Title 44 — Trade and Commerce

Chapter 1 Contracts

Article 1 Statute of Frauds

§ 44-101 Statute of frauds

No action shall be brought in any court in the following cases unless the promise or agreement upon which the action is brought, or some memorandum thereof, is in writing and signed by the party to be charged, or by some person by him thereunto lawfully authorized:

1. To charge an executor or administrator upon any promise to answer for any debt or damages due from his testator or intestate out of his own estate.

2. To charge a person upon a promise to answer for the debt, default or miscarriage of another.

3. To charge a person upon any agreement made upon consideration of marriage, except a mutual promise to marry.

4. Upon a contract to sell or a sale of goods or choses in action of the value of five hundred dollars or more, unless the buyer accepts part of the goods or choses in action, and actually receives them or gives something in earnest to bind the contract, or in part payment, but when a sale is made at auction, an entry by the auctioneer in his sale book, made at the time of the sale, of the kind of property sold, the terms of the sale, the price, and the name of the purchaser and person on whose account the sale is made is a sufficient memorandum.

5. Upon an agreement which is not to be performed within one year from the making thereof.

6. Upon an agreement for leasing for a longer period than one year, or for the sale of real property or an interest therein. Such agreement, if made by an agent of the party sought to be charged, is invalid unless the authority of the agent is in writing, subscribed by the party sought to be charged.

7. Upon an agreement authorizing or employing an agent or broker to purchase or sell real property, or mines, for compensation or a commission.

8. Upon an agreement which by its terms is not to be performed during the lifetime of the promisor, or an agreement to devise or bequeath any property, or to make provision for any person by will.

9. Upon a contract, promise, undertaking or commitment to loan money or to grant or extend credit, or a contract, promise, undertaking or commitment to extend, renew or modify a loan or other extension of credit involving both an amount greater than two hundred fifty thousand dollars and not made or extended primarily for personal, family or household purposes.

Article 2 Consideration

§ 44-121 Contracts in writing; consideration

Every contract in writing imports a consideration.

Article 3 Capacity to Contract

§ 44-131 Capacity of minor veterans and married minors

A. A veteran who is entitled to benefits under the servicemen's readjustment act of 1944 (P.L. 78-346; 58 Stat. 284), or the spouse of that veteran, is not under legal disability by reason of minority to make any contract and any contract made by that veteran or spouse is not invalid or voidable by reason of the minority of the veteran or spouse.

B. A person who is married to an adult is not under legal disability because of that person's minority to make a contract and a contract made by that person is not invalid or voidable because of that person's minority.

§ 44-132 Capacity of minor to obtain hospital, medical and surgical care; definition

A. Notwithstanding any other provision of law except as provided in title 36, chapter 20, article 1, and without limiting cases in which consent may otherwise be obtained or is not required, any emancipated minor, any minor who has contracted a lawful marriage or any homeless minor may give consent to the furnishing of hospital, medical and surgical care to such minor, and such consent shall not be subject to disaffirmance because of minority. The consent of the parent, or parents, of such a person is not necessary in order to authorize hospital, medical and surgical care. For the purposes of this section only, subsequent judgment of annulment of such marriage or judgment of divorce shall not deprive such person of his adult status once attained.

B. A health care provider acting in reliance on the consent of a minor who has authority or apparent authority pursuant to this section to consent to health care is not subject to criminal and civil liability and professional disciplinary action on the ground that he or she failed to obtain consent of the minor's parent, parents or legal guardian. This subsection does not affect any other cause of action permitted under title 12, chapter 5.1.

C. For purposes of this section, a homeless minor is an individual under the age of eighteen years living apart from his parents and who lacks a fixed and regular nighttime residence or whose primary residence is either a supervised shelter designed to provide temporary accommodations, a halfway house or a place not designed for or ordinarily used for sleeping by humans.

§ 44-132.01 Capacity of minor to obtain treatment for venereal disease without consent of parent

Notwithstanding any other provision of the law, a minor who may have contracted a venereal disease may give consent to the furnishing of hospital or medical care related to the diagnosis or treatment of such disease and such consent shall not be subject to disaffirmance because of minority. The consent of the parent, parents or legal guardian of such a person shall not be necessary in order to authorize hospital or medical care.

§ 44-133 Emergency consent for hospital care, medical attention or surgery by person in loco parentis

Notwithstanding any other provision of the law, in cases of emergency in which a minor is in need of immediate hospitalization, medical attention or surgery and after reasonable efforts made under the circumstances, the parents of such minor cannot be located for the purpose of consenting thereto, consent for said emergency attention may be given by any person standing in loco parentis to said minor.

§ 44-133.01 Capacity of minor to consent to treatment for use of a dangerous drug or narcotic

Notwithstanding any other law, any minor who is at least twelve years of age who is found, upon diagnosis of a licensed physician or a registered nurse practitioner, to be under the influence of a dangerous drug or narcotic, which includes withdrawal symptoms, may be considered an emergency case and the minor is considered as having consented to hospital or medical care needed for treatment for that condition. Such consent is not subject to disaffirmance because of minority. The consent of the parent, parents or legal guardian of that minor is not necessary to authorize hospital or medical care, except that the consent is equally valid if obtained.

§ 44-134 Capacity for blood donation

A. Notwithstanding any other law, a person who is at least eighteen years of age and who is otherwise competent may consent to the donation of blood and be subject to the penetration of tissue necessary to accomplish the donation at a federally approved blood bank.

B. Notwithstanding any other law, a minor who is sixteen or seventeen years of age may donate blood and be subject to the penetration of tissue necessary to accomplish the donation at a federally approved blood bank only if the minor has the written consent of the minor's parent or legal guardian.

Article 3.1 Model Minor Student Capacity to Borrow Act

§ 44-140 Definitions

In this article, unless the context otherwise requires:

1. "Educational institution" means a university, college, community college, junior college, high school, technical, vocational or professional school, or similar institution, wherever located, approved or accredited for the purposes of this article by the state board of education.

2. "Educational loan" means a loan or other aid or assistance for the purpose of furthering the obligor's education at an educational institution.

3. "Person" means individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, or any other legal entity.

§ 44-140.01 Educational loan; enforceable; prerequisites

Any written obligation signed by a minor sixteen or more years of age in consideration of an educational loan received by him from any person is enforceable as if he were an adult at the time of execution, but only if prior to the making of the educational loan an educational institution has certified in writing to the person making the educational loan that the minor is enrolled, or has been accepted for enrollment, in the educational institution.

Article 4 Liability of Parties

§ 44-141 Joint and several liability of parties to joint obligations

A. All parties to a joint obligation, including negotiable paper and partnership debts, shall be severally liable also for the full amount of such obligations. An action may be brought against such parties jointly or separately, joining one or more, and judgment may be given in each such action without barring an action against any party to the obligation not included in the judgment, and without releasing any party against whom the action was not brought.

B. The court may, upon its own motion or upon the application of any interested party, require that the plaintiff bring in as defendants all parties jointly liable on the obligation upon which the action is brought, in which event any subsequent judgment shall be for the amount unsatisfied.

§ 44-142 Action against persons primarily and secondarily liable on bill of exchange or other contract

The acceptor of a bill of exchange, or any other principal obligor on any contract, may be sued either alone or jointly with any other party who may be liable thereon, but judgment shall not be given against such other party not primarily liable unless judgment has been previously, or is at the same time, given against the acceptor or other principal obligor, except when the plaintiff discontinues his action against such principal obligor.

§ 44-143 Formal requirements for and limitations upon confession of judgment under power of attorney

Judgment by confession shall not be entered upon a note, bond or other instrument in writing for the payment of money under the authority of a power of attorney to confess judgment thereon, unless such authority is executed and acknowledged on a day subsequent to the date on which the indebtedness to be confessed became due and payable.

§ 44-144 Effect of assignment of chose in action upon defenses existing at time of assignment; exceptions

An assignment of a chose in action shall not prejudice any set-off or other defense existing at the time of the notice of the assignment. This section shall not apply to a negotiable promissory note or bill of exchange, transferred in good faith and upon good consideration before due except as provided in section 44-145.

§ 44-145 Negotiable instruments or other writings evidencing consumer obligations; limitation on liability

A. The rights of a holder or assignee of an instrument, account, contract right, chattel paper or other writing, other than a check or draft, which evidences the obligation of a natural person as buyer, lessee, or borrower in connection with the purchase or lease of consumer goods or services, are subject to all defenses and setoffs of the debtor arising from or out of such sale or lease if notice of such defense or setoff is given within ninety days after receipt of the goods or services by the debtor, notwithstanding any agreement to the contrary. For a period of ninety days after receipt of the goods or services by the debtor, a holder or assignee is not a holder in due course if he takes an instrument, other than a check or draft, which is subject to the provisions of this section. The rights of the debtor under this section may be asserted only as to amounts then owing and as a matter of defense to or setoff against a claim by the holder or assignee and may be asserted only if the buyer or lessee gives notice of the claim or defense in writing by certified mail to the seller or lessor at the last known business address of the seller or lessor within ninety days after receipt of the goods or services.

B. This section is not applicable to:

1. Credit card sales of perishable consumer goods or consumer services on a credit card issued by an issuer other than the seller.

2. Any credit card transaction made outside the state of Arizona.

3. An instrument or other writing which evidences a loan or indebtedness to a lender or person, other than a seller or lessor, which was not arranged by a seller or lessor, the proceeds of which are used by the buyer or lessee to satisfy an obligation to a seller or lessor.

C. The definitions in title 47, chapters 1, 3 and 9 are applicable to this section. For the purposes of this section:

1. "Consumer services" means services for use primarily for personal, family or household purposes.

2. "Arranged" means to provide or offer to provide a loan which is or will be extended by another person under a business or other relationship pursuant to which the person arranging such loan receives or will receive a fee, compensation, or other consideration for such service or has knowledge of the terms of the loan and participates in the preparation of the instruments required in connection with the extension of the loan.

Article 5 European Currency

§ 44-161 Interpretation of contracts, securities and other similar measures; currency; definitions

A. If a subject or medium of payment of any contract, security or other similar instrument is the European currency unit or a currency that has been substituted or replaced by the euro, the euro is a commercially reasonable substitute and substantial equivalent that may be either tendered or used in determining the value of the European currency unit or other currency at the conversion rate specified in and calculated according to the regulations adopted by the council of the European union.

B. Except as provided in an agreement between parties regarding the introduction of the euro, none of the following actions discharge or excuse performance under any contract, security or other similar instrument or give a person the unilateral right to alter or terminate any contract, security or other similar instrument:

1. The introduction of the euro.

2. The tendering of euros for any obligation that complies with subsection A.

3. The determining of the value of any obligation that complies with subsection A or the calculating or determining of the subject or medium of payment of any contract, security or other similar instrument relating to an interest rate or other basis that has been substituted or replaced due to the introduction of the euro and that is a commercially reasonable substitute and substantial equivalent.

C. Notwithstanding title 47, this section applies to all contracts, securities and other similar instruments, including contracts relating to commercial transactions.

D. For the purposes of this section:

1. "Euro" means the currency of participating member states of the European union that adopt a single currency in accordance with the treaty on European union signed February 7, 1992.

2. "European currency unit" means the currency basket that is used as the unit of account of the European community pursuant to the European council's regulations.

3. "Introduction of the euro" includes the implementation of economic and monetary union in member states of the European union pursuant to the treaty on European union signed February 7, 1992.

Article 6 Exemption from Licensure Requirements

§ 44-171 Exemption from licensure, certification, registration or other authorization to act

A. Notwithstanding any other law, if the requirements prescribed by subsection B of this section are met, a person is exempt from state law relating to licensure, certification, registration or other authorization to act under the following:

1. Title 6, not including title 6, chapter 9, except that a party is not exempt from the requirements prescribed in section 6-114, 6-632, 6-635 or 6-637.

2. Title 9.

3. Title 10.

4. Title 11.

5. Title 23.

6. Title 32, chapter 9 or 46.

7. This title, except that this paragraph does not apply to a sales finance company that is licensed pursuant to chapter 2.1 of this title or a party that is subject to chapter 9, article 6 of this title.

B. Subsection A of this section applies only if all of the following apply:

1. The person is a party to a contract between two or more private parties.

2. The subject of the contract is substantially delivered by electronic means.

3. The contract specifies the laws from which the person is exempt.

4. The subject of the contract is lawful.

5. The exemption does not materially affect a third party.

6. The exemption does not clearly harm or damage public health or safety.

7. The subject of the contract does not exceed $6,000 per transaction between any two parties and $150,000 in total aggregate profit in the previous calendar year for all parties related to the services provided in the contract.

C. A person is not guilty of failure to procure or exhibit a business license pursuant to section 13-3706 if the person is exempt from the business license requirement under this section.

D. If a state agency notifies a person described in subsection A of this section that the person is in violation of a state law relating to licensure, certification, registration or other authorization to act, within six months after receiving the notice the person shall do either of the following:

1. Become licensed, certified or registered or receive another authorization to act, as applicable.

2. Amend the contract described in subsection B of this section to exempt the person from the state law relating to licensure, certification, registration or other authorization to act.

E. If the total aggregate profit related to services provided in a contract pursuant to subsection B of this section exceeds $150,000, the parties may agree to amend the contract to comply with state law relating to licensure, certification, registration or other authorization to act, as applicable. After exceeding $150,000 in total aggregate profit, the parties have until July 1 of the following calendar year to amend the contract or become licensed, certified or registered or to receive another authorization to act before the state agency may commence or take disciplinary action against any party to the contract.

F. If a state agency notifies a party to a contract of a violation of a state law pursuant to subsection D of this section, the state agency may not commence or take disciplinary action against the party during either of the following time periods:

1. The six-month period in which the party is working either to become licensed, certified or registered or to receive another authorization to act, as applicable, or to amend the contract to exempt the party from the state law relating to licensure, certification or registration or the other authorization to act.

2. The time period after the party has submitted an application to become licensed, certified or registered or to receive another authorization to act and before the state agency has approved or denied the application.

G. A violation of this section is an unlawful practice pursuant to section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

Chapter 2.1 Motor Vehicle Time Sales Disclosure Act

Article 1 In General

§ 44-281 Definitions

In this article, unless the context otherwise requires:

1. "Administrator" means the deputy director of the financial institutions division of the department of insurance and financial institutions.

2. "Cash sale price" means the price stated in a retail installment contract for which the seller would have sold to the buyer, and the buyer would have bought from the seller, the motor vehicle that is the subject matter of the retail installment contract, if such sale had been a sale for cash instead of a retail installment transaction. The cash sale price may include charges for accessories and their installation and for delivery, and servicing, repairing or improving the motor vehicle, and for charges for other costs that are necessary or incidental to the transaction and that the seller furnishes or agrees to pay on behalf of the buyer, including taxes, assessor's fees, license fees and fees for filing, recording or otherwise perfecting or releasing a reserved title or lien, and may include a reasonable charge for the seller's services.

3. "Finance charge" means the amount agreed on between the buyer and the seller, as limited herein, which in determining the cost of the motor vehicle is added to the aggregate of the following: The cash sale price and the amount, if any, included for insurance and other benefits where a separate cost is assigned thereto.

4. "Holder" of a retail installment contract means the retail seller of the motor vehicle under or subject to the contract or, if the contract is purchased by a sales finance company or other assignee, the sales finance company or other assignee.

5. "Motor vehicle" means any self-propelled device in or by which any person or property is or may be transported or drawn on a public highway, except:

(a) Devices that move on or are guided by a track or travel through the air.

(b) The following, if not designed primarily for highway transportation, but that may incidentally be operated on a public highway:

(i) Tractors.

(ii) Buses.

(iii) Trucks.

(iv) Power shovels.

(v) Road machinery.

(vi) Agricultural machinery.

6. "Person" means an individual, partnership, association, trust, corporation or other legal entity.

7. "Retail buyer" or "buyer" means a person who buys a motor vehicle from a retail seller, not for the purpose of resale, and who executes a retail installment contract in connection therewith.

8. "Retail installment contract" or "contract":

(a) Means an agreement, entered into in this state, pursuant to which the title to or a lien on the motor vehicle, which is the subject matter of a retail installment transaction, is retained or taken by a retail seller from a retail buyer as security for the buyer's obligation.

(b) Includes:

(i) A conditional sales contract and a contract for the bailment or leasing of a motor vehicle by which the bailee or lessee contracts to pay as compensation for its use a sum substantially equivalent to or in excess of its value and by which it is agreed that the bailee or lessee is bound to become, or has the option of becoming, the owner of the motor vehicle for no other or a nominal consideration on full compliance with the provisions of the contract.

(ii) A secondary motor vehicle finance transaction.

9. "Retail installment transaction" means any transaction evidenced by a retail installment contract entered into between a retail buyer and a retail seller wherein the retail buyer buys a motor vehicle from the retail seller at a cost payable in one or more deferred installments. The cash sale price of the motor vehicle, the amount included for insurance if a separate charge is made and the finance charge shall together constitute the cost of the motor vehicle.

10. "Retail seller" or "seller" means a person who sells a motor vehicle to a retail buyer for purposes other than resale under or subject to a retail installment contract. For the purposes of paragraph 12 of this section "seller" means a person who sells and retains the use of the motor vehicle.

11. "Sales finance company":

(a) Means a person engaged, in whole or in part, in the business of purchasing retail installment contracts from one or more retail sellers.

(b) Includes a person engaged, in whole or in part, in the business of creating or holding retail installment contracts that exceed a total aggregate outstanding indebtedness of $50,000.

(c) Does not include:

(i) The pledgee of an aggregate number of retail installment contracts to secure a bona fide loan thereon.

(ii) A motor vehicle dealer who creates retail installment contracts and assigns the retail installment contracts to third-party lenders or financial institutions.

12. "Secondary motor vehicle finance transaction":

(a) Means any contract that includes provisions for either:

(i) Obtaining a security interest in or lien on a motor vehicle other than in connection with the sale of that motor vehicle.

(ii) The sale or conditional sale of a motor vehicle and the seller's right to retain use of the motor vehicle after the sale or conditional sale.

(b) Includes any conditional sales contract or contract for the bailment or leasing of a motor vehicle in which the bailee or lessee agrees to pay for use of the motor vehicle and the bailee or lessee is required to become or has the option of becoming the owner of the vehicle for any or no compensation.

(c) Does not include any commercial transaction as defined in section 44-291.

§ 44-282 Licensing of sales finance companies required; penalty

A. A person shall not engage in the business of a sales finance company in this state without a sales finance company license as provided in this article. A motor vehicle dealer shall not sell or transfer any contract to a person in this state not licensed under the terms of this chapter.

B. The application for a license shall be in writing, under oath and in the form prescribed by the administrator. The application shall contain the name of the applicant, the date of incorporation if incorporated, the address where the business is or is to be conducted and similar information as to any branch office of the applicant, the name and resident address of the owners or partners or, if a corporation or association, of the directors, trustees and principal officers, and such other pertinent information the administrator may require.

C. The license fee for a sales finance company is the fee prescribed in section 6-126.

D. To coincide with the licensing of motor vehicle dealers pursuant to title 28, chapter 10, the administrator may issue a sales finance company license pursuant to this article with staggered renewal dates to distribute the renewal workload as uniformly as practicable throughout the twelve months of the calendar year. In order to initiate a staggered license renewal system, the administrator may issue a license for more or less than a twelve-month period, but not more than eighteen months, and may prorate the license fee.

E. A licensee shall submit its renewal application and applicable renewal fees to the department of insurance and financial institutions on or before December 31 of each year.

F. A penalty of $25 per day shall be assessed against any licensee for each day after the license renewal date that the licensee's renewal application and fee are not received by the department of insurance and financial institutions. Licenses not renewed within thirty days after their license renewal date expire.

G. A license shall be obtained for each separate place of business at or from which a licensee transacts business. Each license shall specify the location of the office or branch and must be conspicuously displayed there. If such location is changed, the administrator shall endorse the change of location on the license on the payment of the fee prescribed in section 6-126, subsection A.

H. On the filing of the application and the payment of the required fee, the administrator shall issue a license to the applicant to engage in the business of a sales finance company under and in accordance with this article. All licenses issued under this article shall remain in full force and effect until surrendered, revoked, suspended or canceled by failure to renew under this article. A licensee shall not transact any business provided for by this article without using the license name or other assumed name or trade name that is submitted to the department pursuant to section 6-117.

I. A license is not transferable or assignable and control of a licensee may not be acquired through a stock purchase or any other device without the prior written consent of the administrator. Written consent shall not be given if the administrator finds that any of the grounds for denial, revocation or suspension of a license as set forth in section 44-283 are applicable to the acquiring person. For the purposes of this subsection, "control" means the power to vote more than twenty percent of the outstanding voting shares of a licensed corporation, partnership, association or trust.

J. A person doing business under the laws of this state or the United States as a bank, savings bank, savings and loan association or credit union is exempt from the licensing requirements of this section but shall comply with all other requirements of this chapter, except that affiliates of banks, savings banks, savings and loan associations or credit unions shall comply with this section. For the purposes of this subsection, "affiliate" means an entity that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the entity specified.

§ 44-283 Denial, suspension or revocation of licenses

A. The administrator may deny a license applied for under this chapter or suspend or revoke a license issued under this chapter on any of the following grounds:

1. Material misstatement in the application for a license.

2. A violation, either knowingly or without the exercise of due care to prevent the violation, of this chapter or of any rule or order adopted or issued pursuant to this chapter.

3. Defrauding any retail buyer to the buyer's damage.

4. Fraudulent misrepresentation, circumvention or concealment by the licensee through whatever subterfuge or device of any of the material particulars or the nature thereof required to be stated or furnished to the retail buyer under this article.

5. Conviction in any state of a felony or a misdemeanor involving breach of trust or dishonesty.

6. Having a judgment or order entered against the licensee or applicant by an administrative agency of this or any other state or by the federal government in which one of the bases of the judgment or order is fraud, deceit or misrepresentation, if the conduct was engaged in directly by the licensee or applicant or was authorized, solicited, commanded or knowingly permitted by the directors or senior management of the licensee or applicant.

B. If a licensee is a firm, association or corporation, it is sufficient cause for the suspension or revocation of a license that any officer, director or trustee of a licensed firm, association or corporation, or any member of a licensed partnership, has so acted or failed to act as would be cause for suspending or revoking a license to such party as an individual. Each licensee is responsible for the acts of any or all of the licensee's employees while acting as the licensee's agent, if the licensee after actual knowledge of the acts retained the benefits, proceeds, profits or advantages accruing from the acts or otherwise ratified the acts.

C. Hearings on the denial, suspension or revocation of a license shall be conducted pursuant to title 41, chapter 6, article 10. No revocation, suspension or surrender of any license shall impair or affect the obligation of any lawful retail installment contract acquired by the licensee before the revocation, suspension or surrender of the license.

§ 44-286 Requirements and prohibitions as to retail installment contracts

A. A retail installment contract shall be in writing, shall be signed by both the buyer and the seller and shall be completed as to all essential provisions prior to the signing of the contract by the buyer. The printed portion of the contract, other than instructions for completion, shall be in at least eight point type. The contract shall contain in a size equal to at least ten point bold type:

1. A specific statement that liability insurance coverage for bodily injury and property damage caused to others is not included, if that is the case; and

2. The following notice: "Notice to the buyer: 1. Do not sign this contract before you read it or if it contains any blank spaces. 2. You are entitled to an exact copy of the contract you sign."

B. The seller shall deliver to the buyer, or mail to him at his address shown on the contract, a copy of the contract signed by the seller. Until the seller does so, a buyer who has not received delivery of the motor vehicle shall have the right to rescind his agreement and to receive a refund of all payments made and return of all goods traded in to the seller on account of or in contemplation of the contract, or if the goods cannot be returned, the value thereof. Any acknowledgment by the buyer of delivery of a copy of the contract shall be in a size equal to at least ten point bold type, and, if contained in the contract, shall appear directly above the buyer's signature.

§ 44-287 Contents of contract

A. The contract shall contain the names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and a description of the motor vehicle including its make, year, model and identification number or marks.

B. The contract shall contain the following items:

1. The cash sale price of the motor vehicle.

2. The amount of the buyer's down payment, and whether made in money or goods, or partly in money and partly in goods.

3. The difference between paragraphs 1 and 2 of this subsection.

4. The amount, if any, included for insurance specifying the term and types of coverage. If the contract does not include liability insurance coverage for bodily injuries and property damage, such fact shall be so set forth in capital letters immediately above the signatures of the parties to the contract.

5. The final cash price balance, which is the sum of paragraphs 3 and 4 of this subsection.

6. The amount of the finance charge and the rate at which it is computed.

7. The time balance, which is the sum of paragraphs 5 and 6 of this subsection, payable in installments by the buyer to the seller, the number of installments, the amount of each installment and the due date or period of each installment.

8. A statement, adjacent to the signature line of the contract, in bold-faced type, setting forth the telephone number and address of the department of insurance and financial institutions and stating that the seller is regulated by the department of insurance and financial institutions and that any complaints concerning the contract may be addressed to the department of insurance and financial institutions.

C. The items set forth in subsection B of this section need not be stated in the sequence or order set forth, and additional items may be included to explain the calculations involved in determining the stated time balance to be paid by the buyer.

D. Notwithstanding any other law, in the case of motor vehicles, trailers or semitrailers, a transaction does not create a sale or security interest merely because it provides that the rental price is permitted or required to be adjusted under the agreement either upward or downward by reference to the amount realized on sale or other disposition of the motor vehicle, trailer or semitrailer.

§ 44-288 Insurance provisions of contract

A. The amount, if any, included for insurance, which may be purchased by the holder of the retail installment contract, shall not exceed the applicable premiums chargeable in accordance with the rates filed with the director of the department of insurance and financial institutions.

B. If dual interest insurance on the motor vehicle is purchased by the seller or seller's assignee, as the case may be, it shall within thirty days after execution of the retail installment contract send or cause to be sent to the buyer a policy, or policies, or certificates of insurance written by an insurance company authorized to do business in this state, clearly setting forth the amount of the premium, the kind or kinds of insurance, the coverages and all the terms, options, limitations, restrictions and conditions of the contract or contracts of insurance. The buyer at the time of execution of the contract may purchase such insurance from an agent or broker of the buyer's own selection and may select an insurance company acceptable to the holder, but in such case the inclusion of the insurance premium in the retail installment contract shall be optional with the seller.

C. If any insurance is canceled, or the premium adjusted, any refund of the insurance premium received by the holder shall be credited to the contract except to the extent applied toward payment for similar insurance protecting the interests of the buyer and the holder or either of them.

§ 44-289 Delinquent contract; recovery; transfer fees; blank spaces in contract

A. If the contract or refinancing agreement so provides, the holder may, as to any delinquent contract, recover one or more of the following:

1. A reasonable amount for the holder's cost of collection.

2. Attorney's fees in a reasonable amount where such contract is referred for collection to an attorney not a salaried employee of the holder.

3. Court costs.

B. In the event of default under a contract, a licensee shall comply with all provisions of title 47, chapter 9, article 6, and be subject to the penalties prescribed therein. All sales of repossessed vehicles shall be conducted in a commercially reasonable manner.

C. As to each transfer of equity by a buyer or subsequent transferee, the holder of the contract shall be entitled to a transfer of equity fee not in excess of fifteen dollars. If the contract so provides, at the option of the holder, no such transfer of equity shall be valid against the holder without the written consent of the holder. No certificate of title shall be issued by the state of Arizona in the name of such transferee unless written consent of the holder accompanies the application for transfer of title.

D. No retail installment contract shall be signed by any party thereto when it contains blank spaces to be filled in after it has been signed except that, if delivery of the motor vehicle is not made at the time of the execution of the contract, the identifying numbers or marks of the motor vehicle or similar information and the due date of the first installment may be inserted in the contract after its execution. The buyer's written acknowledgment, conforming to the requirements of subsection B of section 44-286, of delivery of a copy of a contract shall be conclusive proof of such delivery, that the contract when signed, did not contain any blank spaces except as herein provided, and of compliance with this article in any action or proceeding by or against the holder of the contract.

§ 44-290 Amount of payments; waiver of remedies

A. Upon written request from the buyer, the holder of a retail installment contract shall give or forward to the buyer a written statement of the dates and amounts of payments and the total amount unpaid under such contract. A buyer shall be given a written receipt for any payment when made in cash.

B. No provision in a retail installment contract relieving the seller from liability for any legal remedies which the buyer may have against the seller under the contract, or any separate instrument executed in connection therewith, shall be enforceable.

§ 44-291 Computation of interest; prepayment rebate; additional charges; secondary motor vehicle finance transaction; definitions

A. Except as provided in subsections G and H of this section, under a retail installment contract it is lawful to charge and receive interest not to exceed the maximum rate set by contract.

B. The finance charge may be computed either at a single annual percentage rate using the actuarial method or it may be precomputed on the assumption that all payments will be made in the amount and on the dates scheduled. If the finance charge is precomputed, the fact that payments are made either before or after the date due does not affect the amount of finance charge which the seller or holder may charge or receive. If the precomputed contract balance is prepaid in full by cash, a new loan, refinancing or otherwise, the seller or holder shall charge only for the finance charge which has been earned and unpaid late payment or delinquency charges as of the date of prepayment, and the buyer shall receive a rebate of that portion of the precomputed finance charge which is the difference between the total precomputed finance charges and the charges at the contract finance charge computed on the unpaid principal balance based on the number of days or months to maturity based on either a thirty day month - three hundred sixty day year or daily three hundred sixty-five or three hundred sixty-six day year on the number of days remaining to final maturity, except that the number of days shall be the same as that used in calculating the finance charge as prescribed in subsection C of this section. The amount of such rebate shall not be computed pursuant to the method commonly known as the "rule of 78's". To simplify the calculation of earned finance charge, it is permissible to assume that all payments were made as originally scheduled or as otherwise mutually agreed.

C. It is permissible to calculate a finance charge on an annual basis of twelve months of thirty days each, or on a daily basis if a day is counted as 1/360th, 1/365th, or 1/366th of a year, as the buyer and seller or holder may agree by writing. The seller or holder may also charge a late payment or delinquency charge, in addition to all finance charges permitted, on each installment not paid in full on the tenth day after its due date in an amount not to exceed five per cent of the unpaid balance of the installment.

D. In addition to the cash sale price of the vehicle, the seller may charge for any insurance premiums incurred in connection with the retail installment transaction.

E. Notwithstanding the late payment or delinquency charge provided in subsection C of this section, in a commercial transaction, the seller or holder may charge a late payment or delinquency charge, in addition to all finance charges permitted, on each installment not paid in full on the tenth day after its due date in an amount of not more than five per cent of the unpaid balance of the installment.

F. Any sales finance company may purchase or acquire or agree to purchase or acquire from any seller any contract on such terms and conditions as may be agreed on between them. Filing of the assignment notice to the buyer of the assignment and any requirement that the holder maintain dominion over the payments or the motor vehicle if repossessed is not necessary to the validity of a written assignment of a contract as against creditors, subsequent purchasers, pledgees, mortgagees and lien claimants of the seller. Unless the buyer has notice of the assignment of his contract, payment under the contract made by the buyer to the last known holder of such contract is binding on all subsequent holders.

G. If the retail installment contract is a secondary motor vehicle finance transaction, the seller, bailor, lender or lessor shall determine the annual secondary motor vehicle finance rate and all charges relating to the sale, conditional sale, bailment or lease and repurchase of the vehicle. The seller, bailor, lender or lessor shall calculate the annual secondary motor vehicle finance rate by multiplying the monthly secondary motor vehicle finance rate by twelve. A retail installment contract that is a secondary motor vehicle finance transaction is subject to the following maximum finance rates on a secondary motor vehicle finance contract in the original principal amount of:

1. Five hundred dollars or less, a monthly finance rate of seventeen per cent.

2. More than five hundred dollars but not more than two thousand five hundred dollars, a monthly finance rate of fifteen per cent.

3. More than two thousand five hundred dollars but not more than five thousand dollars, a monthly finance rate of thirteen per cent.

4. More than five thousand dollars, a monthly finance rate of ten per cent.

H. Except as the result of an accidental or bona fide error, if the licensee charges, contracts for or receives any amount in excess of the finance charges and other fees expressly permitted by this chapter, the secondary motor vehicle transaction is voidable and the licensee has no right to collect or receive any principal, finance charges or other fees in connection with that secondary motor vehicle finance transaction. Any secondary motor vehicle finance transaction that is made by a person who is required to be licensed pursuant to this chapter but who is not licensed is void, and the person has no right to collect, receive or retain any principal, finance charges or other fees in connection with that secondary motor vehicle finance transaction.

I. Section 44-287, subsection B does not apply to a secondary motor vehicle finance transaction if the contract complies with the disclosure requirements prescribed in federal law. The seller shall conspicuously disclose in the contract the annual secondary motor vehicle finance rate.

J. For the purposes of this section:

1. "Actuarial method" means the method of allocating payments made on a debt between the unpaid principal balance and the finance charge pursuant to which a payment is applied first to the finance charge due and any remainder is subtracted from the unpaid principal balance.

2. "Commercial transaction" means a transaction in which the motor vehicle is intended by the borrower for use primarily for other than personal, family or household purposes.

§ 44-293 Motor vehicle; refinancing retail installment contract

A. The holder of a contract, upon request by the buyer, may extend the scheduled due date of all or any part of any installment or installments, defer payment or payments, renew or restate the unpaid time balance of such contract, the amount of the installments and the time schedule therefor and may collect for such extension, deferment, renewal or restatement a refinance charge computed at the discretion of the holder as provided in subsection B of this section.

B. If the unpaid time balance of the contract is extended, deferred, renewed or restated, the holder may compute the refinance charge on such amount by adding to the unpaid balance the cost for insurance and other benefits incidental to the refinancing plus any accrued delinquency and collection charges, and deducting any refund which may be due the buyer by prepayment pursuant to section 44-291, for unearned finance charges specified by the contract and by reclassifying the motor vehicle by its then year model, for the term of the refinancing agreement, but otherwise subject to the provisions of this article governing computation of the original finance charge. The provisions of this article governing the minimum finance charge under the refund schedule shall apply in calculating refinance charges on the contract renewed under this method of computation.

§ 44-294 Records

Every holder or sales finance company shall maintain in its office, for a period of not less than one year after date of final payment or entry therein, a copy of all retail installment contracts or retail installment transactions entered into under the terms of this chapter.

§ 44-295 Penalties

Any person wilfully violating any provision of this chapter relating to the provisions of a contract shall not receive or retain any finance, delinquency or collection charge on the contract.

Chapter 3 Revised Arizona Unclaimed Property Act

Article 1 General Provisions

§ 44-301 Definitions

In this chapter, unless the context otherwise requires:

1. "Airdrop":

(a) Means to issue a unit of a digital asset that is distributed in a broad, equipped and nondiscretionary manner based on conditions that are capable of being satisfied by a participant in a blockchain system as incentive-based rewards, including any of the following:

(i) To users of a digital asset or any blockchain system to which the digital asset relates.

(ii) For activities that are directly related to the operation of the blockchain system, including mining, validating, staking and any other activity that is directly tied to the operation of the blockchain system.

(iii) To existing holders of another digital asset in proportion to the total units of the other digital assets that are held by each person.

(b) Does not include an exchange of more than a nominal value of cash, property or other assets.

2. "Apparent owner" means a person whose name appears on the records of a holder as the person entitled to property held, issued or owing by the holder.

3. "Business association" means any corporation, joint stock company, investment company, partnership, limited partnership, registered limited liability partnership, unincorporated association, joint venture, limited liability company, business trust, trust company, land bank, safe deposit company, safekeeping depository, financial organization, insurance company, mutual fund, utility or other business entity, whether for profit or not for profit, that consists of one or more persons.

4. "De minimis property" means any account balances of business associations of $50 or less that is payable to another business association.

5. "Department" means the department of revenue.

6. "Digital assets" means any of the following that confers economic, proprietary or access rights or powers:

(a) Virtual currencies.

(b) Cryptocurrencies.

(c) Any other digital-only assets.

7. "Director" means the director of the department of revenue.

8. "Domicile" means the state of incorporation of a corporation and the state of the principal place of business of a holder other than a corporation.

9. "Financial organization" means a savings and loan association, building and loan association, savings bank, industrial bank, bank, banking organization or credit union.

10. "Holder" means a person who is obligated to hold for the account of or deliver or pay to the owner the property that is subject to this chapter.

11. "Insurance company" means an association, corporation or fraternal or mutual benefit society or organization, whether for profit or not for profit, that is engaged in the business of providing life endowments, annuities or insurance, including accident, burial, casualty, credit life, contract performance, dental, disability, fidelity, fire, health, hospitalization, illness, life, malpractice, marine, mortgage, surety, wage protection and workers' compensation insurance.

12. "Mineral" means gas, oil, coal, sand, gravel, road material, building stone, chemical raw material, gemstone, fissionable and nonfissionable ores, colloid and other clay, steam and other geothermal resource or any other substance defined as a mineral in sections 27-231 and 27-901.

13. "Mineral proceeds" means the amounts payable for the extraction, production or sale of minerals or, if those amounts are abandoned, all payments that become payable after the abandonment. Mineral proceeds include amounts payable:

(a) For the acquisitions and retention of a mineral lease, including bonuses, royalties, compensatory royalties, shut-in royalties, minimum royalties and delay rentals.

(b) For the extraction, production or sale of minerals, including net revenue interest, royalties, overriding royalties, extraction payments and production payments.

(c) Under an agreement or option, including a joint operating agreement, unit agreement, pooling agreement and farm out agreement.

14. "Money order" includes an express money order and a personal money order on which the remitter is the purchaser. Money order does not include a bank money order or any other instrument that is sold by a financial organization if the seller has obtained the name and address of the payee.

15. "Owner" means a person who has a legal or equitable interest in property that is subject to this chapter or the person's legal representative. Owner includes a depositor in the case of a deposit, a beneficiary in the case of a trust other than a deposit in trust and a creditor, claimant or payee in the case of other property.

16. "Person" means an individual, business association, financial organization, estate, trust, government, governmental subdivision, agency or instrumentality or any other legal or commercial entity.

17. "Property":

(a) Means any of the following:

(i) Tangible property pursuant to section 44-303.

(ii) A fixed and certain interest in intangible property that is held, issued or owed in the course of a holder's business or by a government, governmental subdivision, agency or instrumentality and all income or increments from that property.

(iii) Digital assets.

(b) Does not include de minimis property, property of a person who is maintaining a current business relationship with the holder, monies collected pursuant to section 46-441 and property that is referred to or evidenced by gift certificates, electronic gift cards, nonrefundable tickets, certificates evidencing property denominated in value other than a currency, including prepaid phone cards, frequent flyer miles, stored value cards and merchandise points.

(c) Includes property that is referred to as or evidenced by any of the following:

(i) Money or any check, draft, deposit, interest or dividend.

(ii) Any credit balance, customer's overpayment, security deposit, refund, credit memorandum, unpaid wage, unused ticket, mineral proceeds or unidentified remittance.

(iii) Any stock or other evidence of ownership of an interest in a business association or financial organization.

(iv) Any bond, debenture, note or other evidence of indebtedness.

(v) Money deposited to redeem stocks, bonds, coupons or other securities or to make distributions.

(vi) An amount due and payable under the terms of an annuity or insurance policy, including policies that provide life, property, casualty, workers' compensation, health or disability insurance.

(vii) An amount distributable from a trust or custodial fund that is established under a plan to provide health, welfare, pension, vacation, severance, retirement, death, stock purchase, profit sharing, employee savings or supplemental unemployment insurance or similar benefits.

18. "Record" means information that is inscribed on a tangible medium or that is stored in any electronic or other medium and that is retrievable in a perceivable form.

19. "Stake" means committing digital assets to a blockchain network to participate in the blockchain network's operations by validating transactions, proposing and attesting to blocks and securing the network.

20. "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico or any territory or insular possession that is subject to the jurisdiction of the United States.

21. "Utility" has the same meaning prescribed in section 40-491.

§ 44-302 Presumptions of abandonment

A. Property is presumed abandoned if it is unclaimed by the apparent owner according to the following schedule:

1. A traveler's check is presumed abandoned fifteen years after issuance.

2. A money order or similar written instrument, other than a third-party bank check, is presumed abandoned three years after issuance.

3. Any stock or other equity interest in a business association or financial organization, including a security entitlement under title 47, chapter 8, is presumed abandoned three years after any of the following, whichever occurs first:

(a) The date of the most recent dividend, stock split or other distribution that is unclaimed by the apparent owner.

(b) The date of the second mailing of a statement of account or other notification or communication that was returned as undeliverable.

(c) The date the holder discontinued mailings, notifications or communications to the apparent owner.

4. The principal on debt, other than a bearer bond or an original issue discount bond, of a business association or financial organization is presumed abandoned three years after the maturity date and the interest on the debt is presumed abandoned three years after the payment date.

5. Except as otherwise provided in this paragraph, a demand, savings or time deposit, including a deposit that is automatically renewable, and any interest or dividends are presumed abandoned three years after maturity or the date of the last indication by the owner of interest in the property, whichever occurs first. A certificate of deposit and any interest are presumed abandoned three years after maturity. For the purposes of this paragraph, a deposit that is automatically renewable is deemed matured on its initial date of maturity, unless the owner has consented to a renewal at the time of the account opening or about the time of the renewal and the consent is in writing or is evidenced by the original account agreement or by any memorandum or other record on file with the holder.

6. Credits owed to a customer as a result of a retail business transaction are presumed abandoned three years after the obligation accrued.

7. An amount owed by an insurance company on a life or endowment insurance policy or an annuity that has matured or terminated is presumed abandoned three years after the obligation to pay arose or, in the case of a policy or annuity that is payable on proof of death, the amount is presumed abandoned one year after the insured has attained, or would have attained if the insured were living, the limiting age under the mortality table on which the reserve is based. For the purposes of this paragraph, all of the following conditions apply:

(a) If a person other than the insured or annuitant is entitled to the owed amount and the person's address is not known to the company or it is not definite and certain from the records of the company who is entitled to the amount, it is presumed that the last known address of the person who is entitled to the amount is the same as the last known address of the insured or annuitant according to the company's records.

(b) Notwithstanding any law, if the company learns of the death of the insured or annuitant and the beneficiary has not communicated with the insurer within four months after the death, the company shall take reasonable steps to pay the proceeds to the beneficiary.

(c) Every change of beneficiary form issued by an insurance company under any life or endowment insurance policy or annuity contract to an insured or owner who is a resident of this state shall request the following information:

(i) The name of each beneficiary, or if a class of beneficiaries is named, the name of each current beneficiary in the class.

(ii) The address of each beneficiary.

(iii) The relationship of each beneficiary to the insured.

8. A life or endowment insurance policy or annuity contract not matured by actual proof of the death of the insured or annuitant according to the company's records is deemed matured and the proceeds are deemed due and payable and are presumed abandoned after one year if all of the following conditions apply:

(a) The insured has attained, or would have attained if the insured were living, the limiting age under the mortality table on which the reserve is based.

(b) The policy was in force at the time the insured attained or would have attained the limiting age specified in subdivision (a) of this paragraph.

(c) Neither the insured nor any other person who appears to have an interest in the policy within the last year according to the company's records has assigned, readjusted or paid premiums on the policy or subjected the policy to a loan, corresponded in writing with the company concerning the policy or otherwise indicated an interest as evidenced by a memorandum or any other record on file with and prepared by an employee of the company.

9. Property that is distributable by a business association or financial organization in a course of dissolution is presumed abandoned one year after the property becomes distributable.

10. Property that is received by a court as proceeds of a class action and that is not distributed pursuant to the judgment is presumed abandoned one year after the distribution date.

11. Property that is held by a court, government or governmental subdivision, agency or instrumentality, except for support as defined in section 25-500 or for spousal maintenance, is presumed abandoned two years after the property becomes distributable. Monies held for the payment of warrants by a state agency that remain unclaimed by the owner at the time of the void date printed on the face of the warrant are presumed abandoned. For the purposes of this paragraph, governmental subdivision does not include a special taxing district as defined in section 48-241.

12. Wages or other compensation for personal services is presumed abandoned one year after the compensation becomes payable.

13. Property in any individual retirement account, defined benefit plan or other account or plan that qualifies for tax deferral under the income tax laws of the United States is presumed abandoned two years after any of the following, whichever occurs first:

(a) The date of the distribution or attempted distribution of the property.

(b) The date of the required distribution as stated in the plan or trust agreement that governs the plan.

(c) If determinable by the holder, the date specified in the income tax laws of the United States by which distribution of the property must begin in order to avoid a tax penalty.

14. Any amount that is payable on a check, draft or similar instrument on which a financial organization or business association is directly liable, including a cashier's check and a certified check, and that has been outstanding for more than three years after the check, draft or similar instrument was payable or after issuance if payable on demand is presumed abandoned unless within three years the owner has communicated in writing with the financial organization or business association concerning the check, draft or similar instrument or otherwise indicated an interest as evidenced by a memorandum or any other record on file and prepared by an employee of the financial organization or business association.

15. Digital assets are presumed abandoned three years after a written or electronic communication to the owner is returned to the owner as undeliverable by the United States postal service or email or any other electronic messaging method, as applicable. The three-year presumption of abandonment ceases immediately on the exercise of an act of ownership interest in the digital asset or by a written, oral or electronic communication with the holder of the digital asset and that is evidenced by a memorandum or other record that is on file with the holder or the holder's agent. For the purposes of this paragraph, "exercise of an act of ownership interest" includes any of the following:

(a) The owner taking action regarding the digital asset.

(b) Conducting a transaction regarding the digital asset or the account in which the digital asset is held, including depositing monies into or withdrawing monies from the account.

(c) Electronically accessing the account in which the digital asset is held.

(d) Conducting any activity with respect to another account that is owned by the owner and held by the same holder.

(e) Taking any other action that reasonably demonstrates to the holder that the owner knows the property exists.

16. All other property is presumed abandoned three years after the owner's rights to demand the property or after the obligation to pay or distribute the property arises, whichever occurs first.

17. Excess proceeds deposited with the county treasurer pursuant to section 33-812 are presumed abandoned if the monies remain with the treasurer for at least two years from the date of deposit and there is no pending application for distribution.

18. Any dividend, profit, distribution, interest, redemption, payment on principal or other sum held or owing by a business association for or to its shareholder, certificate holder, member, bondholder or other security holder who has not claimed it, or corresponded in writing with the business association concerning it, is presumed abandoned three years after the date prescribed for payment or delivery.

B. At the time that an interest is presumed abandoned under subsection A of this section, any other property right accrued or accruing to the owner as a result of the interest, and not previously presumed abandoned, is also presumed abandoned.

C. Property is unclaimed if, for the applicable period prescribed in subsection A of this section, the apparent owner has not communicated in writing with the holder or communicated by other means reflected in a contemporaneous record that is prepared by or on behalf of the holder and that concerns the property or the account or accounts in which the property is held and has not otherwise indicated an interest in the property and if the holder has not communicated in writing with regard to the property that would otherwise be unclaimed. A communication with an owner by a person other than the holder or the holder's representative who has not identified the property in writing to the owner is not an indication of interest in the property by the owner.

D. An indication of an owner's interest in property includes:

1. Presenting any check or other instrument of payment of any dividend or other distribution that is made with respect to any account, underlying stock or other interest in a business association or financial organization. If the distribution is made by electronic or similar means, an indication of an owner's interest includes evidence that the distribution has been received.

2. The owner directing any activity in the account in which the property is held, including a direction by the owner to increase, decrease or change the amount or type of property held in the account.

3. Making a deposit to or withdrawal from a bank account.

4. Paying a premium with respect to a property interest in an insurance policy. The application of an automatic premium loan provision or any other nonforfeiture provision in an insurance policy does not prevent a policy from maturing or terminating if the insured has died or if the insured or the beneficiary of the policy has otherwise become entitled to the proceeds before the depletion of the cash surrender value of a policy by the application of those provisions.

E. Property is payable or distributable notwithstanding the owner's failure to make demand or present an instrument or document otherwise required to obtain payment.

§ 44-303 Contents of safe deposit box or other safekeeping depository

Tangible property that is held in a safe deposit box or any other safekeeping depository in this state in the ordinary course of the holder's business and the proceeds that result from the sale of the property permitted by law are presumed abandoned if the property remains unclaimed by the owner for more than three years after the expiration of the lease or rental period on the box or other depository.

§ 44-304 Rules for taking custody

Except as otherwise provided in this chapter or by another statute of this state, property that is presumed abandoned, whether located in this or another state, is subject to the custody of this state if any of the following applies:

1. The last known address, as shown on the records of the holder, of the apparent owner is in this state.

2. The records of the holder do not reflect the identity of the person entitled to the property and it is established that the last known address of the person entitled to the property is in this state.

3. The records of the holder do not reflect the last known address of the apparent owner and it is established that either:

(a) The last known address of the person entitled to the property is in this state.

(b) The holder is domiciled in this state or is a government or governmental subdivision, agency or instrumentality of this state and has not previously paid or delivered the property to the state of the last known address of the apparent owner or other person entitled to the property.

4. The last known address, as shown on the records of the holder, of the apparent owner is in a state that does not provide for the escheat or custodial taking of the property and the holder is domiciled in this state or is a government or governmental subdivision, agency or instrumentality of this state.

5. The last known address, as shown on the records of the holder, of the apparent owner is in a foreign nation and the holder is domiciled in this state or is a government or governmental subdivision, agency or instrumentality of this state.

6. The transaction out of which the property arose occurred in this state, the holder is domiciled in a state that does not provide for the escheat or custodial taking of the property and the last known address of the apparent owner or other person who is entitled to the property is unknown or is in a state that does not provide for the escheat or custodial taking of the property.

7. The property is a traveler's check or money order that was purchased in this state or the issuer of the traveler's check or money order has its principal place of business in this state and the issuer's records show that the instrument was purchased in a state that does not provide for the escheat or custodial taking of the property or the records do not show the state in which the instrument was purchased.

§ 44-305 Dormancy charge

A holder, except an agency of this state, may deduct from property presumed abandoned a charge imposed by reason of the owner's failure to claim the property within a specified time if there is a valid and enforceable written contract between the holder and the owner under which the holder may impose the charge and the holder regularly imposes the charge and the charge is not regularly reversed or otherwise canceled. The amount of the deduction is limited to an amount that is not unconscionable.

§ 44-306 Burden of proof as to property evidenced by record of check or draft

A record of the issuance of a check, draft or similar instrument is prima facie evidence of an obligation. In claiming property from a holder who is also the issuer, the department's burden of proof as to the existence and amount of the property and its abandonment is satisfied by showing issuance of the instrument and passage of the requisite period of abandonment. Defenses of payment, satisfaction, discharge and want of consideration are affirmative defenses and are the burden of the holder to establish.

§ 44-307 Report of abandoned property

A. A holder of property that is presumed abandoned shall make a report to the department concerning the property.

B. The report shall be verified and shall contain all of the following:

1. A description of the property.

2. Except for a traveler's check or money order, the name, if known, the last known address, if any, and the social security number or taxpayer identification number, if readily ascertainable, of the apparent owner of property with a value of at least fifty dollars.

3. An aggregate amount of items with a value of less than fifty dollars each.

4. For an amount of at least fifty dollars held or owing under an annuity or a life or endowment insurance policy, the full name and last known address of the annuitant or insured and of the beneficiary.

5. For property held in a safe deposit box or any other safekeeping depository, an indication of the place where it is held and where it may be inspected by the department and any amount owing to the holder.

6. The date, if any, on which the property became payable, demandable or returnable and the date of the last transaction with the apparent owner of the property.

7. Other information that the department by rule deems necessary for the administration of this chapter.

C. If a holder of property that is presumed abandoned is a successor to another person who previously held the property for the apparent owner or the holder has changed the holder's name while holding the property, the holder shall file with the report the holder's former names, if any, and the known names and addresses of all previous holders of the property.

D. A life insurance company that is a holder of property that is presumed abandoned shall file the report prescribed by this section before May 1, and the report shall cover the prior calendar year. Any other holder of property that is presumed abandoned shall file the report before November 1 and the report shall cover the last twelve months before July 1 of that year. A holder may make a onetime election to annually report the property at the same time it reports its income for the purposes of income tax pursuant to title 43.

E. Prior to one hundred twenty days before the holder of property that is presumed abandoned files the report prescribed in this section, the holder shall send a written notice to the apparent owner that states that the holder is in possession of the property subject to this chapter if all of the following apply:

1. The holder has an address in the holder's records for the apparent owner and the records do not indicate that the address is inaccurate.

2. The claim of the apparent owner is not barred by any other law of this state.

3. The value of the property is at least fifty dollars.

F. Before the date for filing the report, the holder of property that is presumed abandoned may request the department to extend the time for filing the report. The department may grant the extension for good cause. On receipt of the extension, the holder may make an interim payment on the amount the holder estimates will ultimately be due and that payment terminates the accrual of additional interest on the amount paid.

G. If the laws of this state or the terms of the life insurance policy require the insurance company to give notice to the insured or owner that any automatic premium loan provision or other nonforfeiture provision has been exercised and the notice given to an insured or owner whose last known address according to the company's records is in this state is undeliverable, the company shall make a reasonable search to ascertain the policyholder's correct address to which the notice must be mailed.

H. State agencies that hold monies for the payment of void warrants shall report to the department in a format prescribed by the department all warrants voided in the previous month not later than the tenth day of each month.

I. A county treasurer holding excess proceeds that are presumed abandoned pursuant to sections 33-812 and 44-302 shall file the report prescribed by this section on or before November 1. The report shall cover the prior fiscal year and include a copy of all documentation filed with the county treasurer.

§ 44-308 Payment or delivery of abandoned property

A. On filing the report prescribed in section 44-307, the holder of property that is presumed abandoned shall pay, deliver or cause to be paid or delivered to the department the property described in the report as unclaimed. If the property is an automatically renewable deposit and a penalty or forfeiture in the payment of interest would result, the time for compliance is extended until a penalty or forfeiture would no longer result. The holder of tangible property held in a safe deposit box or any other safekeeping depository shall deliver the property to the department on filing the report prescribed in section 44-307.

B. If the property reported to the department is a security or security entitlement pursuant to title 47, chapter 8, the department may make an endorsement, instruction or entitlement order on behalf of the apparent owner to invoke the duty of the issuer or its transfer agent or the securities intermediary to transfer or dispose of the security or the security entitlement in accordance with title 47, chapter 8.

C. If the holder of property reported to the department is the issuer of a certificated security, the department has the right to obtain a replacement certificate pursuant to section 47-8405, but an indemnity bond is not required.

D. If the property reported to the department is a digital asset, the holder shall report and deliver the digital asset in its native form to the department or the department's designated qualified custodian within thirty days after reporting the property abandoned. On direction by the department, the qualified custodian may stake to receive rewards or receive airdrops. On the expiration of three years after the date the digital asset was transferred to the qualified custodian and if the property remains unclaimed, any airdrops or staking rewards shall be transferred to the bitcoin and digital asset reserve fund established by section 41-180. If the holder only possesses a partial private key to the digital asset or is unable to move the digital asset, the holder shall maintain the digital asset until the additional keys required to transfer the digital asset become available. For the purposes of this subsection, "qualified custodian" means any of the following that is licensed in this state to sell digital assets and offer custody services to customers:

1. A company.

2. A federal or state chartered bank.

3. A trust company.

4. A special purpose depository institution.

E. An issuer, the holder and any transfer agent or other person who acts pursuant to the instructions and on behalf of the issuer or holder in accordance with this section are not liable to the apparent owner and are indemnified against all claims of any person in accordance with section 44-310.

F. Each month a holder of property reported pursuant to section 44-307, subsection H shall remit the property with the report of property presumed abandoned or other form prescribed by the department.

§ 44-309 Notice and publication of abandoned property

A. The department shall publish a notice at least semiannually with a toll free telephone number and directing the public to the department's website regarding abandoned property that has been paid or delivered to the department. The department shall cause the notice to be published in a newspaper of general circulation in each county. The department shall also cause the notice to either be published on social media or broadcast on radio or published or broadcast by any other means that in the judgment of the department is likely to attract the attention of the apparent owner of the unclaimed property. The department's website shall contain all of the following information not later than November 30 of the year after the year in which abandoned property has been paid or delivered to the department:

1. The name of each person that appears to be the owner of the property as stated in the report filed by the holder.

2. The last known address or location of each person that appears to be the owner of the property, if an address or location is stated in the report filed by the holder.

3. A statement that explains that the property of the owner is presumed abandoned and is in the protective custody of the department.

4. A statement that on request to the department information about the property and its return to the owner is available to a person who has a legal or beneficial interest in the property.

B. The department's website is not required to contain the name, address or location of an owner of property that has a total value of less than fifty dollars or information concerning a traveler's check, money order or similar instrument.

C. The department shall publish annually the estimated total dollar amount of unclaimed property on the home page of the department's unclaimed property website.

§ 44-310 Custody by state; recovery by holder; defense of holder

A. On payment or delivery of property to the department, the state assumes custody and responsibility for the safekeeping of the property. A holder who pays or delivers property to the department in good faith is relieved of all liability with respect to the property that arises after the payment or delivery.

B. A holder who has paid money to the department pursuant to this chapter may subsequently make payment to a person who reasonably appears to the holder to be entitled to payment. On a filing by the holder of proof of payment and proof that the payee was entitled to the payment, the department shall promptly reimburse the holder for the payment without imposing any fee or other charge. If the holder seeks reimbursement for a payment made on a negotiable instrument, including a traveler's check or money order, the department shall reimburse the holder if the holder files proof that the instrument was duly presented and that payment was made to a person who reasonably appeared to be entitled to payment. The department shall reimburse the holder for payment even if the payment was made to a person whose claim was barred pursuant to section 44-321.

C. Without paying any fee or other charge, a holder who has delivered property other than money to the department pursuant to this chapter may reclaim the property if the property is still in the possession of the department and the holder files proof that the apparent owner has claimed the property from the holder.

D. The department may accept a holder's affidavit as sufficient proof of the holder's right to recover money and property under this chapter.

E. If a holder pays or delivers property to the department in good faith and after the payment or delivery another person claims the property from the holder or another state claims the money or property under that state's laws relating to escheat or abandoned or unclaimed property, on written notice of the claim the department shall defend the holder against the claim and indemnify the holder against any liability on the claim that results from payment or delivery of the property to the department.

F. If the department receives any property that is removed from a safe deposit box or any other safekeeping depository the department is subject to the holder's right to be reimbursed for the cost of the opening and to any valid lien or contract that provides for the holder to be reimbursed for unpaid rent or storage charges. The department shall reimburse the holder from the proceeds that remain after deducting the expense incurred by the department in selling the property.

G. For the purposes of this section, payment or delivery is made in good faith if all of the following requirements are met:

1. Payment or delivery was made in a reasonable attempt to comply with this chapter.

2. At the time of the payment or delivery the holder was not in breach of a fiduciary obligation with respect to the property and based on facts known by the holder at the time of the payment or delivery the holder reasonably believed that the property was presumed abandoned.

3. Records pursuant to which the payment or delivery was made meet reasonable commercial standards of practice.

§ 44-311 Crediting of owner's account; interest

A. A holder shall not cease payment of interest on an interest bearing demand, savings or time deposit, including a deposit that is automatically renewable, unless all of the following conditions apply:

1. There is an enforceable written contract between the holder and the owner of the property that allows the holder to impose the charges or cease payment of interest.

2. For property that is more than two dollars, not more than three months before the initial cessation of interest the holder gave written notice to the owner at the last known address of the owner that stated that interest would cease.

3. The holder regularly ceases payment of interest and does not regularly retroactively credit interest on that type of property.

B. If property other than money is delivered to the department pursuant to this chapter, the department shall provide the owner with any income or gain realized or accruing on the property at or before liquidation or conversion of the property to money. If the property delivered to the department is an interest bearing demand, savings or time deposit, including a deposit that is automatically renewable, the department shall pay interest at the legal rate or any lesser rate that the property earned while in the possession of the holder. Interest begins to accrue when the property is delivered to the department and ceases ten years after delivery or on the date the department pays the owner, whichever occurs first.

§ 44-312 Public sale of abandoned property; prohibition

A. Except as otherwise provided in this section, within three years after receiving abandoned property the department shall sell the property to the highest bidder at a public sale at a location in this state that in the judgment of the department affords the most favorable market for the property. The department may decline the highest bid and reoffer the property for sale if the department considers the bid to be insufficient. The department is not required to offer the property for sale if the department determines that the probable cost of the sale will exceed the proceeds from the sale. Before conducting a sale pursuant to this section, the department shall cause a notice to be published at least three weeks before the sale in a newspaper of general circulation in the county in which the sale will occur.

B. The department shall sell securities that are listed on an established stock exchange at prices prevailing on the exchange at the time of the sale. The department may sell other securities over the counter at prices prevailing at the time of the sale or by any reasonable method selected by the department.

C. The department shall sell digital assets that are listed on an established digital asset exchange at prices prevailing on the exchange at the time of the sale. The department may not sell a digital asset listed on an established stock or a digital asset exchange for less than the prevailing price that is listed on the exchange at the time of sale. The department may sell a digital asset that is not listed on an established exchange by any commercially reasonable method.

D. A person who makes a claim pursuant to this chapter for securities is entitled to receive from the department the securities that the holder delivered to the department if the securities remain in the department's custody or the person is entitled to receive the net proceeds of the sale. Except in a case of intentional misconduct or malfeasance by the department, the person is not entitled to receive any appreciation in the value of the property that occurred after the delivery to the department.

E. A purchaser of property at a sale conducted by the department pursuant to this chapter takes the property free of all claims of the owner or previous holder and of all persons claiming through or under the owner or previous holder. The department shall execute all documents necessary to complete the transfer of ownership.

§ 44-313 Deposit of monies

A. Except as otherwise provided in this section or section 44-314, the department shall deposit, pursuant to sections 35-146 and 35-147, in the state general fund all monies received pursuant to this chapter, including the proceeds from the sale of abandoned property pursuant to section 44-312, except that:

1. The first two million dollars of the monies shall be deposited each fiscal year in the seriously mentally ill housing trust fund established by section 41-3955.01.

2. The second two million five hundred thousand dollars of the monies shall be deposited in the housing trust fund established by section 41-3955.

3. The next twenty-four million five hundred thousand dollars of the monies shall be deposited each fiscal year in the department of revenue administrative fund established by section 42-1116.01.

B. The department shall deposit monies from unclaimed shares and dividends of any corporation incorporated under the laws of this state in the permanent state school fund pursuant to article XI, section 8, Constitution of Arizona.

C. The department shall deposit monies from unclaimed victim restitution payments in the victim compensation and assistance fund established by section 41-2407 for the purpose of establishing, maintaining and supporting programs that compensate and assist victims of crime.

D. The department shall retain in a separate trust fund at least one hundred thousand dollars from which the department shall pay claims.

E. Before making the deposit, the department shall record the name and last known address of each person who appears from the holders' reports to be entitled to the property and the name and last known address of each insured person or annuitant and beneficiary. The department shall also record the policy or contract number of each policy or contract of an insurance company that is listed in the report, the name of the company and the amount due. The department shall make the record available for public inspection during reasonable business hours.

§ 44-314 Federal deposit insurance corporation trust fund; temporary custody; interest

A. The federal deposit insurance corporation trust fund is established consisting of monies the department receives from the federal deposit insurance corporation under the unclaimed deposits amendments act of 1993 (P.L. 103-44; 107 Stat. 220; 12 United States Code section 1822(e)). The department shall administer the fund. Monies in the fund are continuously appropriated.

B. If the monies deposited in the federal deposit insurance corporation trust fund are not claimed by the owner within ten years after being surrendered to the department, the department shall return the monies to the federal deposit insurance corporation.

C. This state retains all interest earned on the monies in the federal deposit insurance corporation trust fund. The interest earned on the monies in the federal deposit insurance corporation trust fund shall be credited as follows:

1. Sixty-five per cent in the state general fund.

2. Thirty-five per cent in the housing trust fund established by section 41-3955.

§ 44-315 Confidentiality; violation; classification; definitions

A. The department may disclose confidential information relating to an item of property to the claimant or relating to reports of abandoned property to the holder, a successor in interest to the claimant or holder or a designee of the claimant or holder who is authorized in writing by the claimant or holder.

B. The department also may disclose confidential information to:

1. Any employee of the department whose official duties involve tax or unclaimed property administration.

2. The office of the attorney general for its use in providing counsel relating to unclaimed property administration or in preparation for any proceeding involving unclaimed property before the department or any other agency or board of this state or before any grand jury or any state or federal court.

3. Pursuant to a written agreement between the department and another state or an organization of states that operates an information exchange for unclaimed property administration purposes, a state unclaimed property official from the other state if the other state or organization grants substantially similar privileges to the department for the same type of information.

4. The auditor general, in connection with any audit of the department subject to the restrictions in section 42-2002, subsection D.

5. Any person to the extent necessary for effective unclaimed property administration in connection with the processing, storage, transmission and reproduction of the information and the programming, maintenance, repair, testing and procurement of equipment for purposes of unclaimed property administration.

C. Except as provided in section 42-2002, subsection D, the department may disclose confidential information in any state or federal judicial or administrative proceeding relating to unclaimed property administration if:

1. The claimant or holder is a party to the proceeding.

2. The treatment of an item reflected in the information is directly related to the resolution of an issue in the proceeding.

3. The information directly relates to a transactional relationship between a person who is a party to the proceeding and the claimant or holder and the information directly affects the resolution of an issue in the proceeding.

D. The department may disclose identity information for purposes of notifying persons who appear to be entitled to unclaimed property in the manner described in section 44-309.

E. The department may disclose statistical information gathered from confidential information if it does not disclose confidential information attributable to a claimant or holder.

F. A court may order the department to disclose confidential information pertaining to a party to an action. An order shall be made only on a showing of good cause and that the party who seeks the information has demanded the information from the claimant or holder.

G. If the department is required or permitted to disclose confidential information, it may charge the person or agency that requests the information for the reasonable cost of the department's services.

