SSHB 142: "An Act relating to the sale or transfer of new or used motor vehicles; relating to the confidentiality of certain information related to attorney general investigations of unlawful trade practices and antitrust activities; establishing additional unlawful trade practices; relating to the exemptions from telephonic solicitation regulation; regulating the sale of business opportunities; amending Rules 4 and 73, Alaska Rules of Civil Procedure; and providing for an effective date."
00SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 142 01 "An Act relating to the sale or transfer of new or used motor vehicles; relating 02 to the confidentiality of certain information related to attorney general 03 investigations of unlawful trade practices and antitrust activities; establishing 04 additional unlawful trade practices; relating to the exemptions from telephonic 05 solicitation regulation; regulating the sale of business opportunities; amending 06 Rules 4 and 73, Alaska Rules of Civil Procedure; and providing for an effective 07 date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. AS 45.45.400(a) is amended to read: 10 (a) A person engaged in the business of selling used motor vehicles may not 11 contract to sell, transfer, or assign a [THE OWNER'S TITLE OR INTEREST IN 12 THE] used motor vehicle to a person who resides in an area subject to a state- 13 approved emission inspection program established under AS 46.14.400 or 46.14.510 and who 14 intends to use the vehicle in that area [,] unless, before entering into the contract, the
01 person engaged in the business of selling used motor vehicles 02 (1) provides the prospective buyer, transferee, or assignee with a 03 valid copy of [THE VEHICLE HAS] a certificate of inspection [COMPLIANCE] or 04 noncompliance for the vehicle as required under the air pollution control requirements 05 applicable in that area; and 06 (2) obtains from the prospective buyer, transferee, assignee, or the 07 agent of the prospective buyer, transferee. or assignee, a signed, written 08 acknowledgment that the prospective buyer, transferee, or assignee, or the agent 09 of the prospective buyer, transferee, or assignee has received a copy of the 10 certificate of inspection or noncompliance as required by (1) of this subsection. 11 * Sec. 2. AS 45.45 is amended by adding new sections to read: 12 Article 7A. Disclosures in Motor Vehicle Sales and Transfers. 13 Sec. 45.45.450. Disclosure required. (a) Before the delivery of the vehicle 14 to the motor vehicle dealer, a person who manufactures, imports, or distributes new 15 motor vehicles and who sells or transfers, in the person's capacity as a manufacturer, 16 importer, or distributor of new motor vehicles, a motor vehicle to a motor vehicle 17 dealer in this state shall notify the dealer of any material problems with a vehicle that 18 are known to, or that can with reasonable diligence be discovered by, the manufacturer, 19 importer, or distributor. This section does not apply unless the problem arose after the 20 manufacturing process was completed and before delivery of the vehicle to the dealer. 21 (b) Before a contract for the sale of a new or used motor vehicle is entered 22 into by the dealer in the dealer's capacity as a motor vehicle dealer, a motor vehicle 23 dealer shall disclose to a potential buyer any material problems with the vehicle that 24 are known to, or that can with reasonable diligence be discovered by, the dealer. 25 (c) The disclosures required by (a) and (b) of this section must be in writing. 26 Sec. 45.45.455. Buyer's right to cancel after notice. If a motor vehicle 27 dealer provides the notice required by AS 45.45.450(b) before entering into a contract 28 for the sale of a new motor vehicle, the buyer may cancel the purchase order or other 29 documentation of intent to enter into a contract to purchase the motor vehicle. If the 30 buyer cancels, the motor vehicle dealer shall refund to the buyer the full amount of 31 any deposit or other money paid by the buyer to purchase the motor vehicle.
