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AB-3217 Legal services: advertising.(2017-2018)

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Date Published: 05/10/2018 09:00 PM
AB3217:v97#DOCUMENT

Amended  IN  Assembly  May 10, 2018
Amended  IN  Assembly  April 02, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 3217


Introduced by Assembly Member Berman

February 16, 2018


An act to add Sections 17539.7 and 17539.8 to the Business and Professions Code, amend Section 1770 of the Civil Code, relating to advertising.


LEGISLATIVE COUNSEL'S DIGEST


AB 3217, as amended, Berman. Legal services: advertising.
Existing law, the Consumer Legal Remedies Act, makes unlawful certain unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer. Existing law authorizes any consumer who suffers damages as a result of these unlawful practices to bring an action against that person to recover damages, among other things.
This bill would include, as an unlawful practice prohibited under the Consumer Legal Remedies Act, advertising legal services to persons who may allege an injury from either a prescription drug or a medical device that is designed and intended to be implanted in the body, that is currently approved by the United States Food and Drug Administration, where the advertisement contains a material misrepresentation of fact or law, or omits a fact necessary to make the communication as a whole not materially misleading.

Existing law, the State Bar Act, provides for the licensure and regulation of attorneys by the State Bar of California, a public corporation. The State Bar Act also provides for the regulation of legal advertising, as defined, and, among other things, prohibits an advertisement from containing any false, misleading, or deceptive statement.

The Unfair Competition Law (UCL) establishes a statutory cause of action for unfair competition, including any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.

This bill would require under the UCL that an advertisement for legal services soliciting clients who may allege an injury from a prescription drug to include a statement advising the client not to stop taking the medication, as specified.

This bill would also prohibit a person to use, cause to be used, obtain, sell, transfer, or disclose to another person without written authorization, protected health information, as defined, for the purpose of soliciting an individual for legal services.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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


SECTION 1.

 Section 1770 of the Civil Code is amended to read:

1770.
 (a) The following unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer are unlawful:
(1) Passing off goods or services as those of another.
(2) Misrepresenting the source, sponsorship, approval, or certification of goods or services.
(3) Misrepresenting the affiliation, connection, or association with, or certification by, another.
(4) Using deceptive representations or designations of geographic origin in connection with goods or services.
(5) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that he or she does not have.
(6) Representing that goods are original or new if they have deteriorated unreasonably or are altered, reconditioned, reclaimed, used, or secondhand.
(7) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.
(8) Disparaging the goods, services, or business of another by false or misleading representation of fact.
(9) Advertising goods or services with intent not to sell them as advertised.
(10) Advertising goods or services with intent not to supply reasonably expectable demand, unless the advertisement discloses a limitation of quantity.
(11) Advertising furniture without clearly indicating that it is unassembled if that is the case.
(12) Advertising the price of unassembled furniture without clearly indicating the assembled price of that furniture if the same furniture is available assembled from the seller.
(13) Making false or misleading statements of fact concerning reasons for, existence of, or amounts of, price reductions.
(14) Representing that a transaction confers or involves rights, remedies, or obligations that it does not have or involve, or that are prohibited by law.
(15) Representing that a part, replacement, or repair service is needed when it is not.
(16) Representing that the subject of a transaction has been supplied in accordance with a previous representation when it has not.
(17) Representing that the consumer will receive a rebate, discount, or other economic benefit, if the earning of the benefit is contingent on an event to occur subsequent to the consummation of the transaction.
(18) Misrepresenting the authority of a salesperson, representative, or agent to negotiate the final terms of a transaction with a consumer.
(19) Inserting an unconscionable provision in the contract.
(20) Advertising that a product is being offered at a specific price plus a specific percentage of that price unless (A) the total price is set forth in the advertisement, which may include, but is not limited to, shelf tags, displays, and media advertising, in a size larger than any other price in that advertisement, and (B) the specific price plus a specific percentage of that price represents a markup from the seller’s costs or from the wholesale price of the product. This subdivision shall not apply to in-store advertising by businesses that are open only to members or cooperative organizations organized pursuant to Division 3 (commencing with Section 12000) of Title 1 of the Corporations Code where more than 50 percent of purchases are made at the specific price set forth in the advertisement.
(21) Selling or leasing goods in violation of Chapter 4 (commencing with Section 1797.8) of Title 1.7.
(22) (A) Disseminating an unsolicited prerecorded message by telephone without an unrecorded, natural voice first informing the person answering the telephone of the name of the caller or the organization being represented, and either the address or the telephone number of the caller, and without obtaining the consent of that person to listen to the prerecorded message.
(B) This subdivision does not apply to a message disseminated to a business associate, customer, or other person having an established relationship with the person or organization making the call, to a call for the purpose of collecting an existing obligation, or to any call generated at the request of the recipient.
(23) (A) The home solicitation, as defined in subdivision (h) of Section 1761, of a consumer who is a senior citizen where a loan is made encumbering the primary residence of that consumer for purposes of paying for home improvements and where the transaction is part of a pattern or practice in violation of either subsection (h) or (i) of Section 1639 of Title 15 of the United States Code or paragraphs (1), (2), and (4) of subdivision (a) of Section 226.34 of Title 12 of the Code of Federal Regulations.
(B) A third party shall not be liable under this subdivision unless (i) there was an agency relationship between the party who engaged in home solicitation and the third party, or (ii) the third party had actual knowledge of, or participated in, the unfair or deceptive transaction. A third party who is a holder in due course under a home solicitation transaction shall not be liable under this subdivision.
(24) (A) Charging or receiving an unreasonable fee to prepare, aid, or advise any prospective applicant, applicant, or recipient in the procurement, maintenance, or securing of public social services.
(B) For purposes of this paragraph, the following definitions shall apply:
(i) “Public social services” means those activities and functions of state and local government administered or supervised by the State Department of Health Care Services, the State Department of Public Health, or the State Department of Social Services, and involved in providing aid or services, or both, including health care services, and medical assistance, to those persons who, because of their economic circumstances or social condition, are in need of that aid or those services and may benefit from them.
(ii) “Public social services” also includes activities and functions administered or supervised by the United States Department of Veterans Affairs or the California Department of Veterans Affairs involved in providing aid or services, or both, to veterans, including pension benefits.
(iii) “Unreasonable fee” means a fee that is exorbitant and disproportionate to the services performed. Factors to be considered, if appropriate, in determining the reasonableness of a fee, are based on the circumstances existing at the time of the service and shall include, but not be limited to, all of the following:
(I) The time and effort required.
(II) The novelty and difficulty of the services.
(III) The skill required to perform the services.
(IV) The nature and length of the professional relationship.
(V) The experience, reputation, and ability of the person providing the services.
(C) This paragraph shall not apply to attorneys licensed to practice law in California, who are subject to the California Rules of Professional Conduct and to the mandatory fee arbitration provisions of Article 13 (commencing with Section 6200) of Chapter 4 of Division 3 of the Business and Professions Code, when the fees charged or received are for providing representation in administrative agency appeal proceedings or court proceedings for purposes of procuring, maintaining, or securing public social services on behalf of a person or group of persons.
(25) (A) Advertising or promoting any event, presentation, seminar, workshop, or other public gathering regarding veterans’ benefits or entitlements that does not include the following statement in the same type size and font as the term “veteran” or any variation of that term:
(i) “I am not authorized to file an initial application for Veterans’ Aid and Attendance benefits on your behalf, or to represent you before the Board of Veterans’ Appeals within the United States Department of Veterans Affairs in any proceeding on any matter, including an application for such benefits. It would be illegal for me to accept a fee for preparing that application on your behalf.” The requirements of this clause do not apply to a person licensed to act as an agent or attorney in proceedings before the Agency of Original Jurisdiction and the Board of Veterans’ Appeals within the United States Department of Veterans Affairs when that person is offering those services at the advertised event.
(ii) The statement in clause (i) shall also be disseminated, both orally and in writing, at the beginning of any event, presentation, seminar, workshop, or public gathering regarding veterans’ benefits or entitlements.
(B) Advertising or promoting any event, presentation, seminar, workshop, or other public gathering regarding veterans’ benefits or entitlements that is not sponsored by, or affiliated with, the United States Department of Veterans Affairs, the California Department of Veterans Affairs, or any other congressionally chartered or recognized organization of honorably discharged members of the Armed Forces of the United States, or any of their auxiliaries that does not include the following statement, in the same type size and font as the term “veteran” or the variation of that term:

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

(i) The statement in this subparagraph shall be disseminated, both orally and in writing, at the beginning of any event, presentation, seminar, workshop, or public gathering regarding veterans’ benefits or entitlements.
(ii) The requirements of this subparagraph shall not apply in a case where the United States Department of Veterans Affairs, the California Department of Veterans Affairs, or other congressionally chartered or recognized organization of honorably discharged members of the Armed Forces of the United States, or any of their auxiliaries have granted written permission to the advertiser or promoter for the use of its name, symbol, or insignia to advertise or promote the event, presentation, seminar, workshop, or other public gathering.
(26) Advertising, offering for sale, or selling a financial product that is illegal under state or federal law, including any cash payment for the assignment to a third party of the consumer’s right to receive future pension or veteran’s benefits.
(27) Representing that a product is made in California by using a Made in California label created pursuant to Section 12098.10 of the Government Code, unless the product complies with Section 12098.10 of the Government Code.
(28) Advertising legal services to persons who may allege an injury from either a prescription drug or a medical device that is designed and intended to be implanted in the body, that is currently approved by the United States Food and Drug Administration, where the advertisement contains a material misrepresentation of fact or law, or omits a fact necessary to make the communication as a whole not materially misleading. An advertisement may be considered materially misleading if it materially understates the benefits of a drug or device, or materially overstates the risk associated with the drug or device.
(b) (1) It is an unfair or deceptive act or practice for a mortgage broker or lender, directly or indirectly, to use a home improvement contractor to negotiate the terms of any loan that is secured, whether in whole or in part, by the residence of the borrower and that is used to finance a home improvement contract or any portion of a home improvement contract. For purposes of this subdivision, “mortgage broker or lender” includes a finance lender licensed pursuant to the California Finance Lenders Law (Division 9 (commencing with Section 22000) of the Financial Code), a residential mortgage lender licensed pursuant to the California Residential Mortgage Lending Act (Division 20 (commencing with Section 50000) of the Financial Code), or a real estate broker licensed under the Real Estate Law (Division 4 (commencing with Section 10000) of the Business and Professions Code).
(2) This section shall not be construed to either authorize or prohibit a home improvement contractor from referring a consumer to a mortgage broker or lender by this subdivision. However, a home improvement contractor may refer a consumer to a mortgage lender or broker if that referral does not violate Section 7157 of the Business and Professions Code or any other law. A mortgage lender or broker may purchase an executed home improvement contract if that purchase does not violate Section 7157 of the Business and Professions Code or any other law. Nothing in this paragraph shall have any effect on the application of Chapter 1 (commencing with Section 1801) of Title 2 to a home improvement transaction or the financing of a home improvement transaction.

SECTION 1.Section 17539.7 is added to the Business and Professions Code, to read:
17539.7.

(a)An advertisement for legal services soliciting clients who may allege an injury from a prescription drug approved, cleared, or the subject of a monograph authorized by the United States Food and Drug Administration shall include the following warning: “DO NOT STOP TAKING A PRESCRIBED MEDICATION WITHOUT FIRST CONSULTING WITH YOUR DOCTOR. DISCONTINUING A PRESCRIBED MEDICATION WITHOUT YOUR DOCTOR’S ADVICE CAN RESULT IN INJURY OR DEATH.”

(b)(1)The disclosure required pursuant to subdivision (a) shall be presented clearly and conspicuously.

(2)Written disclosures shall be clearly legible and, if televised or displayed electronically, shall be displayed for a sufficient time to enable the viewer to easily see and fully read the disclosure or disclaimer.

(3)Spoken disclosures shall be plainly audible and clearly intelligible.

(c)As used in this section, “advertising” or “advertisement” means a solicitation for legal services through television, radio, internet, including domain name, newspaper or other periodical, outdoor display, or other written, electronic, or recorded communication.

(d)This section shall apply to any attorney, law firm, or individual, partnership, corporation, association, or any other entity that advertises legal services or identifies potential clients for attorneys or law firms.

(e)Nothing in this section may be construed to limit or otherwise affect the application of the State Bar Act (Chapter 4 (commencing with Section 6000) of Division 3).

SEC. 2.Section 17539.8 is added to the Business and Professions Code, to read:
17539.8.

(a)It is unlawful for a person to use, cause to be used, obtain, sell, transfer, or disclose to another person without written authorization, protected health information, as defined in Parts 160 and 164 of Title 45 of the Code of Federal Regulations, for the purpose of soliciting an individual for legal services.

(b)This section shall apply to any attorney, law firm, or individual, partnership, corporation, association, or any other entity that advertises legal services or identifies potential clients for attorneys or law firms.

(c)As used in this section, “solicit” means offer to provide legal services by written, recorded, or electronic communications or by in-person, telephone, or real-time electronic contact.

(d)Nothing in this section may be construed to limit or otherwise affect the application of the State Bar Act (Chapter 4 (commencing with Section 6000) of Division 3).