H. A disclosure of confidential information in violation of this section is a class 1 misdemeanor. A knowing disclosure of confidential information in violation of this section is a class 6 felony.

I. The provisions of this section apply to independent auditors hired by the department to enforce the provisions of this chapter and chapter 3.1 of this title.

J. A person, including a former employee, agent or independent auditor of the department or office of administrative hearings or a person previously having an administrative duty for the department or the office of administrative hearings, who has received confidential information while an employee, agent or independent auditor of the department or the office of administrative hearings, shall not disclose that information except as provided in this section.

K. For the purposes of this section:

1. "Claimant" means a person or entity that claims to have a property interest in the item of property that is presumed abandoned pursuant to this chapter.

2. "Confidential information" includes reports filed by holders of property presumed abandoned under this chapter, a claimant's application and documents submitted to support a claim and information discovered by the department concerning claims, and claimants, holder reports or holders. Confidential information also includes information supplied at the special request of the department which the claimant or holder requests to be held confidential, whether a holder or report was, is being or will be subject to examination, investigation or collection and data received by, recorded by, prepared by, furnished to or collected by the department with respect to the existence or possible existence of a liability of any holder for unclaimed property.

§ 44-316 Claim of another state to recover property

A. After property has been paid or delivered to the department pursuant to this chapter, another state may recover the property if any of the following applies:

1. The property was paid or delivered to the custody of this state because the records of the holder did not indicate a last known location of the apparent owner within the borders of the other state and the other state establishes that the apparent owner or other person who is entitled to the property was last known to be located within the borders of that state and under the laws of that state the property has escheated or become subject to a claim of abandonment by that state.

2. The property was paid or delivered to the custody of this state because at the time of the payment or delivery the laws of the other state did not provide for the escheat or custodial taking of the property, but after the payment or delivery the other state enacts laws that cause the property to escheat or become subject to a claim of abandonment by that state.

3. The records of the holder did not accurately identify the owner of the property and the last known location of the owner within the borders of another state and under the laws of that state the property has escheated or become subject to a claim of abandonment by that state.

4. The property was subjected to custody by this state pursuant to section 44-304, paragraph 6 and under the laws of the state of domicile of the holder the property has escheated or become subject to a claim of abandonment by that state.

5. The property is a sum that is payable on a traveler's check, money order or similar instrument that was purchased in the other state and delivered to the custody of this state pursuant to section 44-304, paragraph 7 and under the laws of the other state the property has escheated or become subject to a claim of abandonment by that state.

B. In order to file a claim to recover escheated or abandoned property, another state shall present the claim in a form prescribed by the department. The department shall decide the claim within ninety days after the claim is presented. The department shall allow the claim on determining that the other state is entitled to the abandoned property pursuant to subsection A of this section.

C. Before recovering property under this section, the department shall require the other state to agree to indemnify this state and its officers and employees against any liability on a claim to the property.

§ 44-317 Filing claim with department

A. Any person, excluding another state, who claims property that was paid or delivered to the department may file a claim on a form prescribed by the department and verified by the claimant.

B. Within ninety days after a claim is filed the department shall allow or deny the claim and shall give written notice of the decision to the claimant. If the claim is denied the department shall inform the claimant of the reasons for the denial and shall specify what additional evidence is required before the claim will be allowed. The claimant may then file a new claim with the department or may maintain an action pursuant to section 44-318.

C. Within thirty days after a claim is allowed the department shall deliver the property or pay the net proceeds of a sale of the property to the claimant, including any dividend, interest or other increment to which the claimant is entitled pursuant to sections 44-311 and 44-312.

D. A holder who pays the owner for property that has been delivered to the department and that if claimed from the department by the owner would be subject to an increment pursuant to sections 44-311 and 44-312 shall recover from the department the amount of the increment.

E. Notwithstanding any other maximum time period that is specified in a statute, contract or court order to commence or enforce an action to obtain payment of a claim for monies or recovery of property, a person may file a claim under subsection A of this section within thirty-five years after the final day of the fiscal year in which the department receives the unclaimed property.

§ 44-318 Action to establish claim; attorney fees

A person who is aggrieved by a decision of the department, or whose claim has not been decided within ninety days after filing the claim, may begin an original action in superior court to establish the claim by naming the department as a defendant. The person shall file the action in superior court within ninety days after the decision of the department or within one hundred eighty days after the filing of the claim if the department has failed to make a decision. If the aggrieved person establishes the claim in an action against the department, the court may award the claimant reasonable attorney fees.

§ 44-319 Election to take payment or delivery

A. The department may decline to receive property that is reported under this chapter and that the department considers to have a value of less than the costs of notice and sale.

B. With the written consent of the department and on terms prescribed by the department, a holder may report and deliver property before the property is presumed abandoned. The department shall hold that property, and that property is not presumed abandoned until it otherwise would be presumed abandoned pursuant to this chapter.

§ 44-320 Destruction or disposition of property having no substantial commercial value; immunity from liability

If the department determines after investigation that property delivered pursuant to this chapter has no substantial commercial value, the department may destroy or otherwise dispose of the property at any time. A person shall not maintain an action or proceeding against this state, the department or any officer of this state or against the holder for or on account of an act of the department pursuant to this section, except for intentional misconduct or malfeasance.

§ 44-321 Periods of limitation

A. The expiration of a period of limitation on the owner's right to receive or recover property, whether specified by contract, statute or court order, does not preclude the property from being presumed abandoned or affect a duty to file a report or to pay or deliver or transfer property to the department as required by this chapter.

B. An individual, corporation, business association or other organization may not act through an amendment of articles of incorporation, an amendment of bylaws, a private agreement or any other means to do any of the following:

1. Take or divert monies or personal property into income.

2. Divide monies or personal property among patrons or stockholders that are able to be located.

3. Divert monies or personal property by any other method for the purpose of circumventing the unclaimed property process.

C. The department shall not begin an action or proceeding to enforce this chapter in regard to the reporting, delivery or payment of property more than four years after the holder identified the property in a report filed with the department or gave express notice to the department of a dispute regarding the property. If a holder omits from a report any amount of property that is properly includible and that is in excess of twenty-five percent of the amount of property stated in the report, the department may begin an action or proceeding to enforce this chapter at any time within six years after the report was filed. If there is no report or other express notice, the period of limitation is tolled. The period of limitation is also tolled if the holder files a fraudulent report.

§ 44-322 Requests for reports; examination of records

A. The department may require any person who has not filed a report or any person who the department believes has filed an inaccurate, incomplete or false report to file a verified report in a form specified by the department. The report shall:

1. State whether the person is holding property that is reportable under this chapter.

2. Describe the property not previously reported or property about which the department has inquired.

3. Identify and state the amount of property that may be in issue.

B. At reasonable times and on reasonable notice, the department may examine the records of any person to determine whether the person has complied with this chapter. The department may conduct the examination even if the person believes that it is not in possession of any property that must be reported, paid or delivered pursuant to this chapter.

C. At reasonable times the department may examine the records of an agent, including a dividend disbursing agent or transfer agent, of a business association or financial organization that is the holder of property presumed abandoned if the department has given the notice prescribed in subsection B of this section to both the association or organization and the agent at least ninety days before the examination.

D. Documents and working papers that the department or the department's agent, employee or designated representative obtains or compiles in the course of conducting an examination are confidential and are not public records. However, notwithstanding sections 42-2003 and 44-315, the documents and papers may be:

1. Used by the department in the course of an action to collect unclaimed property or otherwise enforce this chapter.

2. Used in joint examinations conducted with or pursuant to an agreement with another state, the federal government or any other governmental subdivision, agency or instrumentality.

3. Produced pursuant to subpoena or court order.

4. Disclosed to the abandoned property office of another state for that state's use in circumstances that are equivalent to those described in this subsection, if the other state is bound to keep the documents and papers confidential.

E. If an examination of the records of a person results in the disclosure of property that is reportable under this chapter, the department may assess the cost of the examination against the holder at the rate of one hundred dollars each day for each examiner, but the assessment shall not exceed the value of the property found to be reportable. The department may assess the cost of an examination made pursuant to subsection C of this section only against the business association or financial organization.

F. If a holder does not maintain the records required in section 44-323 and the records of the holder that are available for the periods subject to this chapter are insufficient to allow the preparation of a report, the department may require the holder to report and pay to the department the amount that the department reasonably believes, based on the holder's available records or any other reasonable method of estimation, should have been but was not reported. The method of estimation shall be agreed to by the holder or shall be a statistically valid sampling method.

§ 44-323 Retention of records

A. A holder that is required to file a report pursuant to section 44-307 shall maintain the records that contain the information required to be included in the report for five years after the holder files the report, except as provided in subsection B of this section or unless the department adopts a rule that allows for a shorter period of time.

B. A business association or financial organization that sells, issues or provides to others for sale or issue in this state traveler's checks, money orders or other similar instruments on which the business association or financial organization is directly liable, other than third party bank checks, shall maintain a record of the instruments while the instruments remain outstanding and the record shall indicate the state and date of issue of the instruments. The association or organization shall maintain the record prescribed by this subsection for three years after the holder files the report.

§ 44-324 Enforcement

The department may request the attorney general to commence an action in the superior court to enforce this chapter, and, if applicable, the department may file an action in another state to enforce this chapter.

§ 44-325 Interstate agreements and cooperation; joint and reciprocal actions with other states

A. The department may enter into an agreement with another state to exchange information relating to abandoned property or the possible existence of abandoned property. The agreement may allow the other state or another person acting on behalf of a state to examine records as authorized in section 44-322. The department by rule may require the reporting of information that is necessary to comply with an agreement made pursuant to this section, and the department may prescribe the form.

B. The department may join with another state to seek enforcement of this chapter against any person who is or may be holding property that is reportable pursuant to this chapter.

C. At the request of another state, the attorney general of this state may maintain an action on behalf of the other state to enforce in this state the unclaimed property laws of the other state against a holder of property that is subject to escheat or a claim of abandonment by the other state, if the other state agrees to pay all costs incurred by the attorney general in maintaining the action.

D. The department may request that the attorney general of another state or another attorney begin an action in the other state on behalf of the department. The department shall pay all costs, including attorney fees, in maintaining an action pursuant to this subsection. The department may pay the costs and attorney fees from monies received pursuant to this chapter. The department may agree to pay costs and attorney fees that are based in whole or in part on a percentage of the value of any property that the department recovers in the action. The department shall not deduct any costs or attorney fees paid pursuant to this section from the amount that is subject to the claim by the owner pursuant to this chapter.

§ 44-326 Interest; penalties

A. The department may require any person who fails to pay or deliver property within the time prescribed in this chapter to pay to the department interest at the rate of one and one-half per cent per month or fraction of a month on the property or value of the property from the date the property should have been paid or delivered.

B. Any person who wilfully fails to:

1. Render any report or perform any other duty required under this chapter shall pay a civil penalty of one hundred dollars for each day the report is withheld or the duty is not performed up to a maximum of five thousand dollars.

2. Pay or deliver property to the department as required under this chapter shall pay a civil penalty of twenty-five per cent of the value of the property that should have been paid or delivered.

§ 44-327 Agreement to locate property

A. The following are void and unenforceable:

1. An agreement entered into by an owner with another person if the primary purpose of that agreement is to locate, deliver, recover or assist in the recovery of property that is presumed abandoned, if the agreement was entered into during the period commencing on the date the property was presumed abandoned and extending to a time that is twenty-four months after the date that the property is paid or delivered to the department. This paragraph does not apply to an owner's agreement with an attorney to file a claim relating to identified property or to contest the department's denial of a claim.

2. A provision in an agreement that requires an owner to pay compensation that includes a portion of mineral proceeds that are not presumed abandoned or the underlying minerals, if the primary purpose of the agreement is to locate, deliver, recover or assist in the recovery of mineral proceeds that are presumed abandoned.

B. If an owner enters into an agreement that is not void pursuant to this section and the primary purpose of that agreement is to locate, deliver, recover or assist in the recovery of property reported to the department, the agreement is:

1. Enforceable if the agreement is in writing, clearly states the nature of the property and the services to be performed, is signed by the apparent owner and states the value of the property before and after the fee or other compensation has been deducted. The fee or payment agreed on shall not be more than thirty per cent of the value of the recoverable property reported to the department.

2. Unenforceable except by the owner if the agreement provides for compensation that is more than thirty per cent of the value of the recoverable property reported to the department.

C. An owner who has agreed to pay compensation that is more than thirty per cent of the value of the recoverable property reported to the department, or the department on behalf of the owner, may maintain an action to reduce the compensation. The court may award reasonable attorney fees to an owner who prevails in the action. This section does not prohibit an owner from asserting that an agreement is invalid on grounds other than compensation.

§ 44-328 Foreign transactions

This chapter does not apply to property that is held, due and owing in a foreign country and that arises out of a foreign transaction.

§ 44-329 Transitional provisions

A. An initial report filed pursuant to this chapter for property that was not required to be reported before January 1, 2001 but that is subject to this chapter shall include all items of property that would have been presumed abandoned within ten years before January 1, 2001 as if this chapter had been in effect during that period.

B. This chapter does not relieve a holder of a duty that arose before January 1, 2001 to report, pay or deliver property. Except as provided in section 44-321, subsection C, a holder who did not comply with the law in effect before January 1, 2001 is subject to the applicable provisions for enforcement and penalties that were in effect under the prior law.

§ 44-330 Rules

The department may adopt rules pursuant to title 41, chapter 6 to carry out this chapter.

§ 44-331 Uniformity of application and construction

This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states that enact the uniform unclaimed property act.

§ 44-333 Erroneous advice or misleading statements by the department; abatement of penalties and interest; definitions

A. The department shall not require interest or a penalty on unclaimed property demanded as a deficiency if either:

1. The deficiency is directly attributable to erroneous written advice furnished to the holder by an employee of the department acting in an official capacity in response to a specific request from the holder and not from the holder’s failure to provide adequate or accurate information.

2. All of the following are true:

(a) An unclaimed property report or comparable document or unclaimed property ruling prepared by the department contains a statement that, if followed by a holder, would cause the holder to misapply this title.

(b) The holder reasonably relies on the statement.

(c) The holder’s underpayment directly results from this reliance.

B. Each employee of the department, at the time any oral advice is given to any person, shall inform the person that the department is not bound by that oral advice.

C. For purposes of this section:

1. "Unclaimed property report" includes the instructions that the department prepares for use with the unclaimed property report or comparable document.

2. "Unclaimed property ruling" means a statement issued by the director and denominated as an unclaimed property ruling or an unclaimed property procedure.

§ 44-334 Basis for evaluating employee performance

A. The department shall establish procedures to monitor the performance of department employees and contingent fee contract auditors that include, if applicable, using evaluations obtained from holders.

B. The department shall not evaluate an employee on the basis of unclaimed property demanded or collected by that employee.

C. The department shall develop metrics to evaluate the accuracy of unclaimed property auditor recommendations to the department and whether such recommendations were not accepted or approved by the department. The outcome of this evaluation metric may be taken into consideration when developing audit engagements entered into on or after August 6, 2016.

§ 44-335 No additional audits or proposed increased demands; exceptions

A. When the department completes an audit and a final examination report has been completely determined under this title, the holder’s liability for the particular unclaimed property for the period subjected to the audit is fixed and determined, and no additional audit for the particular type of property specified in the final exam report may be conducted except under the following circumstances:

1. If a holder files a claim for refund, any departmental audit of the claim is limited to the issues presented on the claim for refund.

2. If a holder failed to disclose material information during the audit, or has falsified books or records or otherwise engaged in an action that prevented the department from conducting an accurate audit, the applicability of this subsection may be part of a subsequent protest and may be contested by the holder.

B. If the department issues a final examination report, the department may not increase the amount of the property demanded in the final examination report except in one or more of the following circumstances:

1. The holder has made a material misrepresentation of facts.

2. The holder has failed to disclose a material fact to the auditor.

3. The department has requested information and the holder fails to provide that information to the department.

4. After issuing the final examination report but before the demand becomes final, the court of appeals or the supreme court issues a decision, the application of which causes the unclaimed property initially proposed to increase.

§ 44-336 Private holder rulings; holder information rulings; request; revocation or modification; definitions

A. The department may issue private holder rulings to unclaimed property holders and potential unclaimed property holders on request. Each request shall be in writing and shall:

1. State the name, address and, if applicable, identifying number of the holder or potential holder who requests the ruling.

2. Describe all facts that are relevant to the requested ruling.

3. State whether, to the best knowledge of the holder or potential holder, the issue or related issues are being considered by the department in connection with an active audit, protest or appeal that involves the holder or potential holder and whether the same request has been or is being submitted to another governmental authority for a ruling.

4. Be signed by the holder or potential holder who makes the request or by an authorized representative of the holder or potential holder.

B. A holder ruling request that complies with subsection A, paragraphs 2 and 3 of this section and that is signed by a representative of a holder or potential holder shall be considered a request for a holder information ruling instead of a request for a private holder ruling.

C. A private holder ruling or holder information ruling may be revoked or modified by either:

1. A change or clarification in the law that was applicable at the time the ruling was issued, including changes or clarifications caused by legislation, adopted administrative rules and court decisions.

2. Actual written notice by the department to the last known address of the holder or potential holder of the revocation or modification of the private holder ruling or holder information ruling if the holder identifying information has been disclosed to the department pursuant to subsection E of this section. If holder identifying information has not been disclosed, written notice by the department to the last known address of the holder representative who requested the ruling will constitute notice to the holder or potential holder.

D. With respect to the holder or prospective holder to whom the private holder ruling was issued, the revocation or modification of a private holder ruling shall not be applied retroactively to unclaimed property periods or years before the effective date of the revocation or modification, and the department shall not demand any penalty or interest attributable to erroneous advice that it furnished to the holder or potential holder in the private holder ruling if:

1. The holder reasonably relied on the private holder ruling.

2. The penalty or interest did not result either from a failure by the holder to provide adequate or accurate information or from a change in the information.

E. Subsection D of this section applies to a holder information ruling if the holder or potential holder provides its name, address, identifying number, if applicable, and authorization pursuant to section 44-315, subsection A, for the representative of the holder or potential holder before the date the department publishes the ruling. The department shall notify the representative of the holder or potential holder of the proposed publication date. If the director has determined that the holder information ruling should not be published pursuant to subsection L of this section, subsection D of this section applies if the holder or potential holder provides the identifying information before the date specified by the department on issuing the holder information ruling to the representative. If the holder or potential holder does not provide the department with the identifying information and representative authorization before the proposed publication date or, for an unpublished ruling, the date specified by the department, the holder information ruling is not binding on the department for the purpose of abating interest, penalty or holder liability.

F. A private holder ruling or holder information ruling shall not be relied on, cited or introduced into evidence in any proceeding by a holder other than the holder who has received the private holder ruling or holder information ruling.

G. A holder may request an administrative hearing to determine the propriety of a retroactive application of a revoked or modified private holder ruling by filing a written petition with the department pursuant to title 41, chapter 6, article 10 within forty-five days after receiving written notice of the department's intent to retroactively apply a revoked or modified private holder ruling. This subsection applies to a holder information ruling if the holder has disclosed the holder's identifying information pursuant to subsection E of this section.

H. A private holder ruling or holder information ruling constitutes the department's interpretation of the law or rules only as they apply to the holder making, and the particular facts contained in, the request.

I. A private holder ruling or holder information ruling may be issued only if no unclaimed property liability has accrued with respect to the transactions, events or facts contained in the request. The department may issue a private holder ruling or holder information ruling addressing a holder's ongoing business activities, except that the ruling applies only to transactions that occur or unclaimed property liabilities that accrue from and after the date the holder receives the ruling.

J. The department shall attempt to issue private holder rulings or holder information rulings within forty-five days after receiving the written request and on receiving the facts that are relevant to the ruling. If the ruling is expected to be delayed, the department shall notify the requestor of the delay and the proposed date of issuance.

K. The department shall maintain the private holder ruling or holder information ruling as a public record and make it available at a reasonable cost for public inspection and copying. The text of private holder rulings and holder information rulings is open to public inspection subject to the confidentiality requirements prescribed by title 42, chapter 2, article 1.

L. At the time of making a private holder ruling request or holder information ruling request, a holder or potential holder may submit a written request that the ruling not be published due to concerns about confidentiality or other disclosed reasons. If the director determines that the ruling should not be published, the ruling shall be deemed confidential for the purpose of section 39-121.01, subsection D, paragraph 2. If the director determines that the ruling should be published, the holder may withdraw the ruling request and the department shall not proceed with a ruling if the request is withdrawn. Notwithstanding section 41-1092.02, the decision of the director to publish is not an appealable agency action as defined in section 41-1092 and is not subject to appeal by the holder.

M. For the purposes of this section:

1. "Holder information ruling" means a written determination by the department issued on or after the effective date of this amendment to this section that interprets and applies any provision of this chapter and any applicable administrative rules that the department has adopted to the specific prospective facts described in a request for a holder information ruling.

2. "Private holder ruling" means a written determination by the department that is issued on or after January 1, 2001 and that interprets and applies any provision of this chapter and any applicable administrative rules that the department has adopted to the specific prospective facts described in the request for a private holder ruling.

§ 44-337 Abatement of interest for errors or delays caused by the department

A. The director may abate all or part of interest accrued on:

1. An unclaimed property deficiency due to any unreasonable error or delay by an officer or employee of the department acting in the employee’s official capacity.

2. Any payment of unclaimed property to the extent that any error or delay in the payment is attributable to an officer or employee of the department being unreasonably erroneous or dilatory.

B. The director may consider an error or delay only if no significant aspect of the error or delay can be attributed to the holder and after the department has contacted the holder in writing with respect to the deficiency or payment.

C. The director’s decision is the department’s final decision or order and, except as provided in section 41-1092.08, subsection H, is subject to judicial review pursuant to title 12, chapter 7, article 6.

D. The department shall provide a written document to each new transaction privilege tax licensee that provides information regarding the reporting and remittance of unclaimed property.

§ 44-338 Appeal of determination of amounts due

A. A determination by the department under section 44-322 that any unclaimed property is reportable, or a demand for interest or penalties, constitutes an appealable agency action pursuant to section 41-1092, paragraph 3. The holder may appeal the department’s determination pursuant to title 41, chapter 6, article 10.

B. Except as provided in section 41-1092.08, subsection H, a final decision of the department is subject to judicial review pursuant to title 12, chapter 7, article 6.

C. If the holder does not file a notice of appeal as provided in subsections A and B of this section, the amount determined to be due becomes final at the expiration of the period provided for appeal and the holder is deemed to have waived and abandoned the right to question the amount determined to be due.

§ 44-339 Signatures for documents; alternative methods; definition

The department may prescribe by administrative rule alternative methods for signing, subscribing or verifying any report or claim required or permitted to be filed with the department pursuant to this article that have the same validity and consequence as the actual signature or written declaration of the taxpayer or other person required to sign, subscribe or verify the report or claim. While the department is adopting a rule prescribing alternative methods for signing, subscribing or verifying any report or claim required to be filed with the department pursuant to this article, the director, by tax ruling, may waive the requirement of a signature for a particular type or class of any report or claim required or permitted to be filed with the department pursuant to this article. For the purposes of this section, "tax ruling" has the same meaning prescribed in section 42-2052.

§ 44-340 Auditor contingent fee contracts; notice of rights

Audits for enforcement of the provisions of this article, including those performed by contingent fee auditors, shall provide holders of unclaimed property a notice of rights. At a minimum, the notice shall include:

1. A statement that the department makes all final decisions regarding recommendations by a contingent fee auditor that any unclaimed property is reportable.

2. Information on corrections and appeals procedures.

3. Where to file complaints of improper, abusive or inefficient service by employees or contingent fee auditors of the department.

4. Contact information of the department's designated employees.

Chapter 3.1 Unclaimed Property in Museums

Article 1 In General

§ 44-351 Definitions

For the purposes of this chapter, unless the context otherwise requires:

1. "Lender" means a person whose name appears on the records of the museum as the person legally entitled to property held or owing by the museum.

2. "Lender's last known address" means a description of the location of the lender, as shown on the museum's records pertaining to the property on loan from the lender, which is sufficient for the purpose of delivering mail.

3. "Loan", "loaned" and "on loan" includes all deposits of property with a museum which are not accompanied by a transfer of title to the property.

4. "Museum" means an organized and permanent nonprofit or public institution which is primarily educational, scientific, historic or aesthetic in purpose and which owns, borrows, cares for, studies, archives or exhibits property. Museum includes historical societies, parks, sites and monuments and libraries.

5. "Person" means an individual, association, trust partnership, corporation or similar organization having a legal interest in property in the possession of a museum.

6. "Property" means all tangible objects, animate and inanimate, under a museum's care which have intrinsic scientific, historic, artistic or cultural value.

7. "Undocumented property" means property in the possession of a museum for which the museum has no reasonable means of determining its owner.

§ 44-352 Acquiring title to loaned property

A. A museum may acquire title to loaned property pursuant to this section. If, since the expiration date of the loan, seven years have passed with no written contact between the lender and the museum or if the loan has no expiration date and at least seven years have passed since the loan was made and written contact between the lender and the museum occurred the museum shall send a notice by certified mail, return receipt requested, to the lender's last known address. This notice shall contain a statement that the loan is now terminated as well as all information required in the notice under section 44-353, subsection A, paragraph 1. If proof of delivery of the notice is not received within thirty days from the date the notice was mailed, the museum shall publish a notice as prescribed by section 44-353, subsection A, paragraph 1.

B. If the requirements of subsection A of this section are met the museum may acquire title to the loaned property by sending a notice by certified mail, return receipt requested, to the lender's last known address. This notice shall contain all information required in the notice under section 44-353, subsection A, paragraph 2. If proof of delivery of the notice is not received within thirty days from the date the notice was mailed, the museum shall publish a notice as prescribed by section 44-353, subsection A, paragraph 2.

§ 44-353 Acquiring title to undocumented property

A. A museum may acquire title to undocumented property held by a museum for seven years or longer, verifiable through written records, with no valid claim or contact by any person in the following manner:

1. The museum shall publish a notice once a week for two consecutive weeks in a newspaper of general circulation in the county in which the museum is located and in the county in which the lender's last known address is located, if applicable. This notice shall include:

(a) A brief and general description of the property.

(b) The date or approximate date of the loan or acquisition by the museum, if known.

(c) Notice of the intent of the museum to claim title if no valid claims are made within sixty-five days from the date of the first notice, if no publication in a newspaper is required, or publication under this section.

(d) The name and address of the museum representative to contact for more information or to make a claim.

(e) The lender's name and last known address, if known.

2. If no valid claims have been made by the end of sixty-five days, the museum shall publish a second notice once a week for two consecutive weeks in a newspaper of general circulation in the county in which the museum is located and in the county in which the lender's last known address is located, if applicable. This second notice shall include:

(a) A brief and general description of the property.

(b) The date or approximate date of the loan or acquisition by the museum, if known.

(c) Notice that the museum claims title to the property as of the date described in paragraph 1, subdivision (c) of this subsection.

(d) The lender's name and last known address, if known.

B. On compliance with subsection A of this section clear and unrestricted title is transferred to the museum as of the date described in subsection A, paragraph 1, subdivision (c) of this section.

§ 44-354 Reclamation of property

After title to the loaned property is transferred to the museum the lender has two years to bring an action against the museum to claim the property. At the end of this two year period no action or proceeding may be brought against the museum, its employees or agents by a lender for any good faith action taken by the museum pursuant to this chapter.

§ 44-355 Museum obligations to the lender

In order to take title pursuant to this chapter a museum shall have the following obligations to a lender:

1. The museum must keep written records regarding the property for at least two years from the date of taking title pursuant to this chapter.

2. The museum must keep written records on all loans acquired. Records shall contain the owner's name, address and phone number, the duration of the loan period and beginning date of the loan period.

3. The museum is responsible for notifying a lender of the museum's change of address or dissolution.

4. The museum shall inform the lender, at the time the loan is made, of state laws governing unclaimed property.

§ 44-356 Lender obligations to the museum

The lender shall notify the museum of a change of address or of a change in ownership of the loaned property in order to ensure the retention of rights to the loaned property.

Chapter 4 Uniform Trade Secrets Act

Article 1 General Provisions

§ 44-401 Definitions

In this chapter, unless the context otherwise requires:

1. "Improper means" includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy or espionage through electronic or other means.

2. "Misappropriation" means either:

(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means.

(b) Disclosure or use of a trade secret of another without express or implied consent by a person who either:

(i) Used improper means to acquire knowledge of the trade secret.

(ii) At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it, was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use or was derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use.

(iii) Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

3. "Person" means a natural person, corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision or agency or any other legal or commercial entity.

4. "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique or process, that both:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

§ 44-402 Injunctive relief

A. Actual or threatened misappropriation may be enjoined. On application to the court, the court shall terminate an injunction if the trade secret has ceased to exist, but the court may continue the injunction for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.

B. In exceptional circumstances an injunction may condition future use on payment of a reasonable royalty for no longer than the period of time for which the use could have been prohibited. Exceptional circumstances include, but are not limited to, a material and prejudicial change of position before acquiring knowledge or reason to know of misappropriation that renders a prohibitive injunction inequitable.

C. In appropriate circumstances, affirmative acts to protect a trade secret may be compelled by court order.

§ 44-403 Damages

A. Except to the extent that a material and prejudicial change of position before acquiring knowledge or reason to know of misappropriation renders a monetary recovery inequitable, a complainant is entitled to recover damages for misappropriation. Damages may include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret.

B. If willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subsection A.

§ 44-404 Attorney fees

The court may award reasonable attorney fees to the prevailing party for any of the following:

1. A claim of misappropriation made in bad faith.

2. A motion to terminate an injunction made or resisted in bad faith.

3. Willful and malicious misappropriation.

§ 44-405 Preservation of secrecy; definition

A. In an action under this chapter or section 13-1802 or 13-2316.02 a court shall preserve the secrecy of an alleged trade secret by reasonable means.

B. For the purposes of this section, "reasonable means" includes granting protective orders in connection with discovery proceedings, holding in camera hearings, sealing the records of the action or ordering a person involved in the litigation not to disclose an alleged trade secret without prior court approval.

§ 44-406 Statute of limitations

An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.

§ 44-407 Effect on other laws

A. Except as provided in subsection B, this chapter displaces conflicting tort, restitutionary and other laws of this state providing civil remedies for misappropriation of a trade secret.

B. This chapter does not affect:

1. Contractual remedies, whether or not based on misappropriation of a trade secret.

2. Other civil remedies that are not based on misappropriation of a trade secret.

3. Criminal remedies, whether or not based on misappropriation of a trade secret.

Chapter 5 Exclusive Property Engagement

Article 1 General Provisions

§ 44-501 Definitions

In this chapter, unless the context otherwise requires:

1. "Exclusive property engagement agreement" means a contract or agreement that provides an exclusive right to a person to list or sell residential real estate, including a contract or agreement to enter into any listing agreement or arrangement in the future or any memorandum recognizing the existence of an exclusive property engagement agreement.

2. "Residential real estate" means real property located in this state that is used or will be used primarily for a personal, family or household purpose and that contains fewer than five dwelling units.

§ 44-502 Unlawful practices; listing services timeline; void agreement

A. It is unlawful for an exclusive property engagement agreement to:

1. Last longer than twelve months after the date that the agreement is executed by the parties.

2. Be a covenant that runs with the land.

3. Bind a future owner of an interest in the residential real estate that is the subject of the exclusive property engagement agreement unless the future owner acquires an interest in the residential real estate after listing services have begun and a broker as defined in section 32-2101 has a ready, willing and able purchaser for the residential real estate.

4. Be recorded in the office of a county recorder.

5. Authorize a person to place a security interest or lien against or otherwise encumber any residential real estate or to constitute a lien, an encumbrance or a security interest in the residential real estate.

6. Allow for the assignment of the exclusive property engagement agreement or the obligation to provide the underlying services without notice to, and agreement by, the owner of the residential real estate that is the subject of the exclusive property engagement agreement.

7. Fail to meet the requirements prescribed in section 32-2151.02.

B. An exclusive property engagement agreement is void if the listing services do not begin within one year after the execution of the exclusive property engagement agreement by the parties.

§ 44-503 Enforcement; recording prohibited; liability

A. A court may not enforce an exclusive property engagement agreement made or recorded in violation of this chapter and may not impose a constructive trust in the residential real estate that is the subject of the exclusive property engagement agreement or on the proceeds of the disposition of a related residential real estate transaction.

B. A contract or agreement made or recorded with a county recorder's office in violation of this chapter is void and unenforceable.

C. Any consideration that was paid to a homeowner relating to a contract or agreement that violates this chapter must be forfeited.

D. A contract or agreement that violates this chapter and that is recorded before September 14, 2024 is void. The state real estate commissioner shall execute and record in the office of the county recorder in each county in this state a document that disclaims the validity and enforceability of the contract or agreement or any related liens or assignments that violate this chapter. The state real estate department shall display on its website the documents that the state real estate commissioner has executed and recorded pursuant to this subsection.

E. An act or practice in violation of this chapter is an unlawful practice under section 44-1522 and is subject to enforcement through private action and by the attorney general. Any person who violates this chapter is also subject to liability and penalties under section 33-420. The remedies provided in this section are not the exclusive remedies for a violation of this chapter.

Chapter 8 Transactions and Transfers Affecting the Interest of Creditors

Article 1 Uniform Fraudulent Transfer Act

§ 44-1001 Definitions

In this article, unless the context otherwise requires:

1. "Asset" means property of a debtor, but asset does not include any of the following:

(a) Property to the extent it is encumbered by a valid lien.

(b) Property to the extent it is generally exempt under nonbankruptcy law.

(c) An interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant.

2. "Claim" means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

3. "Creditor" means a person who has a claim.

4. "Debt" means liability on a claim.

5. "Debtor" means a person who is liable on a claim.

6. "Lien" means a charge against or an interest in property to secure payment of a debt or performance of an obligation and includes a security interest created by agreement, a judicial lien obtained by legal or equitable process or proceedings, a common law lien or a statutory lien.

7. "Person" means an individual, partnership, corporation, association, organization, government or governmental subdivision or agency, business trust, estate, trust or any other legal or commercial entity.

8. "Property" means anything that may be the subject of ownership.

9. "Transfer" means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset and includes payment of money, release, lease and creation of a lien or other encumbrance.

10. "Valid lien" means a lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings and that is not subject to avoidance under this article.

§ 44-1002 Insolvency

A. A debtor is insolvent if the sum of the debtor's debts is greater than all of the debtor's assets at a fair valuation.

B. A debtor who is generally not paying his debts as they become due is presumed to be insolvent.

C. A partnership is insolvent under subsection A if the sum of the partnership's debts is greater than the aggregate, at a fair valuation, of all of the partnership's assets and the sum of the excess of the value of each general partner's nonpartnership assets over the partner's nonpartnership debts.

D. Assets under this section do not include property that has been transferred, concealed or removed with intent to hinder, delay or defraud creditors or that has been transferred in a manner making the transfer voidable under this article.

E. Debts under this section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset.

F. Debts under this section include the full amount of the debtor's potential liability under contracts of guarantee and surety. The assets of the debtor shall include a fair valuation of the rights of the debtor in connection with the contracts under indemnity or similar agreements and under equitable principles, including contribution and subrogation.

§ 44-1003 Value

A. Value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise to furnish support to the debtor or another person unless the promise is made in the ordinary course of the promisor's business.

B. For the purposes of section 44-1004, subsection A, paragraph 2 and section 44-1005, a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor on default under a mortgage, deed of trust or security agreement.

C. A transfer is made for present value if the exchange between the debtor and the transferee is intended by them to be contemporaneous and is in fact substantially contemporaneous.

§ 44-1004 Transfers fraudulent as to present and future creditors

A. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation under any of the following:

1. With actual intent to hinder, delay or defraud any creditor of the debtor.

2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:

(a) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.

(b) Intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.

B. In determining actual intent under subsection A, paragraph 1, consideration may be given, among other factors, to whether:

1. The transfer or obligation was to an insider.

2. The debtor retained possession or control of the property transferred after the transfer.

3. The transfer or obligation was disclosed or concealed.

4. Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.

5. The transfer was of substantially all of the debtor's assets.

6. The debtor absconded.

7. The debtor removed or concealed assets.

8. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.

9. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.

10. The transfer occurred shortly before or shortly after a substantial debt was incurred.

11. The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

§ 44-1005 Transfers fraudulent as to present creditors

A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.

§ 44-1006 When transfer is made or obligation is incurred

For the purposes of this article:

1. A transfer is made:

(a) With respect to an asset that is real property other than a fixture, but including the interest of a seller or purchaser under a contract for the sale of the asset, when the transfer is so far perfected that a good faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee.

(b) With respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien through attachment, garnishment levy or other process otherwise than under this article that is superior to the interest of the transferee.

2. If applicable law permits the transfer to be perfected as provided in paragraph 1 and the transfer is not so perfected before the commencement of an action for relief under this article, the transfer is deemed made immediately before the commencement of the action.

3. If applicable law does not permit the transfer to be perfected as provided in paragraph 1, the transfer is made when it becomes effective between the debtor and the transferee.

4. A transfer is not made until the debtor has acquired rights in the asset transferred.

5. An obligation is incurred:

(a) If oral, when it becomes effective between the parties.

(b) If evidenced by a writing, when the writing executed by the obligor is delivered to or for the benefit of the obligee.

§ 44-1007 Remedies of creditors

A. In an action for relief against a transfer or obligation under this article, a creditor, subject to the limitations in sections 44-1008 and 44-1009, may obtain one or more of the following remedies:

1. Garnishment against the fraudulent transferee or the recipient of the fraudulent obligation, in accordance with the procedure prescribed by law in obtaining such remedy.

2. Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim.

3. An attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by law in obtaining such remedy.

4. Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:

(a) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property.

(b) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee.

(c) Any other relief the circumstances may require.

B. Subject to the limitations in sections 44-1008 and 44-1009, if a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.

§ 44-1008 Defenses, liability and protection of transferee

A. A transfer or obligation is not voidable under section 44-1004, subsection A, paragraph 1 against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.

B. Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under section 44-1007, subsection A, paragraph 1, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection C of this section, or the amount necessary to satisfy the creditor's claim, whichever is less. The judgment may be entered against either:

1. The first transferee of the asset or the person for whose benefit the transfer was made.

2. Any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee.

C. If the judgment under subsection B of this section is based on the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.

D. Notwithstanding voidability of a transfer or an obligation under this article, a good faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to any of the following:

1. A lien on or a right to retain any interest in the asset transferred.

2. Enforcement of any obligation incurred.

3. A reduction in the amount of the liability on the judgment.

E. A transfer is not voidable under section 44-1004, subsection A, paragraph 2 or section 44-1005 if the transfer results from:

1. Termination of a lease on default by the debtor if the termination is pursuant to the lease and applicable law.

2. Enforcement of a security interest in compliance with title 47, chapter 9.

§ 44-1009 Extinguishment of claim for relief

A claim for relief with respect to a fraudulent transfer or obligation under this article is extinguished unless an action is brought:

1. Under section 44-1004, subsection A, paragraph 1 within four years after the transfer was made or the obligation was incurred or, if later, within one year after the fraudulent nature of the transfer or obligation was or through the exercise of reasonable diligence could have been discovered by the claimant.

2. Under section 44-1004, subsection A, paragraph 2 or section 44-1005, within four years after the transfer was made or the obligation was incurred.

§ 44-1010 Supplementary provisions

Unless displaced by the provisions of this article, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency or other validating or invalidating cause, supplement its provisions.

Article 3 Assignments for the Benefit of Creditors

§ 44-1031 Effect of assignment for the benefit of creditors; acknowledgment and recording; invalidity of assignments not made in accordance with this article

A. Every assignment made by an insolvent debtor, or in contemplation of insolvency, for the benefit of his creditors, shall provide, except as otherwise provided in this article, for a distribution of all his real and personal property other than that which is by law exempt from execution, among all his creditors in proportion to their respective claims. However the assignment is made or expressed, it shall have such effect and shall be construed to pass all such property, whether or not specified therein.

B. Every assignment for the benefit of creditors shall be acknowledged and recorded in the manner provided by law for conveyances of real or other property.

C. Assignments for the benefit of creditors under the common law are declared contrary to the public policy of the state and are abolished, and all assignments for the benefit of creditors are void and of no force and effect unless made in accordance with the provisions of this article.

§ 44-1032 Assignment for the benefit of consenting creditors; effect; execution of release by creditors

Any debtor desiring to do so may make an assignment for the benefit of such of his creditors only as will consent to accept their proportional share of his estate, and discharge him from their respective claims. In such case the benefits of the assignment shall be limited and restricted to the creditors consenting thereto. The debtor shall thereupon be discharged from all further liability to the consenting creditors on account of their respective claims, and when paid they shall execute and deliver to the assignee, for the debtor, a release therefrom.

§ 44-1033 Filing of assignment; accompanying inventory of property and indebtedness required; docketing of assignment by clerk

A. The debtor shall forthwith file with the clerk of the superior court of the county where the principal place of business of the debtor is located a copy of the assignment, to which shall be annexed an inventory containing:

1. A true and full account of all the creditors of the debtor or debtors.

2. The place of residence of each creditor, if known to the debtor or debtors, and if not known, such fact shall be stated.

3. The amount owing each creditor and the nature of each debt or demand, whether arising on written security, account or otherwise.

4. The true cause of and consideration for each such indebtedness and the place where the indebtedness arose.

5. Any judgment, mortgage, collateral or other security for the payment of the debt.

6. A full and true inventory of all the debtor's property at the date of the assignment, both real and personal, in law or equity, and all encumbrances thereon, and of all vouchers and securities relating thereto, and the value of such property according to the best knowledge of the debtor.

B. An affidavit shall be made by the debtor, and shall be annexed to and delivered with the inventory or schedule, that the inventory or schedule is in all respects just and true according to his best knowledge and belief.

C. No provision of this article shall affect the assignor's right to retain property exempt from execution by the law of this state. The list and inventory shall not be conclusive except as against the debtor making it.

D. The clerk shall docket the assignment as an action in probate. The qualifications of assignees shall be those prescribed for administrators of estates.

§ 44-1034 Recording of deed of assignment by assignee; bond of assignee; recording; actions upon bond; duty of assignee to execute assignment

A. The assignee shall forthwith, after execution and delivery of the deed of assignment, record it as provided in this article, and execute a bond with securities in an amount determined and approved by the judge of the superior court of the county where the assignment is recorded, or if in more than one county, then in the county where the principal place of business of the debtor is located, conditioned that the assignee will faithfully discharge his duties as assignee, and that he will make proportional distribution of the net proceeds of the property among the creditors entitled thereto.

B. The bond shall be payable to the state of Arizona and shall be filed with the county recorder. It shall inure to the benefit of the assignor and the creditors, who may maintain an action thereon, in his or their own name, jointly or severally, for any breach thereof.

C. Upon the filing of the bond the assignee shall take possession of the assigned property and execute the assignment.

§ 44-1035 Notice of appointment of assignee; publication

The assignee shall, within thirty days after recording the assignment, give public notice of his appointment in some newspaper printed in the county where the assignor resides or where his principal business was conducted, and as far as possible, the assignee shall also give personal notice or notice by mail to each of the creditors.

§ 44-1036 Powers of court with respect to assignee; removal of assignee; appointment of assignee to fill vacancy

A. The relationship of the court having jurisdiction of the insolvent estate and the assignee for the benefit of creditors shall be governed by the provisions which govern the relationship of a superior court and a receiver. The court shall have the same authority and jurisdiction as it has over a receiver appointed by the court.

B. If an assignee becomes unsuitable or refuses or neglects to perform the trust, or mismanages the property, the superior court may, upon application of the assignor or a creditor, upon reasonable notice by publication or otherwise to all parties interested, as the court directs, remove the assignee.

C. In case of removal of the assignee or vacancy in the office by death or otherwise the court shall appoint another in his place who shall have the same powers and be subject to the same liabilities as the original assignee.

§ 44-1037 Notice by creditors of consent to assignment; receipt by creditor of portion of claim as consent

Creditors consenting to the assignment shall give the assignee written notice of consent within four months after publication of the notice required under section 44-1035, and a creditor not assenting shall not receive or take any benefit under the assignment. A creditor who has no actual notice of the assignment may make known his assent any time before any distribution of assets is made under the assignment. Receipt by a creditor of any portion of his claim from the assignee is conclusive evidence of the assent of such creditor to the assignment.

§ 44-1038 Filing of statement of claim by creditors

Every creditor, consenting to an assignment, shall, within six months from the time of the first publication of the notice of appointment of the assignee, file with the assignee a distinct statement of the particular nature and amount of his claim against the debtor, which shall be supported by an affidavit of the creditor, his agent or attorney, that the statement is true, that the debt is just and that there are no credits or offsets that should be allowed against the claim, except as shown by the statement. No creditor shall take any benefit under any assignment whatever who neglects to file this statement.

§ 44-1039 Statement of claim by creditor as justification for payment by assignee; action to dispute claim; duty of assignee to permit creditor to inspect claims filed by other creditors

A. The statement of a creditor, verified and filed with the assignee as provided in section 44-1038, shall justify the assignee in allowing the claim as a valid claim against the estate, and it shall be so allowed.

B. A creditor entitled to his proportional share of the debtor's property, unless the assignor or other creditor disputing the claim shall, within sixty days after expiration of the time within which creditors are required to file their statements, commence an action in the superior court of the proper county to set aside the allowance and to restrain payment thereon. If it appears in such action that the claim or the disputed part thereof is not lawfully due, the claim shall be disallowed in whole or in part, and the assignee shall be restrained from paying the claim or any portion disallowed.

C. The assignee shall permit any creditor to take a copy of any other creditor's statement of claim filed with the assignee.

§ 44-1040 Discount of claims allowed but not due; amount payable on claim secured by collateral in possession of creditor

Claims not due may be allowed at their present value by discounting them at the rate of interest mentioned in the contract, if any, otherwise at the legal rate. If any creditor holds collateral or security of less value than his debt, the value thereof may be estimated by the assignee and only the difference between such value and the amount of the debt shall be allowed.

§ 44-1041 Right of assignee to property fraudulently conveyed by assignor; action by assignee or creditor to recover property fraudulently conveyed; non-recovery from bona fide purchaser

All property conveyed or transferred by the assignor previous to and in contemplation of the assignment with the intent or design to defeat, delay or defraud creditors, or to give preference to one creditor over another, shall pass to the assignee by the assignment notwithstanding the transfer. The assignee, or in case of his neglect or refusal any creditor may, upon securing the assignee against cost or liability, in the name of the assignee, sue for, recover, collect and cause such property to be applied for the benefit of creditors as other property belonging to the debtor's estate in the hands of the assignee. If it appears in such action that the purchaser of such property bought it from the assignor in good faith for a valuable consideration and without reason to believe that the debtor was conveying or transferring the property with intent or design as set forth in this section, the purchaser shall be held to have acquired, as against the assignee and creditors, a good and valid title to the property.

§ 44-1042 Failure of assignor to supply inventory as prima facie evidence of concealment of property by assignor; examination of assignor by court upon application of assignee or creditor

A. No assignment shall be declared fraudulent or void for lack of an inventory or list as required under the provisions of this article, but if such list and inventory are not annexed and verified as provided in section 44-1033, it is prima facie evidence that the assignor has secreted and concealed some portion of his property from his assignee, unless, upon the demand of the assignee or a creditor, the verified inventory and list are furnished to the assignee.

B. If an assignee or creditor has reason to believe that a debtor has concealed any of his property or estate for the purpose of defrauding creditors, the superior court shall, upon application of the assignee or creditor, cause the debtor to appear before it and disclose under oath any knowledge or information he has of such concealment.

§ 44-1043 Attempted preference of creditor void

Any attempted preference, in the assignment, of one creditor or creditors of the assignor, is fraudulent and without effect.

§ 44-1044 Garnishment of assignee by nonconsenting creditor

A creditor, not consenting to the assignment, may proceed by garnishment against the assignee for the excess of property remaining in his hands after payment to consenting creditors the amount of their debts and the costs and expenses of the assignment.

§ 44-1045 Distribution to creditors; compensation and expenses allowed assignee

A. When an assignee has in his possession funds of the estate of the assignor in an amount sufficient to pay ten per cent of the indebtedness of the assignor, he shall make a pro rata distribution of the funds among the creditors.

B. The assignee shall receive reasonable compensation for his services and the necessary costs and expenses, including attorney's fees, of administering the assigned estate, to be allowed by the superior court.

§ 44-1046 Final report by assignee; hearing; discharge of assignee; disposition of funds in estate at final settlement

A. When the assignee has fully performed the duties of his trust and desires to be finally discharged therefrom, he shall make a report of his proceedings under the assignment. The report shall be under oath and shall set forth the money and assets which came into his possession, and how such assets were disbursed and disposed of. The assignee shall file the report in the office of the clerk of the superior court having jurisdiction of the insolvent estate.

B. A hearing shall be held on the report after notice to each known creditor, which shall be mailed at least ten days before the hearing. Approval of the report by the court shall be conclusive in favor of the assignee to the same extent as approval of a report in the case of any other trust.

C. When the trust is fully executed, the assignee may be discharged. Any monies or funds of the insolvent estate in the possession of the assignee at final settlement shall be deposited in the superior court subject to the judgment of the court.

§ 44-1047 Fraudulent transactions by assignor; classification

A. A person who makes an assignment for the benefit of creditors is guilty of a crime punishable as prescribed in subsection B, if he:

1. Secretes or conceals any property belonging to his estate, or parts with, conceals, destroys, alters, mutilates or falsifies a book, document or writing relating to such property or estate, or removes such property, book, document or writing, with intent to prevent it or any part thereof from coming into possession of the assignee or to hinder, impede or delay the assignee in recovering or receiving such property or book, document or writing.

2. Makes any payment, gift, sale, assignment, transfer or conveyance of any property belonging to his estate with intent to prevent it from coming into possession of the assignee or to hinder, impede or delay the assignee in recovering or receiving such property.

3. Spends any property belonging to his estate in gaming.

4. Knowingly and with the intent to defraud omits from his schedule any property or effects.

5. Has knowledge or belief of a false or fictitious debt proved against his estate and fails to disclose such knowledge or belief to his assignee within one month after acquiring such knowledge or belief.

6. Attempts by fictitious losses or expenses to account for any property belonging to his estate.

7. Within three months before making the assignment for the benefit of creditors, under the false pretense of carrying on business and dealing in the ordinary course of trade, obtains on credit, with intent to defraud, goods or chattels from any person.

8. Within three months before making the assignment for the benefit of creditors, with intent to defraud his creditors, pawns, pledges or disposes of, otherwise than by ordinary transactions in due course of business, any goods or chattels obtained on credit and which are unpaid for.

9. Previous to and in contemplation of making an assignment for the benefit of creditors, transfers any property with intent or design to defraud creditors.

B. A person violating any provision of subsection A is guilty of a class 6 felony.

Article 4 Sale or Assignment of Chattels Unaccompanied by Change of Possession

§ 44-1061 Sale of chattels unaccompanied by change of possession as prima facie evidence of fraud against creditors and subsequent purchasers

A. A sale made by a vendor of goods and chattels in his possession or under his control, or an assignment of goods and chattels, unless the sale or assignment is accompanied by an immediate delivery and followed by an actual and continued change of possession of the things sold or assigned, is prima facie evidence of fraud against creditors of the vendor, or creditors of the person making the assignment, or subsequent purchasers in good faith.

B. The term "creditors" includes all persons who are creditors of the vendor or assignor at any time while such goods and chattels are in his possession or under his control.

Chapter 9 Trade Practices Generally

Article 1 Miscellaneous Provisions Relating to Loans

§ 44-1201 Rate of interest for loan or indebtedness; interest on judgments; definitions

A. Interest on any loan, indebtedness or other obligation shall be as follows:

1. The maximum interest rate on medical debt shall be the lesser of the following:

(a) The annual rate equal to the weekly average one-year constant maturity treasury yield, as published by the board of governors of the federal reserve system, for the calendar week preceding the date when the consumer was first provided with a bill, or

(b) Three percent a year.

The maximum interest rate provided pursuant to this paragraph also applies to any judgments on medical debt.

2. For any loan, indebtedness or obligation other than medical debt, interest shall be at the rate of ten percent a year, unless a different rate is contracted for in writing, in which event any rate of interest may be agreed to. Interest on any judgment, other than a judgment on medical debt, that is based on a written agreement evidencing a loan, indebtedness or obligation that bears a rate of interest not in excess of the maximum permitted by law shall be at the rate of interest provided in the agreement and shall be specified in the judgment.

B. Unless specifically provided for in statute or a different rate is contracted for in writing, interest on any judgment other than a judgment on medical debt shall be at the lesser of ten percent a year or at a rate per year that is equal to one percent plus the prime rate as published by the board of governors of the federal reserve system in statistical release H.15 or any publication that may supersede it. A change in the rate that is prescribed in this subsection takes effect on the first business day following publication by the federal reserve. The judgment shall state the applicable interest rate and it shall not change after it is entered.

C. Interest on a judgment on a condemnation proceeding, including interest that is payable pursuant to section 12-1123, subsection B, shall be payable as follows:

1. If instituted by a city or town, at the rate prescribed by section 9-409.

2. If instituted by a county, at the rate prescribed by section 11-269.04.

3. If instituted by the department of transportation, at the rate prescribed by section 28-7101.

4. If instituted by a county flood control district, a power district or an agricultural improvement district, at the rate prescribed by section 48-3628.

D. A court shall not award either of the following:

1. Prejudgment interest for any unliquidated damages, future damages, punitive damages or exemplary damages that are found by the trier of fact.

2. Interest for any future damages, punitive damages or exemplary damages that are found by the trier of fact.

E. For the purposes of subsection D of this section, "future damages" means damages that will be incurred after the date of the judgment and includes the costs of any injunctive or equitable relief that will be provided after the date of the judgment.

F. If awarded, prejudgment interest shall be at the rate described in subsection A or B of this section.

G. For the purposes of this section:

1. "Health care services" means services provided at or by any of the following:

(a) Health care institutions as defined in section 36-401.

(b) Private offices or clinics of health care providers licensed under title 32, chapters 7, 11, 13, 15, 15.1, 16, 17, 18, 19, 19.1, 25, 28, 33, 34, or 35.

(c) Ambulances or ambulance services as defined in section 36-2201.

2. "Medical debt" means a loan, indebtedness or other obligation arising directly from the receipt of health care services or of medical products or devices.

§ 44-1202 Forfeiture of all interest upon obligation involving interest exceeding the maximum amount set by contract

A person shall not directly or indirectly take or receive in money, goods or things in action, or in any other way, any greater sum or any greater value for the loan or forbearance of any money, goods or things in action, than the maximum permitted by law. Any person, contracting for, reserving or receiving, directly or indirectly, any greater sum of value shall, forfeit all interest.

§ 44-1203 Application to principal of payments made upon interest contracted in excess of the maximum permitted by law; judgment in action to recover obligation involving usurious interest limited to amount due on principal

Where a rate of interest greater than the maximum permitted by law is contracted for, reserved or received, directly or indirectly, all payments of money or property made on account of such interest, or as inducements to contract for more than the maximum permitted by law, whether made in advance or not, shall be deemed payments made on account of the principal. In an action brought to recover the amount of the obligation the court shall give judgment for no greater amount than the balance determined to be due upon the principal, without interest, after deducting such payments.

§ 44-1204 Payments of interest on obligation involving more than the maximum permitted by law on counterclaim in action brought on obligation; action to recover payments of interest in excess of principal on usurious obligation

In an action to recover on an obligation whereby there is contracted for, reserved or taken, a greater rate of interest than the maximum permitted by law, all payments made in money or property may be pleaded as a counterclaim or set-off. If such payments exceed the amount of the principal, judgment may be given in favor of the defendant for the excess, with interest at the rate of ten per cent per annum. If such payments exceed the amount of the principal of the debt or obligation, an action may be maintained to recover the excess.

§ 44-1205 Closed end loans of five thousand dollars or less; revolving accounts; check loan accounts; credit card revolving account; delinquency charges; prepayment rebates and additional charges; definition

A. The following apply to closed end loans, other than closed end loans subject to title 6, chapter 5, in which the principal amount of the loan does not exceed five thousand dollars:

1. Interest not to exceed the maximum rate set by contract may be charged. Interest may be computed either at the single annual percentage rate using the actuarial method or it may be precomputed on the assumption that all payments will be made in the amounts and on the dates scheduled and added to the principal of the loan. If interest is precomputed, the fact that payments are made either before or after the date due does not affect the amount of interest which the lender may charge or receive. If such precomputed interest loan balance is prepaid in full by cash, a new loan, refinancing or otherwise, the lender or holder shall charge only for interest which has been earned and unpaid late or delinquency charges as of the date of prepayment, and the borrower shall receive a rebate of that portion of the precomputed interest which is the difference between the total precomputed interest charges and the charges at the contract interest rate computed on the unpaid principal balance based on the number of days or months to maturity based on either a thirty-day month-three hundred sixty day year or daily three hundred sixty-five or three hundred sixty-six day year on the number of days remaining to final maturity. The amount of such rebate shall not be computed pursuant to the method commonly known as the "rule of 78's". To simplify the calculation of earned interest, it is permissible to assume that all payments were made as originally scheduled or as otherwise mutually agreed.

2. It is permissible to calculate interest on an annual basis of twelve months of thirty days each, or on a daily basis if a day is counted either as 1/360th, 1/365th, or 1/366th of a year, as the lender and borrower may agree by writing. The lender may also charge a late payment or delinquency charge, in addition to all interest charges permitted, on each installment not paid in full within ten days of its due date in an amount not to exceed five per cent of the installment or ten dollars, whichever is less.

B. Except as provided in subsection C of this section, revolving accounts in which the agreed upon credit limit does not exceed ten thousand dollars are subject to the provisions of this subsection. Under a revolving loan account of any lender, other than a consumer revolving loan subject to title 6, chapter 5, or resulting from a check loan account, which the borrower may pay at any time but has the privilege of paying in installments, if the interest charge is not precomputed, interest not to exceed the maximum rate set by contract may be charged on the unpaid balances of the account, calculated as of the regular monthly billing date or on the actual daily balances outstanding. The lender may also charge a late payment or delinquency charge on each installment not paid in full within ten days of its due date in an amount not to exceed five per cent of the installment or ten dollars, whichever is less. If a lender makes a loan to a borrower by purchasing or satisfying obligations of the borrower pursuant to a lender credit card or similar arrangement, and the purchase or satisfaction is made at less than the face amount of the obligation, the discount shall not be considered to be interest. If an arrangement constitutes both a revolving loan account under this subsection and a retail installment transaction under section 44-6001, it is governed by this subsection or section 44-6002 as the parties may agree.

C. Except as provided in subsection D of this section a credit card revolving account, including an account that permits access by check, is governed by the laws of this state and is subject to this subsection. Under a credit card revolving account, which the borrower may pay at any time but has the privilege of paying in installments, interest not to exceed the maximum rate set by contract may be charged on the unpaid balances of the account, calculated as of the regular monthly billing date or on the actual or average daily balances outstanding. If the contract provides, the issuer or holder of a credit card revolving account may charge and collect as interest and include in the balances of the account, in addition to or in lieu of interest on the unpaid balances of the account, any of the following:

1. An annual or other periodic charge.

2. A transaction charge for each separate purchase or loan.

3. A minimum interest charge for each regular billing date on which interest charges are due on the unpaid balances.

4. A late payment or delinquency charge.

5. A returned payment charge.

6. A stop payment charge.

7. An overlimit charge.

8. A charge for providing invoices, checks or documentary evidence.

9. A fee incident to the application for and the opening and administration of the credit card account.

10. An automated teller machine or similar electronic or interchange fee or charge.

If a credit card issuer makes a loan to a borrower by purchasing or satisfying an obligation of the borrower pursuant to the use of a lender credit card or similar arrangement and the purchase or satisfaction is made at less than the face amount of the obligation, the discount is not considered interest.

D. If a contract constitutes either a credit card revolving account under subsection C of this section or a retail charge account agreement as defined in section 44-6001, and the agreed upon credit limit of the account or agreement does not exceed ten thousand dollars it is governed in its entirety by subsection C of this section or section 44-6002 as the parties may agree.

E. The limitations of this subsection apply only to the loans described in subsections A, B and C of this section. In addition to the other charges authorized by subsections A, B and C of this section, the lender may charge the borrower only for the lawful fees actually paid by the lender for filing or recording in a public office, for motor vehicle title, registration, assessor's fees and lien filing fees, for escrow fees of an escrow agent as defined by section 6-801, for acknowledging the instrument securing the loan and for costs of obtaining a preliminary title report and title insurance policy. The lender shall not charge or receive any sums for any other service or expense, except in connection with a loan to a participant or beneficiary from a retirement plan which is qualified under section 401(a) of the internal revenue code as defined in section 42-1001 and except for casualty or other insurance covering the security for the loan and credit life and disability and unemployment insurance, even if actually paid to a third party. This section does not preclude a lender from charging the borrower for the payment of court costs, expenses and reasonable attorney fees if the loan is referred for collection to an attorney other than a salaried employee of the lender or holder. If greater aggregate charges are collected or received on a loan than the maximum charges authorized by this section the loan is usurious.

F. All terms, conditions and other provisions relating to revolving accounts as provided in subsections B, C and E of this section and other lawful provisions of the contract governing the revolving loan account are deemed to be material to the determination of interest applicable to revolving accounts under the laws of this state, the most favored lender doctrine and section 85 of the national bank act (12 United States Code section 85) or section 521 of the depository institutions deregulation and monetary control act of 1980 (12 United States Code section 1831d).

G. Subsection C of this section does not apply to loans made by a person who is a licensee under title 6, chapter 5 or 9, or both, or any affiliate of such a licensee which is not a federally insured depository institution.

H. In this section, "actuarial method" means the method of allocating payments made on a debt between the unpaid principal balance and the interest pursuant to which a payment is applied first to the interest due and any remainder is subtracted from the unpaid principal balance.

§ 44-1206 Effect of obligations insured or guaranteed by the United States

No law requiring security upon which loans may be made, prescribing the nature, amount or form of such security, prescribing or limiting interest rates upon loans, or prescribing or limiting the period for which loans may be made, shall apply to loans, advances of credit, or purchases of obligations representing loans and advances of credit payment of which is insured or guaranteed by the United States or any agency or instrumentality thereof.

§ 44-1207 Interest on lawful charge, fee, cost or expense

Any lawful charge, fee, cost or expense paid by or due to a lender on behalf of a borrower, with his consent, may be added to the principal amount of a loan made to such borrower under the provisions of this title or under the provisions of title 6, and such amount shall become part of the principal and interest may be charged thereon as provided by law.

§ 44-1208 Loans secured by real estate; prohibited practices; insurance

Except for consumer lender loans regulated pursuant to section 6-636, for any loan that is secured by real property, a person shall not require as a condition of the loan that the borrower obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer.

Article 2 Miscellaneous Fraudulent Practices

§ 44-1211 Fraudulent conveyance or other transaction with intent to defraud others or defeat creditors; classification

A person is guilty of a class 2 misdemeanor who:

1. Is a party to any fraudulent conveyance of any lands, tenements or hereditaments, goods or chattels or any right or interest issuing therefrom, had, made or contrived with intent to deceive and defraud others, or to defeat, hinder or delay creditors or others of their just debts, damages or demands.

2. Is a party to any bond, action or judgment, or execution, contract or conveyance had, made or contrived with intent to deceive and defraud others, or to defeat, hinder or delay creditors or others of their just debts, damages or demands.

3. Is a party as provided in paragraph 1 or paragraph 2 of this section, and

(a) At any time knowingly puts in, uses, avows, maintains, justifies or defends such transaction as true, and had or made in good faith, or

(b) Upon good consideration aliens, assigns or sells any of such lands or goods or other things which have been so conveyed to him.

§ 44-1212 False report to principal by agent; classification

A commission merchant, broker, agent, factor or consignee who knowingly and with intent to defraud makes to his principal or consignor a false statement concerning the price obtained for, or the quality or quantity of property consigned or entrusted to him for sale, is guilty of a class 2 misdemeanor.

§ 44-1213 Issuance of get rich quick contract prohibited; classification

A person is guilty of a class 2 misdemeanor who issues any contract:

1. Providing for its redemption or fulfillment from contributions made by subscribers to or holders of other similar contracts.

2. Providing for payment of money or giving any consideration greater in value than the amount paid in upon such contracts, together with the actual net earnings accrued and accumulated thereon.

§ 44-1214 Increase of weight of goods sold in container; classification

A person who, in putting up in a bag, bale, barrel or other package any hops, cotton, wool, grain, hay or other commodities usually sold in such bag, bale, barrel or other package by weight, places or conceals therein anything for the purpose of increasing the weight, with intent thereby to sell the commodities therein or to enable another to sell them at an increased weight, is guilty of a class 2 misdemeanor.

§ 44-1215 Salting gold or silver ore to defraud; classification

A person who mingles with a sample of gold or silver bearing ore, any metal or substance whatever which will in any manner change the value of the ore, with intent to deceive, cheat or defraud any person, is guilty of a class 6 felony.

§ 44-1216 Fraud on seller of ore; classification

A person or the agent of any person engaged in milling, smelting, sampling, concentrating, reducing, shipping or purchasing ores in this state, who in any manner knowingly alters or changes the true value of ores delivered to him to deprive the seller of the correct value thereof, or who substitutes other ores for those delivered, or who issues a bill of sale or certificate of purchase which does not exactly and truthfully state the actual weight, assay value and total amount paid for any lot of ore purchased, or who by secret understanding, or agreement with another, issues a bill of sale or certificate of purchase which does not correctly and truthfully set forth the weight, assay value and total amount paid for the ore purchased by him, is guilty of a class 6 felony.

§ 44-1217 Fraud on creditors by removal, sale or concealment of property; classification

A debtor who fraudulently removes his property or effects from the state, or fraudulently sells, conveys, assigns or conceals his property, with intent to defraud, hinder or delay his creditors of their rights, claims or demands, is guilty of a class 2 misdemeanor.