01 Sec. 45.45.460. Failure to give notice. (a) If a motor vehicle dealer fails to 02 provide the notice required under AS 45.45.450(b) before entering into a contract for 03 the sale of a new or used motor vehicle, the buyer may obtain from the dealer a refund 04 of the full amount paid by the buyer toward the purchase price of the vehicle, the 05 amount allowed by the dealer for any trade-in, and the charges that are related to the 06 transaction and incurred by the buyer, less the allowances allowed under (b) of this 07 section and as adjusted by (c) of this section. In this subsection, "charges" includes 08 license fees, registration fees, and similar governmental charges. 09 (b) The refund allowed under (a) of this section shall be reduced by 10 (1) an allowance for the buyer's use of the vehicle that exceeds 1,000 11 miles for each month or part of a month that expires after the delivery of the vehicle 12 to the buyer and before the buyer surrenders the vehicle to the seller to receive the 13 refund; the allowance under this paragraph shall be calculated by dividing the excess 14 mileage by 100,000 and multiplying the result by the purchase price; and 15 (2) a reasonable allowance for any damage that is sustained by the 16 vehicle after the delivery of the vehicle to the buyer and before the buyer surrenders 17 the vehicle to the seller to receive the refund and that is not attributable to normal 18 wear on and use of the vehicle. 19 (c) If the buyer modifies the vehicle after delivery of the vehicle to the buyer, 20 the refund allowed under (a) of this section must be 21 (1) reduced by the value of the modifications that decrease the market 22 value of the vehicle; and 23 (2) increased by the value of the modifications that increase the market 24 value of the vehicle. 25 Sec. 45.45.470. Indemnification and hold harmless requirements. (a) A 26 person who manufactures, imports, or distributes new motor vehicles shall indemnify 27 and hold harmless a motor vehicle dealer that obtains a motor vehicle from the 28 manufacturer, importer, or distributor from and against any liability, including 29 reasonable attorney fees, that 30 (1) the motor vehicle dealer has to the person who buys the motor 31 vehicle from the dealer;
01 (2) results from a material problem with the vehicle that the 02 manufacturer, importer, or distributor knows of or can with reasonable diligence 03 discover and that arose after the manufacturing process was completed and before 04 delivery of the vehicle to the dealer; and 05 (3) was not disclosed to the dealer under AS 45.45.450 before delivery 06 of the vehicle. 07 (b) Notwithstanding AS 45.45.490, in (a) of this section, "material problem" 08 means a defect or condition that makes the vehicle unsafe to operate or any damage 09 suffered by the vehicle. 10 Sec. 45.45.480. Effect of provisions. (a) Nothing in AS 45.45.450 - 11 45.45.490 permits a motor vehicle dealer to respond to the inquiry of a buyer in an 12 untrue or misleading manner. 13 (b) Nothing in AS 45.45.455 or 45.45.460 limits any other right or remedy 14 available at common law or under other state statutes. 15 Sec. 45.45.490. Definitions. In AS 45.45.450 - 45.45.490, 16 (1) "material problem" means a defect or condition that makes the 17 vehicle unsafe to operate or material damage sustained by the motor vehicle; in this 18 paragraph, "material damage" means damage 19 (A) that is not repaired, except for normal wear and tear if the 20 motor vehicle sold or transferred is a used motor vehicle; 21 (B) that is repaired by or on behalf of a person who 22 manufactures, imports, or distributes new motor vehicles, or by or on behalf of 23 a motor vehicle dealer, if the repair cost, including parts and labor calculated 24 at the repairer's retail charge, exceeds $300, or $100 when the repair is touch- 25 up paint applied to correct exterior paint damage; damage to tires, glass, bumpers, and audio 26 equipment in the dashboard are not included when determining the cost of the repair if the 27 tires, glass, bumpers, and audio equipment are replaced by identical manufacturer's original 28 equipment; 29 (C) to a motor vehicle's frame, drive train, or suspension, 30 regardless of the value of the damage and notwithstanding (A) and (B) 31 of this paragraph;
01 (2) "motor vehicle dealer" means a person who engages in the business 02 of selling new or used motor vehicles, but does not include a person who 03 manufactures, imports, or distributes new motor vehicles; 04 (3) "person who manufactures, imports, or distributes new motor 05 vehicles" means a person who engages in the business of selling or transferring new 06 motor vehicles to a motor vehicle dealer for resale. 07 * Sec. 3. AS 45.50.471(b) is amended by adding new paragraphs to read: 08 (42) violating AS 45.45.450 - 45.45.490 (motor vehicle sales 09 disclosures); 10 (43) violating AS 45.66 (sales of business opportunities). 11 * Sec. 4. AS 45.50.521(b) is amended to read: 12 (b) Subject to the provisions of AS 45.50.501(a), the attorney general may not 13 make public the name of a person alleged to have committed an act or practice 14 declared unlawful by AS 45.50.471 - 45.50.561 [IN AS 45.50.471] during and after 15 an investigation conducted by the attorney general under AS 45.50.471 - 45.50.561, 16 nor are the records of investigation or intelligence information of the attorney general 17 obtained or created in the course of the investigation under AS 45.50.471 - 18 45.50.561 considered public records available for inspection or copying under 19 AS 09.25.110 - 09.25.220 by the general public at any time during or after the 20 investigation. However, the attorney general is not prevented from issuing public 21 statements describing or warning of a course of conduct or a conspiracy that 22 constitutes or will constitute an unlawful act or practice, whether on a local, state, 23 regional, or national basis. 24 * Sec. 5. AS 45.50.594 is amended by adding a new subsection to read: 25 (e) Testimony given under a demand, or a copy of the testimony, is subject to 26 the same restrictions and prohibition against disclosure as is documentary material 27 under AS 45.50.592(e). 28 * Sec. 6. AS 45.50 is amended by adding a new section to read: 29 Sec. 45.50.595. Confidentiality of investigatory records. Investigation 30 records obtained or created by the attorney general in the course of an investigation 31 under AS 45.50.562 - 45.50.596 are not considered public records available for
