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AB-1366 Unfair competition and false advertising: disgorgement.(2023-2024)

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Date Published: 10/12/2023 02:00 PM
AB1366:v95#DOCUMENT

Assembly Bill No. 1366
CHAPTER 686

An act to add Section 12527.6 to the Government Code, relating to consumer protection.

[ Approved by Governor  October 10, 2023. Filed with Secretary of State  October 10, 2023. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1366, Maienschein. Unfair competition and false advertising: disgorgement.
Existing law generally regulates false advertising and makes it a crime for a person or a firm, corporation, or association, or any employee thereof, to engage in specified false or misleading advertising practices. Existing unfair competition laws make various unfair competition practices unlawful, including any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.
Existing law authorizes certain public officials, including the Attorney General, to take specified actions upon failure of the advertiser to adequately substantiate a claim within a reasonable time or if the requesting official has reason to believe that an advertising claim is false or misleading. Existing law requires a person who engages or proposes to engage in unfair competition to be liable for a civil penalty of not more than $2,500, per violation, which is assessed and recovered in an action brought by certain public officials, including the Attorney General.
This bill would authorize the court, in an action brought by the Attorney General under specified false advertising and unfair competition laws, to award the remedy of disgorgement, in addition to the other remedies provided under those false advertising and unfair competition laws. The bill would require the funds recovered by the Attorney General under these provisions to be deposited into the Victims of Consumer Fraud Restitution Fund, which the bill would establish in the State Treasury. The bill would make the funds, upon appropriation by the Legislature, available to the Attorney General to provide restitution to victims of acts or practices for which consumer restitution has been ordered but not paid in an action brought by the Attorney General, as specified. The bill would authorize funds recovered by the Attorney General from a defendant after payment from the fund has been made to be used by the Attorney General to reimburse the fund. The bill would authorize the Attorney General to promulgate regulations in furtherance of these provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 12527.6 is added to the Government Code, to read:

12527.6.
 (a) The court may, in an action brought by the Attorney General under the unfair competition laws (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code) or false advertising laws (Article 1 (commencing with Section 17500) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code), and in addition to the remedies provided for in those statutes, award the remedy of disgorgement.
(b) In determining whether to award disgorgement pursuant to subdivision (a), and the amount thereof, the court shall take into account, in addition to any other appropriate factors, the amount of civil penalties and restitution ordered by the court.
(c) Funds recovered by the Attorney General under this section shall be deposited into the Victims of Consumer Fraud Restitution Fund.
(d) The Victims of Consumer Fraud Restitution Fund is established in the State Treasury. Funds in the Victims of Consumer Fraud Restitution Fund may, upon appropriation by the Legislature, be used by the Attorney General to provide restitution to victims of acts or practices for which consumer restitution has been ordered but not paid in an action brought by the Attorney General under Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code or Article 1 (commencing with Section 17500) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code. If the Attorney General pays restitution from the Victims of Consumer Fraud Restitution Fund and then recovers restitution from a defendant in the underlying action or from another source, those recoveries may be used by the Attorney General to reimburse the Victims of Consumer Fraud Restitution Fund.
(e) The Attorney General may promulgate regulations in furtherance of this section.