§ 44-1218 Fraudulent or mock auction; classification; forfeiture of license and disqualification of auctioneer

A. A person who obtains money or property from another, or obtains the signature of another to a written instrument, the false making of which would be forgery, by means of a false or fraudulent sale of property or pretended property by auction, or by any practice known as a mock auction, is guilty of a class 6 felony.

B. A person convicted of a violation of subsection A of this section shall forfeit his license as auctioneer, and shall be forever disqualified from receiving a license to act as auctioneer.

§ 44-1219 Sale, removal or concealment of encumbered property; classification

A. It is unlawful for a person who has mortgaged personal property to another, or who has possession of personal property under a contract of sale whereby the vendor retains title, to:

1. During the existence of the mortgage or contract, and without first obtaining the written consent of the mortgagee or vendor or their assignees, sell, transfer or in any manner encumber such property without first fully advising the person to whom the sale, transfer or encumbrance is to be made, of the facts of the prior mortgage or contract of sale.

2. Conceal, take, drive or otherwise dispose of or destroy any of the encumbered property contrary to the provisions of the mortgage or contract.

3. Remove the property or any part thereof from the county where the property was located when the contract or mortgage was made, if the property is other than an automobile, and if an automobile, to remove the automobile from the state.

B. A person who violates any provisions of this section is guilty of a class 5 felony.

C. In addition to the punishment prescribed in subsection B, the court shall impose a penalty equal to the amount of any expense incurred by the sheriff in out-of-state travel, which has been reimbursed by the board of supervisors as provided by section 11-444. Upon payment of the penalty such sum shall be transmitted to the board of supervisors.

§ 44-1220 Fraudulent insurance claim; classification

A person who presents a false or fraudulent claim or proof in support of such claim, upon a contract of insurance for payment of any loss, or who prepares, makes or subscribes to an account, certificate of survey, affidavit or proof of loss, or other book, paper or writing, with intent to present or use it or allow it to be presented or used in support of such claim, is guilty of a class 5 felony.

§ 44-1220.01 Fraudulent fire insurance application or claim; classification

A person who knowingly provides false or fraudulent material information to or withholds material information from an insurance producer on an application for fire insurance or who presents a false or fraudulent claim or proof in support of such claim, upon a contract of insurance for payment of any loss, or who knowingly prepares, makes or subscribes to a false account, certificate of survey, affidavit or proof of loss, or other false book, paper or writing, with intent to present or use it or allow it to be presented or used in support of such claim is guilty of a class 5 felony.

§ 44-1221 Deceptive use of name; classification; attorney general

A. It is unlawful for a person to deceive another person by misrepresenting the geographical origin or location of the person's business in the conduct of the person's business.

B. A person who intentionally or knowingly violates subsection A of this section is guilty of a class 2 misdemeanor.

C. An act or practice in violation of this section is an unlawful practice under section 44-1522 and subject to enforcement through private action and prosecution by the attorney general. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

§ 44-1222 Unordered merchandise

A. If unsolicited goods are delivered by mail or common carrier to a person, such person may refuse to accept delivery of the goods and shall not be bound to return such goods to the sender. If such unsolicited goods are addressed to and intended for the recipient, they shall be deemed a gift to the recipient, who may use the goods or dispose of them in any manner without any obligation to the sender.

B. This section does not apply to:

1. Property, material or other thing of value mailed by mistake in response to an order, request or application for other property, materials or other thing of value, or

2. Property, material or other thing of value mailed in response to an order, request or application from a person but mistakenly mailed to another person, or

3. Substantially equivalent substitute property, material or other thing of value mailed in response to an order, request or application for other property, material or other thing of value.

4. Property, material or other thing of value mailed to a person pursuant to an order, request or application of another person.

§ 44-1223 Fraudulent practices relating to motor vehicle odometers; classification

A. It is unlawful for any person to:

1. Advertise for sale, sell, use or install any device which causes the odometer of a motor vehicle to register mileage other than the true mileage driven. For the purposes of this paragraph the true mileage driven is that mileage driven by the vehicle as registered by the odometer within the manufacturer's designed tolerance.

2. Operate, with intent to defraud, a motor vehicle on any street or highway knowing that the odometer of such vehicle is disconnected or nonfunctional.

3. Replace, disconnect, turn back or reset the odometer of any motor vehicle with the intent to reduce the number of miles indicated on the odometer.

4. Sell or offer to sell, with intent to defraud, a motor vehicle on which the odometer does not register the true mileage driven.

B. Nothing in this section shall prevent the service, repair or replacement of an odometer, provided the mileage indicated thereon remains the same as before the service, repair or replacement. Where the odometer is incapable of registering the same mileage as before such service, repair or replacement, the odometer shall be adjusted to read "zero" and a notice in writing shall be attached to the left door frame of the vehicle by the owner or his agent specifying the mileage prior to repair or replacement of the odometer and the date on which it was repaired or replaced. Any removal or alterations of such notice so affixed shall be unlawful.

C. A person who violates the provisions of this section shall be guilty of a class 1 misdemeanor.

§ 44-1224 Law enforcement, firefighting or emergency medical services products; sales; certification

A. It is an unlawful practice pursuant to section 44-1522 for any person to sell or offer to sell any product, not including firearms, that is specifically designed, offered for sale or sold for the personal safety of law enforcement, firefighting or emergency medical services personnel unless the product is tested by an independent laboratory or regulatory agency that certifies all claims of the manufacturer with respect to the purpose and the warranty of fitness of the product.

B. An independent laboratory that conducts testing pursuant to subsection A of this section shall be paid by the entity requesting the test. If an independent laboratory is affiliated with the entity requesting the test, the independent laboratory is prohibited from influencing or regulating the test.

Article 2.1 Fraudulent Practices in the Sale of Indian Arts and Crafts

§ 44-1231 Definitions

In this article, unless the context otherwise requires:

1. "Authentic Indian arts and crafts" means any product which is Indian handcrafted and is not made by machine or from unnatural materials, except stabilized or treated turquoise.

2. "Findings" means an ingredient part of the product which adapts the product for wearing or display, including silver beads, leather backing, binding material, bolo tie clips, tie bar clips, tie tack pins, earring pins, earring clips, earring screw backs, cuff link toggles, money clips, pin stems, combs or chains.

3. "Indian" means a person who is enrolled or who is a lineal descendant of one enrolled upon an enrollment listing of the bureau of Indian affairs, or upon the enrollment listing of a recognized Indian tribe domiciled within the United States border.

4. "Indian handcrafted" means the skillful and expert use of the hands in making products solely by Indians within the United States, including the use of findings, hand tools and equipment for buffing, polishing, grinding, drilling or sewing.

5. "Made by machine" means the producing or reproducing of a product in mass production by mechanically stamping, casting, blanking or weaving.

6. "Natural turquoise" means turquoise, exclusive of any backing material, whose composition has not been chemically or otherwise altered.

7. "Nonauthentic Indian arts and crafts" means any product which is made to imitate or resemble authentic Indian arts and crafts and which is either:

(a) Not Indian handcrafted.

(b) Made by machine or from unnatural materials, except stabilized or treated turquoise.

8. "Reconstituted turquoise" means dust and turquoise particles which are mixed with plastic resins and are compressed into a solid form so as to resemble natural turquoise.

9. "Stabilized turquoise" means turquoise which has been chemically hardened, but not adulterated so as to change the color of the natural mineral.

10. "Synthetic turquoise" means any compound or mineral which is manufactured or treated so as to closely approximate turquoise in appearance.

11. "Treated turquoise" means turquoise which has been altered to produce a change in the coloration of the natural mineral.

12. "Turquoise" means a hydrous copper sulphate, containing aluminum salts, plus iron.

13. "Unnatural turquoise" means any substance which is not natural turquoise, including stabilized turquoise, treated turquoise, reconstituted turquoise or synthetic turquoise.

§ 44-1231.01 Unlawful acts

It is unlawful for any person to knowingly do any of the following:

1. Sell or offer for sale any products represented to be authentic Indian arts and crafts unless the products are in fact authentic Indian arts and crafts.

2. Sell or offer for sale any authentic Indian arts and crafts represented to be of silver or nonauthentic Indian arts and crafts represented to be of silver unless the products are made of coin silver or sterling silver.

3. Sell or offer for sale nonauthentic Indian arts and crafts unless the nonauthentic Indian arts and crafts are clearly labeled as to any characteristics which make them nonauthentic.

4. Sell or offer for sale any unnatural turquoise, mounted or unmounted, without a written disclosure of whether the turquoise is stabilized, treated, reconstituted or synthetic.

5. Sell or offer to sell reconstituted turquoise or synthetic turquoise unless the turquoise is clearly labeled as synthetic turquoise.

6. Engage in any false, misleading or deceptive advertising or any unconscionable trade practice regarding Indian arts or crafts. In this paragraph "unconscionable trade practice" means any act or practice in connection with the sale or offering for sale of Indian arts or crafts to a person which to the person's detriment takes advantage of the person's lack of knowledge, ability, experience or capacity to a grossly unfair degree or results in a gross disparity between the value received by the person and the price paid.

§ 44-1231.02 Sale of Indian arts and crafts; inquiry; labels

A. A person who sells or offers to sell nonauthentic Indian arts and crafts shall post a sign bearing the words, in letters not less than three inches in height, "nonauthentic Indian arts and crafts" above or adjacent to the articles being sold.

B. A person who sells or offers to sell a product that is represented to be authentic Indian arts or crafts shall make due inquiry of his suppliers concerning the true nature of the materials, product design and process of manufacture to determine whether the product may be lawfully represented as authentic Indian arts or crafts.

C. A person who sells or offers to sell Indian arts and crafts may elect to label or otherwise clearly and conspicuously disclose as authentic Indian arts and crafts all articles that are authentic Indian arts and crafts in accordance with this article and rules adopted pursuant to this article.

§ 44-1231.03 Enforcement; civil action and penalty; injunctive relief; restitution; private right of action; damages

A. The attorney general or the county attorney shall enforce the provisions of this article. An authorized tribal prosecutor may assist the attorney general or the county attorney in determining whether the provisions of this article are violated.

B. In addition to the criminal penalties provided in this article, the attorney general or the county attorney may bring a civil action for a violation of this article, and the court may order temporary or permanent injunctive relief. In such an action the court may order restitution to the injured party and such other relief the court determines is appropriate.

C. In an action brought under this section, if the court finds that a person is wilfully using or has wilfully used a method, act or practice that is unlawful under this article, the attorney general or county attorney may recover a civil penalty of not more than five thousand dollars for each violation.

D. Civil penalties collected pursuant to this section shall be deposited in the state general fund if the action is brought by the attorney general and in the county general fund where the action is prosecuted if the action is brought by the county attorney.

E. Unless restitution is ordered in an action brought under subsection B, a person who suffers financial injury or damages by reason of any conduct which is in violation of this article may sue in the superior court and recover actual damages sustained and the cost of the suit, including reasonable attorney fees.

§ 44-1231.04 Rules

The attorney general shall adopt necessary rules to implement and enforce the provisions of this article. Rules adopted under this article may specify designations other than "authentic Indian arts and crafts", including a designation such as "Indian crafted", for authorized labeling as Indian arts and crafts.

§ 44-1231.05 Violation; classification

Unless the conduct is prohibited by section 13-1802 or section 13-2310 in which case those sections shall apply, a person who knowingly violates the provisions of this article is guilty of the following:

1. A class 3 misdemeanor if the violation involves property offered for sale at less than two thousand five hundred dollars.

2. A class 2 misdemeanor if the violation involves property offered for sale at two thousand five hundred dollars or more but less than twenty thousand dollars.

3. A class 1 misdemeanor if the violation involves property offered for sale at twenty thousand dollars or more.

Article 2.2 Registration of Fictitious Names

§ 44-1236 Certificate of name required; exceptions

A. Any person other than a partnership transacting business in this state under a fictitious name or a designation not showing the name of the owner of the business or the name of the corporation doing such business shall record with the county recorder of the county in which the place of business is located a certificate stating in full either:

1. The name of the owner of the business and his or her place of residence, signed by the owner and acknowledged.

2. If a corporation, the name and address of the corporation, signed by the statutory agent and acknowledged.

B. A new certificate shall be recorded upon any change in ownership of the business using a fictitious name unless such business is a corporation.

C. A new certificate shall be recorded if a corporation transfers the right to use such fictitious name to another corporation.

D. A person or corporation doing business contrary to this section shall not maintain an action upon or on account of a contract or transaction made in the fictitious name in any court of this state until such person has first recorded the certificate required by this section.

E. This section does not apply to a person or corporation that has either:

1. Filed a trade name certificate with the secretary of state.

2. Obtained authorization from the corporation commission to conduct business as a foreign corporation using a particular name.

Article 3 Fraudulent Practices in Sale of Petroleum Products

§ 44-1241 Fraudulent sales

A. It is unlawful for any person to sell, attempt to sell, offer for sale or participate or assist in the sale of any gasoline, liquefied petroleum gas, distillate, kerosene or other motor fuel or lubricating oil or motor oil of any kind or quality whatever for use in internal combustion engines when the petroleum product is at the time it is sold, offered for sale, caused or attempted to be sold, falsely represented to the purchaser or intended purchaser thereof either verbally or by advertising labels, signs or literature as the product of any manufacturer, refiner, producer or importer other than the true manufacturer, refiner, producer or importer.

B. It is unlawful for any person to sell, attempt to sell, offer for sale or participate or assist in the sale of any gasoline, liquefied petroleum gas, distillate, kerosene or other motor fuel or motor oil or lubricating oil of any kind or quality whatever for use in internal combustion engines when the petroleum product is, at the time it is sold, offered for sale, caused or attempted to be sold, falsely represented to the purchaser or intended purchaser thereof, to be the product of the brand name or trade name specified by the purchaser or intended purchaser. It is unlawful to sell, offer for sale or attempt to sell to a purchaser or intended purchaser a motor oil or lubricating oil with a society of automotive engineers number classification other than the S.A.E. number classification as specified by the purchaser or intended purchaser.

C. It is unlawful for any person to permit, direct or cause any other person to do any of the acts prohibited by this section.

§ 44-1242 Sale under own trademark or brand; authority of manufacturer

This article shall not prohibit any person from selling under his own trademarks, trade names, brands, or the words "no brand", the product of any manufacturer, if such person has first obtained the written authorization of the true manufacturer so to sell such product.

§ 44-1243 Mixtures

A. It is unlawful for any person or corporation to mix or adulterate any gasoline or different grades of gasoline or other motor fuel, distillate, kerosene, or lubricating or motor oil, or fraudulently to sell or offer for sale or attempt to sell or assist in the sale of, any of the products resulting from such mixture or adulteration as the gasoline or specific grade of gasoline or other motor fuel, distillate, kerosene, or lubricating or motor oil, of a brand, trademark or trade name, maintained and in general use by the manufacturer, refiner, producer, or marketer of either or both of the products so mixed or adulterated or by any other manufacturer, refiner, producer or marketer.

B. The provisions of subsection A shall also apply to deliveries by a tank vehicle.

§ 44-1244 Storage; container previously used for different product

It is unlawful for any person to place, store or keep, or cause or permit to be placed, stored or kept, for the purpose of sale any petroleum product in any storage tank underground or otherwise, or container or receptacle which contains or has previously contained a different product, or the product of a different manufacturer, refiner, producer, or marketer unless and until such tank, container or receptacle has first been emptied and relabeled in accordance with this chapter.

§ 44-1245 Violations; continuing violations; classification

A. A person who violates any provision of this article is guilty of a class 2 misdemeanor.

B. A person is guilty of a separate offense for each day during any portion of which a violation of this article is committed, continued or permitted by such person and such person shall be punishable as prescribed by the terms of subsection A.

Article 4 Beverage Containers

§ 44-1251 Definitions

In this article, unless the context otherwise requires:

1. "Beverage" means beer or other malt beverages, mineral water, soda water and similar carbonated soft drinks, fruit juices and vegetable juices in liquid form which are intended for human consumption.

2. "Consumer" means a person who purchases a beverage in this state in a container for use or consumption.

3. "Container" means the individual, separate can sealed or under pressure of carbonation which is composed of metal and contains a beverage.

§ 44-1252 Sale of beverages in containers with severable opening prohibited; exception; violation; classification

A. A person shall not sell or offer to sell to consumers a beverage in a container designed or constructed with a metal opening device that detaches when opening the container. This section does not prohibit the sale of a beverage in a container which has an opening device composed of foil or a paper product attached or added to the container.

B. A person who violates this section is guilty of a petty offense.

Article 5 Motor Vehicle Warranties

§ 44-1261 Definitions; exemptions

A. In this article, unless the context otherwise requires:

1. "Consumer" means the purchaser, other than for purposes of resale, of a motor vehicle, any person to whom the motor vehicle is transferred during the duration of an express warranty applicable to the motor vehicle or any other person entitled by the terms of the warranty to enforce the obligations of the warranty.

2. "Motor vehicle" means a self-propelled vehicle designated primarily for the transportation of persons or property over the public highways.

3. "Used motor vehicle" means a motor vehicle that has been sold, bargained, exchanged or given away or the title to which has been transferred from the person who first acquired the vehicle from the manufacturer, importer or dealer or agent of the manufacturer or importer and that has been placed in bona fide consumer use.

4. "Used motor vehicle dealer" means a person or business that sells or offers for sale a used motor vehicle after selling or offering for sale four or more used motor vehicles in the previous twelve months but does not include a bank or financial institution, an insurance company, a business selling a used motor vehicle to an employee of that business, a lessor selling a leased vehicle by or to the lessee of that vehicle or to an employee of the lessee of that vehicle or a person who buys, sells, exchanges or offers or attempts to negotiate a sale of or exchange an interest in a classic car as defined in section 28-2483 or a historic vehicle as defined in section 28-2484.

B. If the motor vehicle is a motor home, the provisions of this article shall apply to the self-propelled vehicle and chassis but not to those portions of the vehicle designed, used or maintained primarily as a mobile dwelling, office or commercial space.

C. The provisions of this article do not apply to a sale of a motor vehicle to a purchaser for the purpose of resale for profit or to a motor vehicle with a declared gross weight over ten thousand pounds or that is sold at a public auction.

§ 44-1262 New motor vehicle; repair during express warranty or two years or twenty-four thousand miles

A. If a new motor vehicle does not conform to all applicable express warranties:

1. A consumer shall report the nonconformity to the manufacturer, its agent or its authorized dealer or issuer of a warranty during the shorter of the following:

(a) The term of the express warranty.

(b) The period of two years or twenty-four thousand miles following the date of original delivery of the motor vehicle to the consumer, whichever is earlier.

2. The manufacturer, its agent or its authorized dealer or the issuer of a warranty shall make those repairs that are necessary to conform the motor vehicle to such express warranties, even if the repairs are made after the expiration of the term or two year period or twenty-four thousand mile limit.

B. This section does not limit in any way the remedies available to a consumer under a new motor vehicle warranty that extends beyond the limits prescribed in this section.

§ 44-1263 Inability to conform motor vehicle to express warranty; replacement of vehicle or refund of monies; affirmative defenses; tax refund

A. If the manufacturer, its agents or its authorized dealers are unable to conform the motor vehicle to any applicable express warranty by repairing or correcting any defect or condition which substantially impairs the use and value of the motor vehicle to the consumer after a reasonable number of attempts, the manufacturer shall replace the motor vehicle with a new motor vehicle or accept return of the motor vehicle from the consumer and refund to the consumer the full purchase price, including all collateral charges, less a reasonable allowance for the consumer's use of the vehicle. The manufacturer shall make refunds to the consumer and lienholder, if any, as their interests appear. A reasonable allowance for use is that amount directly attributable to use by the consumer before his first written report of the nonconformity to the manufacturer, agent or dealer and during any subsequent period when the vehicle is not out of service by reason of repair.

B. It is an affirmative defense to any claim under this article that either:

1. An alleged nonconformity does not substantially impair the use and market value of the motor vehicle.

2. A nonconformity is the result of abuse, neglect or unauthorized modifications or alterations of the motor vehicle.

C. In the case of taxes paid pursuant to title 42, chapter 5, if the manufacturer:

1. Accepts return of a motor vehicle from a consumer without replacing the motor vehicle, the manufacturer shall refund the amount of tax attributed to the sale of the vehicle to that consumer.

2. Replaces a motor vehicle with a new motor vehicle of lesser value, the manufacturer shall refund the difference between the original amount of tax attributed to the sale of that vehicle and the amount of tax attributed to the sale of the replacement vehicle, excluding the value of the motor vehicle being replaced.

3. Replaces a motor vehicle with a new motor vehicle of greater value, the manufacturer shall calculate the gross proceeds of sales pursuant to section 42-5001, paragraph 6.

D. Pursuant to section 42-1118, subsection F, the manufacturer may apply to the department of revenue for a refund for the amount of tax that the manufacturer properly refunds to the consumer.

§ 44-1264 Reasonable number of attempts to conform motor vehicle to express warranty; presumption

A. It is presumed that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable express warranties if either:

1. The same nonconformity has been subject to repair four or more times by the manufacturer or its agents or authorized dealers during the shorter of the express warranty term or the period of two years or twenty-four thousand miles following the date of original delivery of the motor vehicle to the consumer, whichever is earlier, but the nonconformity continues to exist.

2. The motor vehicle is out of service by reason of repair for a cumulative total of thirty or more calendar days during the shorter of the express warranty term or the two year period or twenty-four thousand miles, whichever is earlier.

B. The term of an express warranty, the two year period and the thirty day period are extended by any period of time during which repair services are not available to the consumer because of any war, invasion, strike, fire, flood or other natural disaster.

C. The presumption prescribed in this section does not apply against a manufacturer unless the manufacturer has received prior direct written notification from or on behalf of the consumer of the alleged defect and has had an opportunity to cure the alleged defect.

§ 44-1265 Nonlimitation of rights; refund or replacement not required if certain procedures not followed; attorney fees

A. If a manufacturer has established or participates in an informal dispute settlement procedure which complies in all respects with 16 Code of Federal Regulations part 703, section 44-1263 relating to refunds or replacement does not apply to any consumer who has not first resorted to such a procedure.

B. A consumer shall begin an action under this article within six months following the earlier of expiration of the express warranty term or two years or twenty-four thousand miles following the date of original delivery of the motor vehicle to the consumer, whichever is earlier. If a consumer prevails in an action under this article, the court shall award the consumer reasonable costs and attorney fees.

§ 44-1266 Notice to dealers and prospective purchasers

A. A manufacturer who has been ordered by judgment or decree to replace or repurchase or who has replaced or repurchased a motor vehicle pursuant to this article or the repair or replace laws of another state shall, before offering the motor vehicle for resale, attach to the motor vehicle written notification indicating the motor vehicle has been replaced or repurchased. A consumer has a cause of action against any person who removes the written notification from the motor vehicle, except as provided in subsection B of this section.

B. A motor vehicle dealer, broker, wholesale motor vehicle dealer or wholesale motor vehicle auction dealer as defined in section 28-4301 who offers for sale a motor vehicle that has been replaced or repurchased pursuant to this article or the repair or replace laws of another state shall provide the purchaser with the manufacturer's written notification indicating that the motor vehicle has been replaced or repurchased before completion of the sale.

C. It shall constitute an affirmative defense in an action brought pursuant to subsection A of this section against a motor vehicle dealer or an agent of a motor vehicle dealer that the notification described in subsection A of this section was removed by someone other than the dealer or agent without the knowledge of the dealer or agent.

§ 44-1267 Used motor vehicles; title; implied warranty of merchantability disclaimer; waiver; burden of proof; remedies

A. Before the seller attempts to sell a used motor vehicle the seller shall possess the title to the used motor vehicle and the title shall be in the seller's name.

B. Except as provided in subsection I of this section and in addition to the requirements of section 28-4412, a used motor vehicle dealer shall not exclude, modify or disclaim the implied warranty of merchantability prescribed in section 47-2314 or limit the remedies for a breach of that warranty, except as otherwise provided in this section, before midnight of the fifteenth calendar day after delivery of a used motor vehicle or until a used motor vehicle is driven five hundred miles after delivery, whichever is earlier. In calculating time under this subsection, a day on which the warranty is breached is excluded and all subsequent days in which the motor vehicle fails to conform with the implied warranty of merchantability are also excluded. In calculating distance under this subsection, the miles driven to obtain or in connection with the repair, servicing or testing of the motor vehicle that fails to conform with the implied warranty of merchantability are excluded. An attempt to exclude, modify or disclaim the implied warranty of merchantability or to limit the remedies for a breach of that warranty, except as otherwise provided in this section, in violation of this subsection renders a purchase agreement voidable at the option of the purchaser.

C. For the purposes of this section, the implied warranty of merchantability is met if the motor vehicle functions in a safe condition as provided in title 28, chapter 3, article 16 and is substantially free of any defect that significantly limits the use of the motor vehicle for the ordinary purpose of transportation on any public highway. The implied warranty of merchantability expires at midnight of the fifteenth calendar day after delivery of a used motor vehicle or when a used motor vehicle has been driven five hundred miles after delivery, whichever is earlier. In calculating time under this subsection, a day on which the warranty is breached is excluded and all subsequent days in which the motor vehicle fails to conform with the implied warranty of merchantability are also excluded. In calculating distance under this subsection, the miles driven to obtain or in connection with the repair, servicing or testing of the motor vehicle that fails to conform with the implied warranty of merchantability are excluded.

D. The implied warranty of merchantability described in this section does not extend to damage that occurs after the sale of the motor vehicle and that is the result of any abuse, misuse, neglect, failure to perform regular maintenance or to maintain adequate oil, coolant or other required fluid or lubricant or off road use, racing or towing.

E. If the implied warranty of merchantability described in this section is breached, the purchaser shall give reasonable notice to the seller. Before the purchaser exercises any other remedies under title 47, chapter 2, the seller shall have a reasonable opportunity to repair the vehicle. The purchaser shall pay one-half of the cost of the first two repairs necessary to bring the vehicle in compliance with the warranty. The purchaser's payments are limited to a maximum payment of twenty-five dollars for each repair.

F. The maximum liability of the seller under this section is limited to the purchase price paid for the used motor vehicle.

G. An agreement for the sale of a used motor vehicle by a used motor vehicle dealer is voidable at the option of the purchaser unless it contains on its face the following conspicuous statement printed in bold-faced ten point or larger type set off from the body of the agreement:

The seller hereby warrants that this vehicle will be fit for the ordinary purposes for which the vehicle is used for 15 days or 500 miles after delivery, whichever is earlier, except with regard to particular defects disclosed on the first page of this agreement. You (the purchaser) will have to pay up to $25.00 for each of the first two repairs if the warranty is violated.

H. The inclusion of the statement prescribed in subsection G of this section in the agreement does not create an express warranty.

I. A purchaser of a used motor vehicle may waive the implied warranty of merchantability described in this section only for a particular defect in the vehicle and only if all of the following conditions are satisfied:

1. The used motor vehicle dealer fully and accurately discloses to the purchaser that because of circumstances unusual to the used motor vehicle dealer's business, the used motor vehicle has a particular defect.

2. The purchaser agrees to buy the used motor vehicle after disclosure of the defect.

3. Before the sale, the purchaser indicates agreement to the waiver by signing and dating the following conspicuous statement that is printed on the first page of the sales agreement in bold-faced ten point or larger type and that is written in the language in which the presentation was made:

Attention purchaser: sign here only if the dealer told you that this vehicle has the following problem(s) and that you agree to buy the vehicle on those terms:

1._______________________________

2._______________________________

3._______________________________

J. The dealer has the burden to prove by a preponderance of the evidence that the dealer complied with subsection I of this section.

K. Any purchaser or seller who is aggrieved by a transaction pursuant to this section and who seeks a legal remedy shall pursue any appropriate remedy prescribed in title 47, chapter 2 and shall comply with the requirements prescribed in title 47, chapter 2.

Article 6 Telephone Solicitations

§ 44-1271 Definitions

In this article, unless the context otherwise requires:

1. "Business opportunity":

(a) Means the sale or lease, or offer for sale or lease, of any goods or services to a consumer for an initial payment of five hundred dollars or greater for the purpose of enabling the consumer to start or operate a business, which sale or lease is not limited to sales initiated or made by the telephone.

(b) Includes a solicitation of consumers in which the seller represents one or more of the following:

(i) That the consumer may or will earn an amount in excess of the initial payment as a result of the purchase.

(ii) That a market exists for any goods to be made or sold or services to be rendered by the consumer.

(iii) That the seller will provide locations or assist the consumer in finding locations for the use or operation of vending machines, racks, display cases or other similar devices or currency-operated amusement machines or devices or any other devices.

(iv) That the seller may purchase from the consumer goods to be made or services to be rendered by the consumer.

(v) That the seller guarantees, either conditionally or unconditionally, that the consumer will derive income from the business opportunity or that the seller will refund all or part of the price paid for the business opportunity or repurchase any of the goods supplied by the seller if the consumer is unsatisfied with the business opportunity.

(vi) That the seller or an entity associated with the seller will provide a sales program or marketing program to the consumer unless the marketing program is offered in conjunction with the licensing of a registered trademark or service mark, if the trademark or service mark has been effectively registered under federal law.

(c) Does not include:

(i) The sale of all or substantially all of the assets of an ongoing business where the owner of that business sells and intends to sell only that one business opportunity.

(ii) The not-for-profit sale of sales demonstration equipment, materials or samples for a total price of five hundred dollars or less.

(iii) The sale of a franchise as defined by the federal trade commission regulations as set forth in 16 Code of Federal Regulations section 436.1.

2. "Consumer" means a person who is solicited by a seller or solicitor.

3. "Goods" means any merchandise, equipment, products, supplies or materials.

4. "Initial payment" means the total amount the purchaser becomes obligated to pay to the seller and to any third party for goods, services or merchandise related to a previously purchased business opportunity, either prior to or at the time of the delivery of any goods, services or merchandise within six months after the commencement of the operation of the business opportunity by the purchaser.

5. "Licensed associated person of a securities, commodities or investments broker" means any associated person registered or licensed by the national association of securities dealers, a self-regulatory organization as defined in the securities exchange act of 1934 (15 United States Code section 78c) or an official or agency of this state or of any other state of the United States.

6. "Licensed securities commodities or investments broker, dealer or investment advisor" means a person licensed or registered as a securities commodities or investments broker, dealer or investment advisor by the securities and exchange commission, the national association of securities dealers, a self-regulatory organization as defined in the securities exchange act of 1934 (15 United States Code section 78c) or an official or agency of this state or of any other state of the United States.

7. "Manager" means a person who supervises the work of a solicitor.

8. "Merchandise" means objects, wares, goods, commodities, intangibles, real estate, securities or services.

9. "Person" means:

(a) A natural person or the person's legal representative.

(b) A partnership, a limited liability company, a limited liability partnership or a domestic or foreign corporation.

(c) A company, trust, business entity or association.

(d) An agent, employee, salesman, partner, officer, director, member, stockholder, associate or trustee.

(e) Any other legal entity or any group associated in fact although not a legal entity.

10. "Premium" means any gift, bonus, prize, award or other incentive or inducement to purchase merchandise.

11. "Principal" means an owner or an officer of a corporation or limited liability company, a general partner of a partnership, a sole proprietor of a sole proprietorship, a partner of a limited liability partnership, a trustee of a trust and any other individual who controls, manages or supervises a telephone sales operation.

12. "Prize" means anything offered or purportedly offered and given or purportedly given to a person by chance. Chance exists if a person is guaranteed to receive an item and at the time of the offer or purported offer the seller or solicitor does not identify the specific item that the person will receive.

13. "Prize promotion" means a sweepstakes or other game of chance or an oral or written express or implied representation that a person has won, has been selected to receive or may be eligible to receive a prize or purported prize.

14. "Recovery service" means any business or other practice in which a person represents or implies that the person will recover or assist in recovering for a fee any amount of money that a consumer has provided to a seller pursuant to a telephone solicitation.

15. "Seller" means a person who, directly or through a solicitor, does any of the following:

(a) Initiates telephone calls to provide or arrange to provide merchandise to consumers in exchange for payment.

(b) Solicits by telephone in response to inquiries from a consumer generated by a notification or communication sent or delivered to the consumer that represents or implies that:

(i) The consumer has been specially selected in any manner to receive the notification or communication or the offer contained in the notification or communication.

(ii) The consumer will receive a premium if the consumer calls the person.

(iii) If the consumer purchases merchandise from the person, the consumer will also receive additional or other merchandise, the same as or different from the type of merchandise purchased, without any additional charge or for a price that the person represents or implies is less than the regular price of the merchandise.

(iv) The person is offering for sale the services of a recovery service.

(v) The person is offering to make a loan, to arrange or assist in arranging a loan or to assist in providing information that may lead to obtaining a loan unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.

(vi) The consumer will receive a credit card if the consumer pays a fee for the card before receiving the card.

(vii) The person is offering for sale identity protection assistance.

(c) Solicits by telephone in response to inquiries generated by advertisements on behalf of the person that represent or imply that:

(i) The person is offering to sell the services of a recovery service.

(ii) The person is offering to make a loan, to arrange or assist in arranging a loan or to assist in providing information that may lead to obtaining a loan unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.

(iii) The consumer will receive a credit card if the consumer pays a fee for the card before receiving the card.

(d) Solicits consumers to purchase a business opportunity or merchandise related to a business opportunity through any means including the telephone, internet or mail or other hard copy text or through any electronic, wireless or other communication media.

16. "Solicitor" means a person, other than a seller or employee of a seller, who uses a telephone to seek sales or rentals of merchandise on behalf of a seller or uses a telephone to verify sales or rentals for a seller.

17.  "Subscriber" means a person who subscribes to residential telephone service from a local exchange company and any person who lives or subscribes with that person.

18. "Telephone solicitation" means any voice communication from a live operator, announcing device or otherwise that offers merchandise for sale or rent and that is to or from a person located in this state.

§ 44-1272 Telephone seller; registration; business opportunities; late filing penalty

A. A seller shall file a verified registration statement with the secretary of state before the seller solicits any consumer from a location in this state or any consumer located in this state. Each principal of the seller shall sign the registration statement, have the signature notarized and file the statement with the secretary of state along with the annual registration fee prescribed by section 44-1275. The registration statement expires on June 30 of each year and shall be annually renewed by completing a new registration statement within thirty days before expiration and paying the annual registration fee. If a seller is delinquent in filing its annual registration statement, the secretary of state may assess a late filing penalty not to exceed one hundred dollars when the seller submits its annual registration statement. If a seller fails to renew its annual registration statement before September 30 of each year, the seller is unregistered.

B. If, before the expiration of a seller's annual registration, there is a change in any of the information required by subsection C of this section, within ten days of the change the seller shall file a supplemental statement with the secretary of state, except that a seller shall only update quarterly any changes in solicitors hired by the seller.

C. Each registration statement shall contain all of the following information:

1. The true legal name of the seller.

2. The name under which the seller is doing business or intends to do business.

3. The seller's business form and state of organization.

4. If the seller is a corporation or limited liability company, a copy of its articles of incorporation and bylaws and amendments to the bylaws. If the seller is a partnership or limited liability partnership, a copy of the partnership agreement. If the seller is operating under a fictitious business name, the location where the fictitious name has been registered.

5. The complete street address of the physical location of the principal place of business of the seller, the complete street address of all other locations from which the seller will be conducting business and all telephone numbers for telephones at these locations.

6. For each principal and manager, the true legal name, residence address, telephone number and date of birth and a clear and legible copy of the current driver license or valid government issued photo identification card. A seller is not required to submit the information required in this section for the seller's employees.

7. For each manager, the address of the business location for which the manager is responsible.

8. For each solicitor, the solicitor's true legal name, business address and telephone number and, for each principal and manager of a solicitor, the true legal name, residence address, telephone number and date of birth and a clear and legible copy of the current driver license or valid government issued photo identification card. A solicitor is not required to submit the information required in this section for the solicitor's employees.

9. The name and address of the seller's agent in this state who is authorized to receive service of process in this state.

10. A copy of the bond filed with the state treasurer pursuant to section 44-1274.

11. Whether a principal or manager:

(a) Has been convicted or pleaded no contest to a felony or misdemeanor involving moral turpitude or a violation of this article.

(b) Has been held liable in a civil action, either by final judgment or by entry of a stipulated judgment, if the civil action alleged fraud, embezzlement, racketeering, fraudulent conversion or misappropriation of property or a violation of this article or the use of untrue or misleading representations in an attempt to sell or dispose of real or personal property or the use of unfair, unlawful or deceptive business practices.

(c) Is subject to a currently effective injunction or restrictive order relating to a business activity as a result of an action brought by a public agency or department, including an action affecting a vocational license. The statement shall include the name of the court, the date of the conviction, the judgment, order or injunction and, if applicable, the name of the governmental agency that filed the action resulting in the conviction, judgment, order or injunction.

12. A copy of any:

(a) Script, outline or presentation the seller will require or suggest that a solicitor use, except that if the seller does not require or suggest a script, outline or presentation, a statement that no such document is required or suggested.

(b) Sales information and literature provided by the seller to a solicitor or described by the seller for use by the solicitor, including scripts, outlines, presentations, information on how to conduct telephone sales, sample instructions, sample closings, product information and contest or premium award information.

(c) Sales information and any other literature provided by the seller to a consumer in connection with any solicitation.

13. If the seller is soliciting consumers to purchase a business opportunity or merchandise related to a business opportunity:

(a) The business experience of the seller, including the length of time that the seller has sold the business opportunity being offered to consumers or sold any other business opportunity to consumers.

(b) The names of all businesses for which each principal or manager previously sold business opportunities.

(c) The dates that each principal or manager previously sold business opportunities.

14. If a solicitation involves a business opportunity or merchandise related to a business opportunity:

(a) A factual description of the business opportunity offered to be sold and of the merchandise, training and assistance that the seller will provide to the consumer.

(b) A statement describing any goods, services, signs or fixtures relating to the establishment or the operation of the business opportunity that the consumer is required to purchase, lease or rent directly or indirectly from the seller.

D. If a seller expressly represents or implies to any consumer, directly or through a solicitor, that the consumer is or may be eligible to receive any premium, the seller shall submit with the registration statement another statement setting forth for each premium mentioned:

1. A description of the premium.

2. The value or worth of the premium and the basis for the valuation.

3. All terms and conditions a consumer must satisfy in order to receive the premium.

4. The odds of being able to receive the premium, and if the odds are not calculable in advance, the factors used in calculating the odds.

5. If the consumer will receive fewer than all of the premiums described by the seller:

(a) The manner in which the seller decides which premium the consumer will receive.

(b) The odds of being able to receive each premium, and if the odds are not calculable in advance, the factors used in calculating the odds.

(c) The name and address of each person who within the past twelve months has received the premium having the greatest value and the premium with the smallest odds of being received.

E. If the seller expressly represents or implies to any consumer, directly or through a solicitor, that the seller can or may be able to make a loan, arrange a loan, assist in arranging a loan or assist in providing information that may lead to obtaining a loan, the seller shall submit with the registration statement another statement setting forth:

1. For the previous twenty-four months, the names and addresses of any person who lent money to:

(a) Consumers who responded to the solicitations of the seller's predecessor or the seller's officers or owners or those persons having present management responsibilities or to companies with which they were associated.

(b) The seller's predecessor or the seller's officers or owners or those persons having present management responsibilities or to those companies with which they were associated for them to lend to consumers who responded to solicitations.

2. For the twelve months after the date of the registration, the names and addresses of all persons who informed the seller that they may be able to lend money to consumers solicited by the seller or to the seller for the seller to lend to consumers who respond to the seller's representations that the seller can make a loan, arrange a loan, assist in arranging a loan or assist in providing information that can lead to obtaining a loan.

3. Copies of all contracts between the seller and lenders or prospective lenders who may lend money:

(a) To the seller to lend to consumers who, in conjunction with the seller's business, respond to the seller's representations that the seller can make a loan, arrange a loan, assist in arranging a loan or assist in providing information that can lead to obtaining a loan.

(b) Directly to consumers to whom the seller may represent that it can arrange or assist in providing information that can lead to obtaining a loan.

F. If any change is made to any script, outline, presentation, sales information or literature to be used by a seller during any solicitation, the seller shall submit the new or revised material before it is used.

G. Compliance with the registration and filing requirements of this article by a seller does not constitute an approval or endorsement by this state of the seller's registration documents or conduct.

§ 44-1272.01 Limited registration; penalty; violation; classification

A. Any seller who is listed in section 44-1273, subsection B shall file with the secretary of state a limited registration statement on a form prescribed by the secretary of state before the seller solicits any consumer from a location in this state or any consumer located in this state.

B. If there is a change in any of the information required by subsection C of this section, within ten days after the change the seller shall file a supplemental statement with the secretary of state.

C. Each limited registration statement shall include all of the following information:

1. The true legal name of the seller.

2. All of the names under which the seller is doing business or intends to do business.

3. The complete street address of the physical location of the principal place of business of the seller and the telephone number for the location.

4. The name and address of the seller's agent who is authorized to receive service of process. Alternatively, the seller may designate the secretary of state to receive service of process.

5. The reason the seller is exempt from full registration.

6. The name and address of the person who files the limited registration statement.

D. A seller who files a limited registration statement pursuant to this section is not required to pay a filing fee and is not required to file and maintain a bond.

E. Compliance with the limited registration prescribed in this section does not constitute an approval or endorsement by this state of the seller's limited registration or conduct.

F. The secretary of state may send by certified mail a notice of failure to file a limited registration statement pursuant to this section to any seller who is listed in section 44-1273, subsection B and who fails to comply with the limited registration prescribed in this section. The seller shall comply with the limited registration prescribed in this section within thirty days after receiving the notice from the secretary of state and shall pay a late registration penalty of twenty-five dollars. If the seller does not comply with this subsection, the seller is guilty of a class 3 misdemeanor.

§ 44-1273 Limited exemptions

A. The following sellers are not required to register and, except for section 44-1278, subsection B and section 44-1282, are exempt from this article:

1. A person acting within the scope of a license issued under title 20.

2. A person who is either a:

(a) Charitable organization as defined in section 44-6551, this state or any county or municipality of this state or its agencies.

(b) Political party, candidate for federal, state or local office or campaign committee required to file financial information with federal, state or local election agencies.

3. A person making telephone solicitations without the intent to complete and who does not complete the sales presentation during the telephone solicitation but completes the sales presentation at a later face-to-face meeting between the solicitor and the consumer provided that the later face-to-face meeting is not for the purpose of collecting the payment or delivering any item purchased.

4. A person who after making a telephone contact with a consumer sends the consumer descriptive literature and does not require payment before the consumer's review of the descriptive literature and the person is not conducting a solicitation involving any of the following:

(a) The sale of an investment or an opportunity for an investment that is not registered with any state or federal authority.

(b) A prize promotion or premium.

(c) A recovery service.

(d) A business opportunity or merchandise related to a business opportunity.

5. A person or solicitor for a person who operates a retail business establishment under the same name as the name used in the solicitation of sales by telephone, if on a continuing basis all of the following apply:

(a) Merchandise is displayed and offered for sale or services are offered for sale and provided at the person's business establishment.

(b) At least fifty percent of the person's business involves the buyer obtaining the merchandise at the person's business establishment.

(c) The person holds a transaction privilege tax license pursuant to title 42, chapter 5.

6. A person or solicitor for a person soliciting another business if all of the following apply:

(a) At least fifty percent of the person's dollar volume consists of repeat sales to existing businesses.

(b) The person does not conduct a prize promotion that requires or implies that to win a consumer must pay money or purchase merchandise.

(c) The person has not, or any of the person's principals have not, within twenty years been convicted in any state of a felony or crime of moral turpitude, breach of trust, fraud, theft, dishonesty or violation of telephone solicitation laws, been subject to a final judgment in a civil action involving fraud, deceit or misrepresentation or been subject to an administrative order involving fraud, deceit, misrepresentation or any violation of telephone solicitations laws of any agency of this state, another state, the federal government, a territory of the United States or another country.

(d) The person is not selling a business opportunity or merchandise related to a business opportunity.

7. A person or solicitor on behalf of a person who solicits sales by periodically publishing and delivering a catalog to consumers if all of the following apply:

(a) The catalog contains a written description or illustration of each item offered for sale and the price of each item offered for sale.

(b) The catalog includes the business address or home office address of the person.

(c) The catalog includes at least twenty-four pages of written material and illustrations.

(d) The catalog is distributed in more than one state and has an annual circulation by mail of at least two hundred fifty thousand.

B. The following sellers shall file a limited registration statement pursuant to section 44-1272.01 and, except for sections 44-1278 and 44-1282, are exempt from this article:

1. A person acting within the scope of a license issued under title 6 or 32 or by the corporation commission pursuant to this title, except persons licensed under title 6, chapter 13.

2. If soliciting within the scope of the license, any licensed securities, commodities or investments broker or dealer or investment advisor or any licensed associated person of a securities, commodities or investments broker or dealer or investment advisor.

3. An issuer or a subsidiary of an issuer that has a class of securities that is subject to section 12 of the securities exchange act of 1934 (15 United States Code sections 78a through 78mm) and that is either registered or exempt from registration under paragraph (A), (B), (C), (E), (F), (G) or (H) or subsection (g)(2) of section 12 of the act. A subsidiary of an issuer that qualifies for exemption under this paragraph is not exempt unless at least sixty percent of the voting power of the subsidiary's shares is owned by the qualifying issuer or issuers.

4. A person certificated or regulated by the corporation commission pursuant to title 40, chapter 2 or a subsidiary of that person or a federal communications commission licensed cellular telephone company or radio telecommunication services provider.

5. A person making telephone solicitations for a newspaper of general circulation, a magazine or a licensed cable television system or video service provider.

6. An issuer or subsidiary of an issuer that is subject to registration under chapter 12, article 6 or 7 of this title or that is exempt from registration under section 44-1843, subsection A, paragraph 1, 2, 3, 4, 5, 7 or 9.

7. A person making telephone solicitations for the sale or purchase of books, recordings, videocassettes and similar goods through a membership group or club regulated by the federal trade commission or through a contractual plan or arrangement such as a continuity plan, subscription arrangement, series arrangement or single purchase under which the seller ships goods to a consumer who has consented in advance to receive those goods and the recipient is given the opportunity to review goods for at least seven days and to receive a full refund for return of undamaged goods.

8. A person or solicitor for a person when soliciting previous customers, if all of the following apply:

(a) The person is not offering to sell or selling a security that is not registered with any state or federal authority.

(b) The person makes the solicitation under the same name as the name used to sell merchandise to the customer previously.

(c) The person does not operate a recovery service.

(d) The person does not conduct a prize promotion that requires a consumer to, or implies that to win a consumer must, pay money or purchase merchandise.

(e) The person has not, or any of its principals have not, within twenty years been convicted in any state of a felony or a crime of moral turpitude, breach of trust, fraud, theft, dishonesty or a violation of telephone solicitation laws, been subject to a final judgment in a civil action involving fraud, deceit or misrepresentation or been subject to an administrative order involving fraud, deceit, misrepresentation or any violation of telephone solicitation laws of any agency of this state, another state, the federal government, a territory of the United States or another country.

9. A person making telephone solicitations exclusively for the purpose of the sale of telephone answering services to be provided by that person or that person's employer.

10. Any bank holding company, bank, financial institution, trust company, savings and loan association, credit union, mortgage banker or broker, consumer lender or insurer that is licensed or supervised by an official or agency of this state, any other state or the United States, including any parent, subsidiary or affiliate of these institutions.

11. A person providing telemarketing sales service continuously for at least five years under the same ownership and control that derives seventy-five percent of its gross telemarketing sales revenues from contracts with persons exempted by this section. A seller using an exempt telemarketing sales service is not exempt unless otherwise qualifying for an exemption under this section.

C. On request by the secretary of state, the director of the department of insurance and financial institutions shall provide a current list in a mutually acceptable electronic format to the secretary of state of the requested licensees described in subsection A, paragraph 1 of this section that includes all of the following information:

1. The true legal name of the seller.

2. All of the names under which the seller is doing business or intends to do business.

3. The complete street address of the physical location of the principal place of business of the seller and the telephone number for the location.

4. The name and address of the seller's agent who is authorized to receive service of process in this state.

D. In any civil proceeding alleging a violation of this article, the burden of proving an exemption or an exception from a definition is on the person claiming the exemption or exception. In any criminal proceeding in which a violation of this article is alleged, the burden of producing evidence to support a defense based on an exemption or an exception from a definition is on the person claiming the exemption or exception.

E. Any person or solicitor exempted in part from this article by this section shall not make or submit a charge to a consumer's credit card account or a consumer's checking, savings, share or similar account unless any of the following applies:

1. The person provides that the consumer may receive a full refund for the return of undamaged and unused goods or a cancellation of services by providing notice to the person within seven days after the date that the consumer receives the merchandise and the person processes:

(a) A full refund within thirty days after the date that the person receives the returned merchandise from the consumer.

(b) A full refund within thirty days after the purchaser of services cancels an order for the services or a pro rata refund for any services not yet performed for the consumer.

2. The person provides the consumer with a signed copy of a written contract that includes the person's name, address and business telephone number and that fully describes the merchandise offered by the person, the total price to be charged by the person and any terms or conditions affecting the sale.

3. The person is either a:

(a) Charitable organization as defined in section 44-6551, this state or any county or municipality of this state or its agencies.

(b) Political party, candidate for federal, state or local office or campaign committee required to file financial information with federal, state or local election agencies.

§ 44-1274 Bond; amount; filing; beneficiaries; cancellation

A. A seller shall maintain a bond of one hundred thousand dollars issued by a surety company duly authorized to do business in this state. The bond shall be filed with the state treasurer. No control or beneficiary interest may be held by the seller in the surety or by the surety company in the seller.

B. The bond required by subsection A of this section shall be in favor of this state to be held in trust by the state treasurer for the benefit of any consumer who suffers financial damage as a result of a violation of this article or an unlawful practice pursuant to section 44-1522.

C. A consumer who makes a claim against the bond may maintain an action against the seller and the surety, except that the surety is liable only for any monies paid by the consumer to the seller or solicitor, plus reasonable attorney fees. The surety bond may be sued upon in successive actions until the full amount is exhausted. A consumer may not commence suit on the bond more than four years after the act or omission on which the suit is based. Subject to the limitations in this article, a surety is liable for damages for an act or omission during the time the bond is in effect.

D. The aggregate liability of the surety to all consumers for all breaches of the conditions of the bond provided in this section shall not exceed the amount of the bond.

E. A surety for any cause may cancel the bond by giving sixty days' written notice by certified mail of the cancellation to the state treasurer, the attorney general and the seller. On or before the effective date of the cancellation of the bond, the seller shall either obtain a new bond which meets the requirements of this section and file a copy of the new bond with the state treasurer or make a cash deposit.

F. In lieu of furnishing the surety bond as required by this section, the seller may deposit with the state treasurer a cash deposit in the required amount.

G. The state treasurer shall maintain cash deposited pursuant to this section in an interest bearing trust account on behalf of the depositor. Deposits plus accrued interest may be withdrawn, if there are no outstanding claims against them, four years after the seller ceases to do business in this state. Deposits may be withdrawn four years after the filing of a surety bond as a replacement to the cash deposit.

§ 44-1275 Fees

A. The secretary of state shall set the annual fee for registration which shall not exceed five hundred dollars.

B. The secretary of state shall set the fee for each supplemental statement which shall not exceed twenty-five dollars.

§ 44-1276 Required disclosures; payment for goods; identification of seller or solicitor; cancellation of telephone solicitation or business opportunity sale; notice of right to cancel

A. Before beginning the solicitation or sales presentation over the telephone, the seller or solicitor shall disclose to the consumer:

1. The complete street address of the physical location from which the seller or solicitor is making the telephone solicitation and the complete street address of the seller's principal location.

2. The legal name of the seller on whose behalf the solicitor is making the solicitation.

3. The solicitor's true legal name.

4. That the purpose of the call is to sell merchandise.

B. During any solicitation or sales presentation made by a seller or solicitor and in any written correspondence provided to the consumer as part of the solicitation, the seller or solicitor shall clearly and conspicuously disclose to the consumer:

1. Any charge, including the amount for the use of any premium being offered.

2. Any material restriction, requirement, condition, limitation or exception that is associated with the use of the premium.

3. Any charge connected with the sale of merchandise.

4. The time period within which any premium will be delivered.

5. The consumer's right to cancel the transaction pursuant to subsection C.

C. In addition to any right to otherwise revoke an offer, the consumer may cancel a telephone solicitation sale up to midnight of the third business day after the receipt of the merchandise or premium, whichever is later.

D. No telephone solicitation sale or sale of a business opportunity or merchandise related to a business opportunity is effective unless the consumer is both:

1. Advised orally and in writing of the legal name, telephone number and complete street address of the physical location of the seller.

2. Advised orally of the right of cancellation along with a written notice containing the following information:

Notice of Cancellation

1. You may cancel this order without any penalty or obligation within three business days from the delivery of the merchandise or premium (gift, bonus, prize or award), whichever is later.

2. If you cancel, any payments made by you will be returned within ten days after the receipt by the seller of your notice of cancellation.

3. To cancel this transaction, mail or deliver a signed and dated copy of your cancellation notice or send a telegram to ____________________ at _______________________________________.

(Name of seller) (Address of seller's place of business)

4. If you cancel, any merchandise or premium delivered to you must be returned at our expense to ________________________ (Name of seller)

at ______________________________________________________ (Address of seller's place of business)

no later than twenty-one business days after the receipt of this merchandise or premium, whichever is later.

E. The notice of cancellation given by the consumer is effective if it indicates the intention on the part of the consumer not to be bound by the telephone solicitation sale or sale of a business opportunity or merchandise related to a business opportunity.

F. A provision of a contract, offer or agreement that waives a consumer's right of cancellation under this section is void and has no effect.

G. A solicitor shall accurately identify themselves on caller identification when making a telephone solicitation call to a residential or mobile telephone in Arizona.

H. For the purposes of this section, business day does not include Sunday or a federal or state holiday.

§ 44-1276.01 Business opportunities; disclosure to consumer

A. A seller who offers or sells a business opportunity and who is required to file a registration statement pursuant to section 44-1272 shall not solicit a consumer from a location in this state or a consumer located in this state unless the seller provides a written disclosure document to the consumer. The seller shall deliver the written disclosure document to the consumer at least five business days before the earlier of the consumer's execution of a contract imposing a binding legal obligation on the consumer or the payment of any monies, receipt of anything of value or authorization to charge a credit or debit card.

B. The disclosure document shall have a cover sheet that contains only the following information:

1. A title and statement that are printed in at least ten point bold type and that shall appear as follows:

Disclosures Required by Arizona Law

The information contained in this disclosure has not been verified by the state. If you have any questions about your purchase of this business opportunity, seek professional advice before you sign a contract or make any payment. You are to be provided five business days to review this document before signing a contract or making any payment to the seller or the seller's representative.

2. The seller's name and principal business address and the date of the disclosure document.

C. The disclosure document shall contain at least the following information, which shall be presented in a single document in the following order:

1. A factual description of the business opportunity that the seller is offering to sell to the consumer, including a full and detailed description of the actual goods or services that the seller undertakes to supply to or perform for the consumer and the actual services that the consumer undertakes to perform, including compliance with procedures established by the seller regarding the operation of the business.

2. A statement of the exact sum of the total monies that the seller requires the consumer to pay to a specifically named person or any other person known to the seller who receives any consideration incident to the transaction or which the seller or any person affiliated with the seller collects in whole or in part on behalf of any party in order to obtain or commence the business opportunity operation, including initial fees, deposits, down payments, prepaid rent, equipment and inventory purchases or marketing expenses. The seller shall disclose if all or part of these fees or deposits are returnable under certain conditions or if all or part of the fees or deposits are not returnable.

3. A statement describing any recurring monies that the consumer is or may be asked to pay to any person in connection with carrying on the business opportunity, including advertising, training, royalty, lease or rental fees or equipment or inventory purchases.

4. A statement advising consumers as follows, "as required by Arizona law, the seller has filed its annual registration statement with the Arizona secretary of state."

5. A statement advising consumers of one of the following:

(a) "As required by Arizona law, the seller has secured a bond issued by _________________ (name and address of surety company), a surety company authorized to do business in Arizona."

(b) "As required by Arizona law, the seller has deposited with the Arizona state treasurer a cash deposit in the amount of one hundred thousand dollars."

6. A statement disclosing the name of each person, including the seller and its affiliates, with whom the seller directly or indirectly requires or advises the consumer to do business.

7. A statement describing any goods, services, real estate, inventories, signs or fixtures relating to the establishment or the operation of the business opportunity that the seller directly or indirectly requires the consumer to purchase, lease or rent. If the purchase, lease or rental is made from specific persons including the seller, a list of the names and addresses of each person shall appear on the disclosure document or in a separate document that is delivered to the consumer with the disclosure document if the existence of the separate document is disclosed in the disclosure document.

8. A statement of all material terms and conditions of any financing arrangement the seller or any person affiliated with the seller offers, directly or indirectly, to the consumer and a description of the terms of payment to the seller from any person offering financing to a prospective consumer and from any person arranging for financing for a prospective consumer.

9. A statement that the seller must provide a written notice of cancellation pursuant to section 44-1276.

§ 44-1276.02 Business opportunity contracts in writing; required information

A. A business opportunity contract or agreement shall be in writing and shall be given to the consumer with the disclosure document required under section 44-1276.01.

B. A business opportunity contract or agreement shall include the following:

1. The terms and conditions of payment.

2. A full and detailed description of the acts or services that the seller undertakes to perform for the consumer.

3. The seller's principal business address and the name and address of its agent in this state that is authorized to receive service of process.

4. The approximate delivery date of any goods that the seller is to deliver to the consumer and an approximate timetable for performance of services necessary to begin substantial operation of the business.

§ 44-1276.03 Business opportunity contract cancellation

A consumer may cancel a business opportunity contract or agreement with a seller for any reason at any time within ten business days after the date that the consumer signs the contract or agreement or the date that the seller notifies the consumer in writing that the contract or agreement is accepted by the seller, whichever is later.

§ 44-1277 Violation; classification

A. Except as provided in section 44-1273, it is unlawful for a seller to engage in a telephone solicitation unless the seller is registered pursuant to section 44-1272.

B. A seller or solicitor engaged in a recovery service shall not charge or receive any money or other valuable consideration from a consumer before full and complete performance of the service that the seller or solicitor has agreed to perform for or on behalf of the consumer.

C. A seller or solicitor who violates this section is guilty of a class 5 felony.

§ 44-1278 Unlawful practice; powers of attorney general; cumulative remedies

A. It is an unlawful practice pursuant to section 44-1522 for a seller or solicitor or anyone acting on their behalf to make or authorize to any consumer any reference to the seller's or solicitor's compliance with this article other than on inquiry by the consumer.

B. It is an unlawful practice pursuant to section 44-1522 for any seller or solicitor or anyone acting on their behalf who conducts a telephone solicitation in this state to do any of the following:

1. Use telephone equipment that blocks the caller identification function on the telephone or telephone equipment of the telephone number dialed so that the telephone number of the caller is not displayed on the telephone or telephone equipment that is capable of displaying the telephone number of the caller.

2. Initiate an outbound telephone call to a person if that person has previously stated a desire not to receive outbound telephone calls made by or on behalf of the seller whose goods or services are being offered. A seller or solicitor is not liable under this paragraph or paragraph 3 if all of the following apply:

(a) The seller or solicitor has established and implemented written procedures to comply with this paragraph.

(b) The seller or solicitor has trained the seller's or solicitor's personnel according to the written procedures prescribed in subdivision (a) of this paragraph.

(c) The seller or the solicitor acting on behalf of the seller establishes and maintains a no call list comprised of all persons who request not to be contacted and keeps all do not call requests for at least ten years.

(d) The initial outbound call or any subsequent outbound call made by the seller or solicitor is the result of an error.

3. Intentionally make or cause to be made any unsolicited telephone sales call to any mobile or telephone paging device.

4. Make a telephone call to any residential telephone using an artificial or prerecorded voice to deliver a message unless the call is initiated for emergency purposes or the call is made with the prior express consent of the called party.

5. Use any automatic terminal equipment that uses a random or sequential number generator unless the equipment excludes calls to the following telephone numbers:

(a) Emergency telephone numbers, including 911, of any hospital, medical physician, health care facility, poison control center, fire protection facility or law enforcement agency.

(b) Any guest room or patient room of a hospital, health care facility, elderly care home or similar establishment.

(c) A paging service, a cellular telephone service, a specialized mobile radio service or any service for which the called party is charged for the call.

(d) The telephone numbers maintained on a no call list established pursuant to paragraph 2 of this subsection.

6. Initiate an outbound call except as provided in 47 Code of Federal Regulations, section 64.1200 or 16 Code of Federal Regulations section 310.4.

C. Failure to comply with this article is an unlawful practice pursuant to section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

D. The provisions of this article are in addition to all other causes of action, remedies and penalties available to this state.

E. The attorney general may bring an action in federal court in accordance with 15 United States Code sections 6101 through 6108.

§ 44-1279 Civil remedies

A consumer may rescind a sale by an unregistered seller at any time. The consumer may recover any purchase monies paid to the unregistered seller, financial damages caused by the unregistered seller and reasonable attorney fees and costs.

§ 44-1280 Subpoena; failure to supply information or obey subpoena; confidentiality of information; violation; classification

A. The county attorney or attorney general, in addition to other powers conferred on him by this article, may issue and serve in the manner provided under section 13-4072 a subpoena to a custodian of records of a public service corporation as defined by section 40-341 requesting:

1. The name and billing address for a subscriber.

2. The physical location of the service address assigned to a subscriber.

3. The long-distance service provider.

4. Subscriber credit information.

B. If a custodian of records of a public service corporation fails or refuses to fully comply with a subpoena issued under this section, the county attorney or attorney general may file a petition with the superior court and, after notice and hearing on the petition, request the following orders until the custodian of records complies:

1. Adjudging the custodian of records or corporation in contempt of court.

2. Granting such other relief as the court deems proper.

3. Granting reasonable attorney fees to the state or county.

C. If the county attorney or attorney general determines that disclosure to the custodian of records of a public service corporation of the evidence relied on to establish reasonable cause would not be in the best interests of the investigation, he may request and the court may examine the evidence in camera and thereafter make its determination.

D. A person releasing information obtained pursuant to this section, except in the proper discharge of official duties, is guilty of a class 2 misdemeanor.

§ 44-1281 Duties of secretary of state

The secretary of state shall:

1. Prescribe and publish the forms and adopt the rules necessary to carry out this article.

2. Refer to the attorney general or county attorney for investigation any matter that the secretary of state has reason to believe constitutes a violation of this article.

3. Preserve for five years from the date of filing all information required to be filed pursuant to this article, after which the information shall be destroyed. This information is public information and is open to public inspection.

4. With referral, provide the attorney general with a complete copy of all registration statements and attachments, including renewals and supplemental statements, that are filed pursuant to section 44-1272 by a seller of business opportunities or merchandise related to business opportunities.

§ 44-1282 National do-not-call registry; prohibitions; enforcement; civil penalty; definition

A. A seller or solicitor or anyone acting on behalf of a seller or solicitor shall not initiate an outbound telephone solicitation call or text message to any telephone number if the telephone number is entered in the national do-not-call registry established by the federal trade commission pursuant to the do-not-call implementation act, except that this section does not apply to any telephone solicitation that would be authorized or permitted by federal law or regulation relating to a telephone solicitation or to calls made by or on behalf of a seller or solicitor who is licensed pursuant to title 32, chapter 20 if the calls are made under any of the following circumstances:

1. In regard to a past or present employment agreement with the consumer pursuant to title 32, chapter 20, article 3 and who is calling in regard to a subject reasonably related to the employment agreement.

2. In response to a referral from a natural person with whom the consumer has a personal relationship.

3. In response to an express request or permission of a consumer whose telephone number is entered in the national do-not-call registry.

B. A violation of this section is an unlawful practice pursuant to section 44-1522. The attorney general may investigate and take appropriate action pursuant to chapter 10, article 7 of this title, but a civil penalty under section 44-1531 for a violation of this section shall not exceed $1,000 per violation. This subsection is in addition to all other causes of action, remedies and penalties available to this state. All monies collected as fines and civil penalties pursuant to this subsection shall be credited to the state general fund.

C. For the purposes of this section, "do-not-call implementation act" means the do-not-call implementation act (P.L. 108-10; 117 Stat. 557) as enacted on March 11, 2003 and federal regulations adopted to implement that act.

Article 7 Aftermarket Crash Parts

§ 44-1291 Definitions

In this article, unless the context otherwise requires:

1. "Aftermarket crash part" means a replacement for any of the nonmechanical sheet metal or plastic parts which generally constitute the exterior of a motor vehicle, including the inner and outer panels.

2. "Installer" means an individual who actually does the work of replacing or repairing parts of a motor vehicle.

3. "Nonoriginal equipment manufacturer aftermarket crash part" means an aftermarket crash part which is not made for or by the manufacturer of the motor vehicle.

4. "Repair facility" means a motor vehicle dealer, garage, body shop or other commercial entity which undertakes the repair or replacement of those parts that generally constitute the exterior of a motor vehicle.

§ 44-1292 Identification of aftermarket crash part

A nonoriginal equipment manufacturer that supplies an aftermarket crash part for use in this state shall affix to the part or inscribe on the part the logo or name of the manufacturer.

§ 44-1293 Disclosure on use of aftermarket crash part

A motor vehicle repair facility or motor vehicle parts installer shall not use a nonoriginal equipment manufacturer aftermarket crash part to repair a vehicle unless the part meets the specifications of section 44-1292 and unless the consumer is advised in a written notice attached to or printed on a repair estimate which:

1. Clearly identifies each part.

2. Contains the following information in ten point or larger type:

"This estimate has been prepared based on the use of replacement parts supplied by a source other than the manufacturer of your motor vehicle. Warranties applicable to these replacement parts are provided by the manufacturer or distributor of these parts rather than the manufacturer of your vehicle."

