found to have violated the

UPA are awarded attorney fees and costs, in addition to their damages.

House Bill 766/aHCPAC – Page

3

TECHNICAL ISSUES

The terms “occupation" and “vocation" as added by HB 766 are not terms previously utilized in

connection with the UPA and there is no case law on point that interprets and applies the

meaning of these terms.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

The AGO reports that consumers and businesses alike will continue to receive the protections

afforded them under the current federal and state law.

POSSIBLE QUESTIONS

How would this enhance the current federal and state law.

EO/nt