01 inspection or copying under AS 09.25.110 - 09.25.220 by the public at any time during 02 or after the investigation. However, the attorney general may issue public statements 03 describing or warning of a course of conduct or a conspiracy that constitutes or will 04 constitute a violation of AS 45.50.562 - 45.50.596, whether on a local, state, regional, 05 or national basis. 06 * Sec. 7. AS 45.63.080(14) is repealed and reenacted to read: 07 (14) of property from a mail order catalog, if the person making the 08 solicitation does not initiate contact with prospective customers by telephonic means, 09 if contact by telephonic means is initiated by the prospective customer in response to 10 the catalog, and if during the contact the person making the solicitation does not make 11 a further solicitation; in this paragraph, 12 (A) "further solicitation" does not include providing the 13 prospective customer with information about, or attempting to sell, another item 14 included in the same mail order catalog that prompted the prospective 15 customer's contact; 16 (B) "mail order catalog" means a publication that 17 (i) is published one or more times a year; 18 (ii) is delivered to prospective customers; 19 (iii) describes or pictures the products, equipment, or 20 supplies for sale and prominently provides the specific price of each; 21 (iv) includes the business name, address, and telephone 22 number of the person who owns and produces the publication; 23 (v) includes instructions to prospective buyers on how 24 to order products from the publication; 25 (vi) includes 10 or more pages of written material and 26 illustrations; 27 (vii) is distributed in this state; and 28 (viii) has an annual mail circulation of 10,000 or more 29 copies. 30 * Sec. 8. AS 45 is amended by adding a new chapter to read: 31 Chapter 66. Sales of Business Opportunities.
01 Sec. 45.66.010. Registration required. A seller may not sell or offer to sell 02 a business opportunity unless the seller is registered with the department at least 30 03 days before the seller's solicitation campaign begins. 04 Sec. 45.66.020. Registration procedure. (a) To register under AS 45.66.010, 05 a seller shall file with the department 06 (1) the disclosure statement required by AS 45.66.070 and any 07 advertising, pamphlets, brochures, or other materials to be used in the solicitation 08 campaign; 09 (2) the bond required by AS 45.66.050; 10 (3) an irrevocable consent appointing the department as the seller's 11 agent for the receipt of service of process in a court action or other proceeding against 12 the seller, or the successor in interest of the seller, for a violation of AS 45.66.010 - 13 45.66.400; 14 (4) a completed application form that satisfies (b) of this section; 15 (5) a signed statement that the seller has read and will comply with 16 AS 45.66.010 - 45.66.400 and the regulations adopted under it; and 17 (6) other information requested by the department to evaluate whether 18 the applicant meets the requirements of AS 45.66.010 - 45.66.400. 19 (b) The application form shall be established by the department by regulation 20 and must contain information including 21 (1) the nature of the solicitation campaign; 22 (2) the identity and business practices of the seller, including 23 information on the owners, employees, agents, officers, and other persons affiliated 24 with the seller; and 25 (3) disclosures of criminal convictions, civil judgments, orders, consent 26 decrees, or administrative determinations involving allegations of fraud, theft, 27 embezzlement, fraudulent conversion, misappropriation of property, the use of untrue 28 or misleading representations in an attempt to sell or dispose of real or personal 29 property, violations of AS 45.66.010 - 45.66.400, violations of AS 45.63 (telephonic 30 solicitations), violations of AS 45.68 (charitable solicitations), or unfair or deceptive 31 business practices under AS 45.50.471 - 45.50.561, by the seller, including the
01 owners, employees, agents, officers, and other persons affiliated with the seller. 02 (c) Registration under AS 45.66.010 or renewal under AS 45.66.030 is not 03 complete until the seller receives an acknowledgment from the department that the 04 seller has complied with (a) of this section or 45.66.030. 05 Sec. 45.66.030. Renewal of registration. If a solicitation campaign continues 06 for more than one year from the date of department's acknowledgment of the initial 07 registration under AS 45.66.010 - 45.66.400, a seller shall renew the registration each 08 year that the solicitation campaign continues by filing before or on the anniversary date 09 of the department's acknowledgment under AS 45.66.020(c) a renewal application on 10 a form established by the department by regulation requesting information that is 11 similar to the information required under AS 45.66.020. 12 Sec. 45.66.040. Material changes in registration information. If there is a 13 material change in the information provided under AS 45.66.020 or 45.66.030, the 14 seller shall, within 10 days of the change, file with the department a statement 15 describing the change on a form established by the department by regulation. 16 Sec. 45.66.050. Surety bond required. (a) A seller shall obtain a surety 17 bond in the amount of $75,000 issued by a surety company authorized to do business 18 in the state. The bond must be in favor of the state for the benefit of a buyer and 19 must satisfy the conditions established by the department by regulation. 20 (b) If the department finds that the amount of the bond set by (a) of this 21 section is insufficient to protect the public interest, the department may by regulation 22 increase the amount of the bond. 23 Sec. 45.66.060. Location of offer and sale. AS 45.66.010 - 45.66.400 apply 24 to a sale of or offer to sell a business opportunity if 25 (1) the offer, regardless of whether either party is then present in this 26 state, originates in this state, or is directed by the offeror to this state and received at 27 the place to which the offer is directed, including a post office box; this paragraph 28 does not include an offer that 29 (A) appears in a bona fide newspaper or other publication of 30 general circulation that is not published in this state or that is published in this 31 state but more than two-thirds of its circulation was outside this state during