§ 44-1294 Enforcement

Violation of this article is declared to be an unlawful practice and is subject to all of the penalties and enforcement procedures provided in chapter 10, article 7 of this title.

Article 8 Waste Tire Disposal

§ 44-1301 Definitions

In this article, unless the context otherwise requires:

1. "Damage" means any cracking, bubbling, cutting, chunking or separation of the tire sidewall or tread, including exposed body ply or belt material, or any visible deterioration of the tire bead or inner liner.

2. "Improper repair" means any puncture repair of damage larger than one-fourth of an inch, any puncture repair to a tire sidewall, the tread shoulder or belt edge area, or a puncture repair that has not been both sealed or patched on the inside and repaired with a cured rubber stem through to the outside.

3. "Motor vehicle" means any automobile, motorcycle, truck, trailer, semitrailer, truck tractor and semitrailer combination or other vehicle operated on the roads of this state, used to transport persons or property and propelled by power other than muscular power, but motor vehicle does not include traction engines, vehicles that run only on a track, bicycles or mopeds.

4. "Off road motor vehicle" means any automobile, motorcycle, truck, trailer, semitrailer, truck tractor and semitrailer combination, heavy equipment used in mining or metallurgical operations, agriculture, construction or earth moving, airplanes or other vehicles operated off the roads of this state, used to transport persons or property or used for agricultural, construction or earth moving activities and propelled by power other than muscular power, but off road motor vehicle does not include traction engines, vehicles that run only on a track, bicycles or mopeds.

5. "Person" means any public or private corporation, company, partnership, firm, association or society of persons, the federal government and any of its departments or agencies, this state or any of its agencies, departments, political subdivisions, counties, towns or municipal corporations, as well as a natural person.

6. "Waste tire" means a motor vehicle tire that is no longer suitable for its original intended purpose because of wear, damage, improper repair or manufacturer's recall.

7. "Waste tire collection site" means a site where waste tires are collected before being offered for recycling or reuse and where more than five hundred tires are kept on site on any day.

8. "Wear" means the reduction of the major groove depth of the tire to two thirty-seconds of an inch.

§ 44-1302 Sale of new tires; fees; acceptance of waste tires; notice; definition

(Rpld. 1/1/29)

A. Until the effective date of the fees authorized pursuant to subsection N of this section, a retail seller of new motor vehicle tires shall collect a fee of two percent of the purchase price for each tire sold but not more than $2 for each tire sold, which shall be listed separately on any invoice.

B. Until the effective date of the fees authorized pursuant to subsection N of this section, if in a sale of a motor vehicle by a manufacturer to a wholesaler or retailer the cost of the tires as a separate component of the motor vehicle is not specified by the manufacturer, the fee per tire to be collected shall not exceed one-half of the maximum fee allowed under this section for a motor vehicle with a gross vehicle weight under ten thousand pounds.

C. Until the effective date of the fees authorized pursuant to subsection N of this section, a wholesale seller of new motor vehicle tires who sells tires to this state or a political subdivision of this state or who sells tires to a private entity that does not resell the tires shall collect a fee of two percent of the purchase price for each tire sold but not more than $2 for each tire sold, which shall be listed separately on any invoice.

D. The fee shall be paid to the department of revenue for deposit on a quarterly basis in the waste tire fund established by section 44-1305. Unless the context otherwise requires, title 42, chapter 5, article 1 governs the administration of the fees imposed by this section, except that:

1. A separate license is not required for the fee imposed by this section. The fee shall be reported and paid on forms prescribed by the department.

2. A separate bond is not required of employees of the department in administering the fee.

3. The fee imposed by this section may be included without segregation in any notice and lien filed for unpaid transaction privilege taxes.

4. The fee imposed by this section shall not be included in computing the tax base, gross proceeds of sales or gross income from the sale of new motor vehicle tires for the purposes of title 42, chapter 5 and is not subject to any transaction privilege, sales, use or other similar tax levied by a city, town, or special taxing district.

E. A retail seller of new motor vehicle tires or a wholesale seller of new motor vehicle tires shall accept waste tires from customers at the point of transfer. A seller shall accept up to the number of new tires sold at that point of transfer annually and may accept additional tires from customers. The seller shall accept tires from a customer if the customer presents a receipt within thirty days after the date of purchase. This subsection does not apply to sellers of new motor vehicles.

F. A designated waste tire collection site established pursuant to section 44-1304, subsection G, shall require a manifest for the disposal of waste tires at the site and shall establish registration procedures for the collection site.

G. A seller of motor vehicle tires or the seller's designee complying with this section shall provide a manifest to the designated collection site established pursuant to section 44-1304, subsection G, to dispose of waste tires and shall be preregistered at the designated collection site.

H. A county or private enterprise under contract with a county may refuse to accept waste tires and may impose a tire tipping fee, not exceeding an amount necessary to recover the costs of administering a waste tire program established pursuant to section 44-1305, if any of the following conditions exists:

1. The private enterprise is not receiving waste tire fund monies from the county pursuant to section 44-1305.

2. Waste tires are manifested as originating outside of the county.

3. A seller of motor vehicle tires complying with subsection E of this section, is not preregistered at a collection site where registration is required.

4. The county's pro rata share of the total waste tire fund is two percent or less, and after a year of receiving monies from the waste tire fund, the county determines that the cost of waste tire disposal exceeds the amount received.

I. A designated waste tire collection site established pursuant to section 44-1304, subsection G, shall not refuse to accept waste tires from a resident of the county who is not a seller of motor vehicle tires and shall not impose a tire tipping fee for up to five waste tires per year from a resident of the county who is not a seller of motor vehicle tires. Such waste tire collection sites may impose a tire tipping fee on waste tires in excess of five tires per year from a resident of the county who is not a seller of motor vehicle tires.

J. A seller of motor vehicle tires who is subject to subsection E of this section shall post a written notice that is clearly visible in the public sales area of the establishment and that contains the following language:

It is unlawful to throw away a motor vehicle tire.

Recycle all used tires.

This retailer is required to accept scrap tires if any new or recapped tires are purchased here. When any new tire is purchased, an additional fee will be charged.

K. An advertisement or other printed promotional material related to the retail sale of tires shall contain the following notice in bold print:

State or local taxes or surcharges for environmental protection will be an extra charge.

L. A credit of $.10 per tire is allowed against the fee imposed by this article for expenses incurred by the payer of the fee for accounting for and reporting the fees.

M. This section does not apply to a person whose retail sales of new motor vehicle tires are not in the ordinary course of business.

N. The director of environmental quality shall establish by rule the fees, including any associated maximum fees, required by subsection A, B or C of this section.

O. For the purposes of this section, "retail seller of new motor vehicle tires" and "wholesale seller of new motor vehicle tires" includes those persons who sell or lease new motor vehicles to others in the ordinary course of business.

§ 44-1303 Waste tire collection sites; registration

A. An owner or operator of a waste tire collection site shall register with the department of environmental quality and provide the department with information concerning the site's location and size and the approximate number of waste tires that are stored at the site and shall initiate steps to comply with this article.

B. Any waste tire collection site that is established after July 20, 2011 shall register with the department before beginning operation and shall pay a registration fee. After July 20, 2011, the director shall establish by rule a registration fee, including a maximum fee. Registration fees shall be deposited, pursuant to sections 35-146 and 35-147, in the solid waste fee fund established by section 49-881.

§ 44-1304 Disposal of waste tires

A. The disposal of waste tires in landfills and the incineration of those tires is prohibited, except as provided in subsection C or D of this section or in accordance with rules adopted by the director of the department of environmental quality. An owner or operator of a solid waste disposal site shall not knowingly accept waste tires for disposal unless the director has approved waste tire disposal pursuant to the site's solid waste facility plan.

B. A person shall not dispose of motor vehicle waste tires unless the waste tires are disposed of at a waste tire collection site or as provided in subsection C or D of this section or in accordance with rules adopted by the director of the department of environmental quality.

C. Off-road motor vehicle waste tires shall not be disposed of or reused except in accordance with this article or rules adopted by the director of the department of environmental quality. In the absence of rules, off-road motor vehicle waste tires shall not be disposed of or put to beneficial use in a manner that results in an environmental nuisance pursuant to section 49-141. Mining industry off-road motor vehicle waste tires may be disposed of by burial at a mining facility in the same manner allowed by rule in effect on February 1, 1996 until the director by rule determines on-site recycling methods that are technically feasible and economically practical.

D. The following are permissible methods of waste tire disposal:

1. Retreading or recapping.

2. Constructing collision barriers.

3. Controlling soil erosion or for flood control only if used in accordance with approved engineering practices.

4. Chopping or shredding for use as waste tire daily cover material at a solid waste landfill.

5. Grinding for use in asphalt and as a raw material for other products.

6. Sludge composting.

7. Using as playground equipment.

8. Incinerating or using as a fuel or pyrolysis if allowed by laws, regulations or ordinances relating to burning or fuel.

9. Hauling to out-of-state collection or processing sites.

10. Tire monofills if tires are chopped or shredded.

11. Use as a building material for building construction in accordance with applicable city, town and county building codes.

12. Agricultural purposes as bumpers on agricultural equipment or as ballast to maintain covers at an agricultural site.

E. For the purposes of subsection D, paragraph 10 of this section, "tire monofill" means a solid waste disposal facility or a part of a facility used for the exclusive purpose of the disposal of waste tires that are chopped, shredded or cut up for the purpose of disposal.

F. The director of the department of environmental quality, by rule, may authorize other methods of disposal of waste tires. If used as daily cover material for a solid waste landfill, the director shall specify the size of the parts into which the material must be cut. The director may allow the disposal of whole tires, including with or without rims, pursuant to a solid waste facility plan if disposed of in either of the following manners:

1. As a layer immediately above the base liner system of a new solid waste landfill.

2. Buried with other waste at a depth of fifty feet or more.

G. Each county shall provide at least one designated waste tire collection site in the county to receive waste tires from a seller of motor vehicle tires or the seller's designee complying with section 44-1302. Additional waste tire collection sites or disposal arrangements shall be established by the county as necessary for the disposal of waste tires as provided in subsection B of this section. All collection sites established under this subsection shall comply with applicable zoning and ordinance regulations. The county or private enterprise receiving waste tire fund monies from a county shall not impose a tire tipping fee and shall not refuse to accept waste tires from a seller of motor vehicle tires or the seller's designee complying with section 44-1302, unless provided for in section 44-1302, subsection H.

H. The director of the department of environmental quality shall issue or revise a permit required pursuant to title 49, chapter 3, article 2 for a facility that applies to the department of environmental quality for a permit or a revision to a permit to burn a tire derived fuel if the applicant can demonstrate that the burning of tire derived fuel will result in equal to or lower emissions than the burning of other types of fuel for which the department of environmental quality may issue permits and the applicant has met all requirements of titles I and V of the clean air act. Any tests involving tire derived fuel conducted by the United States environmental protection agency or any test results involving tire derived fuel approved by the United States environmental protection agency, including hazardous air pollutant studies, shall be accepted by the department of environmental quality. No duplicate testing by the applicant shall be required, except that the applicant shall meet all testing requirements under titles I and V of the clean air act. For the purposes of this subsection, "clean air act" has the same meaning prescribed in section 49-401.01.

§ 44-1304.01 Storage, disposal, discard or abandonment of used motor vehicle tires; registration fees; violation; classification; exception

A. It is unlawful to store one hundred or more used motor vehicle tires outdoors as follows:

1. In any fashion that exceeds twenty feet in height.

2. In a pile that is more than one hundred fifty feet from a twenty foot wide access route that allows fire control apparatus to approach the pile. Access routes between and around tire piles shall be at least twenty feet wide and maintained free of accumulations of rubbish, equipment or other materials. Access routes shall be spaced so that a maximum grid system unit of fifty feet by one hundred fifty feet is maintained.

3. Within three feet of any property line.

4. In any fashion that exceeds six feet in height if the used tires are stored between three and ten feet of any property line.

5. Within fifty feet of any area in which smoking of tobacco or any other substance by persons is allowed. "No smoking" signs shall be posted in suitable and conspicuous locations.

6. At any area in which the used motor vehicle tires are stored and in which electrical wiring, fixtures or appliances do not comply with the national electrical code.

7. Without placing class "2A-10BC" type fire extinguishers at well marked points throughout the storage area so that the travel distance from any point in the storage area to a fire extinguisher is not more than seventy-five feet.

8. Without prior registration of the site with the department of environmental quality. The registration shall be on a form approved by the department and shall include the site's location, the name of the owner of the property, the name of the owner or operator of the business storing the waste tires, if applicable, and the type and approximate quantity of waste tires stored at the site. For any waste tire collection site that is operating on September 26, 2008, the owner of the property shall register pursuant to this paragraph on or before November 25, 2008. For any person who stores one hundred or more used motor vehicle tires outdoors after July 20, 2011, the operator shall pay a registration fee. After July 20, 2011, the department shall establish by rule a registration fee, including a maximum fee. Registration fees shall be deposited, pursuant to sections 35-146 and 35-147, in the solid waste fee fund established by section 49-881.

B. A person who knowingly discards or abandons five hundred or more motor vehicle tires, discards or abandons any motor vehicle tires for commercial purposes except as provided in section 44-1304, or otherwise knowingly performs any act prohibited by subsection A of this section involving five hundred or more motor vehicle tires is guilty of a class 5 felony.

C. The attorney general may enforce this section.

D. For the purposes of this section, used motor vehicle tires do not include tires that have been recapped and have not yet been put back into service.

§ 44-1305 Waste tire fund and program

(Rpld. 1/1/29)

A. A waste tire fund is established to be administered by the department of revenue consisting of monies collected from the fees applied to tires pursuant to this article. Monies in the fund are exempt from lapsing under section 35-190.

B. At the end of each calendar quarter the department of revenue shall certify to the department of administration and to the department of environmental quality the amounts to be paid from the fund as follows:

1. An amount not to exceed three and one-half per cent of the monies in the fund shall be transferred to the department of environmental quality for deposit in the solid waste fee fund established by section 49-881 for monitoring and enforcing this article.

2. An amount not to exceed five per cent or two hundred fifty thousand dollars, whichever is less, may be used by the director of the department of environmental quality for tire fire cleanup expenses if no other funds are available.

3. The remainder of the monies shall be distributed among the counties in this state in proportion to the number of motor vehicles registered in the county as of the preceding July 1. Such monies shall be used by the counties for the purposes prescribed by subsection C of this section.

C. Each county shall establish a waste tire program and shall submit by September 1 of each year a waste tire management plan to the department of environmental quality for review and approval. A waste tire program may include contracts with private enterprise to do any of the following, either individually or collectively:

1. Develop a plan to manage waste tires in the county.

2. Construct or operate or contract for the construction or operation of a waste tire processing facility and purchase equipment for that facility.

3. Contract for a waste tire processing facility service.

4. Remove or contract for the removal of waste tires from the county or other region.

5. Establish waste tire collection centers at solid waste disposal facilities or waste tire processing facilities.

6. Develop an accounting system for the waste tires managed with monies from the waste tire fund.

D. A county with a population of less than four hundred thousand persons as determined by the most recent United States decennial census may join with any other county and pool their financial resources to establish a program pursuant to this section to address the waste tire problem.

E. The department of revenue shall provide an annual report to the legislature and to the department of environmental quality on the collection and distribution of monies in the waste tire fund.

§ 44-1306 Department of environmental quality; rules; annual county report to the department

A. The department of environmental quality shall adopt and enforce rules to carry out the provisions of this article.

B. Each county shall report by September 30 of each year to the department of environmental quality the following for the preceding fiscal year and provide a summary for each waste tire collection site:

1. The number of eligible waste tires collected each month at each collection site with a list of registered tire dealers delivering the tires to each collection site and the number of tires from each dealer.

2. The number of tires collected each month at each collection site from sources other than registered tire dealers.

3. The number of tires transported out of each collection site.

4. The estimated number of tires remaining at each collection site at the end of the preceding fiscal year.

5. Summaries of all manifests tracking the incoming and outgoing waste tires at each collection site.

6. The amount of monies received and expended pursuant to the waste tire program.

§ 44-1307 Civil penalties; environmental nuisance

Unless otherwise provided, a person who violates a provision of this article, or any rule adopted by the director pursuant to this article, is subject to a civil penalty of not more than five hundred dollars per violation and is subject to citation under title 49, chapter 1, article 3, relating to environmental nuisances. Each tire which is sold or disposed of improperly constitutes a separate violation.

Article 9 Sale and Disposal of Batteries

§ 44-1321 Definitions

In this article, unless the context otherwise requires:

1. "Automotive recycler" has the same meaning prescribed in section 28-101.

2. "Industrial account" means a person or business entity that files or is required to file monthly returns for that person's or entity's transaction privilege tax license or a governmental entity that sells lead acid batteries to an automotive recycler.

3. "Lead acid battery" means a battery with a core of elemental lead and a capacity of six or more volts that is suitable for use in a vehicle or a boat.

4. "Peace officer" includes a law enforcement officer who is employed by the department of transportation.

5. "Used automotive components dealer":

(a) Means any business that purchases used components of a motor vehicle with the intent to resell.

(b) Does not include:

(i) An automotive recycler who is licensed pursuant to title 28, chapter 10.

(ii) A lead acid battery seller who is required to accept lead acid batteries pursuant to section 44-1323, subsection A.

§ 44-1322 Disposal of lead acid batteries

A. The disposal of lead acid batteries in landfills and the incineration of those batteries is prohibited.

B. An owner or operator of a solid waste disposal facility shall not knowingly accept a lead acid battery for disposal.

C. A lead acid battery shall be discarded or disposed of only as follows:

1. A lead acid battery retailer or wholesaler may deliver a lead acid battery to any one of the following:

(a) A permitted secondary lead smelter.

(b) A battery manufacturer.

(c) A collection or recycling facility authorized by the federal environmental protection agency or the department of environmental quality.

(d) In the case of battery retailers only, an agent of a battery wholesaler.

2. A person other than a lead acid battery retailer or wholesaler may deliver a lead acid battery to any one of the following:

(a) A lead acid battery retailer or wholesaler.

(b) A permitted secondary lead smelter.

(c) A collection or recycling facility authorized by the federal environmental protection agency or the department of environmental quality.

D. The director of the department of environmental quality shall register collection and recycling facilities that accept lead acid batteries. The director shall require collection and recycling facilities that handle lead acid batteries to pay an initial registration fee and annual fee established by rule. The director shall deposit, pursuant to sections 35-146 and 35-147, registration fees in the solid waste fee fund established by section 49-881.

§ 44-1323 Sale of lead acid batteries; refundable deposit; notice

A. A lead acid battery seller shall accept from customers at the point of transfer used lead acid batteries of the type and quantity sold at that point of transfer and may accept additional batteries. A seller shall not charge any deposit to receive those batteries, other than the refundable deposit authorized by subsection B. A lead acid battery seller shall post a written notice that is clearly visible in the public sales area of the establishment and that contains the following language:

"It is unlawful to dispose of a motor vehicle battery or other lead acid battery in a landfill or any unauthorized site.

Recycle all used batteries.

This seller is required by law to accept used lead acid batteries. When any new lead acid battery is purchased, a refundable deposit will be charged unless a used battery is returned for refund within forty-five days."

B. A lead acid battery seller shall charge each person who purchases a new lead acid battery a refundable deposit per battery. A seller shall refund the deposit to any person who presents a used lead acid battery to the seller with a receipt for the purchase of a new battery from that seller within the forty-five day period immediately following the purchase. A seller may keep any lead acid battery deposit monies that are not properly claimed within forty-five days after the date of sale.

C. All lead acid batteries sold after July 1, 1991 shall bear a universally accepted recycling symbol.

D. An advertisement or other printed promotional material related to the sale of lead acid batteries shall contain the following notice in bold print:

"A deposit is imposed on the purchase of each new lead acid battery unless a used battery is returned where applicable."

E. This section does not apply to a person whose sales of batteries are not in the ordinary course of business.

F. A wholesale seller of lead acid batteries who sells batteries to this state, to a political subdivision of this state or to a private entity that does not resell the batteries:

1. Is subject to this article.

2. May charge a deposit as prescribed by subsection B of this section.

§ 44-1324 Civil penalties; environmental nuisance

A person who knowingly violates section 44-1322 or 44-1323 is subject to a civil penalty of not more than five hundred dollars per violation and is subject to citation under title 49, chapter 1, article 3, relating to environmental nuisances. Each battery that is sold, refunded or disposed of improperly or improperly subjected to a fee constitutes a separate violation.

§ 44-1325 Used automotive components dealers; records of purchase; age requirement for lead acid battery seller

A. Every used automotive components dealer shall keep on the business premises a book or other similar record legibly printed or written in ink and in English of each transaction involving the receipt of two or more lead acid batteries, except if the batteries are a component of a vehicle being purchased. The record of each receipt of lead acid batteries shall include the following information:

1. The date, time and place of the transaction.

2. A photograph and an identifying description of the specific lead acid batteries received.

3. The dollar amount of the transaction.

4. The seller's name, physical description, including gender, height, weight, race and eye and hair color, physical address, date of birth and signature and a photocopy of a current driver license, nonoperating identification license issued pursuant to section 28-3165 or photo identification card issued by a tribal government or the United States military. The used automotive components dealer must validate the recorded information by using the seller's current driver license, nonoperating identification license issued pursuant to section 28-3165 or photo identification card issued by a tribal government or the United States military.

5. The seller's transaction privilege tax number, if applicable.

6. The number and state of issuance of the license on the vehicle used to deliver the lead acid battery.

7. A photograph, video record or digital record of the seller involved in the transaction.

8. A right index fingerprint of the seller.

B. The record and entries shall be retained in a book or similar record at the business premises for one year after making the final entry of any transaction and shall be retained either at the business premises or any other reasonably available location for an additional year. A used automotive components dealer shall not purchase lead acid batteries for which a record is required to be kept by this section in a series of purchases involving less than two batteries to avoid the requirements of this section. A used automotive components dealer's business premises, business records relating to lead acid battery transactions, including a book or similar record prescribed by this section, and business inventory shall be open during regular business hours for reasonable inspection by a peace officer. Before an inspection occurs a peace officer shall identify who the peace officer is and the purpose for the inspection to the used automotive components dealer, the used automotive components dealer's manager or another responsible person and comply with all reasonable and customary safety requirements of that used automotive components dealer for the business premises inspected. The used automotive components dealer may require the peace officer to sign an inspection log that includes the officer's name and serial or badge number and the time, the date and the purpose for the inspection.

C. A used automotive components dealer shall not provide payment for any lead acid batteries on site at the time of the lead acid battery transaction. Payment shall be made by mailing a check or money order to a physical address provided by the seller through a current driver license or other identification prescribed in subsection A, paragraph 4 of this section. The check or money order shall be made payable to the business name for an industrial account. This subsection:

1. Except as provided in paragraph 2 of this subsection, applies to all lead acid battery transactions of three hundred dollars or more.

2. Does not apply to industrial accounts if the industrial accounts annually preregister employees who are authorized sellers on behalf of the industrial accounts.

D. A used automotive components dealer shall provide a receipt to the seller on site at the time of the lead acid battery transaction, for every transaction, and shall include the following information:

1. The date, time and place of the transaction.

2. An identifying description of the specific lead acid battery received.

3. The dollar amount of the transaction.

E. A used automotive components dealer may not conduct a series of transactions for lead acid batteries to avoid the requirements of this section.

F. An individual who is a lead acid battery seller shall not participate in more than one cash transaction per day for lead acid batteries.

G. An individual who is a lead acid battery seller shall be at least sixteen years of age.

§ 44-1326 Violation; classification

A used automotive components dealer who fails in any respect to keep a book or similar record prescribed by section 44-1325 or to set out in a book or similar record any matter this article requires or who refuses, on demand of any peace officer of this state, to exhibit a book or similar record, business record, receipt or transaction record, or who knowingly destroys a book or similar record within two years after making the final entry of any transaction or who otherwise fails to comply with this article is guilty of a class 1 misdemeanor.

§ 44-1327 Report to the department of public safety; exemption; violation; classification

A. Within twenty-four hours of receipt of lead acid batteries, except from an industrial account or a used automotive components dealer, for which a record is required to be kept by section 44-1325, a used automotive components dealer shall electronically submit to the department of public safety a record of the receipt of lead acid batteries. The record shall include the following information:

1. The date, time and place of the transaction.

2. An identifying description of the specific lead acid batteries received including the amount of the transaction or other consideration given.

3. A description of the person delivering the lead acid batteries to the used automotive components dealer including the person's gender, height, weight, race and hair and eye color, address and date of birth and a photocopy of a current driver license, nonoperating identification license issued pursuant to section 28-3165 or photo identification card issued by a tribal government or the United States military.

4. The number and state of issuance of the license on the vehicle used to deliver the lead acid batteries.

B. The department of public safety shall establish by rule electronic submission standards. The submission standards shall allow the submission of the information in an electronic format that is compatible with the output format of not less than four of the record keeping software programs currently in use in the used automotive components dealer industry in this state in a manner that will allow the information to be electronically merged with the department of public safety's database. A used automotive components dealer that submits information to the department of public safety pursuant to this section shall not be required to submit the same information to a local law enforcement agency.

C. The department of public safety shall make the information submitted pursuant to this section available to local law enforcement agencies over the internet and shall provide for training and procedures to allow law enforcement personnel to access the information provided electronically for law enforcement purposes.

D. For transactions with a value over one hundred dollars, a used automotive components dealer shall hold in its custody in the same size, shape and condition in which the lead acid battery was received on its business premises any lead acid batteries received in a reportable transaction for seven days after filing the report prescribed by subsection A of this section.

E. Subsection D of this section does not apply to transactions with industrial accounts or lead acid batteries authorized for release by a peace officer of that jurisdiction.

F. A person who fails to file a report prescribed by this section is guilty of a class 1 misdemeanor.

Article 10 Medical Sharps

§ 44-1341 Medical sharps; label

A. A medical sharp which is sold only by prescription or which is otherwise restricted in its distribution to the general public but which is sold for personal use shall bear a label which describes a safe method for the disposal of the medical sharp.

B. The director of the department of environmental quality shall establish, by rule, the written contents of the label.

§ 44-1342 Tattoo needles and waste; disposal; civil penalty

A. A tattoo needle and any waste exposed to human blood that is generated in the creation of a tattoo shall be disposed of in the same manner as biohazardous medical waste pursuant to section 49-761.

B. A person who disposes of a tattoo needle or any waste generated in the creation of a tattoo in violation of this section is liable for a civil penalty of up to five hundred dollars for each violation.

Article 11 Assistive Device Warranties

§ 44-1351 Definitions

In this article, unless the context otherwise requires:

1. "Assistive device" means any device, including a demonstrator, that a consumer purchases or accepts transfer of in this state and that is used to assist an individual with a disability as described in the Americans with disabilities act of 1990 (P.L. 101-336; 104 Stat. 328; 42 United States Code sections 12101 through 12213) in connection with a major life activity including mobility, vision, speech, communication, maneuvering and manipulation of a consumer's environment. Assistive device includes:

(a) A manual or motorized wheelchair, a motorized scooter and any device that enhances the mobility or functional capability of a consumer.

(b) A voice synthesized computer module, an optical scanner, talking software, a braille printer and any device that enables a sight-impaired consumer's ability to communicate.

(c) An environmental control unit, a motor vehicle modification or any other similar device that enables an individual with a disability to communicate, see, hear, speak, maneuver or manipulate the consumer's environment.

2. "Assistive device dealer" means a person who is in the business of selling new assistive devices.

3. "Assistive device lessor" means a person who leases a new assistive device to a consumer under a written lease or holds the rights of a lessor under a written lease.

4. "Collateral cost" means an expense incurred by an assistive device lessor or a consumer in connection with the repair of a nonconformity, including the costs of sales tax and of obtaining an alternative assistive device. Collateral cost includes the cost to the consumer of returning a nonconforming assistive device.

5. "Consumer" means any of the following:

(a) An individual or entity that purchases a new assistive device if the assistive device was purchased from an assistive device dealer or manufacturer for purposes other than resale.

(b) An individual or entity to which the assistive device is transferred for purposes other than resale and if the transfer occurs before the expiration of an express warranty applicable to the assistive device.

(c) An individual or entity that may enforce any warranty applicable to the new assistive device.

(d) An individual or entity that leases a new assistive device from an assistive device lessor under a written lease.

6. "Current value of the written lease" means the total amount for which the lease obligates the consumer during the period remaining after its early termination plus the assistive device dealer's termination costs and the value of the assistive device at the lease expiration date if the lease sets forth a date minus the assistive device lessor's early termination costs.

7. "Demonstrator" means an assistive device used primarily for the purpose of demonstration to the public.

8. "Early termination cost" means any expense or obligation, including a penalty for prepayment under a finance arrangement, that an assistive device lessor incurs as a result of both the termination of a written lease before the termination date written in the lease and the return of an assistive device to a manufacturer pursuant to this article.

9. "Early termination saving" means any expense or obligation that an assistive device lessor avoids as a result of both the termination of a written lease before the termination date written in the lease and the return of an assistive device to a manufacturer pursuant to this article, including either:

(a) An interest charge that the assistive device lessor would have paid to finance the assistive device.

(b) The difference between the total lease obligation amount during the period of the lease term remaining after the early termination and the present value of that amount at the date of the early termination, if the assistive device lessor does not finance the assistive device.

10. "Manufacturer" means a person who manufactures or assembles assistive devices and the agents of that person, including an importer, a distributor, a factory branch, a distributor branch or a warrantor of an assistive device but does not include an assistive device dealer.

11. "Nonconformity" means a defect, malfunction or condition that substantially impairs the use, safety or value of an assistive device and that is covered by an express warranty applicable to the assistive device or to a component of the assistive device, excluding a defect, malfunction or condition that is the result of either:

(a) An accident involving the assistive device or from abuse, neglect, modification or alteration of the assistive device by any person other than the manufacturer or the manufacturer's agent or distributor or an authorized assistive device dealer or assistive device lessor.

(b) Normal use that could be resolved through fitting adjustments, cleaning or proper use.

12. "Reasonable attempt to repair" means within the terms of an express warranty that applies to a new assistive device either:

(a) Any nonconformity that is covered by the warranty and that has been repaired at least twice by the manufacturer or the manufacturer's authorized assistive device dealer or the assistive device lessor and the same nonconformity continues.

(b) The new assistive device is out of service for repair for an aggregate of at least thirty cumulative days due to a nonconformity covered by the warranty.

§ 44-1352 New assistive device; nonconformity; reasonable attempt to make a repair; reasonable allowance; options

A. Except as provided in subsection B of this section, a manufacturer who sells an assistive device to a consumer, directly or through an assistive device dealer, shall give the consumer an express warranty against defects, malfunctions or conditions for the assistive device. The duration of the express warranty shall be for at least one year after the initial delivery of the assistive device to the consumer.

B. In the absence of an express warranty from the manufacturer, the manufacturer is deemed to have expressly warranted to the consumer that the assistive device will be free from any defect, malfunction or condition that substantially impairs the use, safety or value of the assistive device. The duration of the express warranty shall be for at least one year after the initial delivery of the assistive device to the consumer.

C. During the period of the express warranty, if a new assistive device does not conform to the express warranty and the consumer reports the nonconformity to the manufacturer, the manufacturer's authorized assistive device dealers or the assistive device lessor and makes the assistive device available for repair, the nonconformity shall be repaired at no charge to the consumer.

D. If the nonconformity is not repaired after a reasonable attempt to make a repair, a consumer, as defined in section 44-1351, paragraph 5, subdivision (a), (b) or (c), may direct the manufacturer to perform one of the following options and the manufacturer shall comply with the option chosen by the consumer:

1. Accept return of the assistive device and replace the assistive device with a comparable new assistive device and refund any collateral costs to the consumer and assistive device lessor.

2. Accept return of the assistive device and refund to the consumer and to any holder of a perfected security interest in the assistive device the full purchase price plus any finance charge paid by the consumer at the point of sale and collateral costs minus a reasonable allowance for use. A reasonable allowance for use shall not exceed the amount obtained by multiplying the full purchase price of the assistive device by a fraction, the numerator of which is the number of days that the assistive device was used before the consumer first reported the nonconformity to the assistive device dealer and the denominator of which is one thousand eight hundred twenty-five.

E. If the nonconformity is not repaired after a reasonable attempt to make a repair, a consumer, as defined in section 44-1351, paragraph 5, subdivision (d), may direct the manufacturer to perform one of the following options and the manufacturer shall comply with the option chosen by the consumer:

1. Accept return of the assistive device, replace the assistive device with a comparable new assistive device and refund any collateral cost to the consumer and assistive device dealer.

2. Refund to the assistive device lessor and to any holder of a perfected security interest in the assistive device the current value of the written lease and refund to the consumer the amount that the consumer paid under the written lease plus all collateral costs minus a reasonable allowance for use. A reasonable allowance for use shall not exceed the amount obtained by multiplying the total amount for which the written lease obligates the consumer by a fraction, the numerator of which is the number of days that the assistive device was used before the consumer first reported the nonconformity to the manufacturer, assistive device lessor or assistive device dealer and the denominator of which is one thousand eight hundred twenty-five.

§ 44-1353 Replacement of assistive device; refund of monies; transfer of possession; limitations; disclosure

A. A consumer, as defined in section 44-1351, paragraph 5, subdivision (a), (b) or (c), shall notify the manufacturer of a nonconformity. Within thirty days after receiving notification of a nonconformity, the manufacturer shall provide the consumer with a comparable assistive device or a refund. After receiving the new assistive device or refund, the consumer shall return to the manufacturer the assistive device that has the nonconformity including any endorsements necessary to transfer physical possession to the manufacturer.

B. A consumer, as defined in section 44-1351, paragraph 5, subdivision (d), shall notify the assistive device lessor and manufacturer of a nonconformity. Within thirty days after receiving notification of a nonconformity, the manufacturer shall provide the consumer with a comparable assistive device or a refund. After receiving the refund or comparable assistive device, the consumer shall return to the manufacturer the assistive device that has the nonconformity.

C. An assistive device lessor shall offer to transfer possession to the manufacturer of the assistive device that has the nonconformity. Within thirty days after receiving the offer, the manufacturer shall provide the assistive device lessor with a refund. After receiving the refund, the assistive device lessor shall provide the manufacturer with any endorsements necessary to transfer legal possession to the manufacturer.

D. A person shall not enforce the lease against the consumer after the consumer receives a refund pursuant to this section.

E. An assistive device returned by a consumer or assistive device lessor in this state or by a consumer or assistive device lessor in another state under a similar provision shall not be sold or leased again in this state unless full written disclosure of the reasons for the return is made to the prospective buyer or lessee.

§ 44-1354 Assistive device dealers; lessors; notice

At the time the consumer takes possession of the assistive device, the assistive device dealer or assistive device lessor shall give the consumer the following written notice in fourteen point bold-faced type:

By law the manufacturer is deemed to have provided to you, the purchaser of an assistive device, a one year warranty that begins on the date of the initial delivery to you. This warranty provides that the assistive device will be free from any defect, malfunction or condition that substantially impairs its use, safety or value.

To ensure that you receive the benefits of this warranty, within one year after the initial delivery to you of the assistive device, you must report any problem with the assistive device to the manufacturer, authorized assistive device dealer or assistive device lessor and make the assistive device available for repair by the manufacturer, authorized assistive device dealer or assistive device lessor.

During the warranty period, if any defect, malfunction or condition cannot be repaired after two attempts or if your assistive device is out of service for at least thirty days for repair of any defect, malfunction or condition that substantially impairs the use, safety or value of the assistive device, you are entitled to either a comparable new assistive device or a refund of the full purchase price plus any finance charge and collateral cost minus a reasonable allowance for use. If you are leasing an assistive device you are entitled to either a comparable assistive device or a refund of the amount paid under the written lease plus all collateral costs minus a reasonable allowance for use.

The warranty provided to you by law does not cover any defect, malfunction or condition that results from an accident involving the assistive device or from neglect, modification or alteration of the assistive device by any person other than the manufacturer or the manufacturer's agent or distributor or an authorized assistive device dealer or assistive device lessor and the warranty relieves the manufacturer of liability for repairs in these instances.

A manufacturer may refuse to replace an assistive device or may refuse to refund the purchase price if the problem does not substantially impair the use, safety or value of your assistive device.

A contract or agreement for the sale or lease of an assistive device cannot void any of these rights.

§ 44-1355 Exemption; waiver of rights; action to recover damages; attorney fees

A. An assistive device dealer is not liable to a manufacturer for a refund if the assistive device dealer makes a repair in a manner that is consistent with the manufacturer's instructions.

B. This section does not limit any rights or remedies available to a consumer under any other law. Any waiver of rights by a consumer is void.

C. In addition to any other remedy, a consumer may bring an action in superior court to recover damages caused by a violation of this section. The court may award the prevailing consumer triple the amount of any pecuniary loss plus costs, disbursements and attorney fees. The court may also award any equitable relief deemed appropriate by the court.

Article 12 Check Cashers

§ 44-1361 Definitions

In this article, unless the context otherwise requires:

1. "Check casher" means any person who engages in the business of cashing payment instruments more than ten times in any calendar year and who receives compensation of at least five hundred dollars during any thirty day period for cashing payment instruments. Check casher does not include:

(a) Any person who does business pursuant to any law of this state or any other state if the business conducted in this state is regulated by an agency of this state, of another state or of the United States and the business relates to a bank, savings bank, trust company, savings and loan association or credit union.

(b) Any international banking corporation, a branch office of a foreign bank, a corporation that is organized pursuant to the bank service company act (12 United States Code sections 1861 through 1867) or a corporation that is organized pursuant to the edge act (12 United States Code sections 611 through 633).

(c) The United States or any department, agency, subdivision or instrumentality of the United States.

(d) The United States postal service.

(e) Any state or any department, agency, subdivision or instrumentality of any state.

(f) Electronic funds transfers of government benefits for a federal, state or governmental agency by a contractor on behalf of the United States or any state or a department, agency, subdivision or instrumentality of the United States or any state.

(g) Any person who provides clearance or settlement services pursuant to a registration as a clearing agency or who is exempt from registration pursuant to federal securities laws to the extent of the person's operation as a clearance or settlement service provider.

(h) Any operator of a payment system that provides processing, clearing or settlement services between or among persons who are excluded by this paragraph.

(i) Any person who is registered as a securities broker dealer pursuant to federal securities laws to the extent of the person's operation as a securities broker dealer.

(j) A person who is engaged in the business of issuing, selling or redeeming stored value instruments that are subject to regulation, supervision and examination by a federal or state banking agency that does not issue, sell or redeem stored value instruments to or from individuals.

2. "Payment instrument" means any check, draft, money order, traveler's check in record form, stored value instrument or other instrument for the transmission or payment of money, whether negotiable, and in record form. Payment instrument does not include a credit card voucher, a letter of credit or any instrument that is redeemable by the issuer in goods or services.

§ 44-1362 Check cashing; receipts; notices; government payment instruments; enforcement

A. A check casher may charge a fee for cashing a payment instrument, and the check casher shall give a receipt to the customer for each transaction.

B. A check casher shall display in a conspicuous location in the check casher's principal place of business and each branch office a complete and legible notice that is in English and Spanish and that includes both of the following:

1. A schedule of all fees for both of the following:

(a) Cashing each type of payment instrument.

(b) Issuing an identification card.

2. A list of any identification that is acceptable in lieu of the identification card provided by the check casher.

C. A check casher shall not charge a fee that is more than three per cent of the face amount of the payment instrument or five dollars, whichever is more, for cashing any payment instrument issued by an agency of the United States or of this state or any political subdivision of the United States or of this state.

D. A check casher operating within the office of a labor pool, or the owner or operator of a labor pool, shall not charge a day laborer for cashing a check that is issued by the labor pool.

E. Any act or practice in violation of this article is an unlawful act or practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed in chapter 10, article 7 of this title.

Article 13 Consumer Service Fees

§ 44-1365 Definitions

In this article, unless the context otherwise requires:

1. "Consumer" means a natural person or persons who purchase consumer services.

2. "Consumer service":

(a) Means a service that is primarily for personal, family or household purposes and that the seller provides in return for payment of periodic charges for the service but does not include financial services regulated by title 6, title 20 or the federal government.

(b) Includes a service in which the seller makes equipment or other personal property available to the consumer that is incidental to the provision of the service.

§ 44-1366 Consumer services; delinquency fees; collection fees

A. Unless otherwise prohibited by law, a seller of consumer services may impose a delinquency fee on any consumer with an account that has an unpaid balance of more than ten dollars if the following conditions are met:

1. For a sale of consumer services for which periodic charges begin after December 31, 2000, the seller provides the consumer with a notice written in ten point bold type and in a clear and conspicuous manner that the seller imposes a fee on delinquent accounts and provides the notice not later than at the time the seller and consumer enter into the initial agreement for services.

2. At least ten days before the date that the seller imposes the fee, the seller notifies the consumer of the amount of the fee that the seller will impose if the seller does not receive the consumer's delinquent payment and the earliest date on which the seller will impose the fee. The notice prescribed in this paragraph shall appear clearly and conspicuously on the face of any invoice or other similar written document in at least ten point bold type, and the seller shall send the notice by first class mail to the consumer's last known billing address as shown on the seller's records.

3. The notice shall clearly and conspicuously identify the place and address for making the payment.

4. The consumer's invoice specifies a due date that is not before the tenth day of the service period for which the invoice is issued.

5. The seller imposes the fee at least fifteen days after the due date specified on the invoice.

6. The fee imposed by the seller is not more than five dollars for an unpaid balance of twenty-five dollars or less, or for an unpaid balance of more than twenty-five dollars, ten dollars or five per cent of the balance, whichever is more.

B. In any consumer service transaction the seller may impose a collection fee that is not more than ten dollars and that is in addition to the delinquency fee prescribed in subsection A if the seller does both of the following:

1. Sends an employee, agent or contractor of the seller to the consumer's premises to collect the payment or to disconnect or discontinue the service.

2. For a sale of consumer services for which periodic charges begin after December 31, 2000, provides the consumer with a written notice that the seller imposes a fee on delinquent accounts and provides the notice not later than at the time the seller and consumer enter into the initial agreement for services.

C. This article does not:

1. Impair the enforceability of an agreement that is for the sale of a service to a person who is not a consumer and that provides for the imposition of a delinquency fee on any unpaid balance.

2. Apply to consumer services that are subject to the jurisdiction of the corporation commission.

Article 14 Credit Card Transaction Receipts

§ 44-1367 Credit card transaction receipts; applicability; enforcement; definition

A. Except as provided in subsection B of this section, a person who enters into a contract for the purpose of providing that person or another person with the means of accepting payment by credit card in exchange for goods or services shall not allow to be printed more than the last five digits of the credit card account number or the credit card expiration date on a credit card receipt provided to the cardholder.

B. This section applies only to receipts that are electronically printed and does not apply to transactions in which the sole means of recording the credit card number is by handwriting or by an imprint or copy of the credit card.

C. Any violation of this article is an unlawful act or practice pursuant to section 44-1522. The attorney general may investigate the act or practice and take appropriate action pursuant to chapter 10, article 7 of this title.

D. This section is effective from and after:

1. June 30, 2002 for any person described in subsection A of this section who begins accepting payment by credit card in exchange for goods or services on or after July 1, 2002.

2. June 30, 2004 for any person described in subsection A of this section who began accepting payment by credit card in exchange for goods or services on or before June 30, 2002.

E. For the purposes of this section "credit card" has the same meaning prescribed in section 13-2101.

Article 15 Motor Vehicle Transactions

§ 44-1371 Motor vehicle transactions; conditional financing; traded motor vehicle; advertised price; definition

A. If a sale or lease of a motor vehicle from a motor vehicle dealer or a lessor to a customer is conditioned on final approval of financing by a lender or lessor, the motor vehicle dealer or lessor shall retain title and possession of any motor vehicle traded by a customer as part of the transaction until financing is finally approved or the traded motor vehicle is returned to the customer. Any remedy for a violation of this section may not be waived, modified or limited by agreement or contract.

B. If a motor vehicle dealer charges a document fee for a motor vehicle transaction, the motor vehicle dealer must clearly and conspicuously disclose in its advertisement for a motor vehicle that a document fee will be charged for a motor vehicle transaction.

C. For the purposes of this section, "motor vehicle dealer" has the same meaning prescribed in section 28-4301.

Article 16 Commercial Electronic Mail

§ 44-1372 Definitions

In this article, unless the context otherwise requires:

1. "Commercial electronic mail" means electronic mail sent for the purpose of encouraging the purchase or rental of, or investment in, property, goods or services.

2. "Electronic mail" means an electronic message, executable program or computer file containing an image of a message that is transmitted between two or more computers or electronic terminals and includes electronic messages that are transmitted within or between computer networks.

3. "Electronic mail service provider" means any person who is an intermediary in sending or receiving electronic mail and who provides to end users of electronic mail services the ability to send or receive electronic mail.

4. "Established business relationship" means a prior or existing relationship formed by a voluntary communication between a person or entity and the recipient, with or without an exchange of consideration, on the basis of an inquiry, application, purchase or use by the recipient regarding products or services offered by the person or entity.

5. "Sender" means a person who initiates an unsolicited commercial electronic mail.

6. "Unsolicited commercial electronic mail" means a commercial electronic mail message sent, without the consent of the recipient, by a person with whom the recipient does not have an established business relationship.

§ 44-1372.01 Regulations; powers of attorney general; cumulative remedies; applicability

A. A person shall not knowingly transmit commercial electronic mail if any of the following apply:

1. The person falsifies electronic mail transmission information or other routing information for unsolicited commercial electronic mail.

2. The mail contains false or misleading information in the subject line.

3. The person uses a third party's internet address or domain name without the third party's consent for the purpose of transmitting electronic mail in a way that makes it appear that the third party was the sender of the mail.

B. If a person sends unsolicited commercial electronic mail or maintains a database for the purpose of sending unsolicited commercial electronic mail, the person shall do the following:

1. Use the exact characters "ADV:" as the first four characters in the subject line of the unsolicited commercial electronic mail.

2. Provide a procedure that allows recipients, at no cost to the recipients, to easily do both of the following:

(a) Remove themselves from the sender’s electronic mail address lists so the recipients are not included in future electronic mailings from the sender. The sender shall have three business days to remove the recipient's electronic mail address from the sender's electronic mail address lists so the recipients are not included in future electronic mailings from the sender.

(b) Restrict the future sale or transfer of the recipient’s electronic mail address information to another person or organization for the purpose of sending commercial electronic mail.

C. Failure to comply with this article is an unlawful practice pursuant to section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

D. This article is in addition to all other causes of action, remedies and penalties available to this state.

E. The prohibitions in this section shall apply to any person doing business in this state and to any person who transmits a commercial electronic mail message by any of the following:

1. From a computer located in this state.

2. To an electronic mail address that the sender knows, or has reason to know, is held by a resident of this state.

3. To an interactive computer service with equipment or its principal place of business in this state.

§ 44-1372.02 Damages

A. A person whose property or person is injured because of a violation of this article may recover for any damages sustained, including loss of profits, and the costs incurred from the suit.

B. If an injury results from the intentional transmission of unsolicited commercial electronic mail, the injured person may recover attorney fees and costs and may choose, instead of receiving actual damages, to recover ten dollars for each unsolicited commercial electronic mail message transmitted in violation of this article or twenty-five thousand dollars, whichever is less. This subsection does not apply to an electronic mail service provider.

C. Nothing in this article creates a cause of action or a right to bring an action against the electronic mail service provider for transmitting unsolicited commercial electronic mail over the computer network.

D. If an injury results from the intentional transmission of unsolicited commercial electronic mail, an injured electronic mail service provider may recover attorney fees and costs and may choose, instead of receiving actual damages, to recover ten dollars for each unsolicited commercial electronic mail message transmitted in violation of this article or twenty-five thousand dollars, whichever is greater.

§ 44-1372.03 Court proceedings; secrecy

At the request of any party to an action brought pursuant to this section, the court may conduct all legal proceedings in a manner to protect the secrecy and security of the computer, computer network, computer data, computer program and computer software involved in order to prevent possible recurrence of the same or similar act by another person and to protect any trade secrets of any party.

§ 44-1372.04 Applicability

A. This article does not apply to electronic mail messages if any of the following applies:

1. The sender is an organization using electronic mail to communicate exclusively with either of the following:

(a) Members of the organization.

(b) Employees or contractors of the organization, or both.

2. The sender has the consent of the recipient.

3. The sender has an established business relationship with the recipient.

4. The commercial electronic mail message is the result of an error.

5. An interactive computer service provider has attached an advertisement to the message in exchange for use of an electronic mail account or if the sender has agreed to the arrangement.

B. This article does not apply to an electronic mail service provider if either of the following apply:

1. The electronic mail service provider is an intermediary between the sender and the recipient in the transmission of electronic mail.

2. The electronic mail service provider transmits unsolicited commercial electronic mail over the provider's computer network or facilities.

C. An electronic mail service provider may establish and enforce a policy to block the receipt or transmission through its service of any commercial electronic mail that it believes is or will be sent in violation of this article.

§ 44-1372.05 Violation; classification

A person who violates this article is guilty of a class 2 misdemeanor.

Article 17 Confidentiality of Personal Identifying Information

§ 44-1373 Restricted use of personal identifying information; civil penalty; definition

A. Except as otherwise specifically provided by law, beginning on January 1, 2005, a person or entity shall not:

1. Intentionally communicate or otherwise make an individual's social security number available to the general public.

2. Print an individual's social security number on any card required for the individual to receive products or services provided by the person or entity.

3. Require the transmission of an individual's social security number over the internet unless the connection is secure or the social security number is encrypted.

4. Require the use of an individual's social security number to access an internet web site, unless a password or unique personal identification number or other authentication device is also required to access the site.

5. Print a number that the person or entity knows to be an individual's social security number on any materials that are mailed to the individual, unless state or federal law requires the social security number to be on the document to be mailed. This paragraph does not prohibit the mailing of documents that include social security numbers sent as part of an application or enrollment process or to establish, amend or terminate an account, contract or policy or to confirm the accuracy of the social security number. In a transaction involving or otherwise relating to an individual, if a person or entity receives a number from a third party, the person or entity has no duty to inquire or otherwise determine if the number is or includes that individual's social security number. The person or entity may print that number on materials that are mailed to the individual, unless the person or entity that received the number has actual knowledge that the number is or includes the individual's social security number. This paragraph does not prohibit the mailing to the individual of any copy or reproduction of a document that includes a social security number if the social security number was included on the original document before January 1, 2005.

B. Notwithstanding subsection A, a person or entity that before January 1, 2005 used an individual's social security number in a manner inconsistent with subsection A may continue using that individual's social security number in that manner on and after January 1, 2005 subject to the following conditions:

1. The use of the social security number must be continuous. If the use is stopped for any reason, subsection A applies.

2. Beginning in 2005, the person or entity must provide the individual with an annual written disclosure of the individual's right to stop the use of the social security number in a manner prohibited by subsection A.

3. If the individual requests in writing, the person or entity must stop using the social security number in a manner prohibited by subsection A within thirty days after receiving the request. No fee or charge is allowed for implementing the request, and the person or entity shall not deny services to the individual because of the request.

C. This section does not prohibit the collection, use or release of a social security number as required by the laws of this state or the United States or for internal verification or administrative purposes.

D. Beginning on January 1, 2005, this state or any political subdivision of this state shall not use an individual's social security number on state issued or political subdivision issued forms of identification.

E. This section does not prohibit an agency of this state or a political subdivision of this state from disseminating or using the last four numbers of an individual's social security number.

F. A government agency shall not transmit to an individual material that contains both an individual's social security number and bank, savings and loan association or credit union account number. This subsection does not prohibit the transmitting of documents that include social security and bank, savings and loan association or credit union account numbers as a part of an application or enrollment process or to establish, amend or terminate an account, contract or policy or to confirm the accuracy of the social security, bank, savings and loan association or credit union account number.

G. Except as otherwise provided by law, documents or records that are recorded and made available on the recording entity's public web site after the effective date of this amendment to this section shall not contain more than five numbers that are reasonably identifiable as being part of an individual's social security number and shall not contain an individual's:

1. Credit card, charge card or debit card numbers.

2. Retirement account numbers.

3. Savings, checking or securities entitlement account numbers.

H. Only the attorney general or a county attorney, or both, may commence a legal action for a violation of this section.

I. A person or entity is subject to a civil penalty of up to five hundred dollars for each act of recording that violates subsection G. The civil penalty shall not apply to a person or entity that transmits the document for recording but has no authority for the creation of the document.

J. A county agency is not subject to civil liability for any action relating to information recorded pursuant to subsection G.

K. For the purposes of this section, "individual" means a resident of this state.

§ 44-1373.01 Exceptions

This article does not apply to:

1. The use of social security numbers by the department of revenue or by a law enforcement agency of this state or a law enforcement agency of a county, city, town or other political subdivision of this state, except that these agencies must comply with section 44-1373, subsection A, paragraphs 2 and 5.

2. The use of social security numbers by an agency of this state in its administration of employee payroll, employee benefits and workers' compensation matters, except that the agency shall comply with section 44-1373, subsection A, paragraphs 1, 2, 4 and 5.

3. Documents or records that are recorded or required to be open to the public pursuant to the constitution or laws of this state or by court rule or order, and this article does not limit access to these documents or records.

4. An individual’s social security number that is printed or caused to be printed on a document by the individual.

5. The use of social security numbers by the industrial commission of Arizona or an interested party as defined in section 23-901, on documents or records related to a workers' compensation claim under title 23, chapter 6, except that the industrial commission or the interested party shall comply with section 44-1373, subsection A, paragraphs 1, 2, 3 and 4.

§ 44-1373.02 Restricted use of sequential numbers; definition

A. Except as otherwise specifically provided by law, beginning on January 1, 2009, a person or entity shall not knowingly:

1. Print any sequence of more than five numbers that are reasonably identifiable as being part of an individual's social security number on any card required for the individual to receive products or services provided by the person or entity.

2. Print any sequence of more than five numbers that are reasonably identifiable as being part of an individual's social security number on any materials that are mailed to the individual, unless state or federal law requires the social security number to be on the document to be mailed. This paragraph does not prohibit the mailing of documents to the individual that include social security numbers or any sequence of numbers contained in a social security number that is sent as part of an application or enrollment process or to establish, amend or terminate an account, contract or policy or to confirm the accuracy of the social security number or sequence of numbers.

B. For the purposes of this section, "individual" means a resident of this state.

§ 44-1373.03 Violation; civil penalty

A. A person or entity that knowingly or intentionally violates section 44-1373, subsection A, paragraph 2 is subject to a civil penalty of one hundred dollars for each violation.

B. All civil penalties received pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

Article 18 Confidentiality of Petroleum Industry Information

§ 44-1374 Confidentiality of petroleum industry information; disclosure; supply emergency; definitions

A. A governmental entity shall classify as confidential and not publicly disclose any documents or other information that is received from any petroleum industry related private or public source if the person or entity that provides the information agrees to provide the information only on the express condition that the information remain confidential.

B. If a governmental entity receives a request to publicly disclose information that is confidential information or for any other reason proposes to publicly disclose confidential information, the governmental entity shall provide to the person or entity that submitted the confidential information notice in writing of the request or proposal to disclose. The notice shall identify the confidential information that would be disclosed and indicate the form in which the confidential information would be provided. On receipt of the notice, the person or entity that submitted the confidential information has fifteen working days in which to respond to the notice and to either withdraw the request for confidentiality or justify to the governmental entity the claim of confidentiality on each specific item of confidential information covered by the notice.

C. The governmental entity shall consider the response in determining whether to publicly disclose any confidential information for which a justification has been submitted. Unless the governmental entity determines that there is no trade secret or other legitimate justification for the confidentiality being claimed by the respondent, the governmental entity shall not disclose any confidential information for which a justification has been timely submitted. If the governmental entity determines that there is no trade secret or other legitimate justification for all or a portion of the confidentiality claim, the governmental entity shall issue a written decision that sets forth the reasons for making that determination. The governmental entity shall deliver a copy of the decision to the person or entity submitting the confidential information and the person requesting public disclosure of the confidential information.

D. Notwithstanding a determination that there is no legitimate justification for a claim of confidentiality, and to allow the person or entity that submitted the confidential information to seek direct judicial intervention to prevent its release, the governmental entity shall not publicly disclose confidential information submitted to the governmental entity pursuant to this section for at least fifteen working days after the date on which the governmental entity has issued and disclosed the written determination pursuant to this section.

E. If any legal or administrative action is filed with any court or other agency seeking to force disclosure of any confidential information, the governmental entity, within five working days of being served with the action, shall notify in writing the person or entity that submitted the confidential information of the action to allow the person or entity that submitted the confidential information to intervene in the action.

F. Confidential information shall not be classified or maintained as confidential if the governmental entity determines that the confidential information has already been made public by the submitting person or entity and advises, in writing, the person or entity that submitted the confidential information of this determination. Notwithstanding a determination that the confidential information has already been made public by the submitting person or entity, the governmental entity shall not publicly disclose the confidential information for at least five working days after the governmental entity has advised the submitting person or entity to allow the person or entity that submitted the confidential information to seek direct judicial intervention to prevent its release.

G. This section protects petroleum industry related confidential information submitted to a governmental entity but does not impose any requirement that information of any type from any source be submitted to any governmental entity.

H. If there is a statewide or regional shortage or threatened shortage of a product or service that is essential to the health, safety and welfare of the people of this state due to an abnormal market disruption resulting from any natural disaster, weather condition, act of nature, strike, civil disorder, war, national or local emergency or other extraordinary adverse circumstance, the governor may proclaim that a supply emergency exists. If a supply emergency is declared pursuant to this subsection and a majority of the persons or entities that are the subject of the supply emergency has provided information to the governmental entity, the governmental entity may only disclose the unattributable aggregated total of all sources of confidential information.

I. For the purposes of this section:

1. "Confidential information" means all of the following:

(a) The information is not and has not been reasonably obtainable by legitimate means by other persons without the consent of the person providing the information, other than by governmental entities and other than in discovery based on a showing of a special need in a judicial or quasi-judicial proceeding.

(b) A statute does not specifically require disclosure of the information to the public.

(c) The person has satisfactorily shown that disclosing the information is likely to cause substantial harm to the competitive position of the person providing the information.

2. "Governmental entity" means an agency, board, department or commission of this state, the state legislature and all agencies or committees of the state legislature but does not include the courts of this state.

3. "Publicly disclose" means to reveal the contents of information that has been classified as confidential to any third person or entity that is not bound by this section.

Article 19 Appliances and Equipment Energy Efficiency Standards

§ 44-1375 Definitions

In this article, unless the context otherwise requires:

1. "Automatic commercial icemaker" means a factory made assembly that is shipped in one or more packages, that consists of a condensing unit and icemaking section operating as an integrated unit, that makes and harvests ice cubes and that may store or dispense ice. Automatic commercial icemaker includes machines with capacities between fifty and two thousand five hundred pounds per twenty-four hours.

2. "Ballast" means a device used with an electric discharge lamp to obtain necessary circuit conditions such as voltage, current and waveform for starting and operating the lamp.

3. "Commercial clothes washer" means a soft mount horizontal or vertical axis clothes washer that both:

(a) Has a clothes container compartment no greater than three and one-half cubic feet in the case of a horizontal axis product or no greater than four cubic feet in the case of a vertical axis product.

(b) Is designed for use by more than one household, such as in multifamily housing, apartments or coin laundries.

4. "Commercial prerinse spray valve" means a handheld device designed to spray water on dishes, flatware and other food service items for the purpose of removing food residue prior to cleaning.

5. "Commercial refrigerator, freezer and refrigerator freezer" means self-contained refrigeration equipment that:

(a) Is not a consumer product as regulated pursuant to 42 United States Code chapter 77.

(b) Operates at a chilled, frozen, combination chilled-frozen or variable temperature for the purpose of storing or merchandising food, beverages or ice.

(c) May have transparent or solid or both transparent and solid hinged doors, sliding doors or a combination of hinged and sliding doors.

(d) Incorporates most components involved in the vapor-compression cycle and the refrigerated compartment in a single cabinet.

(e) Does not include:

(i) Units with eighty-five cubic feet or more of internal volume.

(ii) Walk-in refrigerators or freezers.

(iii) Units with no doors.

(iv) Freezers specifically designed for ice cream.

6. "High-intensity discharge lamp" means a lamp in which light is produced by the passage of an electric current through a vapor or gas and in which the light producing arc is stabilized by bulb wall temperature and the arc tube has a bulb wall loading in excess of three watts per square centimeter.

7. "Illuminated exit sign" means an internally illuminated sign that is designed to be permanently fixed in place to identify a building exit and that consists of an electrically powered integral light source that both illuminates the legend "exit" and any directional indicators and provides contrast between the legend, any directional indicators and the background.

8. "Large packaged air conditioning equipment" means electrically operated, air cooled air conditioning and air conditioning heat pump equipment that has cooling capacity greater than or equal to two hundred forty thousand BTU per hour but less than seven hundred sixty thousand BTU per hour and that is built as a package and shipped as a whole to end user sites.

9. "Low voltage dry type distribution transformer" means a transformer to which all of the following apply:

(a) Has an input voltage of six hundred volts or less.

(b) Is air cooled.

(c) Does not use oil as a coolant.

(d) Is rated for operation at a frequency of sixty hertz.

10. "Metal halide lamp" means a high intensity discharge lamp in which the major portion of the light is produced by radiation of metal halides and their products of dissociation, possibly in combination with metallic vapors.

11. "Metal halide lamp fixture" means a light fixture designed to be operated with a metal halide lamp and a ballast for a metal halide lamp.

12. "Portable electric spa" means a factory-built electric spa or hot tub that is supplied with equipment for heating and circulating water.

13. "Probe start metal halide ballast" means a ballast used to operate metal halide lamps that does not contain an ignitor and which instead starts lamps by using a third starting electrode probe in the arc tube.

14. "Pulldown refrigerator" means a commercial refrigerator specifically designed to rapidly reduce all integrated product temperatures from ninety degrees fahrenheit to thirty-eight degrees fahrenheit over a twelve hour period when fully loaded with beverage containers.

15. "Residential pool pump" means a pump that is used to circulate and filter residential swimming pool water in order to maintain clarity and sanitation and that consists, in part, of a motor and an impeller and housing.

16. "Residential pool pump motor" means a definite purpose motor designed for use in a residential pool pump.

17. "Single voltage external AC to DC power supply" means a device that:

(a) Is designed to convert line voltage AC input into lower voltage DC output.

(b) Is able to convert to only one DC output voltage at a time.

(c) Is sold with, or intended to be used with, a separate end use product that constitutes the primary power load.

(d) Is contained within a separate physical enclosure from the end use product.

(e) Is connected to the end use product via a removable or hard wired male/female electrical connection, cable, cord or other wiring.

(f) Does not have batteries or battery packs, including those that are removable and that physically attach directly to the power supply unit.

(g) Does not have a battery chemistry or type selector switch and indicator light or does not have a battery chemistry or type selector switch and a state of charge meter.

(h) Has a nameplate output power less than or equal to two hundred fifty watts.

18. "Torchiere" means a portable electric lighting fixture with a reflective bowl that directs light upward onto a ceiling so as to produce indirect illumination on the surfaces below. A torchiere may include downward directed lamps in addition to the upward, indirect illumination.

19. "Traffic signal module" means a standard eight inch or twelve inch traffic signal indication, consisting of a light source, a lens and all other parts necessary for operation.

20. "Transformer" means a device that consists of two or more coils of insulated wire and that is designed to transfer alternating current by electromagnetic induction from one coil to another to change the original voltage or current value. Transformer does not include:

(a) Transformers with multiple voltage taps, with the highest voltage tap equaling at least twenty per cent more than the lowest voltage tap.

(b) Transformers, such as those commonly known as drive transformers, rectifier transformers, auto transformers, uninterruptible power system transformers, impedance transformers, regulating transformers, sealed and nonventilating transformers, machine tool transformers, welding transformers, grounding transformers or testing transformers, that are designed to be used in a special purpose application and that are unlikely to be used in general purpose applications.

21. "Unit heater" means a self-contained, vented fan type commercial space heater that uses natural gas or propane and that is designed to be installed without ducts within a heated space, except that unit heater does not include any products covered by federal standards established pursuant to 42 United States Code chapter 77 or any product that is a direct vent, forced flue heater with a sealed combustion burner.

§ 44-1375.01 Applicability

A. This article applies to the following types of new products sold, offered for sale or installed in this state:

1. Automatic commercial icemakers.

2. Commercial clothes washers.

3. Commercial prerinse spray valves.

4. Commercial refrigerators, freezers and refrigerator freezers.

5. Illuminated exit signs.

6. Large packaged air conditioning equipment.

7. Low voltage dry type distribution transformers.

8. Metal halide lamp fixtures.

9. Single voltage external AC to DC power supplies.

10. Torchieres.

11. Traffic signal modules.

12. Unit heaters.

13. Portable electric spas.

14. Residential pool pumps and residential pool pump motors.

B. This article does not apply to:

1. New products manufactured in this state and sold outside this state.

2. New products manufactured outside this state and sold at wholesale inside this state for final retail sale and installation outside this state.

3. Products installed in mobile manufactured homes at the time of construction.

4. Products designed expressly for installation and use in recreational vehicles.

5. Products installed in a laundry facility located within an apartment complex or mobile home park at the time of construction or replacement. For the purposes of this paragraph, "apartment complex" means any real property that has one or more structures and that contains four or more dwelling units for rent or lease that are subject to the Arizona residential landlord and tenant act prescribed by title 33, chapter 10.

§ 44-1375.02 Standards

A. Except as provided in subsection C, the following standards apply beginning January 1, 2008:

1. Automatic commercial icemakers shall meet the requirements of section 1605.3 of the California Code of Regulations, title 20: division 2, chapter 4, article 4, in effect on August 12, 2005.

2. Commercial clothes washers shall meet the requirements of section 1605.3 of the California Code of Regulations, title 20: division 2, chapter 4, article 4, in effect on August 12, 2005.

3. Commercial prerinse spray valves shall have a flow rate equal to or less than 1.6 gallons per minute.

4. Commercial refrigerators, freezers and refrigerator freezers shall meet the requirements of section 1605.3 of the California Code of Regulations, title 20: division 2, chapter 4, article 4, in effect on August 12, 2005, except that pulldown refrigerators with transparent doors shall meet a requirement five per cent less stringent than shown in the California regulations.

5. Illuminated exit signs shall have an input power demand of five watts or less per illuminated face and shall either have a power factor of at least 0.70 or meet the power factor product specification of the energy star program requirements, whichever is higher.

6. Large packaged air conditioning equipment shall meet a minimum energy efficiency ratio of 10.0 for air conditioning without an integrated heating component or with electric resistance heating integrated into the unit, 9.8 for air conditioning with heating other than electric resistance integrated into the unit, 9.5 for air conditioning heat pumps without an integrated heating component or with electric resistance heating integrated into the unit and 9.3 for air conditioning heat pump equipment with heating other than electric resistance integrated into the unit. Large packaged air conditioning heat pumps shall meet a minimum coefficient of performance in the heating mode of 3.2 measured at a high temperature rating of forty-seven degrees Fahrenheit.

7. Through December 31, 2010, low voltage dry type distribution transformers shall meet the class 1 efficiency levels for low voltage distribution transformers specified in table 4-2 of the guide for determining energy efficiency for distribution transformers, published by the national electrical manufacturers association (NEMA standard TP-1-2002), in effect on August 12, 2005.

8. Metal halide lamp fixtures designed to be operated with lamps rated greater than or equal to one hundred fifty watts but less than or equal to five hundred watts shall not contain a probe start metal halide lamp ballast.

9. Single voltage external AC to DC power supplies shall meet the tier one energy efficiency requirements of section 1605.3 of the California Code of Regulations, title 20: division 2, chapter 4, article 4, in effect on August 12, 2005. This standard applies to single voltage AC to DC power supplies that are sold individually and to those that are sold as a component of or in conjunction with another product.

10. Torchieres shall not use more than one hundred ninety watts. A torchiere shall be deemed to use more than one hundred ninety watts if any commercially available lamp or combination of lamps can be inserted in its socket and cause the torchiere to draw more than one hundred ninety watts when operated at full brightness.

11. Traffic signal modules shall meet the product specification of the energy star program requirements for traffic signals developed by the United States environmental protection agency that took effect in February 2001, shall have a power factor of at least 0.90 and shall be installed with compatible, electrically connected signal control interface devices and conflict monitoring systems.

12. Unit heaters shall be equipped with an intermittent ignition device and shall have either power venting or an automatic flue damper.

B. Beginning January 1, 2012, the following standards apply:

1. Portable electric spas shall not have a normalized standby power greater than five times the spa's fill volume in gallons raised to the two-thirds power.

2. Residential pool pumps and residential pool pump motors shall comply with both of the following:

(a) Motors shall not be split-phase or capacitor start-induction run type motors, except for the following:

(i) The low-speed section of two-speed motors may be capacitor start-induction run type.

(ii) Forty-eight-frame motors designed for use with aboveground pools are exempt from this requirement.

(b) Motors with a total horsepower capacity of one or more shall have the capability of operating at two or more speeds with a low speed having a rotation rate that is no more than one-half of the motor's maximum rotation rate and shall be operated with a pump control with the capability of operating the pump at two or more speeds. Residential pool pump motor controls that are sold for use with a two or more speed motor shall have a default circulation speed setting no more than one-half of the motor's maximum rotation rate. Any high speed override capability shall be for a temporary period not to exceed one twenty-four hour cycle without resetting to the default setting.

C. The standards prescribed by subsection A apply beginning January 1, 2010, if the product is a commercial refrigerator, freezer or refrigerator freezer or large packaged air conditioning equipment.

D. Beginning on May 31, 2008, and every three years thereafter, the governor's energy office shall conduct a comparative review and assessment of the standards prescribed by subsection A and energy efficiency standards adopted in other states. The energy office shall:

1. Submit a report of its findings and recommendations to the speaker of the house of representatives and president of the senate.

2. Provide a copy of the report to the secretary of state.

§ 44-1375.03 Certification and compliance; violation; civil penalty

A. Except as provided in subsection B of this section, beginning January 1, 2008:

1. A person engages in a deceptive trade practice when, in the course of the person's business, vocation or occupation, the person knowingly sells or installs a product that does not meet or exceed an applicable energy efficiency standard set forth in section 44-1375.02.

2. Manufacturers shall certify in writing to the governor's energy office that products sold in this state meet efficiency standards of this article. Certification to other states with like standards that publish databases of compliant products shall be permitted as an alternative to certifying to the energy office.

B. The requirements prescribed by subsection A of this section apply beginning January 1, 2010, if the product is a commercial refrigerator, freezer or refrigerator freezer or large packaged air conditioning equipment.

C. A deceptive trade practice pursuant to subsection A, paragraph 1 of this section is an unlawful practice under section 44-1522 and subject to enforcement by the attorney general. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title. Notwithstanding section 44-1531, the penalty for violation of this section shall be a civil penalty of not more than five hundred dollars per violation. All monies collected as civil penalties pursuant to this subsection shall be deposited into the state general fund.

Article 20 Telephone, Utility and Communication Service Records

§ 44-1376 Definitions

In this article, unless the context otherwise requires:

1. "Communication service record" includes subscriber information, including name, billing or installation address, length of service, payment method, telephone number, electronic account identification and associated screen names, toll bills or access logs, records of the path of an electronic communication between the point of origin and the point of delivery and the nature of the communication service provided, such as caller identification, automatic number identification, voice mail, electronic mail, paging or other service features. Communication service records do not include the content of any stored oral, wire or electronic communication or a telephone record.

2. "Procure" means to obtain by any means, including electronically, in writing or in oral form, with or without consideration.

3. "Public utility" includes public service corporations, municipally owned systems and districts subject to article XIII, section 7, Constitution of Arizona, power districts, electrical districts, agricultural improvement districts or irrigation and water conservation districts established pursuant to title 48, chapter 11, 12, 17 or 19.

4. "Public utility record" includes customer information, including name, billing or installation address, length of service, payment method or any other personal identifying information.

5. "Telephone" means any device that is used by a person for voice communications in connection with the services of a telephone company whether the voice communications are transmitted in analog, data or any other form.

6. "Telephone company" means any person that provides commercial telephone services to a customer, irrespective of the communications technology that is used to provide the service, including:

(a) Traditional wire line or cable telephone service.

(b) Cellular, broadband personal communication systems or other wireless telephone service.

(c) Microwave, satellite or other terrestrial telephone service.

(d) Voice over internet telephone service.

7. "Telephone record" means information that is:

(a) Retained by a telephone company and that relates to the telephone number dialed by the customer or the incoming number of the call directed to a customer or other data related to such calls typically contained on a customer telephone bill, including the time the call started and ended, the duration of the call, the time of day the call was made, any charges applied and any information that indicates the location from which or to which the call was made.

(b) Made available to a telephone company by a customer solely by virtue of the relationship between the telephone company and the customer. Telephone record does not include any information collected and retained by or on behalf of customers using caller identification or similar technology.

§ 44-1376.01 Unauthorized or fraudulent procurement, sale or receipt prohibited; procedures to protect against disclosure

A. A person shall not do any of the following:

1. Knowingly procure, attempt to procure, solicit or conspire with another to procure a public utility record, a telephone record or communication service record of any resident of this state without the authorization of the customer to whom the record pertains or by fraudulent, deceptive or false means.

2. Knowingly sell or attempt to sell a public utility record, a telephone record or communication service record of any resident of this state without the authorization of the customer to whom the record pertains.

3. Except for the Arizona Corporation Commission in the performance of its official duties, receive a public utility record, a telephone record or communication service record of any resident of this state knowing that the record has been obtained without the authorization of the customer to whom the record pertains or by fraudulent, deceptive or false means.

B. Entities that maintain communication service records, telephone records or public utility records of a resident of this state shall establish reasonable procedures to protect against unauthorized or fraudulent disclosure of such records that could result in a substantial harm or inconvenience to any customer. No private right of action is authorized under this subsection. For the purposes of this subsection, a telephone company's procedures are reasonable if the telephone company complies with the provisions governing customer proprietary network information in section 222 of the communications act of 1934 (47 United States Code section 222), as amended, and regulations promulgated under that section.

C. Any personal information that is contained in a telephone record, public utility record or communication service record that is obtained in violation of this article is inadmissible as evidence in any judicial, administrative, legislative or other proceeding unless that information is offered as proof in an action or prosecution pursuant to this article or is otherwise authorized by law.

§ 44-1376.02 Application

A. This article does not prevent any action by a law enforcement agency or any officer, employee or agent of a law enforcement agency to obtain public utility records, telephone records or communication service records in connection with the performance of the official duties of the agency.

B. This article does not prohibit a public utility, a telephone company or an entity that maintains communication service records from obtaining, using, disclosing or permitting access to any public utility record, telephone record or communication service record, either directly or indirectly through its agents:

1. As otherwise authorized by law.

2. With the lawful consent of the customer or subscriber.

3. As may be necessarily incident to the rendition of the service or to the protection of the rights or property of the provider of that service or to protect users of those services and other carriers from fraudulent, abusive or unlawful use of or subscription to those services.

4. To a governmental entity, if the public utility, telephone company or entity that maintains communication service records reasonably believes that an emergency involving immediate danger of death or serious physical injury to any person justifies disclosure of the information.

5. To the national center for missing and exploited children in connection with a report submitted under the victims of child abuse act of 1990 (42 United States Code section 13032).

C. This article does not prohibit a public utility, a telephone company or an entity that maintains communication service records from disclosing or permitting access to any public utility record, telephone record or other communication service record either directly or indirectly through its agents to the Arizona corporation commission for use in the performance of its duties.

D. This article does not apply to or expand on the obligations and duties of any public utility, telephone company or entity that maintains communication service records or its agents, employees or contractors to protect public utility records, telephone records or communication service records beyond those otherwise established by federal and state law, including the provisions governing customer proprietary network information in section 222 of the communications act of 1934 (47 United States Code section 222), as amended, and regulations promulgated under that section.

E. This article does not apply to a public utility, a telephone company or an entity that maintains communication service records or its agents or representatives who reasonably and in good faith act pursuant to this article, notwithstanding any later determination that the action was not authorized.

§ 44-1376.03 Unfair or deceptive trade practices

Any violation of this article is an unlawful act or practice pursuant to section 44-1522. The attorney general may investigate the act or practice and take appropriate action pursuant to chapter 10, article 7 of this title.

§ 44-1376.04 Civil causes of action

A. In a civil action, a customer whose communication service records, telephone records or public utility records were procured, sold or received in violation of this article may recover from the person that committed the violation the following relief:

1. Preliminary and other equitable or declaratory relief as may be appropriate.

2. Damages equal to the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation but in no case shall a person entitled to recover receive less than one thousand dollars.

3. Reasonable attorney fees and other litigation costs that are reasonably incurred.

B. A civil action under this section may not be commenced more than two years after the date on which the claimant first discovered or had a reasonable opportunity to discover the violation.

§ 44-1376.05 Violation; classification

A person who violates this article is guilty of a class 1 misdemeanor and is subject to forfeiture of any personal property used or intended to be used to commit the offense.

Article 21 Restocking Fees

§ 44-1377 Disclosure of restocking fee; enforcement; definition

A. A business in this state that charges a restocking fee on a product the business sells shall disclose the existence of the fee and the amount of the fee to a customer in accordance with this section.

B. If a business charges a restocking fee, the business shall do all of the following:

1. Disclose in any print advertising and promotional material, including a catalog, that a restocking fee may apply to the purchase of goods. The disclosure shall be printed in a clear and conspicuous manner in the advertising and promotional material.

2. Post a notice disclosing that a restocking fee may apply to the purchase of goods and where the customer may obtain the full restocking fee policy. The notice shall be clearly and conspicuously visible to the customer before purchase.

3. Disclose on the sales receipt in a conspicuous manner in type at least as large as the majority of the printed text on the receipt and in print that is clear and legible, both of the following:

(a) That a restocking fee may apply to the purchased good.

(b) Where the customer may obtain the full restocking fee policy.

4. At the point of purchase for a good on the web site of the business, disclose that a restocking fee may apply to the purchase of goods. The business must provide the full restocking fee policy on the web site. The disclosure prescribed by this paragraph shall be printed in a clear and conspicuous manner on the web site.

C. An act or practice in violation of this section is an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

D. For the purposes of this section, "restocking fee" means a fee charged by a business for restocking of the good purchased on its return or exchange.

Article 22 Foreclosure Consultants

§ 44-1378 Definitions

In this article, unless the context otherwise requires:

1. "Covered service" includes:

(a) Financial counseling, including debt counseling and budget counseling to assist a homeowner in connection with the homeowner's residence in foreclosure.

(b) Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a mortgage or other lien on a residence in foreclosure.

(c) Contacting a creditor on behalf of a homeowner.

(d) Arranging or attempting to arrange an extension of the period within which a homeowner may cure the homeowner's default and reinstate the homeowner's obligation pursuant to a note, mortgage or deed of trust.

(e) Arranging or attempting to arrange any delay or postponement of the time of a foreclosure sale.

(f) Advising the filing of any document or assisting in any manner in the preparation of any document for filing with the United States bankruptcy court.

(g) Giving any advice, explanation or instruction to a homeowner that relates to the cure of a default in or the reinstatement of an obligation secured by a mortgage or other lien on the residence in foreclosure, to the full satisfaction of the obligation or to the postponement or avoidance of a foreclosure sale.

2. "Foreclosure consultant" means a person who, directly or indirectly, makes any solicitation, representation or offer to a homeowner to perform for compensation or who, for compensation, performs any covered service that the person represents will do any of the following:

(a) Prevent or postpone a foreclosure sale.

(b) Obtain any forbearance from any mortgagee or beneficiary of a deed of trust.

(c) Assist the homeowner to exercise the right of reinstatement provided in the legal documents.

(d) Obtain any extension of the period within which the homeowner may reinstate the homeowner's obligation.

(e) Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a residence in foreclosure or included in the mortgage or deed of trust.

(f) Assist the homeowner in foreclosure or loan default to obtain a loan or advance of money.

(g) Avoid or ameliorate the impairment of the homeowner's credit resulting from the recording of a notice of sale or the occurrence of a foreclosure sale.

(h) Save the homeowner's residence from foreclosure.

(i) Assist the homeowner to accomplish a foreclosure reconveyance.

3. "Foreclosure reconveyance" means a transaction that involves both of the following:

(a) The transfer of title to a residence in foreclosure by a homeowner during a foreclosure proceeding by either:

(i) The transfer of an interest in the residence in foreclosure from the homeowner.

(ii) The creation of a mortgage or other lien during the foreclosure process that allows the acquirer to obtain title to the residence in foreclosure by redeeming the property as a junior lienholder.

(b) The subsequent conveyance or promise of a subsequent conveyance of an interest in the residence to the former homeowner by the acquirer, or a person acting in concert with the acquirer, that allows the former homeowner to remain in possession of the residence following the completion of the foreclosure proceeding. For the purposes of this subdivision, "interest in the residence" includes an interest in a contract for a deed, a purchase agreement and an option to purchase or lease.

4. "Foreclosure sale" means the sale of real property to enforce an obligation secured by a mortgage or lien on the property, including the exercise of a trustee's power of sale.

5. "Holder of evidence of debt" means the person in actual possession of or otherwise entitled to enforce an evidence of debt but does not include a person acting as a nominee solely for the purpose of holding the evidence of debt or deed of trust as an electronic registry without any authority to enforce the evidence of debt or deed of trust.

6. "Homeowner" means the record owner of a residence in foreclosure at the time the notice of the pendency of an action for foreclosure or the recording of a notice of sale pursuant to section 33-808.

7. "Residence in foreclosure" means residential real property consisting of not more than four family dwelling units, one of which the homeowner occupies as a principal place of residence, and against which there is recorded an outstanding notice of the pendency of an action for foreclosure or notice of sale pursuant to section 33-808.

§ 44-1378.01 Applicability

A. This article does not apply to:

1. A person licensed to practice law in this state, while performing any activity related to the person's attorney-client relationship with a homeowner or with the beneficiary, mortgagee, grantee or holder of any lien being enforced by foreclosure.

2. A holder or servicer of an evidence of debt or the attorney for the holder or servicer of an evidence of debt secured by a deed of trust or other lien on any residence in foreclosure while the person performs services in connection with the evidence of debt, lien, deed of trust or other lien securing the debt. For the purposes of this paragraph, the following persons are presumed to be the holder of evidence of debt:

(a) The person who is the obligee of and who is in possession of an original evidence of debt.

(b) The person in possession of an original evidence of debt together with the proper endorsement or assignment.

(c) The person in possession of a negotiable instrument evidencing a debt that has been duly negotiated to the person or to bearer or endorsed in blank.

(d) The person in possession of an evidence of debt with authority, which may be granted by the original evidence of debt or deed of trust, to enforce the evidence of debt as agent, nominee or trustee or in a similar capacity for the obligee of the evidence of debt.

3. A person doing business under any law of this state or the United States that regulates banks, trust companies, savings and loan associations, credit unions, insurance companies, title insurers, insurance producers or escrow companies authorized to conduct business in this state, while the person performs services as part of the person's normal business activities, or an affiliate or subsidiary, or an employee or agent acting on behalf of, any of the foregoing.

4. A person originating or closing a loan in the person's normal course of business if any of the following is true:

(a) The loan is subject to the requirements of the real estate settlement procedures act of 1974 (P.L. 93-533; 88 Stat. 1724; 12 United States Code sections 2601 through 2617).

(b) With respect to any second mortgage or home equity line of credit, the loan is subordinate to and closed simultaneously with a qualified first mortgage loan under subdivision (a) of this paragraph or is initially payable on the face of the note or contract to an entity included in paragraph 3.

(c) The loan is recorded in the real property records of the clerk and recorder of the county where the residence in foreclosure is located and the legal action giving rise to the judgment was commenced before the notice of election and demand for sale.

5. A title insurance company or title insurance agent authorized to conduct business in this state while performing title insurance and settlement services.

6. A person licensed as a real estate broker or real estate salesperson under title 32, chapter 20 while the person engages in any activity for which the person is licensed.

7. A nonprofit organization that is exempt from taxation under section 501(c)(3) of the internal revenue code and that solely offers counseling or advice to homeowners in foreclosure or loan default, unless the organization is an associate of the foreclosure consultant.

8. An individual or entity working with the homeowners in foreclosure to purchase the residence in foreclosure through a short sale provided that the individual or entity does not claim, demand, charge, collect or receive any compensation for the transaction.

B. Nothing in this chapter shall be construed as authorizing conduct for which a license would be required under title 6, chapter 9, article 4.

§ 44-1378.02 Prohibited acts

A foreclosure consultant shall not:

1. Claim, demand, charge, collect or receive any compensation until after the foreclosure consultant has fully performed each covered service that the foreclosure consultant contracted to perform or represented that the foreclosure consultant would perform.

2. Claim, demand, charge, collect or receive any fee, interest or other compensation for any reason that is not fully disclosed to the homeowner.

3. Take any wage assignment, lien on real or personal property, assignment of a homeowner's equity or other interest in a residence in foreclosure or other security for the payment of compensation.

4. Receive any consideration from any third party in connection with a covered service provided to a homeowner unless the consideration is first fully disclosed to the homeowner.

5. Acquire, directly or indirectly, any interest in the residence in foreclosure of a homeowner with whom the foreclosure consultant has contracted to perform a covered service.

6. Accept a power of attorney from a homeowner for any purpose, other than to inspect documents as provided by law.

§ 44-1378.03 Foreclosure consulting contract

A foreclosure consulting contract shall:

1. Be in writing and provided to and retained by the homeowner, without changes, alterations or modifications, for review at least twenty-four hours before it is signed by the homeowner.

2. Be printed in at least twelve-point type and shall include the name and address of the foreclosure consultant to which a notice of cancellation can be mailed and the date the homeowner signed the contract.

3. Fully disclose the exact nature of the foreclosure consulting services to be provided and the total amount and terms of any compensation the foreclosure consultant or associate will receive.

4. Be dated and personally signed, with each page being initialed, by each homeowner of the residence in foreclosure and the foreclosure consultant and shall be acknowledged by a notary public in the presence of the homeowner at the time the homeowner signs the contract.

§ 44-1378.04 Right of cancellation

A. In addition to any right of rescission available under state or federal law, a homeowner has the right to cancel a contract with a foreclosure consultant until midnight of the third business day following the day on which the homeowner signs a contract that complies with this article.

B. Cancellation occurs when the homeowner personally gives written notice of cancellation of the foreclosure consulting contract to the foreclosure consultant at the address specified in the contract or through any fax or electronic mail address identified in the contract or other materials provided to the homeowner by the foreclosure consultant.

C. Notice of cancellation, if given by mail, is effective on deposit of the notice in the United States mail, properly addressed, with postage prepaid.

D. A notice of cancellation given by the homeowner does not need to be in the particular form provided with the contract and, however expressed, is effective if it indicates the intention of the homeowner not to be bound by the contract.

E. As part of the cancellation of a foreclosure consulting contract, the homeowner shall repay, within sixty days after the notice of cancellation, all monies paid or advanced in good faith before the receipt of notice of cancellation by the foreclosure consultant under the terms of the foreclosure consulting contract.

F. The right to cancel may not be conditioned on the repayment of any monies.

§ 44-1378.05 Homeowner action to recover damages

A. A homeowner who is injured as a result of a foreclosure consultant's violation of this article may bring an action against the foreclosure consultant to recover damages caused by the violation, together with reasonable attorney fees and costs.

B. If the homeowner prevails in the action, the court may award punitive damages as determined by a jury or by a court sitting without a jury, but the punitive damages shall be at least one and one-half times the amount awarded to the homeowner as actual damages.

§ 44-1378.06 Fraud or deceit against homeowner; classification

A foreclosure consultant who engages in any conduct that constitutes fraud or deceit against a homeowner in connection with a transaction that is subject to this article, including a foreclosure reconveyance, is guilty of a class 1 misdemeanor.

§ 44-1378.07 Enforcement

A. The attorney general or a county attorney may enforce the criminal provisions of this article.

B. An act or practice in violation of this article constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

§ 44-1378.08 Cumulative nature of penalties

The rights, remedies and penalties provided pursuant to this article are cumulative and do not abrogate and are in addition to any other rights, remedies and penalties that may exist at law or in equity.

Article 23 Transportation Service Contracts

§ 44-1379 Indemnity agreements in motor carrier transportation contracts void; definitions

A. A motor carrier and a promisee may not agree to either of the following as it relates to a transportation services contract entered into on or after the effective date of this section:

1. That the motor carrier will indemnify, defend or hold the promisee harmless, or agree to a provision that has the effect of indemnifying, defending or holding a promisee harmless, from claims or liability for the negligence, intentional acts or intentional omissions of the promisee.

2. That the promisee will indemnify, defend or hold the motor carrier harmless, or agree to a provision that has the effect of indemnifying, defending or holding a motor carrier harmless, from claims or liability for the negligence, intentional acts or intentional omissions of the motor carrier.

B. An agreement that violates this section is against public policy and is void and unenforceable.

C. This section does not apply to a contract, subcontract or agreement that concerns or affects railroad operations, railroad property or railroad facilities or to the uniform intermodal interchange and facilities access agreement administered by the intermodal association of North America or to another agreement that provides for the interchange, use or possession of intermodal chassis, intermodal containers or other intermodal equipment.

D. This section does not apply to agreements to which this state, a political subdivision of this state or an agent of a political subdivision of this state is a party, including intergovernmental agreements, or to agreements to which a public service corporation, as defined in article XV, section 2, Constitution of Arizona, including an electric or gas utility or an affiliate of a public service corporation, is a party.

E. For the purposes of this section:

1. "Motor carrier" means a person who is engaged in the transportation of property for compensation by a motor vehicle and includes an agent, employee, servant or independent contractor of the motor carrier if the agent, employee, servant or independent contractor provides services in connection with a transportation services contract that is subject to this section.

2. "Motor vehicle" means a motor vehicle or vehicle combination that has a gross weight vehicle rating or combined gross weight rating that is greater than ten thousand pounds.

3. "Promisee" includes an agent, employee, servant or independent contractor who is directly responsible to the promisee or who provides services in connection with a transportation services contract that is subject to this section, other than a motor carrier that is a party to a transportation services contract with the promisee and an agent, employee, servant or independent contractor directly responsible to the motor carrier.

4. "Transportation services" means any of the following:

(a) The transportation of property.

(b) The entry on property to load, unload or transport property.

(c) The provision of a service that is incidental to the actions prescribed by subdivision (a) or (b), including the packing or storage of property.

Article 24 Retail Food Establishments

§ 44-1380 Consumer incentive item regulation; state preemption; definition

A. The regulation and use of consumer incentive items from retail food establishments are of statewide concern. The regulation of consumer incentive items pursuant to this article and their use, including their use in retail food establishment marketing, are not subject to further regulation by a county, city, town or other political subdivision of this state.

B. For the purposes of this section, "consumer incentive item" means any licensed media character, toy, game, trading card, contest, point accumulation, club membership, admission ticket, token, code or password for digital access, coupon, voucher, incentive, crayons, coloring placemats or other premium or prize or consumer product that is associated with a meal served by or acquired from a restaurant, food establishment or convenience store.

Article 25 Operator Service Providers

§ 44-1381 Operator service providers; collect call rates; disclosure

A provider of automated or live operator services accessed from a jail, prison or correctional facility in this state shall provide an oral rate disclosure to the party responsible for the payment of the call. The rate disclosure shall occur before the party responsible for the payment of the collect call accepts the call regardless if the call is an interstate or intrastate call.

Article 26 Transfer of Personal Property

§ 44-1382 Transfer of personal property; city, town or county

Notwithstanding any other law, this state and a city, town or county shall not require as a condition of a private sale, gift, donation or other transfer of personal property that the owner of the personal property search or facilitate the search of any federal or state databases and shall not require that a third party be involved.

Chapter 10 Competition and Competitive Practices

Article 1 Uniform State Antitrust Act

§ 44-1401 Definition

In this article, unless the context otherwise requires: "Person" means an individual, corporation, business trust, partnership, association or any other legal entity.

§ 44-1402 Contract, combination or conspiracy to restrain or monopolize trade

A contract, combination or conspiracy between two or more persons in restraint of, or to monopolize, trade or commerce, any part of which is within this state, is unlawful.

§ 44-1403 Establishment, maintenance or use of monopoly

The establishment, maintenance or use of a monopoly or an attempt to establish a monopoly of trade or commerce, any part of which is within this state, by any person for the purpose of excluding competition or controlling, fixing or maintaining prices is unlawful.

§ 44-1404 Exclusions

A. Labor of a human being is not a commodity or an article of commerce.

B. This article shall not be construed to forbid the existence and operation of any labor, agricultural or horticultural organization instituted for the purpose of mutual help, while lawfully carrying out its legitimate objects.

§ 44-1405 Judicial jurisdiction

An action for violation of this article shall be brought in the superior court.

§ 44-1406 Investigation; service of demand sanctions; confidentiality

A. If the attorney general has reasonable cause to believe that a person has information or is in possession, custody or control of any document or other tangible object relevant to an investigation for a violation of this article, the attorney general may serve upon the person, before bringing any action in the superior court, a written demand to appear and be examined under oath, to answer written interrogatories under oath and to produce the document or object for inspection and copying. The demand shall:

1. Be served upon the person in the manner required for service of process in this state or by certified mail with return receipt requested.

2. Describe the nature of the conduct constituting the violation under investigation.

3. Describe the class or classes of documents or objects with sufficient definiteness to permit them to be fairly identified.

4. Contain a copy of the written interrogatories.

5. Prescribe a reasonable time at which the person must appear to testify, within which to answer the written interrogatories and within which the document or object must be produced, and advise the person that objections to or reasons for not complying with the demand may be filed with the attorney general on or before that time.

6. Specify a place for the taking of testimony or for production and designate a person who shall be custodian of the document or object.

7. Contain a copy of subsections B and C of this section.

B. If a person objects to or otherwise fails to comply with the written demand served upon him under subsection A, the attorney general may file an action in the superior court for an order to enforce the demand. Venue for the action to enforce the demand shall be in the county in which the person resides or in which the person maintains a place of business or in which the event giving rise to jurisdiction occurred or in which the event had an effect. Notice of hearing the action to enforce the demand and a copy of the action shall be served upon the person in the same manner as that prescribed in the Arizona rules of civil procedure. If the court finds that the demand is proper, that there is reasonable cause to believe there may have been a violation of this article and that the information sought or document or object demanded is relevant to the violation, it shall order the person to comply with the demand, subject to modifications the court may prescribe. If the person fails to comply with such order, the court may issue any of the following orders until the person complies with such order:

1. Adjudging the person in contempt of court.

2. Granting injunctive relief against the person to whom the demand is issued to restrain the conduct which is the subject of the investigation.

3. Granting such other relief as the court may deem proper.

C. The court may award to the attorney general taxable costs and reasonable attorney fees as determined by the court against the person failing to obey the order. Upon motion by the person and for good cause shown, the court may make any further order in the proceedings that justice requires to protect the person from unreasonable annoyance, embarrassment, oppression, burden or expense.

D. If the attorney general determines that disclosure to the respondent of the evidence relied on to establish reasonable cause is not in the best interests of the investigation, he may request that the court examine the evidence in camera. If the attorney general makes this request, the court may examine the evidence in camera and then make its determination.

E. Any procedure, testimony taken or material produced under this section shall be kept confidential by the attorney general before bringing an action against a person under this article for the violation under investigation unless any of the following applies:

1. Confidentiality is waived by the person whose testimony is disclosed.

2. Confidentiality is waived by the person who produced to the attorney general the material being disclosed.

3. The testimony or material is disclosed solely to the person, or the person's attorney, who testified or provided the material to the attorney general.

4. Disclosure is authorized by court order.

F. The attorney general may disclose the testimony or material to a person employed by this state, the United States or any other state, if before disclosure to another state or the United States the receiving official agrees in writing to comply with the confidentiality restrictions of this section.

G. An individual conducting an examination pursuant to this section may exclude from the place of examination any person, except the person being examined and the person's counsel.

§ 44-1407 Civil penalty and injunctive enforcement

The attorney general or a county attorney with the permission or at the request of the attorney general may bring an action for appropriate injunctive or other equitable relief and civil penalties and as determined by the court, taxable costs, such other fees and expenses reasonably incurred and reasonable attorney fees, in the name of the state for a violation of this article. The court may assess for the benefit of the state a civil penalty of not more than one hundred fifty thousand dollars for each violation of this article.

§ 44-1408 Damages; injunctive relief

A. The state, a political subdivision or any public agency threatened with injury or injured in its business or property by a violation of this article may bring an action for appropriate injunctive or other equitable relief, damages sustained and, as determined by the court, taxable costs and reasonable attorney's fees.

B. A person threatened with injury or injured in his business or property by a violation of this article may bring an action for appropriate injunctive or other equitable relief, damages sustained and, as determined by the court, taxable costs and reasonable attorney's fees. If the trier of fact finds that the violation is flagrant, it shall increase recovery to an amount not in excess of three times the damages sustained.

§ 44-1409 Judgment as prima facie evidence

A final judgment or decree determining that a person has violated this article in an action brought by the state under section 44-1407 or 44-1408, subsection A, other than a consent judgment or decree entered before any testimony has been taken, is prima facie evidence against such person in any other action against him under section 44-1408 as to all matters with respect to which the judgment or decree would be an estoppel between the parties thereto. This section does not affect the application of collateral estoppel or issue preclusion.

§ 44-1410 Limitations of actions

A. An action under section 44-1407 to recover a civil penalty is barred if it is not commenced within four years after the cause of action accrues.

B. An action under section 44-1408 to recover damages is barred if it is not commenced within four years after the cause of action accrues, or within one year after the conclusion of any timely action brought by the state under section 44-1407 or 44-1408, subsection A, based in whole or in part on any matter complained of in the action for damages, whichever is later.

§ 44-1411 Remedies cumulative

The remedies provided for in this article are cumulative.

§ 44-1412 Uniformity

This article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this article among those states that enact it. It is the intent of the legislature that in construing this article, the courts may use as a guide interpretations given by the federal courts to comparable federal antitrust statutes.

§ 44-1413 Short title

This article may be cited as the uniform state antitrust act.

§ 44-1414 Order compelling testimony or production of evidence; immunity; contempt

A. In any proceeding or investigation under this article, if a person refuses to answer a question or produce evidence of any kind on the ground that he may be incriminated and if the attorney general or county attorney requests the court in writing to order the person to answer the question or produce the evidence, the court may make this order and the person shall comply with the order. If the court denies the request, the court shall state its reasons for denial in writing. After complying, the testimony or evidence, or any information directly or indirectly derived from the testimony or evidence, shall not be used against the person in any proceeding or prosecution for a crime or offense concerning which he gave an answer or produced evidence under the court order, except that immunity obtained pursuant to this section does not prevent or in any way affect the bringing of an action under section 44-1408. Immunity obtained pursuant to this section does not exempt any person from prosecution, penalty or forfeiture for any perjury, false swearing or contempt committed in answering, or failing to answer, or in producing, or failing to produce, evidence in accordance with the order.

B. If a person refuses to testify after being granted immunity and after being ordered to testify as prescribed in subsection A of this section, he may be adjudged in contempt.

§ 44-1415 Notice to attorney general; appearance

A. A person filing a complaint, counterclaim or answer for any violation of the provisions of this article shall simultaneously with the filing of the pleading in the superior court or, in the case of pendent state law claims in the federal court, serve a copy of the complaint, counterclaim or answer on the attorney general. Proof of service on the attorney general shall be filed with the court.

B. A person who commences, by special action or appeal, any proceeding in any state or federal appellate court in which a violation of this article is alleged or any application of this article appears to be in issue shall serve notice of the special action or appeal on the attorney general within three days after the commencement of the proceeding, provided that the time may be extended by leave of the court for good cause shown.

C. The state may appear as amicus curiae in any civil action or proceeding pending before any Arizona court, agency, board or commission in which matters related to this article appear to be in issue.

D. Service of any notice required under this section does not limit or otherwise affect the right of this state to maintain an action under this article or intervene in a pending action nor does it authorize the person to name this state or the attorney general as a party to the action.

§ 44-1416 Government contract, combination or conspiracy to restrain trade or commerce; violation; classification

A. A contract, combination or conspiracy in violation of section 44-1402 is per se unlawful if it involves:

1. A contract between a governmental agency and a person for the purchase of equipment, services, labor, goods, materials and commodities of any kind.

2. A subcontract with a contractor or proposed contractor for a governmental agency for the purchase of equipment, services, labor, goods, materials and commodities of any kind.

B. This section does not prevent or limit a court in finding other conduct that violates section 44-1402 to be per se unlawful.

C. A person who enters into a contract, combination, conspiracy or other act in violation of this section is guilty of a class 4 felony in addition to all other remedies provided by this chapter.

Article 2 Patent Troll Prevention Act

§ 44-1421 Definitions

In this article, unless the context otherwise requires:

1. "Assertion of patent infringement" means any of the following:

(a) Sending or delivering a demand to a target.

(b) Threatening a target with litigation and asserting or alleging that the target has engaged in patent infringement.

(c) Sending or delivering a demand to the customers of a target.

(d) Making assertions or allegations, other than those made in litigation against a target, that a target has engaged in patent infringement or that a target should obtain a license to a patent in order to avoid litigation.

2. "Claim" means the scope of the patent owner's exclusive rights to the use and control of the patent owner's invention.

3. "Demand" means a letter, an e-mail or any other communication asserting that a person has engaged in patent infringement or should obtain a license to a patent but does not include a petition filed in a court of competent jurisdiction.

4. "Person" means any individual, corporation, partnership, limited liability company, governmental entity, institution of higher education or other legal or commercial entity.

5. "Target" means any of the following:

(a) A person that has received a demand or against whom an assertion of patent infringement has been made and who has information indicating the assertion was made in bad faith pursuant to section 44-1422.

(b) A person that has been threatened with litigation or against whom a lawsuit has been filed alleging patent infringement and who has information indicating the assertion of patent infringement was made in bad faith pursuant to section 44-1422.

§ 44-1422 Bad faith patent infringement claims; prohibited

A. A person may not make an assertion of patent infringement in bad faith. A court may consider the following nonexclusive factors as evidence that a person has made an assertion of patent infringement in bad faith:

1. The demand does not contain all of the following:

(a) The patent number issued by the United States patent and trademark office or foreign agency.

(b) The name and address of the patent owner or assignee, if any.

(c) Facts relating to the specific areas in which the target's product, service or technology infringes the patent or is covered by the claims in the patent.

(d) An explanation of why the person making the assertion has standing, if the assignment system of the United States patent and trademark office does not identify the person asserting the patent infringement as the owner.

2. The target requested the information described in paragraph 1 of this subsection and the person failed to provide the information within a reasonable time.

3. Before making a demand, the person did not conduct an analysis comparing the claims in the patent to the target's product, service or technology or the analysis was conducted but does not identify specific areas in which the product, service or technology is covered by the claims in the patent.

4. The demand requested a response or payment of a licensing fee within an unreasonably short period of time.

5. The person making the assertion of patent infringement knew or should have known that the assertion is without merit.

6. The assertion of patent infringement contains false, misleading or deceptive information.

7. The person or a subsidiary or an affiliate of the person has previously filed or threatened to file one or more lawsuits based on the same or substantially equivalent assertion of patent infringement and a court found the person's assertion of patent infringement to be without merit.

8. Any other factor that the court determines to be relevant.

B. A court may consider the following factors as evidence that a person has made an assertion of patent infringement in good faith:

1. If the demand does not contain the information prescribed in subsection A, paragraph 2 of this section, the person provides the information to the target within a reasonable period of time after the target requests the information.

2. The person has done all of the following:

(a) Engaged in a reasonable analysis to establish a reasonable, good faith basis for believing the target has infringed the patent.

(b) Attempted to negotiate an appropriate remedy in a reasonable manner.

(c) Either:

(i) Demonstrated reasonable business practices in previous efforts to enforce the patent.

(ii) Successfully enforced the patent, or a substantially similar patent, through litigation.

3. The person has made a substantial investment in the use of the patent or in the production or sale of a product covered by the patent.

4. The person is either of the following:

(a) An inventor of the patent or an original assignee.

(b) An institution of higher education or a technology transfer organization affiliated with an institution of higher education.

5. Any other factor that the court determines to be relevant.

C. Unless done in bad faith, this section may not be construed to deem it an unfair or a deceptive trade practice for any person who owns or has the right to license or enforce a patent to do any of the following:

1. Advise others of that ownership or right of license or enforcement.

2. Communicate to others that the patent is available for license or sale.

3. Notify another of the infringement of that patent pursuant to 35 United States Code section 287.

4. Seek compensation for a past or present infringement, or license to the patent, if it is reasonable to believe that the person from whom compensation is sought may owe the compensation or may need or want a license to practice the patent.

§ 44-1423 Enforcement

An act or practice in violation of this article is an unlawful practice under section 44-1522 and subject to enforcement through private action and prosecution by the attorney general. The attorney general may investigate and take appropriate action as prescribed by article 7 of this chapter.

§ 44-1424 Federal patent infringement allegation exception

A civil action that includes a demand or assertion of patent infringement that arises under 35 United States Code section 271(e)(2) or 42 United States Code section 262 is not subject to this article.

Article 3 Registration and Protection of Trademarks and Service Marks

§ 44-1441 Definitions

A. In this article, unless the context otherwise requires:

1. "Applicant" means the person filing an application for registration of a mark under this article or the person's legal representatives, successors or assigns.

2. "Dilution" means the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of either:

(a) Competition between the owner of the famous mark and other parties.

(b) Likelihood of confusion, mistake or deception.

3. "Mark" means any trademark or service mark.

4. "Person" means any individual, firm, partnership, corporation, association, union or other organization.

5. "Registrant" means the person to whom the registration of a mark under this article is issued or the person's legal representatives, successors or assigns.

6. "Service mark" means any word, name, symbol or device or any combination of these items that is adopted and used by a person to identify services provided or sold by that person and to distinguish the services from services provided or sold by others.

7. "Trademark" means any word, name, symbol or device or any combination of these items that is adopted and used by a person to identify goods made or sold by that person and to distinguish the goods from goods made or sold by others.

8. "Use" or "used" means the bona fide use of a mark in the ordinary course of trade and not made merely to reserve a right in a mark.

B. A mark is in use:

1. On goods when it is placed in any manner on the goods or other containers or the displays associated with the goods or other containers or on the tags or labels affixed to the goods or other containers, or if the nature of the goods makes the placement impracticable, then on documents associated with the goods or their sale, and the goods are sold, transported or distributed in this state.

2. On services when it is used or displayed in the sale or advertising of services and the services are rendered in this state.

C. A mark is abandoned if either of the following occurs:

1. Its use has been discontinued with intent not to resume the use. Intent not to resume may be inferred from circumstances. Nonuse for three consecutive years constitutes prima facie evidence of abandonment.

2. Any course of conduct of the owner, including acts of omission as well as commission, causes the mark to lose its significance as a mark.

§ 44-1442 Registrability

A mark by which the goods or services of any applicant for registration may be distinguished from the goods or services of others shall not be registered if it:

1. Consists of or comprises immoral, deceptive or scandalous matter.

2. Consists of or comprises matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.

3. Consists of or comprises the flag or coat of arms or other insignia of the United States, or of any state or municipality, or of any foreign nation, or any simulation thereof.

4. Consists of or comprises the name, signature or portrait of any living individual, except with his written consent.

5. Consists of a mark which:

(a) When used on or in connection with the goods or services of the applicant, is merely descriptive or deceptively misdescriptive of them.

(b) When used on or in connection with the goods or services of the applicant, is primarily geographically descriptive or deceptively misdescriptive of them.

(c) Is primarily merely a surname, but nothing in this paragraph shall prevent the registration of a mark which has become distinctive of the applicant's goods or services in this state. The secretary of state may accept as prima facie evidence that a mark has become distinctive of the applicant's goods in this state proof of substantially exclusive and continuous use of such mark in this state by the applicant during the five-year period preceding the execution of the application for registration.

6. Consists of or comprises a mark that so resembles a mark registered in this state or a mark or trade name previously used in this state by another and not abandoned, and that when applied to the goods or services of the applicant, is likely to cause confusion or mistake or to deceive.

§ 44-1443 Application for registration

A. Subject to the limitations set forth in this article, any person who is domiciled in this state and who adopts and uses a trademark or service mark, or any person who adopts and uses a trademark or service mark in this state, may file in the office of the secretary of state, on a form to be furnished by the secretary of state, an application for registration of that mark setting forth at least the following information:

1. The name and email and business address of the person applying for such registration and, if a corporation, the state of incorporation.

2. The goods or services in connection with which the mark is used, the mode or manner in which the mark is used in connection with such goods or services and the class in which such goods or services fall.

3. The date when the mark was first used anywhere, and the date when the mark was first used in this state by the applicant or the applicant's predecessor in business.

4. A statement that the applicant is the owner of the mark and that no other person has the right to use the mark in this state either in the identical form of the mark or in such near resemblance to the mark as might be calculated to deceive or to be mistaken for the mark.

5. A statement that the applicant has conducted a search and found that the trademark or service mark does not consist of or comprise a mark that so resembles a mark registered in this state or a mark or trade name previously used in this state by another and not abandoned and that, when applied to the goods or services of the applicant, the mark is not likely to cause confusion or mistake or to deceive.

6. A statement whether the applicant previously sought to register the trademark or service mark with the United States patent and trademark office and, if so and the registration was denied, the reasons for the denial.

B. The application shall be:

1. Signed by the applicant, or by a member of the firm or any officer of the corporation or association applying.

2. Accompanied by a specimen or facsimile of the mark in a format specified by the secretary of state by rule.

§ 44-1443.01 Electronic filing; acceptance

A. Any document that is required to be filed pursuant to this article may be filed in an electronic format that is approved by the secretary of state.

B. Any document that is filed in accordance with this section is deemed to comply with:

1. The filing requirements of this article.

2. The requirement that a filing be verified or be submitted with a written signature.

3. Any requirement that the filing be filed under the penalty of perjury.

C. The secretary of state may adopt rules requiring that any person that submits a document for filing pursuant to this section also submit a written or printed copy of the document as a prerequisite to the document being deemed filed.

D. Except as provided in this section, all civil and criminal statutes applicable to the filing of paper documents apply to all documents filed pursuant to this section.

§ 44-1444 Certificate of registration; admissibility as evidence

A. Upon compliance by the applicant with the requirements of this article, the secretary of state shall cause a certificate of registration to be issued and delivered to the applicant. The certificate shall be issued under the signature of the secretary of state and the seal of the state, and it shall show:

1. The name and business address and, if a corporation, the state of incorporation, of the person claiming ownership of the mark.

2. The date claimed for the first use of the mark anywhere and the date claimed for the first use of the mark in this state.

3. The class of goods or services and a description of the goods or services on which the mark is used.

4. A reproduction of the mark.

5. The registration date and the term of the registration.

B. A certificate of registration issued by the secretary of state under the provisions of this article or a copy thereof duly certified by the secretary of state shall be admissible in evidence as competent and sufficient proof of the registration of such mark in any action or judicial proceedings in any court of competent jurisdiction in this state.

§ 44-1445 Duration of registration; renewal notice; application and fee

A. Registration of a mark under the provisions of this article shall be effective for a term of ten years from the date of registration. Upon application filed within six months prior to the expiration of such term, on a form to be furnished by the secretary of state, the registration may be renewed for a like term. A mark registration may be renewed for successive periods of ten years in a like manner.

B. The secretary of state shall notify registrants of marks under this article of the necessity of renewal within the year next preceding the expiration of the ten years from the date of registration by writing to the last known address of the registrants.

C. Any registered mark expires ten years from the date of the registration, or of the last reregistration thereof, and may be reregistered by filing an application with the secretary of state on a form furnished by the secretary of state and paying the renewal fee therefor within six months prior to the expiration of the registration.

§ 44-1446 Assignment of mark and registration

Any mark and its registration under the provisions of this article shall be assignable with the goodwill of the business in which the mark is used or with that part of the goodwill of the business connected with the use of and symbolized by the mark. Assignment shall be by instruments in writing duly executed and may be recorded with the secretary of state who upon recording of the assignment shall issue in the name of the assignee a new certificate for the remainder of the term of the registration or of the last reregistration thereof. An assignment of any registration under this article shall be void as against any subsequent purchaser for valuable consideration without notice, unless it is recorded with the secretary of state within three months after the date thereof or prior to such subsequent purchase.

§ 44-1447 Records

The secretary of state shall keep for public examination a record of all marks registered or renewed under this article.

§ 44-1448 Cancellation of registrations

The secretary of state shall cancel from the register:

1. Any registration concerning which the secretary of state receives a voluntary request for cancellation thereof from the registrant or the assignee of record.

2. All registrations granted under this article and not reregistered in accordance with the provisions hereof.

3. Any registration concerning which a court of competent jurisdiction finds:

(a) That the registered mark has been abandoned.

(b) That the registrant is not the owner of the mark.

(c) That the registration was granted improperly.

(d) That the registration was obtained fraudulently.

(e) That the registered mark is so similar to a mark registered by another person in the United States patent office, prior to the date of the filing of the application for registration by the registrant under this article, and not abandoned, that it might cause confusion or mistake, or a person to be deceived, but if the registrant proves that he is the owner of a concurrent registration of his mark in the United States patent office covering an area including this state, the registration under this article shall not be canceled.

(f) That the mark is or has become the generic name for the goods or services, or a portion of the goods or services, for which it has been registered.

4. When a court of competent jurisdiction orders cancellation of a registration on any ground.

§ 44-1448.01 Injury to business reputation; dilution

A. The owner of a mark that is famous in this state shall be entitled, subject to the principles of equity and on terms as the court deems reasonable, to an injunction against another person's commercial use of a mark or trade name, if the use begins after the mark has become famous and causes dilution of the distinctive quality of the mark and to obtain other relief provided in this section. In determining whether a mark is distinctive and famous, a court may consider at least the following factors:

1. The degree of inherent or acquired distinctiveness of the mark in this state.

2. The duration and extent of use of the mark in connection with the goods and services with which the mark is used.

3. The duration and extent of advertising and publicity of the mark in this state.

4. The geographical extent of the trading area in which the mark is used.

5. The channels of trade for the goods or services with which the mark is used.

6. The degree of recognition of the mark in the trading areas and channels of trade in this state used by the mark's owner and the person against whom the injunction is sought.

7. The nature and extent of use of the same or similar mark by third parties.

8. Whether the mark is the subject of a state registration in this state or a federal registration under the act of March 3, 1881, or under the act of February 20, 1905, or on the principal register.

B. In an action brought under this section, the owner of a famous mark is entitled only to injunctive relief in this state, unless the person against whom the injunctive relief is sought wilfully intended to trade on the owner's reputation or to cause dilution of the famous mark. If wilful intent is proven, the owner shall also be entitled to the remedies set forth in this chapter, subject to the discretion of the court and the principles of equity.

C. The following are not actionable under this section:

1. Fair use of a mark by another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark.

2. Noncommercial use of the mark.

3. All forms of news reporting and news commentary.

§ 44-1449 Classification of goods or services

A single application for registration of a mark may include all goods and services on which the mark is actually being used in one or multiple classes. The following general classes of goods and services are established for convenience of administration of this article, but not to limit or extend the applicant's or registrant's rights:

1. Chemical products used in industry, science, photography, agriculture, horticulture or forestry; artificial and synthetic resins; plastics for industrial use in the form of powders, liquids or pastes; natural and artificial manures; fire extinguishing compositions; tempering substances and chemical preparations for soldering; chemical substances for preserving foodstuffs; tanning substances; adhesive substances used in industry.

2. Paints, varnishes and lacquers; preservatives against rust and against deterioration of wood; coloring matters and dyestuffs; mordants; natural resins; metals in foil and powder form for painters and decorators.

3. Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics and hair lotions; dentifrices.

4. Industrial oils and greases except oils and fats and essential oils; lubricants; dust laying and absorbing compositions; fuels, including motor spirit and illuminants; candles, tapers, night-lights and wicks.

5. Pharmaceutical, veterinary and sanitary substances; infants' and invalids' food; plasters and material for bandaging; material for stopping teeth, dental wax and disinfectants; preparations for killing weeds and destroying vermin.

6. Unwrought and partly wrought common metals and the metals' alloys; anchors, anvils, bells and rolled and cast building materials; rails and other metallic materials for railway tracks; chains, except driving chains for vehicles; nonelectric cables and wires; locksmiths' work; metallic pipes and tubes; safes and cash boxes; steel balls; horseshoes; nails and screws; other goods in nonprecious metal that are not included in other classes; ores.

7. Machines and machine tools; motors, except motors for land vehicles; machine couplings and belting, except couplings and belting for land vehicles; large size agricultural implements; incubators.

8. Hand tools and instruments; cutlery, forks and spoons; side arms.

9. Scientific, nautical, surveying and electrical apparatus and instruments, including wireless apparatus and instruments; photographic, cinematographic, optical, weighing, measuring, signaling, checking, supervision, life-saving and teaching apparatus and instruments; coin or counterfreed apparatus; talking machines; cash registers; calculating machines; fire extinguishing apparatus.

10. Surgical, medical, dental and veterinary instruments and apparatus, including artificial limbs, eyes and teeth.

11. Installations for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes.

12. Vehicles; apparatus for locomotion by land, air or water.

13. Firearms; ammunition and projectiles; explosive substances; fireworks.

14. Precious metals and the metals' alloys; goods in precious metals or coated with precious metals, except cutlery, forks and spoons; jewelry and precious stones; horological and other chronometric instruments.

15. Musical instruments except talking machines and wireless apparatus.

16. Paper and paper articles and cardboard and cardboard articles; printed matters, newspapers and periodicals and books; bookbinding material; photographs; stationery and stationery adhesive materials; artists' materials; paintbrushes; typewriters and office requisites, except furniture; instructional and teaching material, except instructional and teaching apparatus; playing cards; printers' type and cliches or stereotype.

17. Gutta percha, India rubber, balata and substitutes and articles made from these substances and not included in other classes; plastics in the form of sheets, blocks and rods for use in manufacturing; materials for packing, stopping or insulating; asbestos, mica and asbestos or mica products; nonmetallic hose pipes.

18. Leather, imitations of leather and articles made from leather and imitations of leather that are not included in other classes; skins and hides; trunks and traveling bags; umbrellas, parasols and walking sticks; whips, harnesses and saddlery.

19. Building materials, natural and artificial stone, cement, lime, mortar, plaster and gravel; pipes of earthenware or cement; roadmaking materials; asphalt, pitch and bitumen; portable buildings; stone monuments; chimney pots.

20. Furniture, mirrors and picture frames; articles of wood, cork, reeds, cane, wicker, horn, bone, ivory, whalebone, shell, amber, mother-of-pearl, meerschaum or celluloid, substitutes for all of these materials, or of plastics and that are not included in other classes.

21. Small domestic utensils and containers, except utensils and containers of precious metals or utensils and containers coated with precious metals; combs and sponges; brushes, except paintbrushes; brushmaking materials; instruments and material for cleaning purposes and steel wool; unworked or semiworked glass, except glass used in building; glassware, porcelain and earthenware that is not included in other classes.

22. Ropes, string, nets, tents, awnings, tarpaulins, sails and sacks; padding and stuffing materials, including hair, kapok, feathers and seaweed; raw, fibrous textile materials.

23. Yarns and threads.

24. Tissues that are piece goods; bed and table covers; textile articles that are not included in other classes.

25. Clothing, including boots, shoes and slippers.

26. Lace, embroidery, ribands and braid; buttons, press buttons, hooks, eyes, pins and needles; artificial flowers.

27. Carpets, rugs, mats and matting; linoleums and other materials for covering existing floors; nontextile wall hangings.

28. Games and playthings; gymnastic and sporting articles, except gymnastic and sporting clothes; ornaments and decorations for Christmas trees.

29. Meats, fish, poultry and game; meat extracts; preserved, dried and cooked fruits and vegetables; jellies and jams; eggs, milk and other dairy products; edible oils and fats; preserves and pickles.

30. Coffee, tea, cocoa, sugar, rice, tapioca, sago and coffee substitutes; flour and preparations made from cereals; bread, biscuits, cakes, pastry and confectionery; ices; honey and treacle; yeast and baking powder; salt, mustard, pepper, vinegar, sauces and spices.

31. Agricultural, horticultural and forestry products and grains that are not included in other classes; living animals; fresh fruits and vegetables; seeds; live plants and flowers; foodstuffs for animals; malt.

32. Beer, ale and porter; mineral waters, aerated waters and other nonalcoholic drinks; syrups and other preparations for making beverages.

33. Wines, spirits and liqueurs.

34. Raw or manufactured tobacco; smokers' articles; matches.

35. Computers and computer software.

36. Advertising and business.

37. Insurance and financial.

38. Construction and repair.

39. Communication.

40. Transportation and storage.

41. Material treatment.

42. Education and entertainment.

43. Miscellaneous.

§ 44-1450 Fraudulent registration; damages

Any person who for himself, or on behalf of any other person, procures the filing or registration of any mark in the office of the secretary of state under the provisions of this article by knowingly making any false or fraudulent representation or declaration, verbally or in writing, or by any other fraudulent means, shall be liable to pay all damages sustained in consequence of such filing or registration, to be recovered by or on behalf of the party injured thereby in any court of competent jurisdiction.

§ 44-1451 Remedies for infringement

A. Subject to section 44-1452, the owner of a mark registered under this article may proceed by civil action against any person who, without the consent of the registrant:

1. Uses in this state the registered mark or a mark similar to the registered mark on or in connection with any goods or services or any container for goods in any manner that is likely to cause confusion, cause a mistake or deceive a person as to either:

(a) The affiliation, connection or association of the person with another person.

(b) The origin, sponsorship or approval of the goods, services or commercial activities by the owner of the registered mark.

2. Reproduces, counterfeits, copies or colorably imitates a registered mark in any manner whatsoever if such reproductions, counterfeits, copies or colorable imitations are for usage in contravention of paragraph 1 of this subsection.

3. Distributes or uses an unauthorized copy of computer software if the person knows that the copy is an unauthorized copy and when used the copy depicts, incorporates or displays or causes to be depicted, incorporated or displayed a mark that has been registered under this article for computer software. Unauthorized distribution or use is deemed to cause injury in this state.

4. Knowingly obliterates, covers, removes or otherwise alters the mark of another person.

B. In any such action, the court:

1. May grant injunctions to restrain any of such acts as the court deems just and reasonable.

2. May also require the defendant to pay to the plaintiff, subject to the principles of equity:

(a) The defendant's profits.

(b) Any damages sustained by the plaintiff.

(c) The costs of the action, provided that no profits or damages shall be awarded in the case of an action brought under subsection A, paragraph 2 of this section, unless the acts were committed with knowledge that the usage would be in contravention of subsection A, paragraph 1 of this section.

3. If the use is a nonpersonal, commercial use, shall grant to a prevailing plaintiff in an action brought under subsection A, paragraph 3 of this section the plaintiff's reasonable attorney fees and, at the plaintiff's election and in lieu of the defendant's profits or actual damages, presumed damages that are equal to five hundred dollars for each copy or the manufacturer's suggested retail price for each copy, whichever is greater.

4. If the use is a personal, noncommercial use, may grant to a prevailing plaintiff in an action brought under this section the plaintiff's reasonable attorney fees and, at the plaintiff's election and in lieu of the defendant's profits or actual damages, presumed damages that are equal to five hundred dollars for each copy or the manufacturer's suggested retail price for each copy, whichever is greater.

5. May also order the cancellation or transfer of a registration or that any reproductions, copies, counterfeits, or colorable imitations of the registered mark in the possession or under the control of the defendant be destroyed or delivered for destruction.

6. May also order the confiscation or destruction of any unauthorized copy of computer software that when used depicts or displays or causes to be depicted or displayed a registered mark.

C. The enumeration of any right or remedy provided in this article shall not affect a registrant's right to prosecution under any penal law of this state.

§ 44-1452 Common law rights

Nothing in this article shall adversely affect the rights or the enforcement of rights in marks acquired in good faith at any time at common law.

§ 44-1453 Counterfeit marks; violation; classification; presumption; seizure; forfeiture; remedies; definitions

A. Except as provided in subsections B, C and D of this section, a person who knowingly and with intent to sell or distribute uses, displays, advertises, distributes, offers for sale, sells or possesses any item that bears a counterfeit mark or any service that is identified by a counterfeit mark is guilty of a class 1 misdemeanor.

B. A person who commits any act proscribed in subsection A of this section is guilty of a class 6 felony if either:

1. The person has one previous conviction under this section.

2. At least one of the following is true:

(a) The violation involves more than one hundred but fewer than one thousand items that bear the counterfeit mark.

(b) The total retail value of all of the items or services that bear or are identified by the counterfeit mark is more than one thousand dollars but less than ten thousand dollars.

C. A person who knowingly manufactures or produces with intent to sell or distribute any item that bears a counterfeit mark or any service that is identified by a counterfeit mark is guilty of a class 5 felony.

D. A person who commits any act proscribed by subsection A of this section is guilty of a class 5 felony if either:

1. The person has two or more previous convictions under this section.

2. At least one of the following is true:

(a) The violation involves at least one thousand items that bear the counterfeit mark.

(b) The total retail value of all of the items or services that bear or are identified by the counterfeit mark is at least ten thousand dollars.

E. A person who knowingly has possession, custody or control of at least twenty-six items that bear a counterfeit mark is presumed to possess the items with intent to sell or distribute the items.

F. In any criminal proceeding in which a person is convicted of a violation of this section, the court may order the convicted person to pay restitution to the intellectual property owner.

G. A law enforcement officer may seize any item that bears a counterfeit mark and all other personal property that is employed or used in connection with a violation of this section, including any items, objects, tools, machines, equipment, instrumentalities or vehicles. All personal property seized pursuant to this section shall be forfeited pursuant to title 13, chapter 39.

H. After a disposition or final judgment, on the request of the intellectual property owner, a law enforcement officer shall release all seized items that bear a counterfeit mark to the intellectual property owner for destruction or disposition. If the intellectual property owner does not request the release of the seized items that bear a counterfeit mark, the law enforcement officer shall destroy the items unless the intellectual property owner consents to another form of disposition.

I. Any certificate of registration pursuant to this article or federal law of any intellectual property is prima facie evidence of the facts stated in the certificate of registration.

J. In addition to the remedies provided in section 44-1451, an intellectual property owner who sustains a loss as a result of a violation of this section may file an action in superior court for recovery of up to treble damages and the costs of the suit including reasonable attorney fees.

K. The remedies provided in this section are cumulative to all other civil and criminal remedies provided by law.

L. For the purposes of this section, the quantity or retail value of items or services includes the aggregate quantity or retail value of all items that the defendant manufactures, uses, displays, advertises, distributes, offers for sale, sells or possesses and that bear a counterfeit mark or that are identified by a counterfeit mark.

M. For the purposes of this section:

1. "Counterfeit mark" means:

(a) Any unauthorized reproduction or copy of intellectual property.

(b) Intellectual property that is affixed to any item that is knowingly sold, offered for sale, manufactured or distributed or to any identifying services offered or rendered without the authority of the intellectual property owner.

2. "Intellectual property" means any trademark, service mark, trade name, label, term, device, design or word that is adopted or used by a person to identify that person's goods or services.

3. "Item" includes:

(a) Any component that is designed, marketed or otherwise intended to be used on or in connection with any goods or services.

(b) Any component of a finished product.

4. "Retail value" means:

(a) For items that bear a counterfeit mark and that are components of a finished product, the manufacturer's suggested retail price of the finished product on or in which the component would be utilized.

(b) For all other items that bear a counterfeit mark or services that are identified by a counterfeit mark, the manufacturer's suggested retail price for those items or services.

§ 44-1455 Use of unauthorized copy of computer software; violation; classification

A person who knowingly uses, other than for personal, noncommercial use, an unauthorized copy of computer software that when used depicts, incorporates or displays or causes to be depicted, incorporated or displayed a mark that has been registered under this article for computer software is guilty of a class 5 felony.

§ 44-1456 Use of trademarked container for other articles; violation; classification

A person who has or uses a cask, bottle, vessel, case, cover, label or other thing bearing or having in any way connected with it the duly filed trademark or name of another, for the purpose of disposing of, with intent to deceive or defraud, any article other than the article which such container or thing originally contained or was connected with by the owner of such trademark or name, is guilty of a class 2 misdemeanor.

Article 3.1 Trade Names

§ 44-1460 Registration of trade name, title or designation

A. Any person, partnership, corporation, firm, association, society, foundation, federation or organization doing business in this state or any foreign corporation licensed to exercise its corporate powers in this state, may register with the secretary of state, on a form to be furnished by the secretary of state, the name, title or designation under which the applicant is operating, setting forth at least the following information:

1. The name and email and business address of the applicant for such registration. If the applicant is a corporation, the state of its incorporation shall be disclosed.

2. The name, title or designation to be registered.

3. The general nature of the business conducted by the applicant.

4. The length of time during which the name, title or designation has been used by the applicant in the applicant's business operations in this state.

5. A statement that the applicant has conducted a search and found that the trade name, title or designation is distinguishable on the record from both of the following:

(a) Any other name previously filed and on record with the secretary of state.

(b) An existing corporation name or a corporate name reserved pursuant to title 10, chapters 4, 19 and 24 through 40.

B. The applicant or a member or officer of the firm, partnership, corporation, association, society, foundation, federation or other organization shall sign the application.

C. A single name, title or designation may be registered on each application submitted under this article.

§ 44-1460.01 Issuance of certificate; restrictions

A. Upon compliance by the applicant with the requirements of this article the secretary of state shall issue a certificate of registration. The certificate shall show the name and business address of the applicant, the name, title or designation registered, the date of first use claimed, the date of registration and the term of registration.

B. The secretary of state shall not file an application for the registration of any trade name, title or designation if it is not distinguishable on the record from any other name previously filed and on record with the secretary of state.

C. The secretary of state shall not file an application for the registration of any trade name, title or designation if it is not distinguishable on the record from an existing corporate name or a corporate name reserved pursuant to title 10, chapters 4, 19 and 24 through 40.

§ 44-1460.02 Effective term of registration; renewal; expiration notice

A. Registration of a name, title or designation under the terms of this article is effective for a term of five years from the date of registration. Upon application filed within six months prior to the expiration of such term, on a form furnished by the secretary of state, the registration may be renewed at the end of each five-year period for a like term.

B. The secretary of state shall notify registrants within the sixty days next preceding the expiration of the five years from the date of registration of the necessity of renewal by writing to the last known address of the registrants.

§ 44-1460.03 Assignment and recording of rights

Any name, title or designation and its registration may be assignable by an instrument in writing duly executed and may be recorded with the secretary of state who upon recording the assignment shall issue in the name of the assignee a new certificate for the remainder of the term of the registration or of the last renewal of the registration.

§ 44-1460.04 Public examination of records

The secretary of state shall keep for public examination a record of all trade names registered or renewed under the provisions of this article.

§ 44-1460.05 Exclusive rights; common law rights

A. The registration of a trade name if prior in time to the filing of articles of incorporation or the reservation of a corporate name shall give to the holder of the registered trade name exclusive right to the use of such name.

B. Nothing in this article shall adversely affect the rights or the enforcement of rights in trade names acquired in good faith at any time at common law.

§ 44-1460.06 Electronic filing; acceptance

A. Any document that is required to be filed pursuant to this article may be filed in an electronic format that is approved by the secretary of state.

B. Any document that is filed in accordance with this section is deemed to comply with:

1. The filing requirements of this article.

2. The requirement that a filing be submitted with a written signature.

3. Any requirement that the filing be filed under the penalty of perjury.

C. The secretary of state may adopt rules requiring that any person that submits a document for filing pursuant to this section also submit a written or printed copy of the document as a prerequisite to the document being deemed filed.