01 the 12 months preceding the offer; or 02 (B) is made on a radio or television program that originates 03 outside this state and is received in this state; 04 (2) the acceptance 05 (A) has not been previously communicated, orally or in writing, 06 to the offeror outside this state; 07 (B) is communicated to the offeror in this state, regardless of 08 whether the seller or buyer is then present in this state, and the offeree 09 reasonably believes that the offeror is located in this state; and 10 (C) is received at the place to which it was directed, including 11 a post office box; or 12 (3) the buyer is domiciled in this state and the business opportunity is 13 or will be operated in this state. 14 Sec. 45.66.070. Disclosure requirements. (a) At least 10 days before the 15 buyer signs the contract, or at least 10 days before receipt of any consideration by the 16 seller, whichever event occurs first, the seller shall give the buyer the written 17 disclosure statement described in (b) of this section, require the buyer to sign a receipt 18 containing the buyer's name and the date when the buyer received the disclosure 19 statement, and give the buyer the original receipt with the buyer's original signature. 20 The seller shall retain a copy of the receipt. 21 (b) The department shall specify by regulation the form and content of the 22 disclosure statement required by (a) of this section, including 23 (1) the seller's name, type of business organization, address, and name 24 of any parent or affiliated company related to the transaction; 25 (2) the names, addresses, and other relevant information regarding the 26 owners, officers, directors, and other persons responsible for the seller's business 27 activities related to the contract; 28 (3) the business history of the seller and the seller's representatives and 29 the background of the seller and the seller's representatives that relates to business 30 opportunities; 31 (4) the total contract amount to be paid by the buyer and the schedule
01 of payments; 02 (5) the financial condition of the seller, including audits and recent 03 income statements; 04 (6) a complete description of the services that the seller will perform 05 for the buyer, including training; 06 (7) the history of the seller's registration or attempted registration in 07 this or another state as a seller of business opportunities; 08 (8) a history of civil actions, criminal actions, and consumer protection 09 complaints brought against the seller or its representatives related to the sale of 10 business opportunities and the resolution of the actions and complaints; 11 (9) identification of any bankruptcy actions filed in court by the seller 12 and the resolution of the actions; 13 (10) a statement adopted by the department by regulation to alert the 14 public about the legal requirements for a sale of business opportunities if the 15 department determines the statement is reasonable and necessary; 16 (11) if the seller makes a statement about potential earnings that can 17 be made through a business opportunity, the basis for the statement and the economic 18 risks associated with the business opportunity; 19 (12) the rights and obligations of the seller and buyer regarding 20 termination of the contract, including the rights arising out of the bond required by 21 AS 45.66.050; and 22 (13) any additional information that the department determines by 23 regulation is reasonable and in the public interest for the seller to provide in order to 24 make a complete disclosure concerning the contract. 25 Sec. 45.66.080. Written contract required. (a) In addition to the other 26 requirements of AS 45.66.010 - 45.66.400, a person may not contract to sell a business 27 opportunity unless the contract is in writing and the seller gives a copy of the contract 28 to the buyer when the buyer signs the contract. 29 (b) The department shall establish by regulation the content and format of the 30 information that must be contained in the contract, including 31 (1) the payment terms, including any escrow account required under
01 AS 45.66.090; 02 (2) the name, address, and telephone number of the seller, the seller's 03 agent, and each supplier of products, equipment, or supplies that the seller is to deliver 04 to the buyer; 05 (3) the form of the seller's business organization; 06 (4) a description of services, including any training services, that the 07 seller is to provide to the buyer; 08 (5) the delivery date of the product, equipment, or supplies being sold 09 or leased; 10 (6) a complete description of any representation made by the seller that 11 implies in any manner that the buyer's initial payment is protected from loss, including 12 a representation that the seller 13 (A) may repurchase either all or a part of what the seller is 14 selling to the buyer; 15 (B) may at some future time pay the buyer the difference 16 between the initial payment and the amount that has been earned under the 17 business opportunity; 18 (C) may in the ordinary course of business buy from the buyer 19 items made, produced, fabricated, grown, bred, modified, or developed by the 20 buyer using all or part of the products, equipment, supplies, or services that 21 were initially sold or leased to the buyer by the seller; or 22 (D) or a person to whom the seller will refer the buyer, may in 23 the ordinary course of business sell, lease, or distribute the items the buyer has 24 for sale or lease. 25 (7) a statement of buyer's right to cancel, the circumstances when 26 cancellation is authorized, and the procedure for cancellation and refunds; and 27 (8) any other terms that the department determines are necessary to 28 protect the public interest. 29 Sec. 45.66.090. Restrictions on down payments. (a) A seller may not 30 require a buyer to pay as a down payment more than 20 percent of the initial payment 31 unless the excess above the 20 percent is placed in an escrow account that meets the