D. Except as provided in this section, all civil and criminal statutes applicable to the filing of paper documents apply to all documents filed pursuant to this section.

§ 44-1460.07 Trade name registration cancellation; release for use

A. The secretary of state shall cancel a trade name registration if:

1. The secretary of state receives a voluntary request for cancellation from the registrant or the assignee of record.

2. The registration is not renewed in accordance with this article.

3. A court of competent jurisdiction orders the cancellation on any grounds.

4. The registration was obtained fraudulently by containing false or misleading information.

B. The secretary of state may release a trade name for use pursuant to this article six months after the trade name's corporate owner has been administratively dissolved.

Article 5 Advertising

§ 44-1481 Fraudulent advertising practices defined; violation; classification

A. A person is guilty of a class 3 misdemeanor who:

1. Knowingly and with the intent to sell to the public real or personal property or services, or to induce the public to acquire an interest therein, makes and publishes an advertisement, either printed or by public outcry or proclamation, or otherwise, containing any false, fraudulent, deceptive or misleading representations in respect to such property or services, or the manner of its sale or distribution.

2. Publishes, circulates or disseminates any statement or assertion of fact concerning real estate which is known by him to be untrue, and which is made or disseminated with the intention of misleading.

B. A merchant is guilty of a class 3 misdemeanor who advertises or displays any brand of goods known to the general public and quotes prices in connection therewith as an inducement to attract purchasers to the place of business so advertised, and makes false statements regarding the quality or merits of the goods advertised.

§ 44-1482 Unsolicited commercial fax advertisements; definition

A. Each unsolicited commercial fax advertisement shall include the name, address, fax number and toll free or local contact telephone number of the vendor that sends the fax.

B. Any person who receives an unsolicited commercial fax advertisement may contact the vendor that sent the fax and request that no further faxes be sent. On receiving a request that no further faxes be sent, a vendor shall have three business days to update its records. If the vendor continues to send unsolicited commercial faxes three business days after the person requests not to receive further faxes, the person may charge the vendor five dollars for each faxed page received.

C. This section shall not be construed to alter or restrict any rights a person may have under federal law to recover for the sending of an unsolicited commercial fax advertisement by a vendor.

D. For the purposes of this section, "vendor" means any individual, corporation, business trust, partnership, association or other legal entity.

§ 44-1483 Digital advertising directed toward children; content restrictions; civil penalty; enforcement; definitions

(Eff. 1/1/27)

A. A child-directed application shall take appropriate measures to prevent the display of inappropriate and mature advertisements on the child-directed application. In determining whether an application is a child-directed application, all of the following shall be considered:

1. The subject matter.

2. The visual content.

3. The use of animated characters or child-oriented activities.

4. The age of the models and the presence of child celebrities or celebrities who appeal to children.

5. Any incentive.

6. Any music or other audio content.

B. A child-directed application that does not comply with this section is subject to a civil penalty of up to $100,000 per violation.

C. The attorney general shall enforce this section.

D. For the purposes of this section:

1. "Application platform" means a digital distribution service that offers for download an application.

2. "Child-directed application" means an application that is primarily intended for use or download by an individual who is eleven years of age or younger.

3. "Inappropriate and mature advertisement" means an advertisement that sells or promotes any of the following:

(a) Violence.

(b) Explicit language.

(c) Sexual content.

(d) Alcohol or drug use.

Article 6 Rate Signs of Hotels and Motor Courts

§ 44-1501 Definitions

In this article, unless the context otherwise requires:

1. "Operator" includes a manager or any person in charge of the operation of motels, motor hotels, motor courts, motor camps, hotels, and like establishments. "Operator" or "owner" includes natural persons, firms, and corporations.

2. "Outdoor sign" or "outside sign" means any sign visible to passers-by whether it is located within or without the building.

3. "Room rates" means the rates at which rooms or other accommodations are rented to occupants.

§ 44-1502 Application

This article shall apply to operators and owners of motels, motor hotels, motor courts, motor camps, hotels and like establishments.

§ 44-1503 Posting of minimum and maximum rates

A. An owner or operator of an establishment within the scope of this article shall not post or maintain posted on any outdoor or outside advertising sign pertaining to the establishment any rates for accommodations in the establishment unless the sign has posted thereon both the minimum and maximum room or other rental unit rates for accommodations offered for rental. All posted rates and descriptive data on such sign shall be in type and material of the same size and prominence.

B. This section shall not be held to be complied with by signs stating the rate per person or bearing the legend "and up".

§ 44-1504 Accommodations advertised required to be available

An owner or operator of any establishment within the scope of this article shall not post or maintain posted on outdoor or outside advertising signs rates for accommodations in the establishment unless there is available in the establishment, when vacant, accommodations for immediate occupancy to meet the posted rates of such advertising signs.

§ 44-1505 False statements prohibited

An owner or operator of any establishment within the scope of this article shall not post or maintain outdoor or outside advertising signs in connection with any such establishment relating to rates which have thereon any untrue, false or fraudulent representations.

§ 44-1506 Construction

A. Nothing in this article shall be construed to require establishments within the scope of this article to have outdoor or outside signs.

B. This article shall be liberally construed to prevent untrue, misleading, false or fraudulent representations relating to rates being placed upon outdoor or outside signs pertaining to such establishments.

§ 44-1507 Violation; classification

A person violating any provision of this article is guilty of a class 2 misdemeanor.

Article 7 Consumer Fraud

§ 44-1521 Definitions

In this article, unless the context otherwise requires:

1. "Advertisement" includes the attempt by publication, dissemination, solicitation or circulation, oral or written, to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in any merchandise.

2. "Attorney general" means the attorney general of Arizona or the attorney general's authorized delegate.

3. "Authorized delegate" means any attorney, investigator or administrative personnel employed by the attorney general and so designated, and, if requested by the county attorney and authorized by the attorney general, may include similar personnel employed by the several county attorneys of this state.

4. "Examine" means the inspection, study or copying of any account, book, document, merchandise, paper or record.

5. "Merchandise" means any objects, wares, goods, commodities, intangibles, real estate or services.

6. "Person" means any natural person or the person's legal representative, any partnership or domestic or foreign corporation, any company, trust, business entity or association or any agent, employee, salesman, partner, officer, director, member, stockholder, associate or trustee.

7. "Sale" means any sale, offer for sale or attempt to sell any merchandise for any consideration, including sales, leases and rentals of any real estate subject to any form of deed restriction imposed as part of a previous sale.

§ 44-1522 Unlawful practices; intended interpretation of provisions

A. The act, use or employment by any person of any deception, deceptive or unfair act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely on such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice.

B. The violation of chapter 9, article 16 or chapter 19, article 1 of this title is declared to be an unlawful practice and subject to enforcement under this article.

C. It is the intent of the legislature, in construing subsection A, that the courts may use as a guide interpretations given by the federal trade commission and the federal courts to 15 United States Code sections 45, 52 and 55(a)(1).

§ 44-1523 Exemptions

Nothing contained in this article shall apply to the owner or publisher of a newspaper, magazine, or other publication of printed matter wherein such advertisement appears, or to the owner or operator of a radio or television station which disseminates such advertisement when the owner, publisher, or operator has no knowledge of the intent, design, or purpose of the advertiser. Further, nothing contained in this article shall apply to any advertisement which is subject to and complies with the rules and regulations of, and the statutes administered by the federal trade commission.

§ 44-1524 Powers of attorney general

A. If the attorney general has reasonable cause to believe that a person has engaged in, is engaging in or is about to engage in any practice or transaction which is in violation of this article or order or assurance of discontinuance entered under this article, he may:

1. Require such person to file on such forms as he prescribes a statement or report in writing, under oath, as to all the facts and circumstances concerning the sale or advertisement of merchandise by such person, and such other data and information as he may deem necessary.

2. Examine under oath any person in connection with the sale or advertisement of any merchandise.

3. Examine any merchandise or sample thereof, or any record, book, document, account or paper as he may deem necessary.

4. Pursuant to an order of the superior court, impound any record, book, document, account, paper, or sample or merchandise material to such practice and retain the same in his possession until the completion of all proceedings undertaken under this article or in the courts.

B. This section does not prohibit the attorney general from investigation of violations of this article including requesting a person to respond to a complaint filed against him. A person cannot be compelled to comply with a request to respond to a complaint except in accordance with section 44-1527.

§ 44-1525 Confidentiality of information or evidence

All information or evidence provided to the attorney general shall be confidential and shall not be made public unless in the judgment of the attorney general the ends of justice and the public interest will be served by the publication thereof, provided that the names of the interested parties shall not be made public.

§ 44-1526 Subpoena; hearing; rules and regulations

A. To accomplish the objectives and to carry out the duties prescribed in this article, the attorney general, in addition to other powers conferred upon him by this article, may:

1. Issue subpoenas to any person.

2. Administer an oath or affirmation to any person.

3. Conduct hearings in aid of any investigation or inquiry.

4. Prescribe such forms and promulgate such procedural rules and regulations as may be necessary to enforce the provisions of this article, which rules and regulations shall have the force of law. Such rules and regulations shall not be inconsistent with the provisions of this article.

B. The attorney general shall serve a demand or subpoena in accordance with one of the following:

1. Service within or without this state in the manner provided under applicable law or rules of procedure for the service of a summons and complaint in a civil action.

2. On a natural person by delivering the demand or subpoena or by mailing the demand or subpoena by registered mail to the person at his last known place of business, residence, or both, within or without this state.

3. On any person other than a natural person by delivering the demand or subpoena or by mailing the demand or subpoena by registered mail to the person authorized or permitted by law to receive service of a complaint and a summons in a civil action.

4. Service as the superior court may direct.

§ 44-1527 Failure to supply information or obey subpoena; hearing

A. If any person fails or refuses to fully comply with a demand or any subpoena issued by the attorney general under sections 44-1524 or 44-1526, the attorney general may file a petition with the superior court and, after notice and hearing on the petition, request the following orders until the person complies with the demand or the subpoena:

1. Adjudging such person in contempt of court.

2. Granting injunctive relief, restraining the sale or advertisement of merchandise by such person which is the subject of the investigation.

3. Granting such other relief as the court may deem proper.

B. If the court determines that the attorney general has reasonable cause to believe that the respondent has engaged in, is engaging in or is about to engage in any act, practice or transaction which is in violation of this article or order or assurance of discontinuance entered under this article, the court shall grant the appropriate relief.

C. If the attorney general determines that disclosure to the respondent of the evidence relied on to establish reasonable cause would not be in the best interests of the investigation, he may request and the court may examine the evidence in camera and thereafter make its determination.

§ 44-1528 Remedies; injunction; other reliefs; receiver

A. Following an investigation made pursuant to section 44-1524 and when it appears to the attorney general that a person has engaged in or is engaging in any practice declared to be unlawful by this article, the attorney general may seek and obtain in an action in a court of competent jurisdiction an injunction prohibiting the person from continuing the practices or engaging in the practice or doing any acts in furtherance of the practice after notice as is required by the rules of civil procedure. The court may make such orders or judgments as may be necessary to:

1. Prevent the use or employment by a person of any unlawful practices.

2. Restore to any person in interest any monies or property, real or personal, which may have been acquired by means of any practice in this article declared to be unlawful, including the appointment of a receiver.

3. Require that any profits, gain, gross receipts or other benefit obtained by means of any practice in this article declared to be unlawful be disgorged and paid to the state for deposit in the consumer remediation subaccount of the consumer restitution and remediation revolving fund established by section 44-1531.02.

4. Prohibit a person found to have violated this article from engaging in a specified trade or occupation.

B. Following an investigation made pursuant to section 44-1524 and when it appears to the attorney general that a person has engaged in or is engaging in a practice declared to be unlawful by this article and that the person is about to conceal the person's assets or the person's identity or whereabouts or leave the state, the attorney general may apply to a court of competent jurisdiction, ex parte, for an order appointing a receiver of the assets of the person. On a showing made by affidavit or other evidence that the person has engaged in or is engaging in a practice declared to be unlawful by this article and that the person is about to conceal the person's assets or the person's identity or whereabouts or leave the state, the court may order the appointment of a receiver to receive the assets of the person.

§ 44-1529 Powers of receiver

When a receiver is appointed by the court pursuant to this article, he shall have the power to sue for, collect, receive, or take into his possession all the goods, and chattels, rights and credits, monies and effects, lands and tenements, books, records, documents, papers, choses in action, bills, notes and property of every description, including property with which such property has been mingled if it cannot be identified in kind because of such commingling, and to sell, convey, and assign the same and hold and dispose of the proceeds thereof under the direction of the court. Any person who has suffered damages as a result of the use or employment of any unlawful practice, and submits proof to the satisfaction of the court that he has in fact been damaged, may participate with general creditors in the distribution of the assets to the extent he has sustained out-of-pocket losses. The court shall have jurisdiction of all questions arising in such proceedings and may make such orders and enter such judgments therein as may be required.

§ 44-1530 Assurance of discontinuance of unlawful practice

In the enforcement of the provisions of this article, the attorney general may accept an assurance of discontinuance of any act or practice deemed in violation of the provisions of this article from any person engaging in, or who has engaged in, such act or practice. Such assurance may include a stipulation for the payment by such person of reasonable expenses incurred by the attorney general or as restitution to aggrieved persons, or both. Any such assurance shall be in writing and shall be filed with and subject to the approval of the superior court of the county in which the alleged violator resides or has its principal place of business or in Maricopa county. A violation of such assurance within six years of the filing thereof shall constitute prima facie proof of a violation of the provisions of this article. Such assurance of discontinuance shall not be considered an admission of a violation for any purpose.

§ 44-1531 Violations; civil penalties

A. If a court finds that any person has wilfully violated section 44-1522, the attorney general upon petition to the court may recover from the person on behalf of the state a civil penalty of not more than ten thousand dollars per violation.

B. For purposes of this section, a wilful violation occurs when the party committing the violation knew or should have known that his conduct was of the nature prohibited by section 44-1522.

§ 44-1531.01 Consumer protection-consumer fraud revolving fund; use of fund

A. The consumer protection-consumer fraud revolving fund is established to be administered by the attorney general under the conditions and for the purposes provided by this section. Monies in the fund are subject to legislative appropriation. Monies in the fund are exempt from the provisions of section 35-190, relating to lapsing of appropriations.

B. The fund consists of the following:

1. Any investigative or court costs, attorney fees or civil penalties recovered for the state by the attorney general as a result of enforcement of either state or federal statutes pertaining to consumer protection or consumer fraud, whether by final judgment, settlement or otherwise, except that the costs, penalties or fees recovered by a county attorney shall be retained in the county and used for investigative operations for consumer protection in the county.

2. Monies deposited pursuant to section 41-5603.

C. The attorney general shall use the monies in the fund for operating expenses, including any cost or expense associated with the tobacco master settlement agreement arbitration, consumer fraud education and investigative and enforcement operations of the consumer protection division.

D. Notwithstanding subsection C of this section, the attorney general may use up to $335,000 annually from the fund to continue the operation of the federally recognized internet crimes against children task force program. This program shall coordinate a national network of task forces that assist federal, state, local and tribal law enforcement agencies in investigations, forensic examinations and prosecutions related to the technology-facilitated sexual exploitation of children and internet crimes against children.

E. On or before January 15, April 15, July 15 and October 15, the attorney general shall file with the governor, with copies to the director of the department of administration, the president of the senate, the speaker of the house of representatives, the secretary of state and the staff director of the joint legislative budget committee, a full and complete account of the receipts and disbursements from the fund in the previous calendar quarter.

F. On or before January 15, April 15, July 15 and October 15, each county attorney who retains monies pursuant to subsection B of this section shall provide the county board of supervisors with a full and complete account of the receipts and disbursements of the monies in the previous calendar quarter.

§ 44-1531.02 Consumer restitution and remediation revolving fund; subaccounts; annual report

A. The consumer restitution and remediation revolving fund is established to be administered by the attorney general under the conditions and for the purposes provided by this section. On notice from the attorney general, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the appropriate subaccount of the fund.

B. The consumer restitution subaccount of the consumer restitution and remediation revolving fund is established consisting of monies collected or received by the attorney general as the result of an order of a court of competent jurisdiction, or as the result of a settlement or compromise, for the purpose of compensating specific, identifiable persons, including this state, for economic loss resulting from violations or alleged violations of consumer protection laws. The attorney general shall administer the subaccount. Monies in the subaccount are continuously appropriated. Monies in the subaccount are exempt from the provisions of section 35-190 relating to lapsing of appropriations. The attorney general shall distribute monies in the subaccount to specific, identifiable persons as directed by a court order. The attorney general may distribute any unexpended monies in the consumer restitution subaccount to the consumer protection–consumer fraud revolving fund established by section 44-1531.01.

C. The consumer remediation subaccount of the consumer restitution and remediation revolving fund is established consisting of monies collected or received by the attorney general from a party as the result of an order of a court of competent jurisdiction, or as the result of a settlement or compromise, to rectify violations or alleged violations of consumer protection laws, other than monies collected for the benefit of specific, identifiable persons and monies for investigative or court costs, attorney fees, civil penalties or other monies recovered as a result of the enforcement of consumer protection laws deposited in the consumer protection-consumer fraud revolving fund pursuant to section 44-1531.01. The attorney general shall administer the subaccount. All monies deposited in the subaccount pursuant to opioid claims-related litigation or settlements are subject to legislative appropriation. All monies that are not from opioid claims-related litigation or settlements and that are in the subaccount up to the amount of $4,000,000 annually are continuously appropriated. Any amounts in excess of $4,000,000 are subject to legislative appropriation. Monies in the subaccount are exempt from the provisions of section 35-190 relating to lapsing of appropriations. The attorney general may spend monies in the subaccount for programs, including consumer fraud education programs, that are intended to rectify violations or alleged violations of consumer protection laws. The attorney general may spend monies in the consumer remediation subaccount for operating expenses incurred by the department of law in administering or implementing programs intended to rectify violations or alleged violations of consumer protection laws. The attorney general shall submit an expenditure plan to the joint legislative budget committee for review before spending any monies in the subaccount.

D. On or before January 15, April 15, July 15 and October 15 each year, the attorney general shall file with the governor, with copies to the director of the department of administration, the president of the senate, the speaker of the house of representatives, the secretary of state and the staff director of the joint legislative budget committee, a full and complete account of the receipts and disbursements from the fund by subaccount in the previous calendar quarter. The account must include a separate delineated report that includes the receipts and disbursements for all opioid claims-related litigation monies.

E. On or before December 31 of each year, the attorney general shall file with the governor's office of strategic planning and budgeting and the staff director of the joint legislative budget committee a report on the attorney general's current projections for total opioid claims-related litigation monies that are to be deposited in the fund through the lifetime of all opioid settlements. The report shall also include a detailed accounting of all opioid claims-related litigation monies that the attorney general has spent as of the date of the report, outlined by the use of monies and the fiscal year.

§ 44-1532 Violation of order or injunction; penalty

A person who violates any order or injunction issued pursuant to this article shall forfeit and pay to the general fund of the state of Arizona a civil penalty of not more than twenty-five thousand dollars per violation. For the purpose of this section, the superior court in the county issuing any order or injunction shall retain jurisdiction, and the cause shall be continued. In such cases, the attorney general acting in the name of the state may petition for the recovery of civil penalties.

§ 44-1533 Cumulative remedies

A. The provisions of this article are in addition to all other causes of action, remedies and penalties available to this state.

B. The provisions of this article shall not bar any claim against any person who has acquired any monies or property, real or personal, by means of any practice declared to be unlawful by this article.

§ 44-1534 Costs recoverable

In any action brought under the provisions of this article, the attorney general is entitled to recover costs, which in the discretion of the court may include a sum representing reasonable attorney's fees for the services rendered, for the use of the state.

Article 8 Petroleum Products Franchises

§ 44-1551 Definitions

In this article, unless the context otherwise requires:

1. "Affiliate" means a person who controls, is controlled or is under common control with another person.

2. "Control" means actual or legal power of influence over another person, whether direct or indirect, arising through direct or indirect ownership of capital stock, interlocking directorates or officers, contractual relations, agency agreements or leasing arrangements where the result is used to affect or influence such persons.

3. "Dealer" means any person engaged in the retail sale of petroleum products supplied under a distributorship, franchise or other agreement, entered into with a distributor.

4. "Distributor" means any person engaged in the sale, consignment or other distribution of petroleum products to dealers at retail outlets serving the general motoring public.

5. "Engaged in the sale of petroleum products" means, in the case of a dealer, that at least fifty per cent of the average annual gross revenue of the franchise is derived from the sale of petroleum products.

6. "Franchise" or "franchise agreement" means a written agreement between a distributor and a dealer under which the dealer is granted the right to use a trademark, trade name, service mark or other identifying symbol or name owned by the distributor, under which the dealer is granted the right to occupy premises owned, leased, or controlled by the distributor, for the purpose of engaging in the retail sale of petroleum products of the distributor.

7. "Good cause" means the failure of a dealer to comply with those express provisions of the franchise except any that may be unconscionable.

8. "Good faith" includes the duty of a party to act in a fair and equitable manner in the performance and in demanding performance of the franchise.

9. "Petroleum products" means motor vehicle fuels and lubricants.

10. "Retail sale of products" means the sale thereof for consumption and not for resale at a retail outlet serving the motoring public.

11. "Sale, transfer or assignment" means any disposition of a franchise or any interest therein, with or without consideration, to include but not limited to bequest, inheritance, gift, exchange, lease or license.

§ 44-1552 Disclosures to be made by distributor before conclusion of agreement

A distributor shall disclose to any prospective dealer the following information before any franchise agreement is concluded:

1. The gallonage volume history of gasoline sold to the previous dealer or dealers at the same premises and during a three-year period immediately past or such shorter period during which the same premises were used for engaging in the sale of gasoline while the franchise or business operation was in effect.

2. To the extent previously made available to the distributor, the name and last known address of the previous dealer or dealers for the preceding three years or such shorter period during which the premises were used for engaging in the sale of petroleum products.

3. Any legally binding commitments for the sale, demolition or other disposition of the location.

4. The training programs, if any, and the specific goods and services the distributor will provide for and to the dealer.

5. Full disclosure of any and all obligations which will be required of the dealer.

6. Full disclosure of all restrictions on the sale, transfer and termination of the agreement. Any disclosure required by this section may be made in the body of the franchise agreement or separately.

§ 44-1553 Voidable franchises

Any franchise may be cancelled by the dealer at his option by sending a written declaration of that fact and the reasons therefor to the distributor if:

1. The distributor's offer was fraudulent or unlawful, provided that the dealer send such written declaration within sixty days after discovery thereof.

2. The dealer was not afforded the opportunity to negotiate with the distributor on all provisions within the franchise, except that such negotiations shall not impair the uniform image and quality standards of the franchise, provided that the dealer send such written declaration within ten days after execution of the franchise.

3. The dealer was not furnished a copy of the franchise agreement at least seventy-two hours prior to execution. The dealer shall send such written cancellation within ten days after execution of the franchise.

4. The dealer was not furnished the disclosure set forth in section 44-1552 at least seventy-two hours prior to the execution of the franchise agreement. The dealer shall send such written cancellation within ten days after dealer has acquired all of the required information.

§ 44-1554 Prohibited practices

It is a violation of this article for any distributor directly or indirectly or through any officer, agent or employee to engage in any of the following practices:

1. To prohibit directly or indirectly the right of free association among dealers for any lawful purpose.

2. To fail to act in good faith in performing or complying with any terms, provisions of or collateral to a franchise.

3. To terminate or cancel a franchise without good cause.

4. To use undue influence to induce a dealer to surrender any right given to the dealer by any provision contained in the franchise.

5. To cancel, terminate, fail to renew or to threaten the cancellation, termination or nonrenewal of any franchise because of the dealer's failure to purchase merchandise or products sold by the distributor where the requirement that the dealer sell exclusively the merchandise or products of the distributor would be a violation of any law, rule or regulation of this state or of the United States.

6. To change or modify any restrictions upon nonpetroleum related business activities of the gasoline dealer during the term of his franchise.

7. To unreasonably reduce, limit or curtail the supply of gasoline or other petroleum products to any dealer.

8. To cancel or terminate a franchise solely to secure for its own account the distributor's more successful or profitable franchise stations.

9. To place unreasonable restrictions upon nonpetroleum related business activities of the dealer.

§ 44-1555 Permitted practices

Nothing in this article shall prevent a distributor from imposing upon a dealer from time to time reasonable standards of performance, provided that such standards be enforced to the extent reasonable at the time of required performance.

§ 44-1556 Termination of franchise; notice; grounds

A. It is a violation of this article for any distributor, directly or indirectly, or through an officer, agent or employee to terminate, cancel or fail to renew a franchise without having first given written notice as follows:

1. No cancellation or termination of the franchise shall be effective unless distributor shall have first given dealer a written notice of distributor's intent to cancel the franchise specifying all matters of claimed noncompliance with the franchise agreement, allowing dealer at least ten days to comply with the terms of the franchise agreement. In the event of dealer's noncompliance, termination shall be effective the date set forth in the notice.

2. Within at least thirty days in advance of the expiration of a term of a franchise, distributor shall in writing give dealer notice of:

(a) Distributor's intention not to renew the franchise and all the reasons for such failure to renew, or,

(b) Distributor's intention to renew and if such renewal is subject to any change in price, rent, terms or conditions from that of the franchise being renewed, then all such changes and the reasons therefor shall be fully described therein.

3. Where the alleged grounds are voluntary abandonment by the dealer of the franchise relationship, such written notice may be given three days in advance of such termination or cancellation.

4. Where the alleged grounds are the conviction of the dealer of a crime related to the business conducted pursuant to the franchise, termination, cancellation or failure to renew may be effective immediately.

B. All notices required of dealer or distributor under this article shall be given in writing by certified mail return receipt requested to the address indicated in the franchise agreement or as subsequently changed by the party in writing or if no address was designated, to the party's place of business.

C. The failure of a distributor to serve notice upon the dealer as required in this section shall constitute a grant of the option by the distributor to the dealer to renew the franchise for a period of one year under the same price, rent, terms and conditions of the expiring franchise, subject to the provisions of this article. Such option to renew shall expire forty-five days from the date notice should have been served, unless exercised by written notice to the distributor.

§ 44-1557 Required provisions in agreements between distributors and dealers

Every agreement between a distributor and a dealer shall be in writing and contain:

1. In the absence of any express agreement, the dealer shall not be required to participate financially in the use of any premium, coupon, give-away, or rebate in the operation of his retail outlet, provided that the distributor may require the dealer to distribute to customers premiums, coupons or give-aways which are furnished to the dealer at the expense of the distributor.

2. The term of the initial agreement between the distributor and the dealer relating to specific premises shall not be less than one year and the term of all subsequent agreements between the distributor and the dealer shall not be for fewer than three years, provided that where the distributor is the lessee of the premises, this paragraph shall not be construed to require a term of greater duration than the remainder of the term to which the distributor is entitled under its lease, together with any renewal rights which the distributor may have, and further provided that notwithstanding any other provision of this article to the contrary a distributor may reserve the right to cancel such agreement without cause upon thirty days' notice during the first six months of the initial term thereof when no previous distributor-dealer relationship existed between the parties thereto. Agreements entered into by distributors who are not also engaged in the refining of gasoline may be for shorter terms.

§ 44-1558 Obligation of distributor to repurchase upon termination of agreement; designation of successor in interest

A. In the event of any termination, cancellation or failure to renew, whether by mutual agreement or otherwise, a distributor shall make or cause to be made a good faith offer to repurchase from the dealer, his heirs, successors and assigns, at the current wholesale prices, any and all merchantable products purchased by such dealer from the distributor, provided that the distributor shall have the right to apply the proceeds against any existing indebtedness owed to him by the dealer and that such repurchase obligation is conditioned upon there being no other claims or liens against such products by or on behalf of other creditors of the dealer. Such repurchase shall not constitute a waiver of the dealer's other rights and remedies under this article.

B. The distributor shall accept the designee of the dealer as the successor in interest to his rights and obligations under a franchise agreement if:

1. Prior to his death, the dealer notifies the distributor of the designation of his surviving spouse or child as his successor in interest.

2. At the time of his death, the surviving spouse or adult child meets the reasonable qualifications required of dealers by the distributor for the operation of service stations.

§ 44-1559 Remedies

A. A dealer or distributor may bring an action against the other for violation of any provision of the franchise and may recover the damages sustained.

B. An action for injunctive relief to prevent or restore rights lost upon the violation of any provision of the franchise may be brought by a dealer or distributor.

C. The remedies provided in this section are independent of and supplemental to any other remedy or remedies available to the dealer or distributor in law or equity.

D. In any action under this section the prevailing party shall recover from the losing party all costs incurred, including reasonable attorney's fees.

§ 44-1560 Waiver limitation

A. Any condition, stipulation or provision binding any person to waive compliance with any provision of this article is void.

B. The right of either party to trial by jury or to the interposition of counterclaims or cross-claims shall not be waived except after the filing of action and with the concurrence of a counsel of record.

§ 44-1561 Arizona commerce authority; fuel price data; availability

A. The chief executive officer of the Arizona commerce authority shall collect, compile and maintain all brand average retail prices for Phoenix, Tucson, Flagstaff, Kingman, Show Low, Yuma and Sierra Vista on a bimonthly basis in a format that is accessible to the attorney general or any member of the legislature.

B. The authority may acquire the data by survey or may purchase the data. If the authority purchases the data, the data shall be acquired at the lowest available competitive price.

C. The authority shall make the data available to the attorney general or any member of the legislature.

§ 44-1562 Full-service gasoline stations; assistance to drivers with disabilities

Each full-service gasoline station offering self-service at a lesser cost shall require an attendant who is employed by the station to dispense gasoline from the self-service portion of the station to a motor vehicle properly displaying a distinguishing insignia placard or number plate issued to a person with a physical disability pursuant to section 28-2409 if the person to whom the placard or plate has been issued is the operator of the vehicle and the service is requested during those hours that full service is offered at that station.

Article 9 Beer Franchises

§ 44-1565 Definitions

In this article, unless the context otherwise requires:

1. "Beer":

(a) Means any beverage obtained by the alcoholic fermentation, infusion or decoction of barley malt, hops, rice, bran or other grain, glucose, sugar or molasses, or any combination of them, and may include, as adjuncts in fermentation, honey, fruit, fruit juice, fruit concentrate, herbs, spices and other food materials.

(b) Includes beer aged in an empty wooden barrel previously used to contain wine or distilled spirits and as such is not considered a dilution or mixture of any other spirituous liquor.

2. "Franchise" means a commercial relationship between a supplier and a wholesaler that includes all of the following:

(a) A commercial relationship of definite duration or continuing indefinite duration is involved.

(b) A grant to the wholesaler of the right to offer, sell and distribute within this state or any designated territory such of the supplier's brands of beer as may be agreed on. The requirements of this paragraph do not preclude a supplier from establishing more than one commercial relationship of any kind within or with relation to activity in this state or any designated territory therein not in violation of article 1 of this chapter.

(c) An agreement relating to transferability of the commercial relationship.

3. "Good cause" means failure by the supplier or the wholesaler to comply with the provisions of an agreement as delineated therein, which provisions are not unconscionable. Good cause does not include failure or refusal on the part of the wholesaler or supplier to engage in any trade practice, conduct or activity that would result in a violation of any federal law or regulation or any laws or regulations of this state.

4. "Good faith" means the duty of each party to any franchise and all officers, employees or agents of the franchise to act in a fair and equitable manner in carrying out the agreement.

5. "Spirituous liquor" includes alcohol, brandy, whiskey, rum, tequila, mescal, gin, wine, porter, absinthe, a compound or mixture of any of them or of any of them with any vegetable or other substance, alcohol bitters, bitters containing alcohol, any liquid mixture or preparation, whether patented or otherwise, that produces intoxication, fruits preserved in ardent spirits and beverages containing more than one-half of one percent of alcohol by volume.

6. "Supplier" means any person other than a wholesaler engaged in business as a manufacturer, distiller, rectifier, importer, brewer, vintner, broker or agent that distributes any or all of its beer through duly licensed wholesalers in this state.

7. "Wholesaler" means any person licensed by the department of liquor licenses and control to sell at wholesale beer to retailers duly licensed in this state.

§ 44-1566 Franchise termination

A supplier of beer or wholesaler of beer shall not fail to act in good faith in performing or complying with any terms, provisions or condition of the franchise or in terminating, canceling or not renewing a franchise. Any termination, cancellation or failure to renew shall be done in good faith and for good cause.

§ 44-1567 Action for damages; other remedies; defense

A. Any wholesaler may bring an action against a supplier or a supplier may bring an action against a wholesaler for violation of section 44-1566 in any court of competent jurisdiction and may recover damages sustained. In such action the prevailing party shall receive reasonable attorney fees.

B. The remedies provided in this section are independent of and supplemental to any other remedy or remedies available to the wholesaler or supplier in law or equity.

C. In any action pursuant to this section for termination, cancellation or failure to renew a franchise in violation of section 44-1566, it shall be a complete defense to prove that the termination, cancellation or failure to renew was done in good faith and for good cause.

D. A person violating section 44-1566 shall not be subject to criminal prosecution as provided in section 4-246 for such violation.

Chapter 11 Regulations Concerning Particular Businesses

Article 1 Dealers of Precious Items

§ 44-1601 Definitions

In this article, unless the context otherwise requires:

1. "Dealer" means a person engaged in conducting, managing or carrying on the business of purchasing solely precious items or precious items in addition to other tangible personal property. Dealer does not include:

(a) Investment brokerage houses.

(b) Financial institutions regulated by the department of insurance and financial institutions.

(c) Securities brokerage houses regulated by a recognized national stock exchange.

2. "Investment brokerage house" means a house with commissioned agents who execute buy and sell orders for their customers and who:

(a) Execute orders for investment items.

(b) Do not assume the risks of ownership in the normal course of providing their brokerage services.

(c) Do not maintain or deal from an inventory of investment items.

3. "Investment items" means commodities that possess the characteristics of those items commonly traded in internationally recognized markets.

4. "Local law enforcement agency" means the police department of an incorporated city or town or, in areas outside of incorporated cities and towns, the county sheriff.

5. "Person" means an individual, partnership, corporation, association or any other entity of whatever kind or nature.

6. "Precious item" means:

(a) Secondhand gold, silver, platinum or jewelry, flatware or holloware containing gold, silver or platinum.

(b) Secondhand precious or semiprecious stones whether mounted or unmounted.

(c) Secondhand pearls. Precious item does not include coins and unmounted gemstones accompanied by a certificate from an independent, internationally recognized gem grading laboratory.

7. "Purchase" means to buy, trade, exchange or receive a precious item.

8. "Secondhand" means that the precious item has previously been owned by someone other than the manufacturer or dealer whose business it is to sell such items to the public.

§ 44-1602 Requirements of dealers of precious items; violation; classification

A. Each dealer shall keep for six months from the date of purchase of a precious item and make available on request of a peace officer:

1. The name, current address, date of birth and signature of the person from whom the item was purchased.

2. A description of the person, including height, weight, race, complexion and hair color.

3. Identification card serial number as required under subsection B.

4. A list pursuant to subsection C describing the items purchased from that person.

B. Before making a purchase, a dealer shall require the person from whom he is purchasing to identify himself with a valid motor vehicle operator's license, valid motor vehicle nonoperating identification license, valid armed forces identification card or other valid photo identification sufficient to verify the information required pursuant to subsection A of this section.

C. Each dealer shall, at least once each week in which he makes a purchase, make out and deliver to the local law enforcement agency a true, complete and legible list of all items purchased during the period since the last report. The dealer shall use local law enforcement agency forms to meet the requirements of this subsection if such forms are issued by the local law enforcement agency. The list shall include:

1. The brand name and serial number, if any.

2. An accurate description of each item sufficient to enable the local law enforcement agency to identify the item.

3. The date and time when the item was received.

4. The amount paid for each item.

5. All information pursuant to subsection A, paragraphs 1, 2 and 3.

D. Any item purchased shall be held in the same shape and form as receipted for in the dealer's custody for ten calendar days after delivering the list to the local law enforcement agency as required under subsection C. This subsection shall not apply to the redemption of pawned or pledged items.

E. Payment to the seller or consignor shall be by check only, made payable to a named payee who is the actual intended seller.

F. It is presumptive evidence of intent to violate this section if the items purchased are not listed or fail to agree with the description contained in the list.

G. On notification by a peace officer that the items purchased are the fruits of a crime, the dealer shall not dispose of those items.

H. A dealer shall not purchase any precious item from any person under eighteen years of age unless the person is accompanied by a parent or guardian who must submit identification as required under subsection B.

I. Dealers of precious items may only purchase at their permanent place of business, as listed on their sales tax license.

J. Each dealer shall prominently display a copy of this statute in a conspicuous place on the premises of the business.

K. A person who violates this article is guilty of a class 1 misdemeanor.

§ 44-1603 Applicability

This article does not apply to:

1. Gem and mineral shows which have been regularly scheduled within this state for at least three consecutive years.

2. Transactions in precious items that constitute a partial trade for new or used merchandise of like kind.

3. Any person who purchases precious items from merchants, manufacturers or wholesale dealers.

§ 44-1604 Local ordinances

This article does not supersede any city, town or county ordinance nor does this article prohibit a city, town or county from enacting an ordinance regulating dealers of precious items. If a city, town or county has an ordinance regulating dealers of precious items, the provisions of this act and the provisions of that ordinance shall both apply except that an ordinance of a city, town or county which conflicts with or provides less stringent requirements than are provided in this article shall not be enforceable.

Article 2 Household Goods Movers

§ 44-1611 Definitions

In this article, unless the context otherwise requires:

1. "Advertisement" has the same meaning prescribed in section 44-1521.

2. "Carrier's lien" means a lien that is established under section 47-7307.

3. "Consumer" means an individual who uses or intends to use household goods moving services provided by a household goods mover.

4. "Household goods" means goods that are used primarily for personal, family or household purposes and that are used in connection with household goods moving services.

5. "Household goods mover" means a person that provides household goods moving services.

6. "Household goods moving services":

(a) Means the loading, packing, moving, transporting, storing while in transit, delivering, unloading or otherwise taking possession or control of household goods from a consumer for the purpose of intrastate household goods moves to another location at the direction of the consumer for a fee.

(b) Does not include moving household goods for disposal or destruction or moving household goods from a factory or store, unless a consumer has purchased the property to be moved from a factory or store with the intent to use that property for personal, family or household purposes.

7. "Moving destination" means the location that the consumer specifies is where the household goods shall be delivered and unloaded.

8. "Person" has the same meaning prescribed in section 44-1521.

§ 44-1612 Exemption qualifications

A. To qualify for the exemption set forth in section 44-1614, a household goods mover must:

1. Provide to the consumer a written contract that meets all of the following requirements:

(a) Is signed and dated, through electronic means or otherwise, by the consumer and household goods mover before the household goods mover provides any household goods moving services or takes possession of any household goods.

(b) Includes:

(i) The name, telephone number and physical address of the household goods mover that issues the contract and that provides the household goods moving services.

(ii) The date and time of the scheduled household goods moving services.

(iii) The name, address and telephone number of the consumer, the address of where the household goods that need to be moved are located and the address of the moving destination.

(iv) A detailed list of household goods moving services to be provided under the contract and any other fees that the consumer may be required to pay.

(v) A list of any terms and conditions for payment of the total charges, including a notice of any minimum charges.

(vi) A list of acceptable methods of payment for the household goods moving services.

(vii) A statement as to whether a household goods mover will reimburse consumers for any loss or damage incurred during the move and, if applicable, an explanation of how the household goods mover will reimburse consumers for loss or damage and the process consumers must follow to obtain a reimbursement.

(viii) The total estimated price, including all anticipated fees and charges, based on the specific circumstances of the services to be performed.

2. Before providing any household goods moving services, the household goods mover must also provide the consumer with a clear and conspicuous disclaimer with the following language: "By signing this disclaimer, I acknowledge that the household goods mover may refuse to unload and deliver my household goods until I have paid the total estimated price set forth in this contract. I can cancel this contract at any time prior to the moving company providing services." The disclaimer must be signed by the household goods mover and the consumer.

3. The household goods mover must provide to the consumer a legible copy of the signed contract and the disclaimer before providing any household goods moving services.

B. The consumer may cancel the contract at any point before the household goods mover provides any household goods moving services. The notice of cancellation does not need to be in any particular form and is effective if it indicates the intention of the consumer not to be bound by the contract.

§ 44-1613 Unlawful moving practices

A. Except as provided in section 44-1614, after taking possession of a consumer's household goods, a household goods mover may not refuse to deliver or unload a consumer's household goods or enforce, or threaten to enforce, a carrier's lien against a consumer's household goods when providing household goods moving services for an intrastate move. For the purposes of this subsection, a written estimate or contract that includes disclosure of a carrier's lien does not constitute threatening to enforce a carrier's lien.

B. Any advertisement or representation by a household goods mover relating to:

1. Insurance, loss or damage must accurately disclose the extent to which the referenced insurance and the household goods mover will cover loss or damage incurred during household goods moving services.

2. Fees, charges and rates must accurately disclose all fees, charges and rates.

C. An act or practice in violation of this article constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title. In addition to being subject to the enforcement and penalty provisions in chapter 10, article 7 of this title, a household goods mover that violates this article is subject to any other civil or criminal action, remedy and penalty provided by law.

§ 44-1614 Delivery and unloading of household goods; exemption

A. If a household goods mover complies with section 44-1612 and the household goods mover has transported the household goods to the moving destination, all of the following apply:

1. The household goods mover may require the consumer to tender the total estimated price set forth in the contract pursuant to section 44-1612 before delivering and unloading the household goods, except that on a consumer's request a household goods mover may not refuse or charge additional fees to deliver and unload medicine or medical devices or items used to treat or assist an individual with a disability.

2. On the consumer's tender of payment of the total estimated price set forth in the contract, less any amounts previously collected from the consumer, the household goods mover must deliver and unload household goods at the moving destination.

3. A household goods mover may not refuse to deliver and unload household goods to a consumer at the moving destination based on the household goods mover's refusal or inability to accept a method of payment listed in the contract pursuant to section 44-1612.

4. If a consumer does not tender the total estimated price set forth in the contract pursuant to section 44-1612, the household goods mover may refuse to deliver and unload the household goods until the consumer tenders payment of the total estimated price.

B. If a household goods mover refuses to deliver and unload household goods, the household goods mover must use reasonable care to safeguard, preserve and protect the household goods until the household goods are properly delivered and unloaded at the moving destination.

C. If a household goods mover unlawfully fails to deliver and unload household goods, a peace officer may take custody of the household goods or direct the household goods mover to deliver and unload the household goods to the consumer.

D. After the written contract is signed pursuant to section 44-1612, if the consumer makes any request for an additional service not reflected in the contract prescribed by section 44-1612, the household goods mover must obtain written acknowledgement from the consumer of the fee the consumer should expect to pay for the service requested before the household goods mover provides the service. The household goods mover must also provide the consumer with a copy of the written acknowledgement of the fee before providing the service.

E. After delivering and unloading the household goods at the moving destination, a household goods mover may present an invoice for any remaining charges for additional services not reflected in the contract prescribed by section 44-1612, but that is acknowledged under subsection D of this section. To secure payment for any additional services provided, a household goods mover may not refuse to deliver and unload household goods at the moving destination. If the total amount collected by a household goods mover exceeds the amount prescribed by the contract as set forth in section 44-1612 and any acknowledged fees as set forth in subsection D of this section, the household goods mover shall refund the excess amount. The requirement to refund the excess amount does not apply to any gratuity that may have been collected by the household goods mover.

§ 44-1615 Waiver prohibited; failure to comply with article

A. The requirements and rights set forth in this article may not be waived.

B. If a household goods mover fails to comply with any requirements prescribed in this article, the household goods mover is not eligible for the exemption set forth in section 44-1614.

§ 44-1616 Lawful collection of monies

Notwithstanding any provision of this article, a household goods mover is entitled to pursue any lawful means to collect an amount properly due from a consumer after the household goods mover has finished delivering and unloading the household goods at the moving destination.

Article 3 Pawnbrokers

§ 44-1621 Definitions

In this article, unless the context otherwise requires:

1. "Designee" means a local law enforcement agency designated in writing by a county sheriff to perform designated duties specified in this article on behalf of the sheriff.

2. "Identification document" means a valid driver license, a valid nonoperating identification license, a valid armed forces identification card or any other valid government issued photo identification.

3. "Loan" means advancing money on the security of pledged goods or purchasing tangible personal property on the condition that it may be redeemed or repurchased by the seller for a fixed or variable price within a fixed or variable period of time.

4. "Local law enforcement agency" means the chief of police, the police department or the town marshal, if applicable to a city or town, or the county sheriff, the sheriff's designee or the county sheriff's department, if applicable to a county.

5. "Maturity date" means the date specified on the pawn ticket by which the pledged goods must be redeemed or the pawn ticket must be renewed.

6. "Misrepresentation" means a false or misleading representation made by a person with an intent to deceive or defraud.

7. "Omission" means a failure to include or to take notice of or the leaving out of pertinent information by a person with an intent to mislead.

8. "Pawn ticket" means the actual executed document that records the pawn transaction and describes the conditions of the loan agreement between the pawnbroker and pledgor.

9. "Pawn transaction" means either the act between the pawnbroker and a person pledging tangible personal property or extending credit on the security of pledged goods or the act of purchasing tangible personal property with an express or implied agreement or understanding that it may be redeemed or repurchased by the seller for a fixed or variable price within a fixed or variable period of time, except that a good faith outright purchase of tangible personal property is not a pawn transaction.

10. "Pawnbroker" means a person who is engaged in the business of advancing money on the security of pledged goods or is engaged in the business of purchasing tangible personal property on the condition that it may be redeemed or repurchased by the seller for a fixed or variable price within a fixed or variable period of time.

11. "Pawnshop" means the location or premises at which a pawnbroker is licensed to regularly conduct the pawnbroker's business.

12. "Pledged goods" means tangible personal property which is deposited with or otherwise actually delivered into the possession of a pawnbroker in the course of the pawnbroker's business in connection with the pawn transaction.

13. "Pledgor" means the person leaving the personal property with the pawnbroker and executing the pawn ticket.

14. "Redeem" or "redemption" means the act of the pledgor or the pledgor's agent of retrieving and paying in full all charges and fees for the pledged goods left with the pawnshop.

15. "Reportable transaction" means any transaction conducted by a pawnbroker in which merchandise is received through a pawn, purchase, trade or consignment.

16. "Transaction date" means the initial date of the reportable transaction.

§ 44-1622 Pawn tickets; requirements

A. All pawn transactions must be evidenced by a pawn ticket that is issued at the time of the pawn transaction.

B. A pawn ticket shall include, at a minimum, all of the following:

1. The name, address and telephone number of the pawnshop and pledgor.

2. The birth date and physical description of the pledgor, including height, weight and hair and eye color.

3. The number and type of the identification document presented by the pledgor.

4. A listing of the articles left in the possession of the pawnbroker.

5. The date of the pawn transaction.

6. The maturity date of the pawn transaction, which shall be set forth in at least twelve point type.

7. The principal amount of the pawn transaction.

8. The following statement in at least ten point type:

"You are not obligated to redeem the pledged goods. The pledged goods will be forfeited to the pawnbroker after the maturity date unless the pledged goods are redeemed or you enter into a new pawn transaction for the pledged goods."

§ 44-1623 Sale of pledged goods

A. A pawnbroker shall not sell any items pledged to him as security for a pawn transaction until at least the day after the maturity date.

B. All of a pledgor's right, title and interest in the pledged goods shall pass by operation of law to the pawnbroker, without recourse, on the day after the maturity date.

§ 44-1624 Pawn transactions; reportable transactions

A. The length of all pawn transactions is a minimum of ninety days, except that a longer term may be contracted for between the pawnbroker and the pledgor.

B. A pawnbroker shall not enter into a pawn transaction or good faith outright purchase of tangible personal property with a person who is less than eighteen years of age.

C. A pawnbroker shall not enter into a pawn transaction or good faith outright purchase of tangible personal property that has a manufacturer's serial number that has been removed, altered or obliterated.

D. Before entering into a pawn transaction or good faith outright purchase of tangible personal property a pawnbroker shall require the pledgor or seller to identify himself with an identification document sufficient to verify the information required pursuant to section 44-1625.

E. A pawnbroker shall retain any pledged goods at the pawnbroker's place of business or any other storage location approved by the applicable local law enforcement agency.

F. The pawnbroker shall retain any property obtained by good faith outright purchase in its original form for twenty days after the original transaction date at the pawnbroker's place of business or other storage location approved by the applicable local law enforcement agency.

G. The pawnbroker shall maintain at the pawnbroker's place of business records of all reportable transactions and pawn tickets and shall retain the records for at least two years after the date when the transaction occurred. The pawnbroker shall ensure that the records include accurate copies of all transaction receipts or pawn tickets. On request by a local law enforcement agent in the course of the agent's duties, the pawnbroker shall allow the agent to inspect the pawnbroker's receipts, pawn tickets or required alcohol, tobacco and firearms logs or to review any article received by the pawnbroker by pledge, purchase or trade.

H. A pawnbroker shall produce the pawnbroker's register, shall exhibit all articles received by the pawnbroker in pledge or purchase or shall produce the pawnbroker's account of sales to a local law enforcement agency on the agency's request to inspect the register, articles or accounts of sales of the pawnbroker or on service of a search warrant or order issued by a judge or magistrate.

§ 44-1625 Report to sheriff

A. A pawnbroker shall make a true, complete and accurate report each day of each article the pawnbroker receives through a reportable transaction. The report shall be delivered within two business days to the sheriff or the sheriff's designee of the county in which the pawnbroker is licensed by mail, hand delivery or electronic means as approved by the sheriff or the sheriff's designee. For the purposes of this subsection "electronic means" means a computer diskette or modem.

B. The pawnbroker shall make the report of each item received through a reportable transaction on the form provided or approved by the sheriff or the sheriff's designee.

C. The report form provided or approved by the sheriff or his designee shall include at least all of the following:

1. The last, first and middle name of the pledgor or seller.

2. The permanent address and telephone number, if applicable, of the pledgor or seller.

3. The physical description of the pledgor or seller including height, weight, hair and eye color, sex, race and date of birth.

4. The number and type of the identification document presented by the pledgor or seller.

5. An accurate, legible description of each item pledged or sold, including the manufacturer's name, model number, serial number, caliber, size, type of item and any owner applied number, inscription or monogram.

6. The pawnbroker's name and address and the clerk's initials or identifying number.

7. The date and time of the initial pawn or purchase transaction.

8. The type of transaction and initial pawn ticket number.

9. A fingerprint of the pledgor or seller.

D. The pledgor or seller shall sign the report and attest to the following statement that shall appear on the report in ten point bold type:

All information in this report is complete and accurate. I am the owner of the goods described in this report or I am authorized to enter into this pawn or sale transaction on behalf of the owner of the goods described in this report. I understand that I will be guilty of a class 1 misdemeanor if the information in this report is not complete and accurate, if I am not the owner of the goods pledged or sold or if I am not authorized to enter into the pawn or sale transaction on behalf of the owner of the goods.

§ 44-1626 Interest; fees; payment; military members

A. A pawnbroker may charge or receive interest at a rate not exceeding thirteen per cent per month for the first two months and at a rate not exceeding eleven per cent per month thereafter. A pawnbroker shall prorate interest on a daily basis and shall not impose an additional charge if the pledgor agrees to pay a loan in monthly installments, except that interest for two months may be charged or received if the pledged goods are redeemed within two months of the pawn transaction.

B. In addition to interest charged pursuant to subsection A of this section, a pawnbroker may charge and collect at redemption or renewal the following fees:

1. A fee that does not exceed five dollars for handling each firearm.

2. If the pledgor loses the pledgor's claim ticket, a fee that does not exceed seven dollars fifty cents.

3. An initial setup fee of not more than five dollars.

4. A storage fee that does not exceed five dollars per month or a portion of a month for each item of pledged goods, other than a vehicle as defined in section 28-101, that exceeds one cubic foot in volume.

5. A vehicle storage fee that does not exceed five dollars per day for each item of pledged goods that is a vehicle as defined in section 28-101.

6. A fee or charge equal to the amount of any fee, tax, imposition or assessment levied or imposed by any governmental agency in connection with or as a result of any reportable transaction. The pawnbroker may collect at the time of any reportable transaction any fee, tax, imposition or assessment that relates to a reportable transaction and that is imposed by a governmental agency.

C. A pawnbroker shall not demand or require payment of a pawn ticket before the maturity date.

D. If a pawnbroker receives a copy of military orders that indicates that a pledgor has been deployed as a member of the Arizona national guard, the United States armed forces reserves or the regular component of the United States armed forces and the member is serving on federal active duty, the pawnbroker must waive any unpaid interest charges and hold the pledged goods until sixty days after the military member returns from deployment.

§ 44-1627 Licensing; requirements

A. A person shall not act as a pawnbroker until licensed by the sheriff of the county in which the person regularly conducts business.

B. A pawnbroker shall obtain a separate license for each pawnshop owned by that pawnbroker.

C. A pawnbroker license may not be sold or transferred without the approval of the sheriff or the sheriff's designee.

D. A pawnbroker shall not conduct business at a location other than a licensed location except for firearms transactions that are permitted by a federally licensed firearms dealer at an organized gun show.

E. Every pawnbroker shall be a bona fide resident of this state. If a partnership, each partner shall be a bona fide resident of this state. If a corporation, it shall be a domestic corporation or a foreign corporation which has qualified to do business in this state. The corporation shall hold its pawnbroker license through an agent.

F. The sheriff or the sheriff's designee shall require any person, other than a bank or licensed lending institution, having any interest, directly or indirectly, in a pawnshop to submit a full set of fingerprints, together with the applicable fingerprint processing fee, to the sheriff. The sheriff shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation. The sheriff shall forward the fee to the department of public safety.

G. A corporation shall own the entire equitable interest in its license through an agent if the agent is otherwise qualified to hold a pawnbroker license. The agent is subject to the penalties prescribed for any violation of law relating to pawnbrokers. On the death, resignation or discharge of an agent of a corporation holding a pawnbroker license, the corporation shall promptly assign the license to another qualified agent selected by the corporation.

H. The sheriff shall not issue a license to a person who, within one year before the application, has violated any provision of a previously issued pawnbroker license or has had a license revoked. The sheriff shall not issue to or renew a license of a person who, within five years before the application, has been convicted of a felony involving trafficking in stolen property, fraudulent schemes, forgery, theft, extortion or conspiracy to defraud or a felony involving moral turpitude. The sheriff shall not issue to or renew a license of a corporation unless it has on file with the sheriff of the county in which the license is issued a list of its officers and directors and any stockholders who own ten per cent or more of the corporation. The sheriff shall not issue to or renew a license of a corporation if any of its officers or directors or any stockholder who owns ten per cent or more of the corporation has within five years been convicted of a felony involving trafficking in stolen property, fraudulent schemes, forgery, theft, extortion or conspiracy to defraud or a felony involving moral turpitude.

I. The sheriff shall not issue a license to a person or corporation that has knowingly made any false statements or material misrepresentations in the license application.

J. A person shall not use the word "pawn", "pawnshop" or "pawnbroker" in its business name, on any sign or in any advertisement unless the person is licensed as a pawnbroker pursuant to this article.

§ 44-1628 Revocation and suspension

A. After notice and an opportunity for a hearing in accordance with title 41, chapter 6, article 6, the sheriff may suspend any license for a period of not more than thirty days for acts that demonstrate a pattern of misrepresentation or wilful omissions or a violation of or noncompliance with any provision of this article other than a violation or noncompliance resulting from a bona fide error that occurred provided that the pawnshop maintains procedures reasonably adapted to avoid the occurrence of bona fide errors. The sheriff or the sheriff's designee shall provide procedures for the redemption of pledged goods and the renewal of pawn transactions on maturity during a period when a license is suspended. For the purposes of this subsection, "bona fide error" includes clerical, calculation, computer malfunction, programming and printing errors and other similar errors.

B. The sheriff may revoke or refuse to renew a license if more than two suspensions of the license have occurred within the preceding twelve calendar months or if the licensee has been convicted of a felony involving trafficking in stolen property, fraudulent schemes, forgery, theft, extortion or conspiracy to defraud or a felony involving moral turpitude.

C. Decisions of the sheriff or the sheriff's designee are subject to judicial review pursuant to title 12, chapter 7, article 6.

§ 44-1629 Fees; penalty

A. A person applying for a new pawnbroker license shall pay an application fee of one thousand dollars to the sheriff of the county in which the pawnbroker is to be licensed.

B. Each licensed pawnbroker shall pay a renewal fee of five hundred dollars annually to the sheriff of the county in which the pawnbroker is licensed. The annual renewal fee is due not later than January 31.

C. A licensee who fails to renew his license within thirty days after the payment of the license fee is due is subject to a penalty of ten per cent of the license fee which is payable with the license fee.

§ 44-1630 False representation

A person who gives false information or provides false representation as to the person's true identity or as to the person's ownership interest in property in order to receive monies or other valuable consideration from a pawnbroker, second hand dealer, scrap metal dealer or dealer in precious metals and who receives monies or other valuable consideration from a pawnbroker, second hand dealer, scrap metal dealer or dealer in precious metals is guilty of false representation.

§ 44-1631 Violations; classification

A. A person who knowingly violates section 44-1622 is guilty of a class 1 misdemeanor.

B. A person who violates section 44-1623, 44-1624 or 44-1625, section 44-1626, subsection B, C or D or section 44-1630 is guilty of a class 1 misdemeanor.

C. A person who knowingly charges and collects interest at a rate that is greater than permitted under section 44-1626, subsection A is guilty of a class 6 felony.

D. A person who violates section 44-1627 is guilty of a class 6 felony.

§ 44-1632 Pawnshop hours; city or town ordinance

A city or town may adopt an ordinance prohibiting the operation of pawnshops from 12:00 a.m. to 6:00 a.m.

Article 3.1 Scrap Metal Dealers

§ 44-1641 Definitions

In this article, unless the context otherwise requires:

1. "Business records" means records of any purchase, trade, barter or other transaction that involves the receipt of scrap metals and that is made in the ordinary course of business at or near the time of the purchase, trade, barter or transaction, including receipts, books or similar records as prescribed by section 44-1642, but does not include correspondence, tax returns or financial statements.

2. "Department" means the department of public safety.

3. "Ferrous metals":

(a) Means those metals that will attract a magnet.

(b) Includes a scrap vehicle.

4. "Industrial account" means either:

(a) A person or business entity that files or is required to file monthly returns for that person's or entity's transaction privilege tax licenses and that is reasonably expected to generate the type of scrap metals it sells.

(b) A governmental entity that sells scrap metal to a scrap metal dealer.

5. "Scrap metal dealers" means each person or business entity, including all employees of the person or business entity, except automotive recyclers that are licensed pursuant to title 28, chapter 10 and whose primary business is the dismantling, selling or disposing of parts or accessories of motor vehicles, engaged in the business of purchasing, trading, bartering or otherwise receiving secondhand or castoff material of any kind that is commonly known as scrap metal.

6. "Scrap metals" includes insulated and uninsulated metallic cables and scrap vehicles.

7. "Scrap vehicle" means a vehicle that has been reported to the national vehicle title information system and that has been flattened, crushed, baled or logged so that the vehicle is less than fifty percent of its original volume, is no longer the vehicle that is described by the certificate of title and is sold for purposes of scrap metal only.

§ 44-1641.02 Law enforcement; theft notification website

All law enforcement in this state shall be registered on a free theft notification website that allows law enforcement to send detailed descriptions of stolen items to recycling operations and other law enforcement within at least a one hundred mile radius of a theft. The website must allow scrap metal dealers to alert law enforcement when the dealers are offered suspicious materials.

§ 44-1641.03 Registration; application; information disclosed on website

A. A person must register pursuant to this article to conduct business as a scrap metal dealer in this state.

B. A person shall submit information for registration to the department in a form prescribed by the department. The information shall include all of the following:

1. The name and address of the scrap metal dealer.

2. The name of each person who owns at least ten percent of a scrap metal dealer business.

3. Full personal identification information on each owner of a scrap metal dealer business including a copy of each owner's driver license.

4. The location of each principal office and branch office at which the scrap metal dealer will conduct business in this state.

5. The name and address of any wholly owned subsidiary of the scrap metal dealer.

C. A registered scrap metal dealer does not need to separately register either of the following:

1. Any of its branch offices.

2. A wholly owned subsidiary of the registrant.

D. The department must post the information that is submitted pursuant to subsection B, paragraphs 1 and 4 of this section on the department's website.

§ 44-1641.04 Registration; fees

A. A scrap metal dealer must provide the information prescribed by section 44-1641.03 to the department every two years.

B. The department shall charge and collect fees as determined by the director. It is the intent of the legislature that fees charged and collected by the department shall be to cover the costs of registering the scrap metal dealers pursuant to section 44-1641.03 and this section.

§ 44-1641.05 Items required to be maintained at place of business; city or county ability to recover costs; violation; civil penalty

A. A registered scrap metal dealer must keep the following at each place of business:

1. Proof of registration that is issued by the department.

2. A statement indicating that the scrap metal dealer has registered on a free theft notification website that allows law enforcement to send detailed descriptions of stolen items to recycling operations and other law enforcement within at least a one hundred mile radius of a theft. The website must allow scrap metal dealers to alert law enforcement when the dealers are offered suspicious materials.

3. An affidavit signed by the scrap metal dealer that states that the person is in compliance with this article.

4. A questionnaire that the scrap metal dealer must prepare every two years to show compliance with this article.

B. The scrap metal dealer must maintain and make available the items prescribed by subsection A of this section for inspection by law enforcement. If after inspection law enforcement determines that the scrap metal dealer is in violation of this section, law enforcement must submit a notice of violation to the scrap metal dealer. Except as otherwise provided in this section, law enforcement shall reinspect the scrap metal dealer's place of business not earlier than seven days after the scrap metal dealer receives the notice of violation. After reinspection, if law enforcement determines that the scrap metal dealer is in violation of this section, law enforcement may conduct a subsequent reinspection without a minimum waiting period.

C. If a person violates this section, the person is subject to the following:

1. For a first violation, a civil penalty of $500.

2. For a second violation, a civil penalty of $2,000 and a licensing jurisdiction shall suspend or revoke the person's business license or, if a business license is not required to operate a business, the jurisdiction shall order the suspension or permanent cessation of the person's business operations.

3. For a third or subsequent violation, a civil penalty that is $2,000 more than the previous civil penalty imposed on the person for violating this section.

4. Any costs associated with the enforcement of this article as determined by a city or county.

D. Failure to comply with this section may result in the immediate suspension of all scrap metal transactions unless one of the following applies to the business:

1. The business has been previously registered as a scrap metal recycler.

2. The business has a local business license.

§ 44-1642 Records of purchase; transaction limitations; age requirement for scrap metal seller; used catalytic converter retainment period; exception

A. Every scrap metal dealer shall keep on the business premises a book or other similar record legibly printed or written in ink, in the English language of each transaction involving the receipt of scrap metal. The record of each receipt of scrap metal shall include the following information:

1. The date, time and place of the transaction.

2. A photograph and an identifying description and weight of the specific scrap metal received.

3. The dollar amount of the transaction.

4. Except as otherwise provided in this paragraph, the seller's name, physical description including gender, height, weight, race and eye and hair color, physical address, date of birth and signature and a photocopy of a current driver license, nonoperating identification license issued pursuant to section 28-3165 or photo identification card issued by a tribal government or the United States military. The scrap metal dealer must validate the recorded information by using the seller's current driver license, nonoperating identification license issued pursuant to section 28-3165 or photo identification card issued by a tribal government or the United States military. This paragraph does not apply to a seller who is exclusively selling aluminum beverage containers.

5. The seller's transaction privilege tax number, if applicable.

6. The number and state of issuance of the license on the vehicle used to deliver the scrap metal.

7. A photograph, video record or digital record of the seller involved in the transaction.

8. A right index fingerprint of the seller.

B. The record and entries shall be retained in a book or similar record at the business premises for one year after making the final entry of any transaction and shall be retained either at the business premises or any other reasonably available location for an additional year. A scrap metal dealer's business premises, business records relating to scrap metal transactions, including a book or similar record prescribed by this section, and business inventory shall be open during regular business hours for reasonable inspection by a peace officer. Before an inspection shall take place, a peace officer shall first identify himself and the purpose for the inspection to the scrap metal dealer, dealer's manager or other responsible person and comply with all reasonable and customary safety requirements of that scrap metal dealer for the business premises inspected. The scrap metal dealer may require the peace officer to sign an inspection log that includes the officer's name and serial or badge number and the time, the date and the purpose for the inspection.

C. A scrap metal dealer shall not provide payment for any scrap metal on site at the time of the scrap metal transaction. Payment shall be made by mailing a check or money order to a physical address provided by the seller through a current driver license or other identification prescribed in subsection A, paragraph 4 of this section. The check or money order shall be made payable to the business name for an industrial account. This subsection:

1. Except as provided in paragraphs 2, 3 and 4 of this subsection, applies only to industrial accounts, copper and aluminum wire with a diameter of at least three-eighths of an inch.

2. Except as provided in paragraph 3 or 4 of this subsection, applies to all scrap metal transactions of $300 or more.

3. Does not apply to industrial accounts if the industrial accounts annually preregister employees who are authorized sellers on behalf of the industrial accounts.

4. Applies to all transactions involving air conditioner cooling coils, including industrial accounts, except that for these transactions a scrap metal dealer may give a seller on site a check made payable to an industrial account.

D. A scrap metal dealer shall provide a receipt to the seller on site at the time of the scrap metal transaction, for every transaction, and shall include the following information:

1. The date, time and place of the transaction.

2. An identifying description and weight of the specific scrap metal received.

3. The dollar amount of the transaction.

E. A scrap metal seller may not conduct a series of transactions for one vehicle load of scrap metal to avoid the requirements of this section.

F. A scrap metal seller shall not participate in more than one cash transaction per day for scrap metal.

G. A scrap metal seller shall be at least sixteen years of age.

H. If a scrap metal dealer purchases a used catalytic converter or any nonferrous parts of a catalytic converter, the scrap metal dealer shall retain the used catalytic converter or the nonferrous parts of the catalytic converter in their original form for at least seven days after the original purchase date at the scrap metal dealer's place of business.

I. This section does not apply to transactions involving materials consisting of a metal product in its original manufactured form that is composed of not more than twenty percent by weight of nonferrous metal.

§ 44-1642.01 Prohibited scrap metal transactions; exceptions; violation; classification

A. A scrap metal dealer shall not knowingly purchase the following types of scrap metal:

1. Metal manhole covers that are used to cover street or alley service personnel access entrances to municipal sewers and storm drains.

2. Brass or bronze valves or fittings that are commonly used on structures for access to water for the purpose of extinguishing fires.

3. Brass or bronze commercial potable water backflow preventer valves that are valves commonly used to prevent backflow of potable water into municipal domestic water service systems from commercial structures.

4. Water meters that are used for measuring the use and consumption of domestic water.

5. Aluminum trench shoring that is commonly used for shoring below ground trenches and excavations for constructing buildings and structures.

6. Aluminum loading ramps that are manufactured and used for loading motor vehicles for hauling the motor vehicles.

7. Aluminum or stainless steel beer or malt beverage kegs that are commonly used by brewers or producers for selling and transporting beer or malt beverages.

8. Catalytic converters or any nonferrous parts of a catalytic converter. For the purposes of this paragraph, "catalytic converters" means motor vehicle exhaust system parts that are used for controlling the exhaust emissions from motor vehicles and that contain a catalyst metal.

9. Metal municipal storm grates that are used to allow for water drainage from municipal streets or alleys.

B. This section does not apply to or prohibit the purchase or possession of the types of items that are listed in subsection A of this section and that are acquired in transactions with industrial accounts, with other scrap metal dealers or after the scrap metal is authorized for release by a peace officer of that jurisdiction if the scrap metal dealer keeps records pursuant to section 44-1642 and electronically reports the transactions pursuant to section 44-1644.

C. A person who violates this section is guilty of a class 1 misdemeanor.

§ 44-1642.02 Scrap vehicle purchase; applicable law

Notwithstanding any other law, only title 28 governs the purchase by a scrap metal dealer of a vehicle as defined in section 28-101 solely for the purpose of processing the vehicle into a scrap vehicle or into prepared grades of scrap metal.

§ 44-1643 Violation; classification

A scrap metal dealer who fails in any respect to keep a book or similar record prescribed by section 44-1642 or to set out in a book or similar record any matter this article requires or who refuses, upon demand of any peace officer of this state, to exhibit a book or similar record, business record, receipt or transaction record, or who knowingly destroys a book or similar record within two years after making the final entry of any transaction or who otherwise fails to comply with this article, is guilty of a class 1 misdemeanor.

§ 44-1644 Report; exemption; violation; classification

A. Within twenty-four hours after receiving scrap metals, except from an industrial account or a scrap metal dealer, for which a record is required to be kept by section 44-1642, a scrap metal dealer shall electronically submit to the department a record of the receipt of the scrap metals. The record shall include the following information:

1. The date, time and place of the receipt of the scrap metal.

2. An identifying description of the specific scrap metal received, including:

(a) The weight and amount of the transaction or other consideration given.

(b) Unique identifying numbers and markings on catalytic converters as defined in section 44-1642.01, subsection A, paragraph 8 or any nonferrous parts of a catalytic converter.

3. A description of the person delivering the metal to the scrap metal dealer including the person's gender, height, weight, race and hair and eye color, address and date of birth and a photocopy of a current driver license, nonoperating identification license issued pursuant to section 28-3165 or photo identification card issued by a tribal government or the United States military.

4. The number and state of issuance of the license on the vehicle used to deliver the scrap metal.

B. A scrap metal dealer shall electronically submit to the department a record of the receipt of each purchase of a used catalytic converter as defined in section 44-1642.01, subsection A, paragraph 8 or any nonferrous parts of a catalytic converter from an industrial account or another scrap metal dealer. The report shall include:

1. The name, address and transaction privilege tax number of the seller.

2. The date, time and place of the transaction.

3. The number of catalytic converters purchased.

4. Any unique identifying numbers and markings on catalytic converters or any nonferrous parts of a catalytic converter.

C. The department shall establish by rule electronic submission standards. The submission standards shall allow the submission of the information in an electronic format that is compatible with the output format of not less than four of the record keeping software programs currently in use in the scrap metal industry in this state in a manner that will allow the information to be electronically merged with the department's database. A scrap metal dealer that submits information to the department pursuant to this section is not required to submit the same information to a local law enforcement agency.

D. The department shall make the information submitted pursuant to this section available to local law enforcement agencies over the internet and shall provide for training and procedures to allow law enforcement personnel to access the information provided electronically for law enforcement purposes.

E. For copper, aluminum wire with a diameter of at least three-eighths of an inch and transactions with a value over $100, a scrap metal dealer shall hold in its custody in the same size, shape and condition in which the scrap metal was received on its business premises any scrap metal received in a reportable transaction for seven days after filing the report prescribed by subsection A of this section.

F. Subsection E of this section does not apply to transactions with industrial accounts, other scrap metal dealers or purchases by scrap metal dealers of used aluminum beverage containers or ferrous metals and of scrap metal authorized for release by a peace officer of that jurisdiction.

G. A person who fails to file a report prescribed by this section is guilty of a class 1 misdemeanor.

§ 44-1645 Applicability; state preemption

This article applies throughout this state and counties, cities and towns may not enact or enforce ordinances, rules or regulations that conflict with this article. Counties, cities and towns may enact ordinances, rules or regulations that regulate scrap metal dealers and that are not in conflict with this article.

§ 44-1646 Burned metallic wire; aluminum wire; copper wire; transaction restrictions; applicability

A. A scrap metal dealer shall not purchase or receive metallic wire that was burned in whole or in part to remove insulation unless the scrap metal dealer receives from the scrap metal seller written evidence identifying the person who delivers the wire to the scrap metal dealer that includes evidence that the wire was lawfully burned.

B. A scrap metal dealer shall not accept aluminum wire with a diameter of 3/8 inch or more or any copper wire that has the insulation removed and shall not remove the insulation from the wire until after the seven-day period prescribed by section 44-1644, subsection E.

C. This section does not apply to transactions with all industrial accounts or to transactions between scrap metal dealers.

§ 44-1647 Department of public safety; transaction form

The department of public safety shall design and make available a seller and transaction form that may be used by a scrap metal dealer who must report pursuant to section 44-1644.

§ 44-1648 Preemption; power of local authorities; city, town or county licensing system

A. The state legislature determines that the registration of scrap metal dealers is a matter of statewide concern. The power to register scrap metal dealers is preempted by this state.

B. Sections 9-500.38 and 11-269.16 do not affect a city's, town's or county's power to enforce laws relating to business licensing of scrap metal dealers. This article does not affect a city's, town's or county's power to enforce laws relating to business licensing. Sections 9-500.38 and 11-269.16 and this article do not apply to a city's, town's or county's system for licensing a scrap metal dealer if the licensing system includes background checks or identification and fingerprinting of the owners of the scrap metal dealer.

C. A scrap metal dealer's license that is current and in good standing with a city's, town's or county's licensing system before September 13, 2013 is in compliance with that licensing system and the city, town or county may not require the scrap metal dealer to reapply for licensure in order to be in compliance with the city's, town's or county's licensing system unless there is an event or circumstance that requires an amendment or filing pursuant to the city's, town's or county's licensing system's requirements.

Article 4 Future Contracts and Bucket Shops

§ 44-1651 Definitions

In this article, unless the context otherwise requires:

1. "Bucket shop" means any place wherein dealing in futures is carried on as defined in this section.

2. "Futures," "dealing in futures," and "future contracts" mean:

(a) A sale or purchase or contract to sell or offer to sell or purchase any copper, gold, silver, lead, cotton, grain or meat or any stocks or bonds of any corporation, to be delivered in the future when it is not the bona fide intention of the party being prosecuted, at the time the transaction was made, that the subject matter of the transaction should be delivered and paid for as specified in such transaction.

(b) Any sale, purchase, offer or contract where it was the intention of the party being prosecuted at the time of making the transaction, that it should, or at the option of either party might be, settled by paying or receiving a margin, or profit on such contract.

(c) Any purchase, sale or offer of sale or purchase, or contract for future delivery of anything set forth in this section, on, by or through any exchange or board of trade, the rules, by-laws, customs or regulations of which permit such transaction to be settled or closed by delivery or tender of any grade of the thing specified in such transaction, other than the grade upon which the price is based in such transaction, at any price other than the actual price for spot delivery of such other grade at the time and place of delivery or tender.

§ 44-1652 Operating bucket shop prohibited; classification

A person who carries on or conducts a bucket shop is guilty of a class 2 misdemeanor.

§ 44-1653 Owner or manager of property permitting bucket shop; classification

An owner or person managing or controlling property who knowingly rents or leases such property to be used as a bucket shop, or knowingly permits the property to be so used, is guilty of a class 2 misdemeanor.

§ 44-1654 Telegraph or telephone company permitting use of instrument in bucket shop; classification

A telegraph or telephone company or any agent thereof which knowingly permits a telegraph or telephone wire or instrument to remain in a bucket shop or knowingly permits the wires, instruments or equipment of the telegraph or telephone company to be used by a person operating a bucket shop, whether or not such equipment or instruments are leased by the person illegally using them, is guilty of a petty offense. Each day shall constitute a separate offense.

§ 44-1655 Making or offering to make future contract; classification; defense

A. A person who makes or offers to make for himself a future contract is guilty of a class 3 misdemeanor.

B. It may be shown in defense of a prosecution under this section that the transaction out of which the prosecution arose was a "hedging" contract between parties in this state and parties without the state, and if such contract was made wholly or in part by a message sent by telegraph or telephone, that such message was delivered to the person sending it by the defendant himself, and not through or by any broker or agent, and that the person rendering the service was a common carrier, exclusively engaged as a common carrier with no connection with or interest in such transaction other than the transmission of the message and receiving the charges therefor which are not in excess of the usual rate for commission messages between the points of transmission and receipt of such message.

§ 44-1656 Acting or offering to act as agent or broker to make future contract; classification

A person who acts or offers to act as the agent or broker of any person in making or offering to make a future contract is guilty of a class 2 misdemeanor.

§ 44-1657 Facts constituting prima facie proof of future contract

If in a prosecution it is a material issue whether or not the rules, regulations, by-laws or customs of an exchange or board of trade on, by or through which a contract or offer for future delivery was made, permitted such contract or transaction to be settled or closed by delivery or tender of any grade of the subject matter specified in the contract or transaction, other than the grade upon which the price was based in the transaction, or at any price other than the actual price for spot delivery of such other grade or grades, at the time and place of the delivery or tender, proof that the delivery or tender was made or offered or pretended to be made by, through or upon any exchange or board of trade constitutes a prima facie case for the state.

§ 44-1658 Burden of proof in prosecution for making future contract

In a prosecution under this article the burden shall be on the defendant to prove that the subject matter contracted for or offered to be contracted for was in fact delivered in accordance with the terms of the contract or that it was the bona fide intention of the defendant at the time of making the contract, that the subject matter contracted for should be so delivered, if it is a material issue, and the court shall so instruct the jury.

§ 44-1659 Injunctive remedy against bucket shop

The habitual, actual, threatened or contemplated use of any premises, place or building, telegraph or telephone wires or instruments in violation of the prohibitions imposed on bucket shops by this article may be enjoined by the state or any citizen thereof.

§ 44-1660 Compulsory testimony regarding futures or bucket shops; prosecution of witness prohibited

No person is exempt from testifying concerning any offense set forth or prohibited by this article on the ground that such testimony may incriminate him, but no prosecution may afterwards be had against him for any offense concerning which he testified.

Article 5 Jewelry Auctions

§ 44-1671 Definitions

In this article, unless the context otherwise requires:

1. "Auction" means the sale of jewelry at either private or public sale, upon oral or written bids, to the highest bidder, and includes all such sales by whatever name called.

2. "Jewelry" includes gold, platinum, silver, gold-filled or plated ware, diamonds and other precious or semiprecious stones whether mounted or unmounted, cultured pearls, watches, clocks, and goods, wares and merchandise commonly classified as jewelry and commonly offered for sale in jewelry stores.

§ 44-1672 License required; exemptions

It is unlawful to sell, offer for sale, or attempt to sell at auction any jewelry without a license as provided in this article, except as exempted by section 44-1685.

§ 44-1673 Application for license; contents

A. Not less than thirty days nor more than sixty days prior to the date of a proposed auction, any person desiring to sell at auction any jewelry shall apply to the board of supervisors of the county in which the auction is to be conducted for a license to conduct the auction. The application shall contain:

1. The name, residence, address and business address of applicant.

2. The purpose for which the auction is to be held.

3. The type and location of business, if any, engaged in by the applicant during the two years immediately preceding the date of application.

4. Whether the proposed auction is to be held at the applicant's existing regularly established place of business.

5. Whether applicant will personally participate at the auction.

6. Whether any addition to the stock to be sold at auction has been made within sixty days prior to the auction.

7. The name, address and occupational history for the two years immediately preceding the date of application of any person who will participate in conducting the auction.

B. The application shall also contain a statement whether applicant has conducted any auction of jewelry within a period of five years prior to the date of application, and, if so, a statement when and where such auction was held. The application shall further indicate that no person will be employed in any manner in the conduct of the auction who has been convicted of any violation of this article within the six-year period immediately preceding the date of application.

§ 44-1674 Inventory

The application shall have attached thereto a detailed inventory listing each article to be auctioned, together with an inventory number for each article to be auctioned, and a detailed itemization of the quantity, quality, kind or class of each article to be sold and the wholesale cost or invoice price thereof.

§ 44-1675 Verification

The applicant shall verify under oath or affirmation that all the data and statements in the application and inventory are true and correct.

§ 44-1676 Fee and bond

A. In addition to the inventory, the applicant shall submit, together with the application, a fee of two hundred dollars, and shall file with the county board of supervisors a bond in a form approved by the board, executed by a surety company authorized to do business in this state, in an amount equal to one-half of the cost value of the articles inventoried for sale, said bond to be approved by the board of supervisors.

B. The bond shall run to the state of Arizona and shall be conditioned that it is for the use or benefit of the person who may be damaged by the violation of any provision of this article by the licensee, his employees or agents, or who may have the cause of action against said licensee, his employees or agents by reason of any matters arising out of the conduct of the auction. Any such person shall have, in addition to any other right of action which he may have, a right of action on the bond for all damages not exceeding one thousand dollars, and the aggregate liability of the surety upon the bond for all claims which may arise thereunder shall not exceed the sum specified in the bond.

§ 44-1677 Issuance of license

The board of supervisors shall issue a license to conduct an auction of jewelry if it finds the application, inventory, fee and bond are in order, and further finds that the applicant has not been convicted of violating any provision of this article within a period of six years immediately preceding the date of application. The license shall be issued for a period of not more than thirty consecutive days, legal holidays excepted.

§ 44-1678 Numbering of inventoried articles; subsequent inventory; intent to defraud

A. No article shall be sold at the auction for which the license was obtained unless there is securely attached to the article sold a tag, card or label bearing accurate reference to the written inventory prescribed in section 44-1674, upon which shall be plainly written or printed a true statement of the kind, quality and weight of the metal of which the article is made or composed and the percentage or karat or purity of such metal. If the article is plated or overlaid, then the label shall contain a true statement of the kind of plate and percentage of purity thereof, and the kind of metal or material covered. If the article is a precious or semiprecious stone, the statement shall contain the true name, weight, quality and fineness thereof. If the article is a watch or clock, the statement shall contain the true name of the manufacturer thereof. If a second-hand or old movement or substitute part or movement of any watch or clock is offered for sale in a new case, such fact shall be set forth in the attached statement, and no such article so sold or offered for sale shall bear any false or misleading name, description or entry thereon.

B. The tag, card or label shall remain securely attached to any article sold or offered for sale, and shall be delivered to the purchaser by the person selling the same as a correct description or representation of the article sold. If there is more than one of the same kind of article to be sold, then the tag, card or label shall indicate the chronological number of the respective articles of the same class sold.

C. No article shall be sold at the auction for which the license was obtained unless it was listed in the inventory accompanying the application, except that such articles may be sold if listed on a supplementary inventory subsequently approved by a majority of the board of supervisors of the county in which the auction is held.

D. It shall be presumptive evidence of intent to defraud or to violate the provisions of this article where goods, wares, merchandise or articles sold or offered for sale under the provisions of this article fail to agree with the description contained on the tag, card or label provided for in this section.

§ 44-1679 Articles stocked within sixty days prior to application

No article shall be listed in the inventory and any supplement thereto or sold at the auction which was purchased or stocked by the applicant within sixty days immediately preceding the date of application.

§ 44-1680 Representation of articles

At an auction held under the provisions of this article, the licensee and his employees and agents shall represent to the public the true manufacture, quality and kind of articles to be sold. Upon request of any person, a copy of the inventory shall be shown.

§ 44-1681 Return of purchases; display of notice

The licensee shall cause to be displayed in a prominent place on the premises where the auction is being conducted a notice that all merchandise may be returned, if it is at the time in the same condition as when purchased, for the amount paid, if returned within forty-eight hours from the time of purchase and if the merchandise sold fails to agree with the description contained on the tag, card or label. The notice shall be of sufficient size as to be readily discernible by the bidders.

§ 44-1682 Suspension, restoration of licenses; appeal

The board of supervisors may suspend and restore licenses as they may deem necessary or reasonable to insure compliance with the provisions of this article. Appeal from a decision of the board of supervisors may be made by the licensee or any aggrieved person within ten days from date of filing of the decision of the board of supervisors, to the superior court of the county in which the license was issued. The appeal may be taken by the issuance of an order to show cause directed to the board of supervisors, or by any other appropriate legal remedy afforded by law.

§ 44-1683 Licensee's responsibility

The licensee shall be responsible for compliance with the provisions of this article whether he is present at or absent from the auction.

§ 44-1684 Sale of articles described falsely

No article shall be sold at auction which has been falsely described or concerning which any false statement has been made by the licensee or his employee or agent.

§ 44-1685 Application of article; exemptions

A. This article shall not apply to any sale of second-hand jewelry, judicial sales or government sales, sales by an executor, administrator, guardian, receiver, or trustee in bankruptcy authorized by any court of competent jurisdiction, or any other sale authorized by law.

B. A license issued under the provisions of this article shall be in addition to any license required by the ordinance of any city or town in which the auction is to be conducted.

§ 44-1686 Violation; classification

Violation of any provision of this article is a class 2 misdemeanor.

Article 6 Consumer Reporting Agencies and Fair Credit Reporting

§ 44-1691 Definitions

In this chapter, unless the context otherwise requires:

1. "Consumer" means an individual.

2. "Consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information on consumers for the purpose of furnishing consumer reports to third parties.

3. "Consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (a) credit or insurance to be used primarily for personal, family, or household purposes, or (b) employment purposes, or (c) other purposes authorized under section 44-1692. The term does not include any report containing information solely as to transactions or experiences between the consumer and the person making the report; or any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device; or any report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys his decision with respect to such request, if the third party advises the consumer of the name and address of the person to whom the request was made.

4. "Employment purposes" when used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.

5. "File" when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.

6. "Person" means an individual, partnership, corporation, association, or any other entity of whatever kind or nature.

§ 44-1692 Permissible use of consumer reports

A. Except as provided in section 44-1693, a consumer reporting agency may furnish a consumer report only under the following circumstances and no other:

1. In response to the order of a court having jurisdiction to issue such an order.

2. In accordance with the written instructions of the consumer to whom it relates.

3. To a person that it has reason to believe:

(a) Intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer.

(b) Intends to use the information for employment purposes.

(c) Intends to use the information in connection with the underwriting of insurance involving the consumer.

(d) Intends to use the information in connection with a determination of the consumer's eligibility for any license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status.

(e) Otherwise has a legitimate business need for the information in connection with a business transaction involving the consumer.

4. On request by the department of economic security, its agent or another agency administering a title IV-D program under the social security act certifying that:

(a) The obligor mother or the obligor father has been determined to be the parent of a child to whom a support obligation relates.

(b) The consumer report is needed to establish an obligor's capacity to make support payments or to determine the appropriate amount of the payments or for the purpose of setting an original support amount or modifying an existing support order.

(c) The obligor has received at least ten days' advance notice, by certified mail, at the last known address, by personal delivery or by personal service that a consumer report will be requested.

(d) The consumer report shall be kept confidential and shall be used only for the purposes described in subdivision (b) of this paragraph.

(e) The consumer report shall not be used in connection with any other civil, administrative or criminal proceeding or for any other purpose.

B. The report furnished in subsection A of this section may be provided by electronic or other means.

§ 44-1693 Access to reports by a consumer

A. Upon furnishing adequate credentials by a consumer as to his identity:

1. A creditor who denies credit to any consumer shall disclose to such consumer the name and address of any consumer reporting agency which has furnished such creditor with a consumer report on such consumer which was considered by the creditor in making the determination.

2. A licensing agency which denies a license to any consumer shall disclose to such consumer the name and address of any consumer reporting agency which has furnished such agency with a consumer report on such consumer which was considered by the licensing agency in making the determination.

3. An employer who denies a consumer employment, a promotion, retention as an employee or reassignment or does reassign the consumer, whichever is not to the advantage of the consumer, shall disclose to such consumer the name and address of any consumer reporting agency which has furnished such employer with a consumer report on such consumer which was considered by the employer in making the determination.

4. A consumer reporting agency shall disclose to any consumer the contents of its file used for the purpose of making a consumer report on that consumer, any and all facts, allegations or sources upon which such information is based and the name and address of each person requesting a report on the consumer within the previous six months. A credit reporting agency may make the disclosures in the following manner:

(a) By a trained employee of the credit reporting agency when the consumer makes the request in person.

(b) By telephone if the credit reporting agency receives a written request for a telephone disclosure from the consumer. Any toll for the telephone disclosure shall be prepaid by the consumer or charged directly to the consumer requesting the telephone disclosure.

(c) By a decoded written copy of the file or a written copy of the consumer report with an explanation of any codes used if the credit reporting agency receives a written request for a written disclosure from the consumer.

B. A consumer reporting agency shall provide trained personnel to disclose the contents of its file to consumers during normal business office hours and assist a consumer in fully understanding all items on his consumer report.

C. The consumer shall be permitted to be accompanied by one other person of his choosing, who shall furnish reasonable identification, at such time as the consumer reviews the files of the consumer reporting agency as provided in this section.

D. No consumer reporting agency nor any creditor, licensing agency or employer shall request or require any waiver of rights by any consumer. No consumer reporting agency nor any creditor or any other person shall charge any fee to a consumer for a disclosure of his file if within a thirty-day period prior to the request for a disclosure the consumer is denied credit, licensure, employment or received a notice of collection or received other adverse action due to the credit report. Except as provided for in this subsection, a consumer reporting agency may charge a reasonable fee for any disclosures of a file to the consumer or his designee.

§ 44-1694 Correction of credit reports

A. If any consumer disputes the accuracy of any item in the consumer's records with any consumer reporting agency, the consumer may give notice in writing to the consumer reporting agency specifying in what manner the report is inaccurate and the consumer reporting agency shall reinvestigate the inaccuracy at no charge to the consumer and record the current status of the disputed information. The consumer reporting agency shall provide forms for such notice and shall assist a consumer in preparing the notice when requested.

B. Within thirty days after receiving a notice of inaccuracy, a consumer reporting agency shall deny or admit the inaccuracy to the consumer in writing. If the consumer reporting agency denies the inaccuracy, the consumer reporting agency shall include the following information with the written results of the reinvestigation:

1. The basis for the denial.

2. A copy of the consumer's file that is based on the consumer's file as revised as a result of the reinvestigation, including the business name and address of any furnisher of information who was contacted in connection with that information and, if reasonably available, the telephone number of the furnisher.

3. A notice that states that, if requested by the consumer, the consumer reporting agency shall provide the consumer with a description of the procedure used by the consumer reporting agency to determine the accuracy and completeness of the information.

C. If the consumer reporting agency admits that the item is inaccurate, it shall immediately correct the item in its records and, on request by the consumer, it shall inform any person who within the last six months has previously received a report containing such inaccurate information.

D. A consumer may provide a statement to the consumer reporting agency and, unless there are reasonable grounds to believe that it is frivolous or irrelevant, the consumer reporting agency shall include the statement in the consumer's file if either of the following applies:

1. The statement is a written explanation regarding an item of information that the consumer reporting agency denies is inaccurate.

2. The statement is regarding the contents of the consumer's file. The consumer may provide such a statement at any time, and the consumer reporting agency shall not charge the consumer for the statement.

E. A consumer reporting agency may limit a consumer's statement as described in subsection D to not more than one hundred words if the consumer reporting agency provides the consumer with assistance in writing the statement.

§ 44-1695 Liability

A. A consumer reporting agency or information source is not liable to any consumer resulting from:

1. Reporting inaccurate information corrected in compliance with sections 44-1694 and 44-1698 except as provided in this section.

2. Failing to lift a security freeze pursuant to section 44-1698, subsection G.

B. A consumer reporting agency is liable for any damages and attorney fees and court costs that are incurred by a consumer and that result from reporting of inaccurate information that a consumer reporting agency refuses to correct as provided in section 44-1694.

C. Any consumer reporting agency, user of information or source of information that is grossly negligent in the use or preparation of a consumer report or that acts wilfully and maliciously with intent to harm a consumer is liable to the consumer for actual damages, if any, punitive damages and attorney fees and court costs. If a consumer reporting agency prepares a consumer report, the consumer reporting agency shall follow reasonable procedures to ensure the maximum possible accuracy of the information relating to the consumer who is the subject of the consumer report.

D. Under section 44-1698, any consumer reporting agency that is grossly negligent or that acts wilfully and maliciously with intent to harm a consumer is liable to the consumer for actual damages, if any, attorney fees and court costs for the following:

1. Failing to implement a security freeze.

2. Releasing a credit report or credit score if a security freeze has been placed by the consumer.

3. Failing to remove a security freeze at the consumer's request.

§ 44-1696 Unlawful acts; classification

A. Any person who requests or obtains a consumer report from a consumer reporting agency under false pretenses or furnishes a consumer report to any person except as prescribed by this article or any employee of a consumer reporting agency who knowingly falsifies a consumer report or any records relating thereto shall be guilty of a class 1 misdemeanor.

B. Any person or the agent, clerk or employee thereof, who knowingly makes, causes to be made, or permits to be made, any false statement to any consumer reporting agency for the purpose of having such false information reported on a consumer report, shall be guilty of a class 1 misdemeanor.

C. Any consumer reporting agency, or the agent, clerk or employee thereof, who knowingly violates any provision of this article, shall be guilty of a class 1 misdemeanor.

§ 44-1697 Fair credit reporting

A. If a consumer makes a payment on a credit or loan account to the proper address to which the payment should be directed, a person shall calculate the number of days by which an account is delinquent by determining the number of days between the scheduled due date of the payment and the date the payment was received by that person.

B. If a person uses a reporting standard that requires a calculation of the number of days an account is delinquent, the person may report the delinquency based only on the number of days of the delinquency plus not more than four days.

§ 44-1698 Security freeze on credit reports and credit scores; fees prohibited; definitions

A. A consumer may request in writing or in a form acceptable to the consumer reporting agency that a consumer reporting agency place a security freeze on the consumer's credit report. If a security freeze is in place, a consumer reporting agency shall not release a consumer's credit report or consumer's credit score to a third party without the consumer's prior express authorization. This subsection does not prevent a consumer reporting agency from advising a specific party that a security freeze is in effect with respect to the consumer's credit report.

B. A consumer reporting agency shall place a security freeze on a consumer's credit report not later than ten business days after receiving a written request from the consumer.

C. The consumer reporting agency shall send a written confirmation of the security freeze to the consumer within ten business days after placing the security freeze on the consumer's credit report and shall provide the consumer with a unique personal identification number or password, other than the consumer's social security number, that the consumer may use to provide authorization for the release of the consumer's credit report for a specific period of time and to remove the security freeze.

D. A security freeze remains in effect until the consumer requests that the security freeze be removed or temporarily lifted as provided in this section. A consumer may request that a security freeze be removed or temporarily lifted by mail, telephone, internet or other electronic contact method in a form acceptable to the consumer reporting agency. A consumer reporting agency shall require proper identification of any person who makes a request to place or remove a security freeze.

E. On requesting removal, the consumer shall provide the following information:

1. Proper identification.

2. The unique personal identification number or password that the consumer reporting agency provided to the consumer.

F. On requesting a temporary lift to allow a credit report to be accessed for a specific period of time, the consumer shall contact the consumer reporting agency and shall request that the security freeze be temporarily lifted and shall provide the following information:

1. Proper identification.

2. The unique personal identification number or password that the consumer reporting agency provided to the consumer.

3. The proper information regarding the specific time period for which the credit report shall be available to users of the credit report.

G. A consumer reporting agency shall remove or temporarily lift a security freeze from a consumer's credit report within:

1. Three business days after receiving the consumer's request for the removal or temporary lift by mail.

2. Fifteen minutes after receiving the consumer's request through the use of telephone, internet or other electronic contact method in a form acceptable to the consumer reporting agency, during normal business hours. The consumer reporting agency is not required to remove or temporarily lift the security freeze within the fifteen minute time limit if the agency's ability is prevented by any of the following:

(a) An act of God, including fire, earthquakes, hurricanes, storms or similar natural disaster or phenomena.

(b) Unauthorized or illegal acts by a third party, including terrorism, sabotage, riot, vandalism, labor strikes or disputes disrupting operations or similar occurrence.

(c) Operational interruption, including electrical failure, unanticipated delay in equipment or replacement part delivery, computer hardware or software failures inhibiting response time or similar disruption.

(d) Governmental action, including emergency orders or regulations, judicial or law enforcement action or similar directives.

(e) Regularly scheduled maintenance, during other than normal business hours of, or updates to, the consumer reporting agency's systems.

(f) Commercially reasonable maintenance of, or repair to, the consumer reporting agency's systems that is unexpected or unscheduled.

(g) Receipt of a removal or temporary lift request outside of normal business hours.

H. A consumer reporting agency shall remove or temporarily lift a security freeze placed on a consumer's credit report only in the following cases:

1. If the consumer requests removal pursuant to subsection E of this section or a temporary lift pursuant to subsection F of this section.

2. If the consumer's credit report was frozen as a result of a material misrepresentation of fact. If a consumer reporting agency intends to remove a security freeze on a consumer's credit report pursuant to this paragraph, the consumer reporting agency shall notify by mail, telephone, internet or other electronic contact method the consumer before removing the security freeze on the consumer's credit report.

I. When a consumer requests a security freeze, the consumer reporting agency shall disclose the process for placing and for removing or temporarily lifting a freeze and the process for allowing access to information from the consumer's credit report for a specific period of time while the security freeze is in place.

J. If a third party requests access to a credit report on which a security freeze is in effect, the request is in connection with an application for credit or any other use and the consumer does not allow the consumer's credit report to be accessed for a specific period of time, the third party may treat the application as incomplete.

K. A consumer reporting agency may not charge a fee for a security freeze, removal of the freeze or temporary lift of the freeze for a period of time on the consumer's credit report.

L. A consumer reporting agency may not charge a fee if the consumer fails to retain the original unique personal identification number or password provided by the consumer reporting agency and the consumer reporting agency must reissue the unique personal identification number or password or provide a new unique personal identification number or password to the consumer.

M. If a security freeze is in place, a consumer reporting agency shall not change a consumer's name, date of birth, social security number or address in the consumer's credit report without sending a written confirmation of the change to the consumer within thirty days after the change is posted to the consumer's file. Written confirmation is not required for technical modifications of a consumer's official information, including name and street abbreviations, complete spellings or transposition of numbers or letters. For the purposes of address changes, the consumer reporting agency shall send the written confirmation to both the new address and the former address.

N. This section does not apply to the use of a credit report or credit score by any of the following:

1. A person, a subsidiary, affiliate, agent or subcontractor of that person, an assignee of a financial obligation owed by the consumer to that person or a prospective assignee of a financial obligation owed by the consumer to that person in conjunction with the proposed purchase of the financial obligation with which the consumer has or had before assignment an account or contract, including a demand deposit account, or to whom the consumer issued a negotiable instrument, for the purposes of reviewing the account or collecting the financial obligation owed for the account, contract or negotiable instrument. For the purposes of this paragraph, "reviewing the account" includes activities that are related to account maintenance, monitoring, credit line increases and account upgrades and enhancements.

2. A subsidiary, affiliate, agent, assignee or prospective assignee of a person to whom access has been granted under this section for the purpose of facilitating the extension of credit or other permissible use.

3. Any state or local agency, law enforcement agency, trial court or private collection agency acting pursuant to a court order, warrant or subpoena.

4. A child support agency acting pursuant to title 25, chapter 3, article 2 or title IV-D of the social security act.

5. The department of health services or its agents or assigns acting to investigate fraud.

6. The department of revenue or its agents or assigns acting to investigate or collect delinquent taxes or unpaid court orders or to fulfill any of its other statutory responsibilities.

7. The department of transportation or its agents or assigns acting to investigate or collect delinquent taxes or unpaid court orders or to fulfill any of its other statutory responsibilities.

8. The administrative office of the courts to conduct audits or investigate fraud or for applicant screening.

9. Any agency or entity for the purposes of prescreening or postscreening as provided for by the federal fair credit reporting act (15 United States Code section 1681b).

10. Any person or entity that administers a credit file monitoring subscription service to which the consumer has subscribed.

11. Any person or entity for the purpose of providing a consumer with a copy of the consumer's credit report or consumer's credit score on the consumer's request.

12. Except as otherwise provided by law, a person setting or adjusting a rate or claim or underwriting for insurance purposes.

13. Any person who uses a consumer reporting agency's database or file that consists entirely of information concerning, and is used solely for, one or more of the following:

(a) Criminal record information.

(b) Fraud prevention or detection.

(c) Tenant screening.

(d) Employment screening.

14. Any state or federally regulated bank or financial institution for checking, savings and investment accounts.

O. The following entities are not required to place a security freeze on a credit report:

1. A check services or fraud prevention services company that issues reports on incidents of fraud or authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers or similar methods of payments.

2. A deposit account information service company that issues reports regarding account closures due to fraud, substantial overdrafts, automated teller machine abuse or similar negative information regarding a consumer to inquiring banks or financial institutions for use only in reviewing a consumer request for a deposit account at the inquiring bank or financial institution.

3. A consumer reporting agency that acts only as a reseller of credit information by assembling and merging information contained in the database of another consumer reporting agency or multiple consumer reporting agencies and that does not maintain a permanent database of credit information from which new credit reports or credit scores are produced.

P. An act or practice in violation of this section is an unlawful practice under section 44-1522 and is subject to enforcement through a private action and by the attorney general. Injunctive relief may be sought to prevent future violations of this section. The remedies provided in this section are not intended to be the exclusive remedies available to a consumer. This subsection does not apply to subsection G, paragraph 2 of this section.

Q. For the purposes of this section:

1. "Proper identification" means information that is generally deemed to be sufficient to identify a person under the circumstances.

2. "Security freeze" means a notice that is placed in a consumer's credit report at the request of the consumer and that prohibits the consumer reporting agency from releasing the consumer's credit report without the express authorization of the consumer.

§ 44-1698.01 Consumer credit reports; extension of credit; identity theft; definition

A. Any person who does not use a consumer credit report in connection with the approval of credit based on the application for an extension of credit shall not lend money or extend credit without taking reasonable steps to verify the consumer's identity and confirm that the application for an extension of credit is not the result of taking the identity of another person or entity pursuant to section 13-2008 or aggravated taking the identity of another person or entity pursuant to section 13-2009.

B. Any person who uses a consumer credit report in connection with the approval of credit based on the application for an extension of credit shall not lend money or extend credit without taking reasonable steps to verify the consumer's identity and confirm that the application for an extension of credit is not the result of taking the identity of another person or entity pursuant to section 13-2008 or aggravated taking the identity of another person or entity pursuant to section 13-2009 if either of the following applies:

1. The creditor has received notification that a police report has been filed with a consumer reporting agency and that the applicant has been a victim of an offense involving a violation of section 13-2008 or 13-2009.

2. The creditor has received notification that the consumer has placed a fraud alert or security freeze on the consumer's credit report.

C. In an action to collect on a debt as a result of an extension of credit, if a consumer proves by a preponderance of the evidence that an extender of credit extended the credit in violation of this section, the finder of fact may infer someone other than the consumer applied for and received the benefit of the extension of credit.

D. An act or practice in violation of this section is an unlawful practice under section 44-1522 and is subject to enforcement through private action and by the attorney general. Injunctive relief may be sought to prevent future violations of this section. The remedies provided in this section are not intended to be the exclusive remedies available to a person whose identity was used to secure an extension of credit in violation of this section.

E. For the purposes of this section, extension of credit does not include an increase in an existing open-end credit plan, as defined in regulation Z of the federal reserve system, 12 Code of Federal Regulations section 226.2, or any change to or review of an existing credit account.

F. Financial institutions that are required to have a customer identification program pursuant to 31 Code of Federal Regulations section 103.121 are exempt from this section.

G. For the purposes of this section, "reasonable steps" means any commercially reasonable action taken by an extender of credit that is intended to improve identity verification or confirmation or to lessen the likelihood of a violation of sections 13-2008 and 13-2009.

§ 44-1698.02 Security freezes; credit reports; protected person; fee prohibited; definitions

A. A consumer reporting agency shall place a security freeze on a protected person's record or credit report if both of the following apply:

1. The consumer reporting agency receives a request from the protected person's representative for the placement of the security freeze.

2. The protected person's representative does all of the following:

(a) Submits the request to the consumer reporting agency at the address or other point of contact and in the manner specified by the consumer reporting agency.

(b) Provides to the consumer reporting agency sufficient proof of identification of the protected person and the representative.

(c) Provides to the consumer reporting agency sufficient proof of authority to act on behalf of the protected person.

B. If a consumer reporting agency does not have a file pertaining to a protected person when the consumer reporting agency receives a request pursuant to subsection A, paragraph 1 of this section, the consumer reporting agency shall create a record for the protected person.

C. Within thirty days after receiving a request pursuant to this section, a consumer reporting agency shall place a security freeze on the protected person's record or credit report.

D. Unless a security freeze is removed pursuant to subsection F or I of this section, a consumer reporting agency may not release the protected person's credit report, any information derived from the protected person's credit report or any record created for the protected person.

E. A security freeze that is placed on a protected person's record or credit report under this section remains in effect until either:

1. The protected person or the protected person's representative requests that the consumer reporting agency remove the security freeze pursuant to subsection F of this section.

2. The security freeze is removed pursuant to subsection I of this section.

F. To remove a security freeze for a protected person, the protected person or the protected person's representative shall submit a request for the removal of the security freeze to the consumer reporting agency at the address or other point of contact and in the manner specified by the consumer reporting agency. In addition:

1. If the protected person requested the removal of the security freeze, the protected person shall provide to the consumer reporting agency either of the following:

(a) Proof that the protected person's representative no longer has sufficient proof of authority to act on behalf of the protected person.

(b) Sufficient proof of identification of the protected person.

2. If the protected person's representative requested the removal of the security freeze on behalf of the protected person, the protected person's representative shall provide to the consumer reporting agency both of the following:

(a) Sufficient proof of identification of the protected person and the representative.

(b) Sufficient proof of authority to act on behalf of the protected person.

G. Within thirty days after receiving a request to remove a security freeze placed pursuant to subsection A of this section, the consumer reporting agency shall remove the security freeze for the protected person.

H. A consumer reporting agency may not charge a fee for each placement or removal of a security freeze on a protected person's record or credit report.

I. A consumer reporting agency may remove a security freeze for a protected person or may delete a protected person's record if the security freeze was placed or the record was created based on a material misrepresentation of fact by the protected person or the protected person's representative.

J. An act or practice in violation of this section is an unlawful practice under section 44-1522 and is subject to enforcement through a private action and by the attorney general. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title. The remedies provided in this section are not intended to be the exclusive remedies available to a protected person.

K. This section does not apply to the use of a protected person's credit report or record by any of the following:

1. A person administering a credit file monitoring subscription service to which either:

(a) The protected person has subscribed.

(b) The protected person's representative has subscribed on behalf of the protected person.

2. A person providing the protected person or the protected person's representative with a copy of the protected person's credit report on the request of the protected person or the protected person's representative.

3. A check services or fraud prevention services company that issues either:

(a) Reports on incidents of fraud.

(b) Authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers or similar payment methods.

4. A deposit account information service company that issues reports relating to account closures due to fraud, substantial overdrafts, automated teller machine abuse or similar negative information about a protected person to inquiring banks or other financial institutions for use only in reviewing a protected person's request for a deposit account at the inquiring bank or financial institution.

5. An insurance company for the purpose of conducting its ordinary business.

6. A consumer reporting agency that both:

(a) Acts only to resell credit information by assembling and merging information contained in a database of another consumer reporting agency.

(b) Does not maintain a permanent database of credit information from which new credit reports are produced.

7. A consumer reporting agency's database or file that consists of information concerning and used for one or more of the following, but not for credit granting, purposes:

(a) Criminal record information.

(b) Fraud prevention or detection.

(c) Personal loss history information.

(d) Employment, tenant or individual background screening.

8. A governmental entity when carrying out its duties.

9. A person, a subsidiary, affiliate, agent or subcontractor of that person, an assignee of a financial obligation owed by the protected person to that person or a prospective assignee of a financial obligation owed by the protected person to that person in conjunction with the proposed purchase of the financial obligation with which the protected person has or had before assignment an account or contract, including a demand deposit account, or to whom the protected person issued a negotiable instrument, for the purposes of reviewing the account or collecting the financial obligation owed for the account, contract or negotiable instrument. For the purposes of this paragraph, "reviewing the account" includes activities that are related to account maintenance, monitoring, credit line increases and account upgrades and enhancements.

L. For the purposes of this section:

1. "Protected person" means an individual who is under sixteen years of age at the time a request for the placement of a security freeze is made or who is an incapacitated person or a protected person for whom a guardian or conservator has been appointed.

2. "Record" means a compilation of information to which all of the following apply:

(a) The record identifies a protected person.

(b) The record is created by a consumer reporting agency solely for the purpose of complying with this section.

(c) The record is not created or used to consider the protected person's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living.

3. "Representative" means a person who provides to a consumer reporting agency sufficient proof of authority to act on behalf of a protected person.

4. "Security freeze" means:

(a) If a consumer reporting agency does not have a file pertaining to a protected person, a restriction that is placed on the protected person's record and that prohibits the consumer reporting agency from releasing the protected person's record.

(b) If a consumer reporting agency has a file pertaining to the protected person, a restriction that is placed on the protected person's credit report and that prohibits the consumer reporting agency from releasing the protected person's credit report or any information derived from the protected person's credit report.

5. "Sufficient proof of authority" means documentation that shows a representative has authority to act on behalf of a protected person and includes:

(a) A court order.

(b) A lawfully executed and valid power of attorney.

(c) A written, notarized statement signed by a representative that expressly describes the authority of the representative to act on behalf of a protected person.

6. "Sufficient proof of identification" means information or documentation that identifies a protected person or a representative of a protected person and includes:

(a) A social security number or a social security card issued by the social security administration.

(b) A certified or official copy of a birth certificate issued by the department of health services.

(c) A driver license or a nonoperating identification license issued by the department of transportation pursuant to title 28, chapter 8 or any other government issued identification.

Article 7 Credit Services

§ 44-1701 Definitions

In this article, unless the context otherwise requires:

1. "Buyer" means any natural person who is solicited to purchase or who purchases the services of a credit services organization.

2. "Credit services organization" means a person who, with respect to the extension of credit by others, sells, provides, performs or represents that he can or will sell, provide or perform any of the following services in return for the payment of monies or other valuable consideration:

(a) Improving a buyer's credit record, history or rating.

(b) Obtaining an extension of credit for a buyer.

(c) Providing advice or assistance to a buyer with regard to either subdivision (a) or (b) of this paragraph.

3. "Extension of credit" means the right to defer payment of debt or to incur debt and defer its payment, which is offered or granted primarily for personal, family or household purposes.

§ 44-1702 Exemptions

This article does not apply to:

1. A person who is organized, chartered or holding a license or authorization certificate to make loans or extensions of credit pursuant to the laws of this state or the United States and who is subject to regulation and supervision by an official or agency of this state or the United States.

2. A bank or savings and loan institution whose deposits or accounts are eligible for insurance by the federal deposit insurance corporation or the federal savings and loan insurance corporation.

3. A person licensed as a real estate broker by this state if the person is acting within the course and scope of that license.

4. A person licensed to practice law in this state if the person renders services within the course and scope of his practice as an attorney at law.

5. A broker-dealer registered with the securities and exchange commission or the commodity futures trading commission if the broker-dealer is acting within the course and scope of such regulation.

6. Any nonprofit organization exempt from taxation under section 501(c)(3) of the internal revenue code.

§ 44-1703 Credit services organizations; prohibited activities

A credit services organization and its salespersons, agents and representatives who sell or attempt to sell the services of a credit services organization shall not do any of the following:

1. Charge or receive monies or other valuable consideration before full and complete performance of the services the credit services organization has agreed to perform for or on behalf of the buyer, unless the credit services organization, in conformity with section 44-1708, has obtained a surety bond issued by a surety company authorized to do business in this state. If a credit services organization is in compliance with this paragraph, the salesperson, agents and representatives who sell the services of the organization are not required to obtain the surety bond provided for in section 44-1708.

2. Charge or receive monies or other valuable consideration solely for referral of the buyer to a retail seller who will or may extend credit to the buyer, if the credit which is or will be extended to the buyer is on substantially the same terms as those available to the general public.

3. Make or counsel or advise a buyer to make any statement which is untrue or misleading and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading to a consumer credit reporting agency or to any person who has extended credit to a buyer or to whom a buyer is applying for an extension of credit, with respect to a buyer's credit worthiness, credit standing or credit capacity.

4. Make or use any untrue or misleading representations in the offer or sale of the services of a credit services organization or engage, directly or indirectly, in an act, practice or course of business which operates or would operate as a fraud or deception on a person in connection with the offer or sale of the services of a credit services organization.

§ 44-1704 Information statement; necessity and time of delivery to buyer; acknowledgment of delivery; retention on file

Before the execution of a contract or agreement between the buyer and a credit services organization or before the receipt by the credit services organization of monies or other valuable consideration, whichever occurs first, the credit services organization shall provide the buyer with a statement, in writing, containing all the information required by section 44-1705. The credit services organization shall maintain on file or microfilm for a period of two years an exact copy of the statement, personally signed by the buyer, acknowledging receipt of a copy of the statement.

§ 44-1705 Information statement; contents

The information statement shall include all of the following:

1. A complete and accurate statement of the buyer's right to review any file on the buyer maintained by a consumer credit reporting agency and the right of the buyer to receive a copy of that file, as provided by section 44-1693. The statement shall include the approximate price the buyer will be charged by the credit reporting agency for a copy of the file.

2. A complete and accurate statement of the buyer's right to dispute the completeness or accuracy of any item contained in any file on the buyer maintained by any consumer credit reporting agency as provided by section 44-1694.

3. A complete and detailed description of the services to be performed by the credit services organization for or on behalf of the buyer and the total amount the buyer has to pay, or become obligated to pay, for the services.

4. If the credit services organization is required to obtain a surety bond pursuant to section 44-1703, the statement shall set forth both of the following:

(a) The buyer's right to proceed against the bond under the circumstances and in the manner set forth in section 44-1708.

(b) The name and address of the surety company which issued the bond.

§ 44-1706 Contracts; requirements; contents

A. Every contract between the buyer and a credit services organization for the purchase of the services of the credit services organization must be in writing, be dated, be signed by the buyer and include all of the following:

1. A conspicuous statement in size equal to at least ten point type in immediate proximity to the space reserved for the signature of the buyer as follows: You, the buyer, may cancel this contract at any time before midnight of the third day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right.

2. The terms and conditions of payment, including the total of all payments to be made by the buyer, whether to the credit services organization or to some other person.

3. A full and detailed description of the services to be performed by the credit services organization for the buyer, including all guarantees and all promises of full or partial refunds, and the estimated date by which the services are to be performed or the estimated length of time for performing the services.

4. The credit services organization's principal business address and the name and address of its agent authorized to receive service of process.

B. The contract shall be accompanied by a completed form in duplicate, entitled "notice of cancellation", which shall be attached to the contract and easily detachable and which shall contain in at least ten point type the following statement written in the same language as used in the contract: Notice of Cancellation You may cancel this contract without any penalty or obligation within three days from the date the contract is signed. If you cancel, any payment made by you under this contract will be returned within fifteen days after receipt by the credit services organization of your cancellation notice. To cancel this contract, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, to

(name of credit services organization)

_______________________________________________ at

(address of credit services organization) (place of business)

---

not later than midnight (date) ________________.

I hereby cancel this transaction. (date) ________________

(purchaser's signature)

---

C. A copy of the fully completed contract and all other documents the credit services organization requires the buyer to sign shall be given to the buyer at the time they are signed.

§ 44-1707 Credit service organization's breach of contract or obligation; violation of article

The credit services organization's breach of a contract under this article or of any obligation arising from the contract constitutes a violation of this article.

§ 44-1708 Surety bond; procedures to obtain or establish; claim by action at law; limit of liability

A. If a credit services organization is required to obtain a surety bond pursuant to section 44-1703, the following procedures apply:

1. A copy of the bond shall be filed with the corporation commission.

2. The bond required shall be in favor of this state for the benefit of any person who is damaged by any violation of this article. The bond shall also be in favor of any person damaged by the practices.

3. A person claiming against the bond for a violation of this article may maintain an action at law against the credit services organization and against the surety.

B. The surety is liable only for actual damages and not the punitive damages permitted under section 44-1711. The aggregate liability of the surety to all persons damaged by a credit services organization's violation of this article shall in no event exceed the amount of the bond.

C. The bond shall be in an amount equal to five per cent of the total amount of the fees charged buyers by the credit services organization under the contracts entered into between the credit services organization and the buyers during the previous twelve months, but in no case shall the bond be less than five thousand dollars or more than twenty-five thousand dollars. The amount required shall be adjusted once a year, no later than the tenth day of the first month of the credit services organization's fiscal year.

§ 44-1709 Waiver of rights by buyer; prohibition; burden of proof on exemption or exception from article

A. A waiver by a buyer of the provisions of this article is deemed contrary to public policy and is void and unenforceable. An attempt by a credit services organization to have a buyer waive rights given by this article consitutes a violation of this article.

B. In any proceeding involving this article the burden of proving an exemption or an exception is on the person claiming it.

§ 44-1710 Violation; classification; enforcement

A. A person who violates section 44-1703, 44-1704, 44-1705, 44-1706 or section 44-1709, subsection A, is guilty of a class 1 misdemeanor.

B. The superior court has jurisdiction to restrain and enjoin any violation of this article.

C. The duty to institute actions for violations of this article, including proceedings to restrain and enjoin such a violation, is vested in the attorney general, county attorneys and city attorneys. The attorney general, a county attorney or a city attorney may prosecute misdemeanor actions or institute proceedings to restrain and enjoin such violations, or both.

D. This section does not prohibit the enforcement by a person of a right provided by this or any other law.

E. The class 1 misdemeanor provision of this section does not apply to a seller's breach of a contract subject to this article.

§ 44-1711 Action for recovery of damages by buyer

A buyer injured by a violation of this article or by the credit services organization's breach of a contract subject to this article may bring any action for recovery of damages. Judgment shall be entered for actual damages, but in no case less than the amount paid by the buyer to the credit services organization, plus reasonable attorney fees and costs. If the trial court deems it proper, the court may enter an award for punitive damages.

§ 44-1712 Application of other laws; remedies as additional

A. The provisions of this article are not exclusive and do not relieve the parties or the contracts subject to this article from compliance with any other applicable provision of law.

B. The remedies provided in this article for a violation of this article are in addition to any other procedures or remedies for any violation or conduct provided for in any other law.

Article 8 Delivery Containers

§ 44-1721 Definitions

In this article, unless the context otherwise requires:

1. "Bakery rack" means a metal frame that holds bakery trays or other bakery products and that is used by a bakery, distributor or retailer or its agent as a means to transport, store or carry bakery products.

2. "Bakery tray" means a wire or plastic receptacle that holds bread, buns or other baked goods and that is used by a bakery, distributor or retailer or its agent as a means to transport, store or carry bakery products.

3. "Container" means a bakery rack, bakery tray, dairy case, egg basket or merchandise pallet.

4. "Dairy case" means a plastic receptacle that holds sixteen quarts or more of beverage and that is used by a dairy, distributor or retailer or its agent as a means to transport, store or carry dairy products.

5. "Egg basket" means a wire or plastic receptacle that holds four dozen or more shell eggs and that is used by a processor, distributor or retailer or its agent as a means to transport, store or carry eggs.

6. "Merchandise pallet" means a wooden or plastic carrier or holder used by a manufacturer or distributor to transport merchandise to wholesale and retail outlets.

7. "Name or mark" means a permanently affixed or permanently stamped name or mark that satisfies the requirements of section 44-1722 and that is used for the purpose of identifying the owner of the containers.

8. "Parking area" means a lot or other property provided by a recipient for the use of its customers to park vehicles while at the recipient's establishment.

9. "Recipient" means a person, firm, corporation or association that is authorized by the owner to use an owner's container.

§ 44-1722 Registration of name or mark; notice

To designate ownership of a particular name or mark, the owner of a container may either:

1. Use as a name or mark a trademark or trade name that the owner of the container has registered with the secretary of state pursuant to chapter 10, articles 3 and 3.1 of this title.

2. Use as a name or mark the owner's legal corporate name.

§ 44-1723 Unlawful activities; civil action

The owner of a container may file a civil action for and shall be awarded damages, injunctive relief or the provisional remedy of replevin or any such combination against a person who, without the owner's consent, does any of the following:

1. Removes the owner's container from the owner's or a recipient's premises or parking area.

2. Uses or knowingly possesses the owner's container that has been removed from the owner's or a recipient's premises or parking area.

3. Obliterates, covers, removes or otherwise alters the name or mark on the owner's container.

4. Abandons or leaves the owner's container at a location other than the owner's or a recipient's premises or parking area.

5. Alters, converts, destroys or tampers with the owner's container.

6. Sells the owner's container to or purchases the owner's container from someone other than the owner.

7. Refuses to return the owner's container on demand of the owner.

§ 44-1724 Damages; costs; attorney fees

In a civil action pursuant to section 44-1723, the container owner is entitled to recover as damages the greater of three times the amount of actual replacement cost of each container recovered or taken or one hundred dollars for each violation and ten dollars for each container. The prevailing party shall recover reasonable attorney fees, costs and other expenses incurred in the action.

§ 44-1725 Presumption of unauthorized activity

A rebuttable presumption arises that there is a violation of section 44-1723 if any person other than the owner possesses, without the owner's consent, a container that displays the owner's name or mark.

Article 9 Pyramid Promotional Schemes

§ 44-1731 Definitions

In this article, unless the context otherwise requires:

1. "Compensation" includes a payment based on a sale or distribution made to a person who either is a participant in a pyramid promotional scheme or has the right to become a participant upon payment.

2. "Consideration" means the payment of cash or the purchase of goods, services or intangible property but does not include:

(a) The purchase of goods or services furnished at cost to be used in making sales and not for resale.

(b) Time and effort spent in pursuit of sales or recruiting activities.

3. "Pyramid promotional scheme" means any plan or operation by which a participant gives consideration for the opportunity to receive compensation which is derived primarily from any person's introduction of other persons into participation in the plan or operation rather than from the sale of goods, services or intangible property by the participant or other persons introduced into the plan or operation.

§ 44-1732 Violation; classification

A. Any person who violates any of the provisions of this article is guilty of a class 6 felony.

B. The attorney general or county attorney, or both, shall institute the criminal actions to enforce the provisions of this article.

C. An act or practice in violation of this article constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

§ 44-1733 Sale or contract for sale of interest in pyramid promotional scheme voidable

Any purchaser in a pyramid promotional scheme may, notwithstanding any agreement to the contrary, declare the related sale or contract for sale void, and he may bring an action in a court of competent jurisdiction to recover the consideration he paid to participate in the scheme. In such action the court shall, in addition to any judgment awarded to the plaintiff, require the defendant to pay interest, reasonable attorneys' fees and the costs of the action, less any money paid to the plaintiff as profit in the transaction.

§ 44-1734 Scope of remedy

A. The rights and remedies that this article grants to purchasers in pyramid promotional schemes are independent of and supplemental to any other right or remedy available to them in law or equity, and nothing contained herein shall be construed to diminish or to abrogate any such right or remedy.

B. The provisions of this article are in addition to all other causes of action, remedies and penalties available to this state.

§ 44-1735 Pyramid promotional scheme; prohibition; defenses excluded

A. A person shall not establish, operate, advertise or promote a pyramid promotional scheme.

B. A limitation as to the number of persons who may participate or the presence of additional conditions affecting eligibility for the opportunity to receive compensation under the plan or operation does not change the identity of the scheme as a pyramid promotional scheme nor is it a defense under this article that a participant, on giving consideration, obtains any goods, services or intangible property in addition to the right to receive compensation.

Article 10 Dance Studio Contracts

§ 44-1741 Definitions

In this article, unless the context otherwise requires:

1. "Contract for dance studio lessons and other services" means a contract for instruction in ballroom or other types of dancing and includes but is not limited to dance competitions, olympics, single specialist projects, showcases and other services whether given to customers individually or in groups.

2. "Dance studio" means any person who contracts directly with members of the general public to provide dance studio lessons and other services.

§ 44-1742 Written contract required; conspicuous statement of cost; limitation of amount

A. Every contract for dance studio lessons and other services shall be in writing and subject to the provisions of this article. A copy of the written contract shall be given to the customer at the time the customer signs the contract.

B. No contract for dance studio lessons and other services shall be effective unless the contract specifically sets forth, in a conspicuous manner on the top of the first page of such contract, the customer's total payment obligation for lessons and other services to be received pursuant to the contract.

C. No contract for dance studio lessons and other services shall require payment for the lessons and other services or the use of the facilities of a total amount in excess of four thousand five hundred dollars, exclusive of interest.

§ 44-1743 Limitation on payment period; prohibition against life contract; single contract

A. No contract for dance studio lessons and other services shall require payments or financing by the customer over a period in excess of two years from the date the contract is signed, nor shall the term of any such contract be measured by the life of the customer. Lessons and other services to be rendered to the customer under the contract shall not extend over a period of two years from the date the contract is signed.

B. Any additional dance studio lessons or other services agreed to by the dance studio and the customer after an initial contract has been signed, all or part of which are to be rendered during the term of the initial contract must, together with the effective provisions of the initial contract, be set forth in a new contract.

§ 44-1744 Contract; additional provisions required

Every contract for dance studio lessons and other services shall provide:

1. That the lessons will begin within thirty days.

2. That a contract with respect to new or increased dance studio lessons and other services, which are not subject to prior agreements between the parties, may be canceled within fifteen days after the date of receipt by the customer of a copy of the contract by written notice to the other party by registered mail return receipt requested at the address specified in the contract. All moneys paid pursuant to such contract shall be refunded within ten days of receipt of the notice of cancellation except that payment shall be made for any dance studio lessons and other services received prior to such cancellation.

3. A written statement of the hourly rate for the lessons and other services.

4. A conspicuous notice as follows:

"Notice to Customer

Do not sign this contract if any of the spaces intended for the agreed terms to the extent of then available information are left blank. You are entitled to a copy of this contract at the time you sign it.

You may cancel this contract within fifteen days of the time you receive a copy by written notice to the dance studio by registered mail return receipt requested at the address specified in the contract.

If you cancel the contract in the fifteen-day period, you are entitled to a refund of your money less payment for dance lessons or services received before cancellation. Refunds must be made within ten days, not including Sundays and holidays of receipt of the cancellation notice by the studio."

§ 44-1745 Execution of notes; assignment; customer's defenses retained

A. No contract for dance studio lessons and other services shall require the execution of any note or series of notes by the customer which, when separately negotiated, will cut off as to third parties any right of action or defense which the customer may have against the dance studio.

B. No right of action or defense arising out of a contract for dance studio lessons and other services which the customer has against the dance studio shall be cut off by assignment of the contract whether or not the assignee acquires the contract in good faith and for value. Such an assignee is not a holder in due course.

§ 44-1746 Relief from payment

A. Every contract for dance studio lessons and other services shall contain a clause providing that if, by reason of death or disability, the customer is unable to receive all lessons and other services for which the customer has contracted, the customer or his estate shall be relieved from the obligation of making payment for lessons and other services other than those received prior to death or the onset of disability. If the customer has prepaid any sum for lessons and other services so much of such sum as is allocable to lessons and other services the customer has not taken shall be promptly refunded to the customer or his legal representative. Any dance studio contract terminated under the provisions of this section may provide for a servicing fee not to exceed ten per cent, less interest or finance charges, of the remaining balance of the contract.

B. Notwithstanding the provisions of any contract to the contrary, whenever the contract price is payable in installments and the customer is relieved from making further payments or entitled to a refund under this section, the amount of the contract price allocable to lessons and other services not received shall represent at least as great a proportion of the total contract price as the sum of the periodic monthly balances not yet due bears to the sum of all the periodic monthly balances under the schedule of installments in the contract.

§ 44-1747 Voidable contracts; waiver voidable; damages for violation of article

A. Any contract for dance studio lessons and other services entered into in reliance upon any wilful and false, fraudulent or misleading information, representation, notice or advertisement of the dance studio shall be voidable. Any contract for dance studio lessons and other services which does not comply with the applicable provisions of this article shall be voidable.

B. Any waiver of the customer of the provisions of this article shall be voidable.

C. Any customer injured by a violation of this article may bring an action for the recovery of damages. Judgment may be entered for the amount at which the actual damages are assessed plus reasonable attorney fees.

§ 44-1748 Violation of provisions of article; injunction

A. The superior court of this state shall have jurisdiction in equity to restrain and enjoin the violation of any of the provisions of this article.

B. The duty to institute actions for violation of the provisions of this article, including equity proceedings to restrain and enjoin such violations, is hereby vested in the attorney general, county attorneys and city attorneys. The attorney general, any county attorney or any city attorney may institute equity proceedings.

Article 10.1 Pharmacy Benefit Managers

§ 44-1751 Definitions

In this article, unless the context otherwise requires:

1. "Cost share" means an insured's applicable coinsurance, copayment and deductible requirement under a health plan based on the adjudicated claim.

2. "Pharmacy benefit manager" has the same meaning prescribed in section 20-3321.

3. "Plan sponsor" means an employer or organization that offers a group health plan to its employees or members.

§ 44-1752 Pharmacy benefits managers; prohibitions; applicability

A. A pharmacy benefits manager may not do any of the following:

1. Prohibit a pharmacist or pharmacy from providing an insured individual information on the amount of the insured's cost share for the insured's prescription drug and the clinical efficacy of a more affordable alternative drug if one is available. A pharmacy benefits manager may not penalize a pharmacy or pharmacist for disclosing such information to an insured or for selling to an insured a more affordable alternative if one is available.

2. Require a pharmacist or pharmacy to charge or collect from an insured a copayment that exceeds the total submitted charges by the network pharmacy.

B. To the extent that any provision of this section is inconsistent or conflicts with an applicable federal law, rule or regulation, the applicable federal law, rule or regulation applies.

C. This section applies to all contracts between a pharmacy benefits manager and a pharmacy or a pharmacy's contracting representative or agent that are entered into or renewed on or after August 3, 2018.

§ 44-1753 Prescription medications; ninety-day fill; exceptions

A. A plan sponsor or pharmacy benefit manager may not prohibit a retail pharmacy in its network from dispensing a ninety-day fill of a prescription medication pursuant to Arizona state board of pharmacy rules and guidance if either:

1. A ninety-day fill of that medication is allowed by the plan sponsor's pharmacy benefit at any retail pharmacy and the retail pharmacy agrees to the reimbursement rate and the contractual requirements required by the plan sponsor or pharmacy benefit manager.

2. A ninety-day fill is required for that medication by the plan sponsor's pharmacy benefit and the retail pharmacy agrees to the reimbursement rate and the contractual requirements required by the plan sponsor or pharmacy benefit manager.

B. This section does not apply to:

1. Dispensing schedule II or III controlled substances.

2. The Arizona health care cost containment system administration and its contractors as defined in section 36-2901 to the extent the services are provided pursuant to title 36, chapter 29 or 34.

§ 44-1754 Delivery of prescription drugs; disclosure; exception

A. A plan sponsor or pharmacy benefit manager may not prohibit a retail pharmacy from offering as an ancillary service of a pharmacy within the terms of the contract either of the following:

1. The limited delivery of prescription drugs by mail or common carrier to a patient.

2. The hand delivery of prescription drugs to a patient by an employee or contractor of the pharmacy.

B. A pharmacy may not charge the plan sponsor or pharmacy benefit manager for the delivery of a prescription to a patient pursuant to subsection A of this section unless specifically agreed on by the plan sponsor or pharmacy benefit manager.

C. A pharmacy shall disclose to the patient any fee that will be charged to the patient for the delivery of a prescription drug, including that the fee may not be reimbursable by the plan sponsor or pharmacy benefit manager.

D. This section does not apply to the Arizona health care cost containment system administration and its contractors as defined in section 36-2901 to the extent the services are provided pursuant to title 36, chapter 29 or 34.

Article 11 Solar Energy Devices

§ 44-1761 Definitions

In this article, unless the context otherwise requires:

1. "Collector" means a component of a solar energy device that is used to absorb solar radiation, convert it to heat or electricity and transfer the heat to a heat transfer fluid or to storage.