01 requirements of AS 45.66.100. 02 (b) In this section, "down payment" means that portion of the initial payment 03 that the buyer is obligated to pay to the seller before or at the time the products, 04 equipment, supplies, or services are delivered, but does not include any amount that 05 is financed by or for which financing is to be obtained by the seller or that results 06 from financing that the seller assists the buyer to obtain. 07 Sec. 45.66.100. Escrow account requirements. (a) The holder of an escrow 08 account required by AS 45.66.090 must be a person who is independent from the 09 seller, and the seller may not make direct disbursements from the escrow account 10 except as provided in (c) of this section. 11 (b) A seller who establishes an escrow account required by AS 45.66.090 shall 12 promptly report to the department the following information: 13 (1) the name and address of the escrow account holder; 14 (2) the name and address of the financial institution, including the 15 branch, where the escrow account is located; and 16 (3) the escrow account number. 17 (c) Except as provided under AS 45.66.110, money placed in an escrow 18 account required by AS 45.66.090 may not be released until the buyer notifies the 19 escrow holder in writing that the products, equipment, supplies, or services required 20 by the contract have been delivered within the time set in the contract between the 21 buyer and seller. The buyer shall timely notify the escrow holder of deliveries in a 22 timely manner and may not unreasonably withhold the notification. 23 Sec. 45.66.110. Actions for claims against escrow account. (a) A buyer 24 who has a claim against an escrow account required by AS 45.66.090 may bring a 25 civil action against the seller or escrow account holder to recover money from the 26 escrow account. 27 (b) Upon the filing of an action brought under this section, the clerk of the 28 court shall mail a copy of the complaint to the attorney general and, upon entry of an 29 order or judgment in the action, shall mail a copy of the order or judgment to the 30 attorney general. 31 (c) A person may not begin an action under this section more than two years
01 after the person discovers or reasonably should have discovered the basis for the claim. 02 (d) In an action brought under this section, the court may award the prevailing 03 party all or a portion of the actual costs and attorney fees incurred by the party. 04 (e) The escrow holder is not liable for the amount by which claims or damages 05 caused by the seller exceed the amount of the escrow account. 06 Sec. 45.66.120. Cancellation of contract. (a) A buyer may cancel a contract 07 for any reason if the buyer gives notice of the cancellation to the seller within 30 days 08 after signing the contract. 09 (b) In addition to the right to cancel under (a) of this section, a buyer may 10 cancel the contract at any time if the seller 11 (1) fails to comply with AS 45.66.070 or 45.66.080; 12 (2) uses untrue, misleading, incomplete, or deceptive statements in the 13 solicitation campaign; 14 (3) fails, within 30 days of the delivery date specified in the contract, 15 to deliver the products, equipment, supplies, or services required under the contract to 16 begin substantial operation of the business to be started under the contract; or 17 (4) fails, contrary to the contract, to provide a location for the business 18 to be started under the contract. 19 (c) If provided by mail, the notice of cancellation is effective when it is 20 deposited in the mail properly addressed to the seller with postage prepaid. 21 (d) The notice of cancellation is not required to have a particular form. The 22 notice is sufficient if it indicates in writing the intention of the buyer not to be bound 23 by the contract. 24 (e) Within 15 days after the date the buyer gives a notice of cancellation under 25 this section, the seller must tender to the buyer any payments, including payments for 26 shipping costs, made by the buyer and terminate all financial obligations of the buyer 27 under the contract. Within five days of refund, the buyer shall make available to the 28 seller, at a reasonable time and place, any products, equipment, or supplies delivered 29 by the seller. 30 Sec. 45.66.130. Prohibited representations. (a) The seller may not state that 31 the seller is registered under AS 45.66.010 - 45.66.400 unless the seller has complied
01 with the registration requirements of AS 45.66.010 - 45.66.400. 02 (b) Unless the seller is asked for the information by the buyer, a seller may 03 not state or imply that the seller has a license, consent, or other form of permission 04 from the state to sell business opportunities in this state. 05 (c) A seller may not make, or cause to be made, a representation that is 06 inconsistent with AS 45.66.150. 07 (d) A seller may not state or imply that the seller's compliance with the laws 08 of this state or a municipality constitutes approval or endorsement of the seller by the 09 state or municipality. 10 Sec. 45.66.140. Untrue statements or omissions. A person may not, in 11 connection with a sale of or offer to sell a business opportunity subject to registration 12 under AS 45.66.010 - 45.66.400, directly or indirectly make an untrue statement of 13 material fact in the registration information required under AS 45.66.020 - 45.66.040 14 or in other written or oral communications, including the disclosure required under 15 AS 45.66.070 and advertising, related to the sale or offer, or omit to state a material 16 fact necessary, in light of the circumstances under which it is made, to avoid a 17 statement being misleading. 18 Sec. 45.66.150. Unwarranted conclusions. (a) Acknowledgment of 19 registration by the department under AS 45.66.030 does not constitute a finding by 20 the department that a document filed with the department under AS 45.66.010 - 21 45.66.400 is true, complete, or not misleading. 22 (b) Acknowledgment of registration by the department under AS 45.66.030 23 does not mean that the department has passed in any way on the merits or 24 qualifications of the seller or business opportunity, or that the department recommends 25 or approves a seller. 26 (c) Availability of an exemption under AS 45.66.210 for a seller does not 27 mean that the state recommends or approves the seller. 28 Sec. 45.66.160. Waiver prohibited and void. A seller may not request or 29 obtain from a buyer a waiver of the rights or defenses of the buyer under 30 AS 45.66.010 - 45.66.400. A waiver of the rights or defenses of the buyer under 31 AS 45.66.010 - 45.66.400 is void.
01 Sec. 45.66.170. Seller's records and files. (a) A seller shall maintain a 02 complete set of records of the solicitation campaigns of the seller and allow the 03 department to inspect and copy them during reasonable business hours. 04 (b) A seller shall keep all documents relating to a contract entered into by the 05 seller for four years after the date the contract is entered into. 06 Sec. 45.66.180. Public records. Except for testimony and records related to 07 an investigation by the department under AS 45.66.010 - 45.66.400, the registration 08 application form, registration renewal form, disclosure statement, bond, contract, and 09 other documents required to be prepared or filed with the department under 10 AS 45.66.010 - 45.66.400, including a document created or obtained by the department 11 under AS 45.66.190, are public records available for public inspection and copying 12 under AS 09.25.110 - 09.25.220. 13 Sec. 45.66.190. Denial, suspension, or revocation of registration. (a) 14 Subject to the other requirements of this section and after reviewing a response 15 submitted by the person under (b) of this section, the department may issue an order 16 denying, suspending, or revoking a registration made by a person under AS 45.66.010 17 - 45.66.030, or prohibiting a person from selling or offering to sell business 18 opportunities if the department finds that 19 (1) the person failed to comply with AS 45.66.010 - 45.66.400 or the 20 regulations adopted under AS 45.66.010 - 45.66.400; 21 (2) the sale of or offer to sell would constitute, or has constituted, a 22 misrepresentation of, deceit of, or fraud on the buyer; 23 (3) the nature of the person's business enterprise or method of business, 24 or the nature or methods of the business opportunity includes activities that are illegal 25 where performed; 26 (4) the person failed to file a document or information required by 27 AS 45.66.020 - 45.66.040; 28 (5) the literature or advertising of the person, or of another person 29 recommended by the person, is misleading, incorrect, materially incomplete, or 30 deceptive; 31 (6) a person identified in the registration represents an unreasonable
01 risk to the public interest and 02 (A) has been convicted of 03 (i) a felony or misdemeanor involving fraud, theft, 04 embezzlement, fraudulent conversion, misappropriation of property, or 05 the use of untrue or misleading representations in the sale of or offer to 06 sell or otherwise dispose of real or personal property; or 07 (ii) violations under AS 45.66.010 - 45.66.400, 08 violations of AS 45.63 (telephonic solicitations), violations of AS 45.68 09 (charitable solicitations), or an unfair trade practice prohibited by 10 AS 45.50.471 - 45.50.561; 11 (B) is subject to a final order or judgment against the person in 12 a civil or administrative action, including a stipulated order or judgment, if the 13 complaint or petition in the action alleged acts constituting 14 (i) a violation of AS 45.66.010 - 45.66.400; 15 (ii) fraud, theft, embezzlement, fraudulent conversion, 16 or misappropriation of real or personal property; 17 (iii) the use of untrue or misleading representations in 18 an offer to sell or dispose of real or personal property; 19 (iv) the use of unfair trade practices under AS 45.50.471 20 - 45.50.561; or 21 (v) a violation of AS 45.63 or AS 45.68; or 22 (C) is subject to an injunction relating to business activity if the 23 injunction resulted from an action brought by a federal, state, or local public 24 agency, including an action related to an occupational license under AS 08. 25 (b) Before issuing an order to a person under (a) of this section, the 26 department shall send by certified mail to the address set out in the person's 27 registration a notice of intent to issue the order. In the notice, the department shall 28 provide the facts supporting the denial, suspension, or revocation of the registration. 29 The person may respond to the notice by submitting a statement signed under penalty 30 of perjury by an owner or officer of the person. 31 Sec. 45.66.200. Criminal penalties. (a) A seller who recklessly violates
01 AS 45.66.010 - 45.66.050, 45.66.070 - 45.66.100, or 45.66.140 is guilty of a class C 02 felony. 03 (b) A seller who recklessly violates AS 45.66.120(e), 45.66.130, or 45.66.160 04 is guilty of a class A misdemeanor. 05 (c) Each violation is a separate offense and a prosecution or conviction for one 06 of the offenses does not bar prosecution or conviction of another offense. 07 Sec. 45.66.210. Exemptions. AS 45.66.010 - 45.66.400 do not apply to a sale 08 or offer to sell 09 (1) if the total amount of the payments to be made by the buyer under 10 the contract is less than $200, including a nonprofit sale; 11 (2) a franchise under 16 CFR 436, as amended from time to time; 12 (3) an ongoing business operated by the seller that is to be sold in its 13 entirety; 14 (4) a business opportunity to an ongoing business if the seller will 15 provide products, equipment, supplies, or services that are to be sold by the buyer in 16 connection with the buyer's ongoing business; 17 (5) by an executor, an administrator, a marshal, a receiver, a trustee in 18 bankruptcy, or a guardian or conservator, or under a judicial sale; 19 (6) a security regulated under AS 45.55 or a security that is exempted 20 by AS 45.55.900 from regulation under AS 45.55; 21 (7) if the sale or offer is by a person registered with the United States 22 Securities and Exchange Commission when acting within the scope of the person's 23 Securities and Exchange Commission license; 24 (8) a business opportunity where the buyer is 25 (A) a bank, savings and loan association, trust company, 26 insurance company, credit union, or investment company under 15 U.S.C. 80a- 27 1 - 80a-64 (Investment Company Act of 1940), pension or profit sharing trust, or other 28 financial institution or institutional buyer; or 29 (B) a dealer registered under AS 45.55 (Alaska Securities Act 30 of 1959) if the buyer is acting for itself or in a fiduciary capacity; 31 (9) a business opportunity that involves a marketing plan made in
01 conjunction with the registration of a trademark or service mark under 15 U.S.C. 1051 02 - 1127 (Lanham Act) if the seller has a minimum net worth of $1,000,000 as 03 determined on the basis of the seller's most recent audited financial statement prepared 04 within 13 months of the first offer to sell in this state; net worth may be determined 05 on a consolidated basis if one person owns at least 80 percent of the seller and that 06 one person expressly guarantees the obligations of the seller that arise under the sale 07 or offer claimed to be exempt under this paragraph; or 08 (10) in which either the seller or the buyer is licensed as a real estate 09 broker, associate real estate broker, or real estate sales person under AS 08.88 and the 10 sale or offer is regulated by AS 08.88. 11 Sec. 45.66.220. Coordination with other laws. (a) The rights and remedies 12 in AS 45.66.010 - 45.66.400 are in addition to other legal rights and remedies available 13 to a buyer or the department. 14 (b) To the extent of the conflict, the provisions of AS 45.66.010 - 45.66.400 15 govern if a sale or offer to sell a business opportunity is regulated by AS 45.66.010 - 16 45.66.400 and by AS 45.63 (telephonic solicitations), by AS 45.01 - AS 45.09, 17 AS 45.12 and AS 45.14 (Uniform Commercial Code), or by another law, and it is not 18 possible to comply with or to apply both AS 45.66.010 - 45.66.400 and the other law. 19 Sec. 45.66.230. Regulations. The department may adopt regulations under 20 AS 44.62 (Administrative Procedure Act) to implement or interpret AS 45.66.010 - 21 45.66.400. 22 Sec. 45.66.400. Definitions. In AS 45.66.010 - 45.66.400, unless the context 23 indicates otherwise, 24 (1) "advertising" means a circular, prospectus, advertisement, or other 25 material or a communication by radio, television, pictures, telephone, facsimile 26 machine, electronic communication between electronic computing devices, or similar 27 means used in connection with a sale of or offer to sell a business opportunity; 28 (2) "business opportunity" means an express or implied arrangement 29 under which the seller or a person recommended by the seller will provide to the buyer 30 products, equipment, supplies, or services enabling the buyer to start a business and 31 in which the seller
01 (A) or a person recommended by the seller, will provide or 02 assist the buyer in finding locations for the use or operation of vending 03 machines, racks, display cases, or other similar devices on premises that are not 04 owned or leased by the buyer or seller; 05 (B) or a person recommended by the seller, will provide or 06 assist the buyer in finding outlets or accounts for the buyer's products or 07 services; 08 (C) or a person specified by the seller, will purchase any or all 09 products made, produced, fabricated, grown, bred, or modified by the buyer; 10 (D) or a person specified by the seller, will buy back or is likely 11 to buy back any products made, produced, fabricated, grown, bred, or modified 12 by the buyer using, in whole or in part, the product, supplies, equipment, or 13 services that were initially sold or offered for sale to the buyer by the seller; 14 (E) makes an oral or a written representation that the buyer will 15 derive income from the business that will exceed the price paid to the seller 16 and the representation would cause a reasonable person in the buyer's position 17 to believe the income is assured; 18 (F) will refund all or part of the price paid to the seller, or 19 repurchase some or all of the products, equipment, or supplies provided by the 20 seller or a person recommended by the seller, if the buyer is dissatisfied with 21 the business; or 22 (G) will provide the buyer with a marketing plan; 23 (3) "buyer" means a person who is solicited to become obligated or 24 does become obligated on a contract; 25 (4) "contract" means an agreement relating to a business opportunity; 26 (5) "department" means the Department of Law; 27 (6) "equipment" includes machines, electrical devices, video or audio 28 devices, computer devices, molds, display racks, vending machines, coin operated 29 game machines, machines that dispense products, and display units of all kinds; 30 (7) "initial payment" means the total amount a buyer is obligated to pay 31 under the terms of the contract before or at the time the equipment, supplies, products,
01 or services are delivered or within six months of the buyer commencing operation of 02 the business opportunity, except that, if the contract sets out a specific total sale price 03 for the purchase of the business opportunity and the total price is to be paid partially 04 as a down payment and then in specific monthly payments or a subsequent lump sum 05 payment, "initial payment" means the entire total sale price; "initial payment" does not 06 include the amount paid for a nonprofit sale; 07 (8) "marketing plan" means advice or training provided to the buyer by 08 the seller or a person recommended by the seller pertaining to the sale of products, 09 equipment, supplies, or services; 10 (9) "nonprofit sale" means a sale of items that are sales demonstration 11 equipment, materials, or samples to be used for making sales and not for resale if the 12 total price for the items is less than $200 and the seller does not make a profit on the 13 sale; 14 (10) "offer" or "offer to sell" means an attempt to sell or otherwise 15 dispose of a business opportunity for value; 16 (11) "product" includes a tangible chattel, including food or living 17 animals, that the buyer intends to 18 (A) sell or lease; 19 (B) use to perform a service; 20 (C) resell or offer to resell to the seller; or 21 (D) provide or offer to provide to the seller, or to another person 22 whom the seller suggests the buyer contact, so that the seller or the other 23 person may assist either directly or indirectly the buyer to distribute, sell, lease, 24 or otherwise dispose of a product; 25 (12) "recklessly" has the meaning given in AS 11.81.900; 26 (13) "sale" means a contract to sell, lease, or otherwise dispose of a 27 business opportunity or an interest in a business opportunity for value; 28 (14) "sell" means to sell, lease, or otherwise dispose of a business 29 opportunity or an interest in a business opportunity for value; 30 (15) "seller" means a person, or the person's agent, who sells, leases, 31 offers to sell, offers to lease, or otherwise disposes of a business opportunity;
01 (16) "services" includes assistance, guidance, direction, work, labor, or 02 other act that may be provided by the seller in the initiation or maintenance of a 03 business; 04 (17) "solicitation campaign" means the sale of, or the offer to sell, a 05 business opportunity; 06 (18) "supplies" includes materials used to produce, grow, breed, 07 fabricate, modify, develop, or make a product or other item. 08 * Sec. 9. AS 45.63.080(3) is repealed. 09 * Sec. 10. COURT RULES. AS 45.66.110(b), enacted by sec. 8 of this Act, changes 10 (1) Rule 4, Alaska Rules of Civil Procedure, by requiring the clerk of 11 the court to mail a copy of the complaint to the attorney general when an action is 12 filed under AS 45.66.110; 13 (2) Rule 73, Alaska Rules of Civil Procedure, by requiring the clerk of 14 the court to mail a copy of an order or judgment in an action under AS 45.66.110 to 15 the attorney general. 16 * Sec. 11. REGULATIONS. The Department of Law may proceed to adopt regulations 17 that it has authority to adopt for or under secs. 1 - 8 of this Act. The regulations take effect 18 under AS 44.62 (Administrative Procedure Act), but not before the effective dates of secs. 1 - 19 8 of this Act. 20 * Sec. 12. AS 45.66.110(b), enacted by sec. 8 of this Act, takes effect only if sec. 10 of 21 this Act receives the two-thirds majority vote of each house required by art. IV, sec. 15, 22 Constitution of the State of Alaska. 23 * Sec. 13. Sections 1 - 10 of this Act take effect July 1, 1997. 24 * Sec. 14. Section 11 of this Act takes effect immediately under AS 01.10.070(c).