2. "Distributed energy generation system":

(a) Means a device or system that is used to generate or store electricity, that has an electric delivery capacity, singly or in connection with other similar devices or systems, greater than one kilowatt or one kilowatt-hour, and that is primarily for on-site energy consumption.

(b) Does not include an electric generator that is intended for occasional use.

3. "Energize" or "energized" means that the distributed energy generation system is installed and operational for its intended purposes of generating or storing electricity.

4. "Heat exchanger" means a component of a solar energy device that is used to transfer heat from one fluid to another.

5. "Interconnected" or "interconnection" means a distributed energy generation system that is connected to the power grid and that is able to transfer electricity to the power grid.

6. "Seller or marketer" means an individual or a company acting through its officers, employees or agents that markets, sells or solicits the sale, financing or lease of distributed energy generation systems or negotiates or enters into agreements for the sale, financing or lease of distributed energy generation systems.

7. "Solar daylighting" means a device that is specifically designed to capture and redirect the visible portion of the solar beam spectrum, while controlling the infrared portion, for use in illuminating interior building spaces in lieu of artificial lighting.

8. "Solar energy device":

(a) Means a system or series of mechanisms that is designed primarily to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination of the foregoing by means of collecting and transferring solar generated energy into such uses either by active or passive means. Such systems may also have the capability of storing such energy for future utilization. Passive systems shall clearly be designed as a solar energy device such as a trombe wall and not merely a part of a normal structure such as a window.

(b) Includes a distributed energy generation system.

§ 44-1762 Solar energy device warranties; installation standards; inspections

A. The collectors, heat exchangers and storage units of a solar energy device that is sold or installed in this state or leased or financed under an agreement pursuant to section 44-1763, and the installation of the solar energy device, shall be warranted for a period of at least two years or shall include an energy production output guarantee provided pursuant to section 44-1763, subsection A, paragraph 4. The remaining components of the solar energy device and their installation shall be warranted for a period of at least one year.

B. Any person who manufactures, furnishes for installation or installs a solar energy device shall provide with the device a written statement of warranty, responsibilities assumed or disclaimed and performance data of the solar energy device and components of the solar energy device as prescribed by section 44-1763 as part of the agreement for the financing, sale or lease of a solar energy device. The form of the statement required by this subsection is subject to approval by the registrar of contractors. The statement shall specify the source of any performance data it contains. A copy of the statement shall be delivered to the registrar of contractors where it shall be kept on public file.

C. A person who sells a solar energy device in this state shall furnish a certificate to the buyer that the solar energy device complies with the requirements of this section.

D. A solar energy device that is sold or installed in this state shall comply with all applicable state and federal consumer protection, rating, certification, performance, marking, installation and safety standards that are required by section 44-1763.

E. An individual who installs a solar energy device in this state, in addition to being a licensed solar contractor under title 32, chapter 10, article 4, shall:

1. Possess the general license that is appropriate to the type of solar energy device that is installed. Installers of a solar water heater or a photovoltaic device shall possess an appropriate contractor's license.

2. Meet any education and training standards that have been adopted by the registrar of contractors.

3. Pass an examination on the installation of the type of device to be installed, if the registrar of contractors has adopted such an examination.

F. Solar energy devices that are designed or installed by the final owner are exempt from the requirements of subsections A through E of this section.

G. The installation of a solar energy device shall meet the requirements of:

1. All applicable fire, safety and building codes.

2. Consumer protection standards, including any freeze protection and temperature related damage standards.

3. All other applicable federal, state and local laws.

H. Contractors who fail to meet safety, installation or other prescribed standards or the requirements of section 44-1763 are subject to disciplinary action under title 32, chapter 10, article 3.

§ 44-1763 Distributed energy generation system agreements; disclosures; exception

A. An agreement governing the financing, sale or lease of a distributed energy generation system to any person or a political subdivision of this state must:

1. Be signed by the person buying, financing or leasing the distributed energy generation system and must be dated. Any agreement that contains blank spaces affecting the timing, value or obligations of the agreement in a material manner when signed by the buyer or lessee is voidable at the option of the buyer or lessee until the distributed energy generation system is installed. Any blank spaces in the agreement must be shown to and initialed by the buyer or lessee at the time the buyer or lessee signs the agreement.

2. Be in at least ten-point type.

3. Include a provision, which must be separately acknowledged by the buyer or lessee, granting the buyer or lessee the right to rescind the financing, sale or lease agreement for a period of not less than three business days after the agreement is signed by the buyer or lessee and before the distributed energy generation system is installed.

4. Provide a description, which must be separately acknowledged by the buyer or lessee, including the make and model of the distributed energy generation system's major components or a guarantee concerning energy production output that the distributed energy generation system being sold or leased will provide over the life of the agreement. If the warranty period for any major component is less than the duration of the agreement, the length of the warranty must be disclosed to and separately acknowledged by the buyer or lessee.

5. Separately set forth the following items, which must be separately acknowledged by the buyer or lessee, if applicable:

(a) The total purchase price or total cost to the buyer or lessee under the agreement for the distributed energy generation system over the life of the agreement.

(b) Any interest, installation fees, document preparation fees, service fees or other costs to be paid by the buyer or lessee of the distributed energy generation system.

(c) If the distributed energy generation system is being financed or leased, the total number of payments, the payment frequency, the amount of the payment expressed in dollars and the payment due date.

6. Provide a disclosure in the sale and financing agreements, to the extent they are used by the seller or marketer in determining the purchase price of the agreement, that identifies all current tax incentives and rebates or other state or federal incentives for which the buyer or lessee may be eligible and any conditions or requirements pursuant to the agreement to obtain these tax incentives, rebates or other incentives.

7. Identify the tax obligations that the buyer or lessee may be required to pay as a result of buying, financing or leasing the distributed energy generation system, including:

(a) The assessed value and the property tax assessments associated with the distributed energy generation system calculated in the year the agreement is signed.

(b) Transaction privilege taxes that may be assessed against the person buying or leasing the distributed energy generation system.

(c) Any obligation of the buyer or lessee to transfer tax credits or tax incentives of the distributed energy generation system to any other person.

8. Disclose whether the warranty or maintenance obligations related to the distributed energy generation system may be sold or transferred to a third party.

9. Include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, if a transfer of the sale, lease or financing agreement contains any restrictions pursuant to the agreement on the lessee's or buyer's ability to modify or transfer ownership of a distributed energy generation system, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the distributed energy generation system is subject to review or approval by a third party, the agreement must identify the name, address and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer.

10. Include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, if a modification or transfer of ownership of the real property to which the distributed energy generation system is or will be affixed contains any restrictions pursuant to the agreement on the lessee's or buyer's ability to modify or transfer ownership of the real property to which the distributed energy generation system is installed or affixed, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the real property to which the distributed energy generation system is affixed or installed is subject to review or approval by a third party, the agreement must identify the name, address and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer.

11. Provide a full and accurate summary of the total costs under the agreement for maintaining and operating the distributed energy generation system over the life of the distributed energy generation system, including financing, maintenance and construction costs related to the distributed energy generation system.

12. If the agreement contains an estimate of the buyer's or lessee's future utility charges based on projected utility rates, provide an estimate of the buyer's or lessee's future utility charges as impacted by potential utility rate changes ranging from at least a five percent annual decrease to at least a five percent annual increase from current utility costs applied to the duration of the agreement in one percent increments. Any comparative estimates must be calculated by applying the entire rate change range to the duration of the agreement.

13. Include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, that states:

Utility rates and utility rate structures are subject to change. These changes cannot be accurately predicted. Projected savings from your distributed energy generation system are therefore subject to change. Tax incentives are subject to change or termination by executive, legislative or regulatory action.

14. Comply with section 32-1158.

B. If a document or sales presentation relating to a distributed energy generation system states or suggests that the distributed energy generation system will result in financial savings for a buyer or lessee, the document or sales presentation must substantiate the methodology used to calculate those savings and, if the document or sales presentation is intended for a specific potential buyer or lessee, reasonably quantify the cumulative savings expected for the duration of the agreement.

C. If a document or sales presentation relating to a distributed energy generation system contains financial savings comparative estimates or utility rate comparative estimates, the document or sales presentation must include historical utility rates for the immediately preceding period of time that is of the same duration as the proposed financing or lease period for the same class of utility customer in the same utility service territory as the prospective buyer or lessee. These historical rates must be included in any comparative estimates.

D. Before the maintenance or warranty obligations of a distributed energy generation system under an existing lease, financing or purchase agreement is transferred, the person who is currently obligated to maintain or warrant the distributed energy generation system must disclose the name, address and telephone number of the person who will be assuming the maintenance or warranty of the distributed energy generation system.

E. If a document or sales presentation relating to a distributed energy generation system contains an estimate of the buyer's or lessee's future utility charges based on projected utility rates, the document or sales presentation must contain an estimate of the buyer's or lessee's future utility charges as impacted by potential utility rate changes ranging from at least a five percent annual decrease to at least a five percent annual increase from current utility costs applied to the duration of an agreement for the financing, sale or lease of a distributed energy generation system in one percent increments. Any comparative estimates must be calculated by applying the entire rate change range to the duration of the agreement.

F. Recurring payments under a distributed energy generation system lease may not begin until the distributed energy generation system is energized and interconnected.

G. This section does not apply to an individual or company, acting through its officers, employees or agents, that markets, sells, solicits, negotiates or enters into an agreement for the sale, financing or lease of a distributed energy generation system as part of a transaction involving the sale or transfer of the real property to which the distributed energy generation system is or will be affixed.

§ 44-1764 Distributed energy generation systems; interconnection

Any person who seeks to install, energize or interconnect a distributed energy generation system must first submit a complete application for interconnection to the power grid to the utility that owns or operates the power grid at the point of interconnection. A person shall not install, energize or interconnect the distributed energy generation system until the utility approves the application. If the utility does not approve or deny the application within sixty days after the filing date of the application, the distributed energy generation system may be installed. The application must disclose the current owner of the distributed energy generation system and the owner of the distributed energy generation system at the time the system will be energized. The utility that owns or operates the power grid to which the distributed energy generation system is interconnected must receive notice of any changes in ownership of the distributed energy generation system. A utility with less than seventy-five thousand customers, in its sole discretion, may waive any of the requirements of this section.

Article 12 Consignments of Works of Fine Art

§ 44-1771 Definitions

In this article, unless the context otherwise requires:

1. "Art dealer" means a person engaged in the business of selling works of fine art, other than a person exclusively engaged in the business of selling goods at public auction.

2. "Artist" means the creator of a work of fine art.

3. "On consignment" means delivered to an art dealer for the purpose of sale or exhibition, or both, to the public by the art dealer other than at a public auction.

4. "Work of fine art" means an original or multiple original art work which is:

(a) A visual rendition, including a painting, drawing, sculpture, mosaic or photograph.

(b) A work of calligraphy.

(c) A work of graphic art, including an etching, lithograph, offset print or silk screen.

(d) A craft work in materials, including clay, textile, fiber, wood, metal, plastic or glass.

(e) A work in mixed media, including a collage or a work consisting of any combination of subdivisions (a) through (d).

§ 44-1772 Art dealer and artist; relationship

If an art dealer accepts a work of fine art, on a fee, commission or other compensation basis, on consignment from the artist who created the work of fine art:

1. The art dealer is, with respect to that work of fine art, the agent of the artist.

2. The work of fine art is trust property and the art dealer is trustee for the benefit of the artist until the work of fine art is sold to a bona fide third party or returned to the artist.

3. The proceeds of the sale of the work of fine art are trust property and the art dealer is trustee for the benefit of the artist until the amount due the artist from the sale is paid.

4. The art dealer is strictly liable for the loss of or damage to the work of fine art while it is in the art dealer's possession. The value of the work of fine art is, for the purpose of this section, the value established in a written agreement between the artist and art dealer prior to the loss or damage or, if no written agreement regarding the value of the work of fine art exists, the fair market value of the work of fine art.

§ 44-1773 Purchase or resale of consigned fine art by art dealer

A. If a work of fine art is trust property under section 44-1772 when initially received by the art dealer it remains trust property notwithstanding the subsequent purchase of the work of fine art by the art dealer directly or indirectly for the art dealer's own account until the purchase price is paid in full to the artist.

B. If the art dealer resells a work of fine art to which subsection A of this section applies to a bona fide third party before the artist has been paid in full, the work of fine art ceases to be trust property and the proceeds of the resale are trust funds in the hands of the art dealer for the benefit of the artist to the extent necessary to pay any balance still due to the artist. The trusteeship of the proceeds continues until the fiduciary obligation of the art dealer with respect to the transaction is discharged in full.

§ 44-1774 Trust property exempt from claims of art dealer's creditors

Notwithstanding title 47, no property which is trust property under section 44-1772 or 44-1773 is subject to the claims, liens or security interests of the creditors of the art dealer.

§ 44-1775 Art dealer required to obtain written contract

A. An art dealer may accept a work of fine art, on a fee, commission or other compensation basis, on consignment from the artist who created the work of fine art only if prior to or at the time of acceptance the art dealer enters into a written contract with the artist establishing:

1. The value of the work of fine art.

2. The time within which the proceeds of the sale are to be paid to the artist, if the work of fine art is sold.

3. The minimum price for the sale of the work of fine art.

B. If an art dealer violates this section a court may, at the request of the artist, void the obligation of the artist to that art dealer or to a person to whom the obligation is transferred, other than a holder in due course.

§ 44-1776 Art dealer; duties

A. An art dealer who accepts a work of fine art, on a fee, commission or other compensation basis, on consignment from the artist who created the work of fine art may use or display the work of fine art or a photograph of the work of fine art or permit the use or display of the work of fine art or a photograph of the work of fine art only if:

1. Notice is given to users or viewers that the work of fine art is the work of the artist.

2. The artist gives prior written consent to the particular use or display.

B. An art dealer who sells a work of fine art which is on consignment for the purpose of sale shall transmit all monies due the artist on a monthly basis.

§ 44-1777 Waiver voided

Any portion of an agreement which waives any provision of this article is void.

§ 44-1778 Civil penalty

A. Any art dealer who violates section 44-1775 or section 44-1776, subsection A is liable to the artist in an amount equal to:

1. Five hundred dollars.

2. The actual damages, if any, including the incidental and consequential damages, sustained by the artist by reason of the violation and reasonable attorney fees.

B. An art dealer who violates section 44-1776, subsection B is liable to the artist in an amount equal to three times the amount due the artist.

Article 13 Health Spa Contracts

§ 44-1791 Definitions

In this article, unless the context otherwise requires:

1. "Contract for health spa services" means a contract for membership in any health spa or for instruction, training, assistance or use of facilities primarily for physical exercise, weight control or figure development.

2. "Health spa" means an establishment which provides as its primary purpose services or facilities which are purported to assist patrons in physical exercise, weight control or figure development.

3. "Operating day" means any calendar day on which patrons may inspect and use the facilities and services of the health spa during a period of at least eight hours.

§ 44-1792 Exemption

This article does not apply to:

1. Any private club owned and operated by its members, any facility owned or operated by the state of Arizona or any of its political subdivisions, any health spa operated by a fraternal or benevolent society organized under title 10, chapter 19, article 3 or a nonprofit corporation organized under title 10, chapters 24 through 40, or any health care institution licensed pursuant to title 36, chapter 4.

2. Any health spa that does not require or in the ordinary course of business receive prepayment for services. For the purposes of this paragraph, payment for health spa services received within the thirty-one days in which the services are to be rendered does not constitute prepayment. A health spa that intends to begin requiring or receiving prepayment for health spa services shall comply with this article.

§ 44-1793 Contract form; conspicuous statement of costs; duration and cancellation

A. Every contract for health spa services shall be in writing and subject to this article. A copy of the written contract shall be given to the customer at the time the customer signs the contract.

B. A contract for health spa services shall specifically set forth in a conspicuous manner on the top of the first page of the contract the customer's total payment obligation for health spa services to be received pursuant to the contract.

C. Services to be rendered to the customer under the contract shall not extend for more than three years from the date the contract is signed by the customer.

D. A contract for new or increased health spa services may be canceled by the customer for any reason at any time before midnight of the third operating day after the customer received a copy of the contract. In order to cancel a contract the customer shall notify the health spa of cancellation in writing pursuant to subsection I of this section. All monies paid pursuant to the canceled contract shall be fully refunded within thirty days after receipt of the notice of cancellation. If the customer has executed any credit or loan agreement through the health spa to pay for all or part of health spa services, any such negotiable instrument executed by the customer shall also be returned within thirty days. The contract shall contain a conspicuous notice printed in at least ten-point bold-faced type as follows:

Notice to customer

You are entitled to a copy of this contract at the time you sign it.

You may cancel this contract at any time before midnight of the third operating day after receiving a copy of this contract. If you choose to cancel this contract, you must do one of the following:

1. Send a signed and dated written notice of cancellation by mail to the address listed below.

2. Personally deliver a signed and dated written notice of cancellation to the address listed below.

3. Send a notice of cancellation by email to the email address listed below.

Notice of cancellation should be sent to:

(name of health spa)

(address of health spa)

or sent to:

(email address of health spa.)

If you cancel this contract within the three-day period, you are entitled to a full refund of your money. If the third operating day falls on a Sunday or holiday, notice is timely given if it is mailed, delivered or emailed as specified in this notice on the next operating day. Refunds must be made within thirty operating days of receipt of the cancellation notice by the health spa.

"Operating day" means any calendar day on which patrons may inspect and use the facilities and services of the health spa during a period of at least eight hours.

E. A contract for health spa services shall provide that it is subject to cancellation by notice sent pursuant to subsection I of this section on the customer's death or permanent disability.

F. A contract for health spa services shall provide that it is subject to cancellation by notice sent pursuant to subsection I of this section on the customer's change of permanent residence to a location more than twenty-five miles from the health spa or an affiliated health spa offering the same or similar services and facilities at no additional expense to the customer.

G. A contract for health spa services shall provide that it is subject to cancellation or suspension by notice sent pursuant to subsection I of this section if the customer is a member of the United States military, including a member of the national guard or a reserve unit, and is serving on federal active duty and deployed outside this state. The request for cancellation or suspension must be made by the member or the member's legally designated representative, must include a copy of the member's official military orders or a written verification from the member's commanding officer and must be made within ninety days after the member receives notice of serving on federal active duty and deployment outside this state. If the contract is suspended under this subsection, the health spa shall not charge any fees to reinstate the contract and shall maintain the original payment obligations set forth in the original contract. A contract that is suspended under this subsection is subject to cancellation two years after the date of suspension if the customer fails to reinstate the contract.

H. In a cancellation under subsection E, F or G of this section, the health spa may retain the portion of the total contract price representing the services used plus reimbursement for the expenses incurred in an amount not to exceed twenty-five percent of the total contract price.

I. A health spa must notify a customer of the methods to cancel or suspend the customer's contract that are described in paragraphs 1, 2 and 3 of this subsection. A customer may cancel or suspend the customer's contract by notifying the health spa of the cancellation or suspension by any of the following methods:

1. Mailing a notice to the health spa's address that is specified in the contract.

2. Personally delivering a notice to the health spa's address that is specified in the contract.

3. Emailing a notice to the email address that is specified in the contract or, if there is not an email address specified, to any email address that is used by the health spa for customer service.

4. Using a cancellation option provided by the health spa's website.

5. Using any other manner specified by the contract.

§ 44-1794 Execution of notes; assignment; customer's defenses retained

A. A contract for health spa services shall not require the execution of any note or series of notes by the customer which, if separately negotiated, will cut off as to third parties any right of action or defense which the customer has against the health spa.

B. A right of action or defense arising out of a contract for health spa services which the customer has against the health spa shall not be cut off by assignment of the contract whether or not the assignee acquires the contract in good faith and for value.

§ 44-1795 Installment payments

A. A health spa may charge and accept a down payment not to exceed five per cent of the total contract price prior to opening of the health spa facility unless the seller maintains the same or similar facilities and services within ten miles of the customer's residence which the customer may use at no additional charge. A health spa shall not charge or accept a down payment which exceeds twenty per cent of the total contract price. However, if such health spa has been in operation in Arizona for a period of two years or more and if the customer makes a written request to the health spa, the customer may make a payment of up to one hundred per cent at the time of signing the contract. The customer shall receive a copy of the written request.

B. The balance of the total contract price shall be payable in equal periodic payments extending over the full term of the contract.

§ 44-1796 Voidable contracts; waiver voidable; damages

A. Any contract for health spa services entered into in reliance upon any false, fraudulent or misleading information, representation, notice or advertisement of the health spa is voidable at the option of the customer. Any contract for health spa services which does not comply with the applicable provisions of this article is voidable at the option of the customer.

B. Any waiver by the customer of the provisions of this article is void.

C. Any customer injured by a violation of this article may bring an action for the recovery of damages, reasonable attorney fees, and, if the violation is wilful, punitive damages in the amount of two thousand five hundred dollars per violation.

D. The attorney general, county attorneys, city attorneys, or any aggrieved customer may institute proceedings to restrain and enjoin violations of this article.

E. The provisions of this article are in addition to all other causes of action, remedies and penalties available to this state or to the customer.

Article 14 Discount Buying Services

§ 44-1797 Definitions

A. In this article, unless the context otherwise requires:

1. "Contract for discount buying services" means a written contract between one party who is purchasing the service for personal or family use and a discount buying organization by which the buyer for a consideration receives the right to obtain goods or services from the discount buying organization or to utilize the discount buying organization services in obtaining goods and services at discount prices.

2. "Control or any beneficial interest" means possession of a financial interest in a discount buying organization sufficient to permit direct influence over the business affairs of the organization or possession of a financial interest in the discount buying organization's equity or debt liability.

3. "Discount buying organization" or "organization" means a person, corporation, unincorporated association or other organization that, for a consideration, provides or purports to provide its clients or the clients or members of any other discount buying organization with the ability to purchase goods or services at discount prices, except that such organization does not include:

(a) A discount buying organization in which the total consideration paid by each client or member in any manner whatsoever for the purchase of discount buying services from such organization does not exceed a one-time fee of fifty dollars or an annual fee of fifty dollars to be paid on a yearly basis.

(b) A discount buying organization in which a person receives incidental discount buying services as part of a package of services provided to or available to such person on account of his membership in such organization, which is not organized for the profit of any person or corporation and which does not have as one of its primary purposes or businesses the provision of discount buying services.

4. "Discount prices" means prices which are represented to be lower on most or all offered goods or services than those generally charged for such items in the locality in which the representation is made.

5. "Pro rata refund" means the actual amount paid for the discount buying services excluding interest, less the product of the actual amount paid for the discount buying services excluding interest multiplied by a fraction, the numerator of which is the number of months the person was a member of the discount buying organization and the denominator of which is thirty.

B. This section does not attempt to define the degree of savings which must be offered on an item or selection of items in order to truthfully and without misleading consumers represent an item, selection of items or entire store as being "discount" or "discounted".

§ 44-1797.01 Bond; amount; copy; conflict of interest

Each discount buying organization shall maintain a bond in the principal sum of thirty thousand dollars for each outlet of such discount buying organization where contracts for discount buying services are sold or orders for goods are taken. The bond shall be executed by the discount buying organization as principal and issued by a surety company admitted to do business in this state according to the provisions of title 20, chapter 6, article 8. The organization shall file the bond with the state treasurer. No control or beneficial interest may be held by the discount buying organization in the surety company and vice versa.

§ 44-1797.02 Bond; beneficiaries; actions; liability; cancellation

A. The bond required by section 44-1797.01 shall be in favor of this state to be held in trust by the state treasurer for the benefit of any person who suffers financial damage as a result of any violation of this article or by fraud or dishonesty or failure to provide the services of the discount buying organization in the performance of the contract. Any person making a claim against the bond may maintain an action against the discount buying organization and the surety, except that the surety is liable only for the actual damages plus restitution and not the treble damages permitted under section 44-1797.16. The surety bond may be sued upon successive actions until the full amount is exhausted. A person may not commence suit on the bond after the expiration of four years following the act or omission on which the suit is based. Subject to the limitations in this article, a surety shall be liable for damages for any act or omission occurring during the time its bond is in effect.

B. The aggregate liability of the surety to all persons for all breaches of the conditions of the bond provided in this section may not exceed the amount of the bond.

C. A surety for any cause may cancel the bond by giving sixty days' written notice of the cancellation to the state treasurer, attorney general and the discount buying organization. The surety shall give the notice by certified mail. On or before the effective date of the cancellation of the bond, the discount buying organization shall either obtain a new bond which meets the requirements of this section and section 44-1797.01 and file a copy of the new bond with the state treasurer or make a cash deposit in lieu of a bond as provided in section 44-1797.03.

§ 44-1797.03 Cash deposit in lieu of bond

A. In lieu of furnishing the bond as required by section 44-1797.01, the seller may deposit with the state treasurer a cash deposit in a like amount or by any of the following:

1. Certificates of deposit issued by banks doing business in this state and insured by the federal deposit insurance corporation.

2. Investment certificates for share accounts issued by a savings and loan association or credit union doing business in this state and insured by the federal savings and loan insurance corporation or the national credit union administration, whichever appropriate.

3. Bearer bonds issued by the United States government or by this state.

B. The financial instruments cited in the foregoing paragraphs shall be assigned to the state treasurer for the principal amount with any interest earned assigned to the depositor.

C. The state treasurer shall maintain cash deposited pursuant to this section in an interest bearing trust account on behalf of the depositor. Deposits plus accrued interest may be withdrawn, if there are no outstanding claims against them, two years after the discount buying organization ceases to do business as such in this state. Deposits may be withdrawn sixty days after the filing of a surety bond as a replacement to the cash deposit.

§ 44-1797.04 Disclosures by buying organization; nature of services; listing of items; warranties or guarantees; charges; criminal or civil actions

A. Each discount buying organization, immediately upon obtaining the signature of a buyer on any application or contract for discount buying services, shall provide to the buyer and shall allow the buyer to retain a copy of the following written disclosures:

1. An itemization of the services it provides, specifying:

(a) The general categories of goods which are available at the discount buying organization's place of business or warehouse.

(b) Those categories of goods which must be ordered or obtained through stores to which the discount buying organization will refer the customer.

(c) Those categories of goods which must be ordered or obtained through the mail.

2. A list of at least one hundred items sold by or through the organization or available to those who contract with the organization during the preceding one hundred twenty days. The items must be representative as to the type of items sold and the prices charged for the listed items sold during that period. If the maximum number of items available through a discount buying organization is less than one hundred, it may comply with this paragraph by furnishing a list of the total items available with a statement that those are the only items presently available. This list shall state the date on which it was prepared and identify the items by brand name, model, and total price, including the following charges, if the total price for the item or items purchased is not quoted at the time the purchase order is made:

(a) A reasonable estimate of the freight charges.

(b) A reasonable estimate of the delivery charges.

(c) A reasonable estimate of the setup charges.

(d) The organization's price markup.

(e) A reasonable estimate of any other charges.

3. In lieu of providing a buyer the list required by paragraph 2, the discount buying organization shall provide a list of at least one hundred items purchased by those who have contracted for services with the organization during the preceding one hundred twenty days. This list shall state the date on which it was prepared, identify the items by brand name, model and total price, and include the charges required by subdivisions (a) through (e) in paragraph 2, if imposed.

4. A statement of the discount buying organization's policy with respect to warranties or guarantees on goods ordered and the organization's policy with respect to the return of ordered goods, cancellation of orders by the buyer and refunds for cancellation or return of the goods purchased by the buyer.

5. With respect to any order for goods, a description of any charges, such as estimated freight charges, estimated delivery charges, estimated setup charges, seller's markup and any other charges which are incidental to the purchase of goods through the discount buying organization and which are to be paid by the buyer.

6. If any stockholder, director, officer or general or limited partner or any person or business entities exercising control or any beneficial interest in the discount buying organization:

(a) Has been convicted or pleaded nolo contendere to a felony or misdemeanor involving moral turpitude, or a violation of this article.

(b) Has been held liable in a civil action, either by final judgment or by entry of a stipulated judgment, if the civil action alleged fraud, embezzlement, racketeering, fraudulent conversion or misappropriation of property or a violation of this article or the use of untrue or misleading representations in an attempt to sell or dispose of real or personal property or the use of unfair, unlawful or deceptive business practices.

(c) Is subject to any currently effective injunction or restrictive order relating to business activity as the result of an action brought by a public agency or department, including an action affecting any vocational license, a statement so stating and including the name of the court, the date of the conviction, judgment, order or injunction and, if applicable, the name of the governmental agency that filed the action resulting in the conviction, judgment, order or injunction.

B. The discount buying organization shall disclose to the attorney general whether any employee, stockholder, director, officer, general or limited partner, or any persons or business entities exercising control or any beneficial interest in such organization:

1. Has been convicted or pleaded nolo contendere to a felony or misdemeanor involving moral turpitude, or a violation of this article.

2. Has been held liable in a civil action, either by final judgment or by entry of a stipulated judgment, if the civil action alleged fraud, embezzlement, racketeering, fraudulent conversion or misappropriation of property or a violation of this article or the use of untrue or misleading representations in an attempt to sell or dispose of real or personal property or the use of unfair, unlawful or deceptive business practices.

3. Is subject to any currently effective injunction or restrictive order relating to business activity as a result of an action brought by a public agency or department, including an action affecting any vocational license, a statement so stating and including the name of the court, the date of the conviction, judgment, order or injunction and, if applicable, the name of the governmental agency that filed the action resulting in the conviction, judgment, order or injunction.

C. The attorney general may disclose to the public information disclosed to him under subsection B.

§ 44-1797.05 Written contract; contents

A. Each contract for discount buying services shall be in writing and is subject to the provisions of this article. The address of the seller's discount buying facility and the residence address of the buyer shall be clearly indicated on the face of the contract. A copy of the written contract shall be given to the buyer at the time he signs the contract. All blank spaces in the contract shall be filled in before the contract is signed by the buyer. Provisions or terms written by hand on the buyer's copy shall be legible. The contract shall be specific as to the period of time for which the discount buying services will be available to the buyer. This time period shall not be measured by the life of the buyer.

B. No agreement of the buyer of a contract for discount buying services shall be effective unless the contract, receipt and all other documents pertaining to the contract are written in the same language used in the oral sales presentation. If a language which cannot be written is used in the oral sales presentation, such documents may be in English.

C. No contract for discount buying services shall be effective unless it is dated, signed by the buyer and contains a conspicuous notice in the language used in the oral sales presentation which, if in English, would read as follows:

Notice to buyer

1. Do not sign this agreement if any of the spaces intended for the agreed terms to the extent of then available information are left blank.

2. You are entitled to a copy of this agreement at the time you sign it.

3. You may pay off the full unpaid balance due under this agreement at any time, and in so doing you shall be entitled to a full rebate of the unearned finance and insurance charges.

4. You may cancel this agreement any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.

D. No contract for discount buying services shall be effective unless the following completed form, in duplicate and in the language used in the oral sales presentation which, if in English, would read in the form set forth in this subsection, is attached to the contract of receipt:

Notice of cancellation

Enter date of transaction

(Date)

You may cancel this transaction within three business days from the above date.

If you cancel, any property traded in, any payments made by you under the contract of sale in excess of twenty-five dollars shall be refunded within fifteen business days following receipt by the seller of your cancellation notice. Any negotiable instrument executed by you will be returned within fifteen business days following receipt by the seller of your cancellation notice and any security interest arising out of the transaction will be cancelled.

To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice or any other written notice, or send a telegram, to (name of seller), at (address of seller's place of business) not later than midnight of _________________ (date). I hereby cancel this transaction.

---

(Date) (Buyer's signature)

§ 44-1797.06 Payment or financing period; limitation

No contract for discount buying services may require payments or financing by the buyer over a period in excess of thirty months from the date the contract was entered into.

§ 44-1797.07 Availability of services; time

Each contract for discount buying services shall provide that the buying services become available to the buyer within three days from the date the contract was entered into.

§ 44-1797.08 Prohibition of notes cutting off, as to third parties, buyer's right of action or defense against seller

No contract for discount buying services may require or entail the execution of any note or series of notes by the buyer which, if separately negotiated, will cut off as to any third party any right of action or defense which the buyer may have against the seller.

§ 44-1797.09 Prohibition against assignment or transfer of contract cutting off buyer's right of action or defense against organization

No right of action or defense arising out of a contract for discount buying services which the buyer has against the discount buying organization may be cut off by assignment or transfer of the contract to any third party.

§ 44-1797.10 Receipt of payment or monies; delivery or availability of goods; time; refund; trust account; deposits and withdrawals

A. Each contract for discount buying services shall provide that if any goods ordered by the buyer from the seller are not delivered to the buyer or available for pickup by the buyer at a location within his county of residence within one hundred twenty days from the date the buyer placed an order for such goods, any monies paid by the buyer for such goods in advance of delivery shall, on the buyer's request, be fully refunded unless a predetermined delivery date has been furnished to the buyer in writing at the time he ordered such goods and the goods are delivered to the buyer or are available for pickup by that date or if the buyer has waived his right to a refund in writing.

B. Before receiving monies for an order of goods or services from any buyer, the discount buying organization shall establish a trust account at a federally insured bank, savings and loan association or credit union for the deposit of the monies. The discount buying organization shall deposit into the account all monies received from buyers for orders of goods or services regardless of how the monies are styled, including down payment, partial payment, payment in full, freight charge or any other terms. If the total cost of goods or services ordered by a buyer on any one day does not exceed fifty dollars, including taxes, freight charges, delivery charges, markup and all other charges collected by the discount buying organization, the monies received from the buyer need not be deposited in the trust account.

C. The trust account required by this section shall be created and maintained for the benefit of buyers who order goods or services from or through the discount buying organization. The discount buying organization shall not in any manner encumber the corpus of the account and shall not withdraw monies deposited in the account on behalf of a buyer except:

1. In partial or full payment to the discount buying organization's source for the goods or services ordered by the buyer.

2. To make a refund to the buyer. After the withdrawal of monies from a buyer's deposit pursuant to this subsection, only that portion of the remainder of the deposit which represents compensation to the discount buying organization may be withdrawn.

§ 44-1797.11 Cancellation of contract; time; definition

A. Each contract for discount buying services shall further provide that such contract may be canceled at any time within three business days after the date of receipt by the buyer of a copy of the contract, such time to be computed exclusive of the date of receipt of the contract.

B. Cancellation occurs when the buyer gives written notice of cancellation in person or by telegram to the seller at the address specified for notice of cancellation provided by the seller or when such written notice bearing such address is deposited in the United States mail by either ordinary mail or registered mail. Notice of cancellation is effective as of the date of the postmark affixed by the United States postal service.

C. Notice of cancellation given by the buyer is effective if it indicates the intention on the part of the buyer not to be bound by the contract for discount buying services. Monies paid pursuant to the contract in excess of twenty-five dollars shall be refunded within fifteen business days of the date notice of cancellation is given.

D. Every contract for discount buying services shall be subject to the cancellation privileges provided by this article.

E. For the purposes of this section, "business days" does not include Sundays or the federal holidays of New Year's Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day, Christmas Day, or Washington's Birthday.

§ 44-1797.12 Voidable contracts; reference to compliance with article

A. A contract for discount buying services which does not comply with the applicable provisions of this article is voidable by the buyer.

B. No discount buying organization may make or authorize the making of any reference to its compliance with this article.

§ 44-1797.13 Misrepresentation; contract void and unenforceable

Any untrue or misleading information, representation, notice, material omission or advertisement of the seller which has been received by or made to the buyer before he signs a contract for discount buying services renders the contract for discount buying services void and unenforceable by the seller. No seller may make or disseminate such information, representations, notices, material omissions or advertisements.

§ 44-1797.14 Rescission and pro rata refund; removal of place of business

If a discount buying organization removes its place of business, or if it conducts business at more than one location, that place of business which is geographically closest to the buyer's residence indicated on the face of the contract, more than twenty miles farther from the buyer's residence than it was at the time the contract for discount buying services was entered into, the organization shall offer rescission and a pro rata refund to each buyer affected, based on the amount of time for which the buyer has been a member of the organization.

§ 44-1797.15 Transfer to another entity of duty or obligation to provide services; defense in action for enforcement or collection on contract; definition

A. Any transfer by a discount buying organization of its duty or obligation to provide services to buyers under its contracts for discount buying services to another individual, corporation or other business entity as a result of which a buyer has available substantially fewer goods and services constitutes a complete defense to an action for further enforcement of or collection on such a contract for discount buying services which may be asserted by any buyer who did not consent in writing, after a full and fair disclosure of the categories of goods and services to be provided by the new discount buying organization, to such transfer of the duty or obligation of performance and entitles such a nonconsenting individual to rescind the contract and obtain a pro rata refund from the transferor.

B. For the purposes of this section, "substantially fewer goods and services" is defined to be less than seventy-five per cent of the lines of merchandise, catalogs or types of services available than at the time the buyer entered into the contract with the discount buying organization.

§ 44-1797.16 Action for damages and restitution of monies paid; treble damages and attorney fees and costs

A buyer suffering financial damages as a result of a violation of this article may bring an action for the recovery of damages and return of all monies paid by the buyer to the seller. Judgment shall be entered for three times the amount at which the actual damages, plus such restitution, are assessed plus reasonable attorney fees and costs. If a court finds a violation of section 44-1797.13, judgment shall be entered for seven hundred fifty dollars plus reasonable attorney fees or three times the amount of actual damages plus restitution plus reasonable attorney fees, whichever is greater.

§ 44-1797.17 Violation; classification

A person who violates any provision of this article is guilty of a class 6 felony.

§ 44-1797.18 Provisions not exclusive

The provisions of this article are not exclusive and do not relieve the parties or the contracts subject to this article from compliance with any other applicable provision of law.

§ 44-1797.19 Waiver

A waiver by the buyer of the provisions of this article is deemed contrary to public policy and is void and unenforceable.

§ 44-1797.20 Enforcement

A. The attorney general or county attorney shall have the power to enforce the criminal provisions of this article.

B. An act or practice in violation of this article constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

Article 15 Sales Representative Contracts

§ 44-1798 Definitions

In this article, unless the context otherwise requires:

1. "Commission" means:

(a) Compensation accruing to a sales representative for payment by a principal the rate of which is expressed as a percentage of the dollar amount of orders or sales.

(b) Any other method of compensation agreed to between a sales representative and a principal, including fees for services and retainers.

2. "Principal" means a person who does all of the following:

(a) Engages in the business of manufacturing, producing, importing, selling or distributing a product or service.

(b) Uses sales representatives to solicit orders for the product or service.

(c) Compensates the sales representative in whole or part by commission.

3. "Sales representative":

(a) Means a person who does both of the following:

(i) Establishes a business relationship with a principal to solicit orders for products or services.

(ii) Is compensated, in whole or in part, by commission.

(b) Is not an employee or a person who places orders or purchases on the person's own account or for resale.

4. "Termination" means the end of the business relationship between the sales representative and the principal, whether by agreement, by expiration of time or by exercise of a right of termination by either party.

§ 44-1798.01 Sales representative contract

A. The sales representative and the principal shall enter into a written contract. The contract shall set forth the method by which the sales representative's commission is to be computed and paid.

B. The principal shall provide each sales representative with a signed copy of the contract. The principal shall obtain a signed receipt for the contract from each sales representative.

§ 44-1798.02 Termination of sales representative contract; payment of earned commissions

A. If an agreement of services is terminated for any reason both of the following apply:

1. All the commissions due through the time of termination shall be paid to the sales representative within a period of not to exceed thirty days after termination.

2. All the commissions that become due after the effective date of termination shall be paid to the sales representative within fourteen days after they become due.

B. The principal shall pay the sales representative all commissions due while the business relationship is in effect in accordance with the agreement between the parties.

C. A principal who fails to comply with subsections A and B of this section is liable to the sales representative for damages in the amount of three times the sum of the unpaid commissions owed to the sales representative.

D. The prevailing party in an action brought under this section is entitled to the cost of the suit, including reasonable attorney fees.

E. Commissions shall be paid at the usual place of payment unless the sales representative requests that the commissions be sent by registered mail. If, in accordance with a request by the sales representative, the sales representative's commissions are sent by mail, the commissions are deemed to have been paid as of the date of the registered postmark on the envelope.

F. Unless payment is made pursuant to a binding and final written settlement agreement and release, the acceptance by a sales representative of a commission payment from the principal does not constitute a release as to the balance of any commissions claimed due. A full release of all commission claims that is required by a principal as a condition to a partial commission payment is null and void.

§ 44-1798.03 Revocable offers of commission

If a principal makes a revocable offer of a commission to a sales representative, the sales representative is entitled to the commission agreed on if all of the following apply:

1. The principal revokes the offer of commission and the sales representative establishes that the revocation was for a purpose of avoiding payment of the commission.

2. The revocation occurs after the principal has obtained an order for the principal's product or service through the efforts of the sales representative.

3. The principal's product or service that is the subject of the order is provided to and paid for by a customer.

§ 44-1798.04 Jurisdiction; no waiver; election of remedies

A principal who establishes a business relationship with a sales representative to solicit orders for products or services in this state is doing business in this state for purposes of jurisdiction. A provision in a contract between a sales representative and a principal that purports to waive a provision of this article by an express waiver or a contract subject to the laws of another state is void. This section does not invalidate or restrict any other right or remedy available to a sales representative or preclude a sales representative from seeking to recover in one action on all claims against a principal.

§ 44-1798.05 Applicability

This article does not apply to any of the following:

1. An individual or business entity engaged in providing insurance pursuant to title 20.

2. A bank, trust company, savings and loan association, credit union, consumer lender or financial institution organized, chartered or holding a license or authorization certificate under the law of this state, any other state, the United States or the parent, subsidiary or affiliate of such entity.

3. A person who holds a real estate salesperson’s license pursuant to title 32, chapter 20 and who has a claim for payment of a real estate commission or compensation against the real estate broker with whom such real estate salesperson is affiliated.

Article 16 Loan Servicing

§ 44-1798.21 Loan servicing; service of process; definitions

A. If a person, whose principal place of business is located in a state other than this state and who has not appointed a statutory agent or maintained an office in this state for service of process, engages in servicing a residential loan, the person is deemed to have consented to the jurisdiction of the courts of this state and appointed the secretary of state as the agent of the person on whom any process, notice or demand may be served with respect to causes of action arising out of the servicing of the residential loan. When service is made on the secretary of state under this section, the person shall have thirty days to respond in addition to the time otherwise provided by law.

B. Upon receipt of any process, notice or demand under this section, the secretary of state shall immediately forward, by certified mail, one copy of the process, notice or demand to the person to whom the process, notice or demand is directed or addressed to the address where periodic payments are mailed. The person initiating the process, notice or demand shall be responsible at the time of service upon the secretary of state to provide to the secretary of state the address where periodic payments are mailed.

C. Service of process, notice or demand shall be deemed complete with service upon the secretary of state.

D. The secretary of state shall keep a permanent record of all processes, notices and demands served on the secretary of state under this section which includes the time of each service and the secretary of state's action with relation to each service.

E. For the purposes of this section:

1. "Residential loan" means any loan that is secured by a lien on residential property in this state except temporary financing such as a construction loan.

2. "Residential property" means real property consisting of two and one-half acres or less or a mobile home as defined in section 28-2001, either of which is limited to and utilized for either a single one-family or a single two-family dwelling.

3. "Servicing" means receiving any scheduled periodic payments from a borrower pursuant to the terms of any residential loan.

Article 17 Pet Dealers

§ 44-1799 Definitions

In this chapter, unless the context otherwise requires:

1. "Clinically ill" means an illness that is apparent to a veterinarian based on the veterinarian's observation, examination or testing of an animal or on a review of the animal's medical records.

2. "Nonelective surgical procedure" means a surgical procedure that is necessary according to commonly accepted standards of veterinary medicine to preserve or restore the health of the cat or dog, to prevent the animal from experiencing pain or discomfort or to correct a condition that would interfere with the cat's or dog's ability to walk, run or jump or to otherwise function in a normal manner.

3. "Pet dealer" means a person who owns a pet store.

4. "Pet store" means a commercial establishment that engages in a for-profit business of selling at retail cats, dogs or other animals, but does not include commercial livestock operations and commercial livestock auction markets. Pet store does not mean a publicly operated pound or a private, charitable not-for-profit humane society or any animal adoption activity that a pound or humane society conducts off site at any pet store or other commercial enterprise.

5. "Purchaser" means a person who purchases any cat or dog without intent to resell.

§ 44-1799.01 Initial veterinary examination

A. A veterinarian who is licensed pursuant to title 32, chapter 21 shall examine all cats and dogs that are received by a pet dealer before the cat or dog is placed for sale.

B. If the veterinarian determines that a cat or dog is afflicted with a contagious disease, the cat or dog may be returned to the source or kept by the pet dealer. If the pet dealer keeps the cat or dog, the pet dealer shall cage the cat or dog separately from healthy animals and shall house and handle the cat or dog in a manner that will minimize the likelihood of contagion.

§ 44-1799.02 Information statement; purchaser rights; notice

A. At the time of sale, each pet dealer shall give the purchaser of a cat or dog a written statement that contains the following information:

1. The date of the animal's birth, if known, the state in which the animal was born, if known, and the date the pet dealer received the animal.

2. The immunizations and deworming treatments that have been administered to the animal as of the time of sale, if known, including the dates of administration and the type and brand of vaccine or deworming treatment.

3. The breed, sex, color and other identifying marks apparent at the time of sale. If the animal is from a source that is licensed by the United States department of agriculture, the individual identifying tag, tattoo or color number for the animal shall be included. If the breed is unknown or mixed, this fact shall be stated.

4. Any veterinary treatment or medication that the animal received while in the possession of the pet dealer and either of the following:

(a) A statement signed by the pet dealer and the purchaser at the time of sale that contains all of the following:

(i) A statement that a veterinarian examined the animal and the animal has no apparent disease or illness.

(ii) A statement that a veterinarian examined the animal and at the time of the examination the animal had no apparent congenital or hereditary condition that would adversely affect the health of the animal at the time of sale or that is likely to adversely affect the health of the animal in the future.

(b) A record of any known disease or illness or any hereditary or congenital condition that adversely affects the health of the animal at the time of sale or that is likely to adversely affect the health of the animal in the future. The record shall include a statement that is signed by a veterinarian who is licensed pursuant to title 32, chapter 21, that recommends necessary treatment, if any, and that verifies that the disease, illness or condition does not require hospitalization or nonelective surgical procedures and is not likely to require hospitalization or nonelective surgical procedures in the future. A veterinarian's statement is not required for intestinal or external parasites. The pet dealer and the purchaser shall sign the statement required by this subdivision.

B. The purchaser shall acknowledge in writing that the purchaser has received the information required by subsection A.

C. In addition to information required to be given to a purchaser pursuant to subsection A, at the time of sale and on request of the purchaser, a pet dealer that sells a cat or dog shall provide the prospective purchaser with written notice of the purchaser's rights. The notice shall be a legible copy of this article.

D. A pet dealer shall post the following notice within close proximity of the cages or enclosures in which cats or dogs are offered for sale:

Pursuant to title 44, chapter 11, article 17, Arizona Revised Statutes, information on the source of the cat or dog and any veterinary treatment received by the cat or dog is available for review. You are entitled to a copy of the law describing your rights as a consumer.

§ 44-1799.03 Record keeping

A. A pet dealer shall maintain a written record on the health, status and disposition of each cat and dog at the time of sale for at least one year after the cat or dog is sold or as otherwise provided by law.

B. The records shall contain all of the information that is required by section 44-1799.02 and shall be made available to animal control officers, law enforcement officers and representatives of the county health or environmental services department for inspection during normal business hours.

§ 44-1799.04 Animal care requirements; violation; classification

A. A pet dealer shall do the following:

1. Maintain facilities in which cats or dogs are housed in a sanitary condition.

2. Provide cats or dogs with potable water and adequate nutrition.

3. Provide adequate space that is appropriate to the age, size, weight, species and breed of cat or dog. For the purposes of this paragraph, "adequate space" means sufficient space for the cat or dog to experience normal body movements without having to make contact with the sides or top of the enclosure, including the ability to stand up, sit down, turn about freely and relax in a natural position.

4. If cats or dogs are housed on wire flooring, provide a resting board, a floormat or another similar device that is maintained in a sanitary condition and that allows the cat or dog to rest off of the wire flooring.

5. If a cat or dog is afflicted with a contagious disease, handle the cat or dog in a manner that is required by section 44-1799.01, subsection B.

6. Promptly provide appropriate veterinary care when it is necessary.

B. A pet dealer shall not offer for sale a cat or dog that is less than eight weeks old.

C. A pet dealer who violates subsection A of this section is guilty of a class 1 misdemeanor.

§ 44-1799.05 Purchaser remedies for sale of unfit cats or dogs; requirements; exceptions

A. A cat or dog that is purchased from a pet dealer is considered to be unfit for sale if either of the following applies:

1. Within fifteen days after the purchaser takes possession of the animal, a veterinarian who is licensed pursuant to title 32, chapter 21, states in writing that in the veterinarian's opinion the cat or dog has become ill or otherwise symptomatic due to any illness, injury or other defect that existed in the animal before the purchaser took possession of the animal.

2. Within sixty days after the purchaser takes possession of the animal, a veterinarian who is licensed pursuant to title 32, chapter 21 states in writing that the animal has a congenital or hereditary condition that adversely affects the health of the animal or that requires or is likely to require hospitalization or nonelective surgical procedures.

B. The veterinary statement that is required pursuant to subsection A shall contain the following information:

1. The purchaser's name and address.

2. The date or dates on which the cat or dog was examined.

3. The type, breed and age of the cat or dog, if known.

4. A verification that the veterinarian examined the cat or dog.

5. A statement that the cat or dog had an illness or congenital or hereditary problem that rendered the cat or dog unfit for sale or that resulted in the cat's or dog's death.

6. The findings of the examination or necropsy, including laboratory results or copies of laboratory reports.

C. If a cat or dog is unfit for sale pursuant to subsection A, the purchaser may elect one of the following remedies:

1. Return the animal to the pet dealer for a refund of the purchase price, including transaction privilege, sales or similar excise tax.

2. If a replacement animal is available, exchange the animal for an animal of the same species and of equivalent value and receive reimbursement for reasonable veterinary fees for diagnosis and treatment in an amount of not more than the original purchase price of the animal, including transaction privilege, sales or similar excise tax.

3. Retain the animal and receive reimbursement from the pet dealer for reasonable veterinary fees for diagnosis and treatment in an amount of not more than the original purchase price of the animal, including transaction privilege, sales or similar excise tax.

D. The purchaser shall comply with all of the following requirements to obtain the remedies available under this section:

1. Notify the pet dealer in writing that the cat or dog has a medical or health problem, including a congenital or hereditary condition, within five days after a veterinarian who is licensed pursuant to title 32, chapter 21 diagnoses the problem. The purchaser shall provide the pet dealer with the veterinarian's name and telephone number.

2. If the cat or dog is ill or injured or has a congenital or hereditary condition, offer to present the cat or dog to the pet dealer, together with copies of all records that are available to the purchaser regarding the cat's or dog's diagnosis and condition.

3. If the cat or dog dies within fifteen days of the purchase, give the pet dealer the veterinarian's written statement that the cat or dog died from an illness that existed on or before the purchaser took possession of the cat or dog. The presentation of the written statement is sufficient proof to claim reimbursement or replacement pursuant to this section. The purchaser is not required to return the dead cat or dog to the pet dealer.

E. If a cat or dog was unfit for sale and has died or was euthanized by a veterinarian who is licensed pursuant to title 32, chapter 21, the pet dealer shall refund to the purchaser the purchase price, including transaction privilege, sales or similar excise tax.

F. If the purchaser is requesting a refund for reasonable veterinary expenses, an itemized bill of fees shall accompany the veterinarian statement required pursuant to subsection A. The itemized bill shall include fees for examination, diagnosis and treatment.

G. Unless the pet dealer contests the demand for remedies, the pet dealer shall pay refunds and shall reimburse veterinary expenses within thirty days after receiving the veterinarian's statement or, if applicable, within thirty days after the date on which the cat or dog is returned to the pet dealer.

H. The purchaser shall not be reimbursed for the purchase price or veterinary fees if any of the following applies:

1. The cat's or dog's illness or death resulted from maltreatment or neglect or from an injury that the cat or dog sustained after the purchaser took possession of the cat or dog.

2. The purchaser failed to carry out the recommended treatment prescribed by the veterinarian who made the initial diagnosis. This paragraph does not apply if the cost of the treatment together with the veterinarian's fees would exceed the purchase price of the cat or dog, including transaction privilege, sales or similar excise tax.

3. At the time of sale, the purchaser received the veterinary statement pursuant to subsection A and the statement disclosed the disease, illness or condition for which the purchaser seeks to return the cat or dog.

4. The purchaser refuses to return to the pet dealer all of the documents that were provided to the purchaser for the purpose of registering the cat or dog.

I. The value of veterinary medical services is deemed to be reasonable if the services rendered are appropriate for the diagnosis and treatment of an illness or congenital or hereditary condition and are comparable to the value of similar services rendered by other licensed veterinarians.

§ 44-1799.06 Contested actions; procedures

A. If a pet dealer contests a demand for remedies, the pet dealer may require the purchaser to produce the cat or dog for examination by a veterinarian who is licensed pursuant to title 32, chapter 21 unless the cat or dog has died. The pet dealer shall pay the costs of examination.

B. If the purchaser and the pet dealer are unable to reach an agreement within thirty days after the pet dealer receives the veterinarian statement or the veterinarian receives the cat or dog for examination, whichever is later, the purchaser may file an action in a court of competent jurisdiction or the parties may agree in writing to submit to binding arbitration.

C. The prevailing party in the action shall be awarded reasonable attorney fees if the other party acted in bad faith in seeking or denying the requested remedy.

§ 44-1799.07 Presumption of illness

A. It is a rebuttable presumption that an illness or a congenital or hereditary defect existed at the time of sale if the cat or dog dies within fifteen days after the purchaser takes possession of the cat or dog.

B. A finding by a veterinarian who is licensed pursuant to title 32, chapter 21 that the cat or dog had intestinal or external parasites is not grounds for declaring a cat or dog unfit for sale.

§ 44-1799.08 Civil penalties; enforcement actions

A. Except as provided in subsection B or C of this section, a pet dealer who violates this article is subject to a civil penalty of not more than one thousand dollars per violation.

B. In an action brought by a city, town or county to enforce an ordinance against a pet store or pet dealer who knowingly obtains a dog or cat for sale or resale in violation of section 44-1799.10, subsection A or B or who should have known the dog or cat was obtained for sale or resale in violation of section 44-1799.10, subsection A or B, the pet store or pet dealer is subject to the following penalties:

1. For a first violation, a civil penalty of not more than one thousand dollars per violation.

2. For a second violation within a five-year period, a civil penalty of not more than two thousand five hundred dollars per violation.

3. For a third or subsequent violation within a five-year period:

(a) A civil penalty of not more than five thousand dollars per violation.

(b) An order entered by the court enjoining the pet store or pet dealer from selling or offering for sale, for up to three years, a dog or cat obtained from any person other than a publicly operated pound or a private, charitable nonprofit humane society or from any animal adoption activity conducted by a pound or humane society.

C. In an action brought to enforce section 44-1799.10, subsection A or B:

1. A violation is a subsequent violation if it occurs within a five-year period after a final judgment or order that the pet store or pet dealer knowingly violated section 44-1799.10, subsection A or B or should have known of the violation.

2. In addition to any other defense that may be raised, a pet store or pet dealer is presumed to have acted in good faith and to have satisfied its obligation to ascertain whether a person meets the criteria described in section 44-1799.10, subsection A if, when placing an order to obtain a dog or cat for sale or resale, the pet store or pet dealer conducts a search for inspection reports of the breeder on the animal care information system search tool maintained by the United States department of agriculture.

3. Each order placed by a pet store or pet dealer to obtain a dog or cat for sale or resale shall be considered a single act, regardless of the number of dogs or cats obtained in the order.

D. This section does not prohibit prosecution for criminal violations.

§ 44-1799.09 Applicability to other laws; waiver of rights

A. This article does not limit the rights or remedies that are otherwise available to consumers and does not prevent the purchaser and the pet dealer from agreeing on additional terms and conditions that are not inconsistent with this article.

B. A contract or agreement under which a purchaser agrees to waive any rights under this article is null and void and is unenforceable.

§ 44-1799.10 Pet stores; pet dealers; prohibitions on dog and cat purchases; recordkeeping

A. A pet store or pet dealer may not obtain a dog or cat for resale or sell or offer for sale any dog or cat obtained from a person who is required to be licensed by the pet dealer regulations of the United States department of agriculture under the animal welfare act (7 United States Code sections 2131 through 2159) if any of the following applies:

1. The person is not currently licensed by the United States department of agriculture under the animal welfare act (7 United States Code sections 2131 through 2159).

2. Within two years before obtaining the dog or cat the person commits a direct violation of any of the pet dealer regulations of the United States department of agriculture under the animal welfare act (7 United States Code sections 2131 through 2159).

3. The person receives an indirect no access violation on each of the two most recent inspection reports issued by the United States department of agriculture under the animal welfare act (7 United States Code sections 2131 through 2159).

4. The person commits three or more indirect violations of the pet dealer regulations of the United States department of agriculture during the two-year period before obtaining the dog or cat for violations relating to the health or welfare of the animal and the violations were not administrative in nature. The indirect violations described in this paragraph do not include a violation described in paragraph 3 of this subsection.

B. A pet store or pet dealer may not obtain a dog or cat for resale or sell or offer for sale any dog or cat obtained from a person who directly or indirectly obtained a dog or cat from a person described in subsection A of this section. A pet store or pet dealer is presumed to have acted in good faith and to have satisfied its obligation to ascertain whether a person meets the criteria described in subsection A of this section if, when placing an order to obtain a dog or cat for sale or resale, the pet store or pet dealer conducts a search for inspection reports of the breeder on the animal care information system search tool maintained by the United States department of agriculture.

C. Notwithstanding subsections A and B of this section, a pet store or pet dealer may obtain a dog or cat for resale or sell or offer for sale any dog or cat obtained from a publicly operated pound or a private, charitable nonprofit humane society or from any animal adoption activity conducted by a pound or humane society.

D. A pet dealer shall maintain records verifying its compliance with this section for at least two years after obtaining the dog or cat to be sold or offered for sale. Records maintained pursuant to this subsection shall be open to inspection on request by a municipal or county peace officer or enforcement official.

E. A pet dealer shall display the source of any dog or cat offered for sale by providing the name of the breeder of the animal, the United States department of agriculture license number of the breeder if the animal is from a breeder that is licensed by the United States department of agriculture and the United States department of agriculture website where information about the breeder may be obtained. The pet dealer shall display the information described in this subsection on both of the following:

1. The cage or enclosure for each animal.

2. All printed or electronic marketing materials about a specific dog or cat that has been obtained by the pet dealer and that is being offered for sale.

§ 44-1799.11 Pet dealer regulation; state preemption

The regulation of pet dealers is a matter of statewide concern. A city, town or county may enact or enforce an ordinance to enforce section 44-1799.10 against a pet store or pet dealer. Any local law, rule, regulation or ordinance that imposes requirements on pet dealers that exceed the requirements of section 44-1799.10 or penalties prescribed by section 44-1799.08 is preempted. Any local law, rule, regulation or ordinance may not directly or indirectly prohibit or be applied to prohibit the sale of dogs or cats by a pet store or pet dealer, expressly or in effect, based on the source from which the animal is obtained if obtained in compliance with section 44-1799.10.

Article 18 Casket Sales

§ 44-1799.21 Casket sales; price disclosure; definition

A. A person offering caskets for sale to the public shall provide accurate price information to potential purchasers of caskets as follows:

1. The person offering caskets for sale shall provide accurate casket retail price information to any person who telephones for casket price information. If a person requests a casket price list by telephone, the person offering caskets for sale shall mail a price list to the caller and may charge a reasonable postage and handling fee of not more than two dollars.

2. The person offering caskets for sale shall provide a written or printed casket price list for retention to each person who personally inquires about casket prices. The person offering caskets for sale shall offer the inquiring person the casket price list on beginning a discussion regarding the selection of a casket. The person offering caskets for sale shall not show any caskets to a potential purchaser before offering the written or printed price list. The price list shall state the effective date of the list.

B. The person who sells a casket shall deliver the casket to the purchaser or designee at the time of sale.

C. If a person offering caskets for sale to the public does not make the disclosures required by this section to a customer, any contract for the purchase of a casket executed by the person offering caskets for sale and the customer is not enforceable against that customer.

D. For the purposes of this section, "casket" means a rigid container that is designed for the permanent encasement of human remains and that is usually constructed of wood, metal or man-made substances and ornamented or lined with fabric.

Article 19 Shopping Carts

§ 44-1799.31 Definitions

In this article, unless the context otherwise requires:

1. "Business of shopping cart retrieval" means searching for, gathering and restoring possession to the owner or the owner's agent, for compensation or in expectation of compensation, of shopping carts located outside the premises or parking area of a retail establishment.

2. "Parking area" means a parking lot or other property provided by a retailer for use by a customer for parking any automobile or other vehicle.

3. "Shopping cart" means a basket that is mounted on wheels or a similar device that is generally used in a retail establishment by a customer for the purpose of transporting goods of any kind.

§ 44-1799.32 Prohibition of certain shopping cart activity; applicability; consent; presumption

A. A person shall not do any of the following with the intent to temporarily or permanently deprive the owner or retailer of possession of a shopping cart, if the shopping cart has a permanently affixed sign as provided in subsection B:

1. Remove a shopping cart from the premises or parking area of a retail establishment.

2. Be in possession of any shopping cart that has been removed from the premises or parking area of a retail establishment.

3. Be in possession of any shopping cart with the serial numbers removed, obliterated or altered.

4. Leave or abandon a shopping cart at a location other than the premises or parking area of the retail establishment.

5. Alter, convert or tamper with a shopping cart, remove any part or portion of a shopping cart or remove, obliterate or alter serial numbers on a shopping cart.

6. Be in possession of any shopping cart while that cart is not located on the premises or parking lot of a retail establishment.

B. Subsection A applies if a shopping cart has a sign permanently affixed to it that identifies the owner of the cart or retailer, or both, notifies the public of the procedure to be used for authorized removal of the cart from the premises, notifies the public that the unauthorized removal of the cart from the premises or parking area of the retail establishment or the unauthorized possession of the cart is a violation of law and lists a valid telephone number and address for returning the cart removed from the premises or parking area to the owner or retailer.

C. This section does not apply to the owner of a shopping cart or to a retailer or a retailer's agents or employees or to a customer of a retail establishment who has written consent from the owner of a shopping cart or a retailer to be in possession of the shopping cart or to remove the shopping cart from the premises or the parking area of the retail establishment or to do any of the acts specified in subsection A.

D. In any civil proceeding, any shopping cart that has a sign affixed to it pursuant to this section establishes a rebuttable presumption affecting the burden of producing evidence that the property is that of the person or business named in the sign and not abandoned by the person or business named in the sign. In any criminal proceeding, it may be inferred that any shopping cart that has a sign affixed to it pursuant to this section is the property of the person or business named on the sign and has not been abandoned by the person or business named on the sign.

§ 44-1799.33 Finding; impoundment of shopping carts by local agencies; conditions; emergencies; costs; fines; disposal of unclaimed carts; applicability

A. The legislature finds that the retrieval by local government agencies of shopping carts specified in this section is in need of uniform statewide regulation and constitutes a matter of statewide concern that shall be governed solely by this section.

B. A shopping cart that has a sign affixed to it in accordance with section 44-1799.32 may be impounded by a city, town or county if both of the following conditions have been satisfied:

1. The shopping cart is located outside the premises or parking area of a retail establishment. The parking area of a retail establishment located in a multistore complex or shopping center includes the parking area used by the complex or center.

2. The shopping cart is not retrieved within three business days after the date the owner of the shopping cart, or the owner's agent, receives actual notice from the city, town or county of the shopping cart's discovery and location.

C. If the location of the shopping cart will impede emergency services, obstruct vehicle traffic or create a safety hazard to the public on a public right-of-way, a city, town or county may immediately retrieve the shopping cart from public or private property.

D. A city, town or county that impounds a shopping cart may recover its actual costs for providing this service.

E. A shopping cart that is impounded by a city, town or county shall be held at a location that is within the city, town or county and open for business at least six hours on Monday through Friday of each week except on holidays observed by the city, town or county.

F. A city, town or county may fine the owner of a shopping cart not more than fifty dollars for each occurrence in excess of three during the previous six month period for failure to retrieve shopping carts within one day in accordance with this section. An occurrence includes all shopping carts impounded in accordance with this section in a one day period.

G. A shopping cart that is not reclaimed from the city, town or county within thirty days after receipt of a notice of violation by the owner of the shopping cart may be sold or otherwise disposed of by the city, town or county in possession of the shopping cart.

H. Notwithstanding subsection B, paragraph 2 of this section, a city, town or county may impound a shopping cart that otherwise meets the criteria prescribed in subsection B, paragraph 1 of this section without complying with the three day advance notice requirement if all of the following apply:

1. The owner of the shopping cart or the owner's agent is provided with actual notice within twenty-four hours after the impound and that notice informs the owner or the owner's agent of the location where the shopping cart may be claimed.

2. The shopping cart is impounded at a location in compliance with subsection E of this section.

3. The shopping cart is reclaimed by the owner or the owner's agent within three business days after the date of actual notice as provided in paragraph 1 of this subsection and is released and surrendered to the owner or agent at no charge, including the waiver of any impound and storage fees or fines that would otherwise apply pursuant to subsection D or F of this section. Any cart reclaimed within the three business day period is not deemed an occurrence for purposes of subsection F of this section.

I. Any shopping cart not reclaimed by the owner or the owner's agent after three business days after the date of actual notice as provided in subsections B and H of this section is subject to any applicable fee or fine imposed pursuant to subsection D or F of this section commencing on the fourth business day after the date of the notice.

J. Any shopping cart not reclaimed by the owner or the owner's agent within thirty days after the date of actual notice as provided by subsection H, paragraph 1 of this section may be sold or disposed of in accordance with subsection G of this section.

§ 44-1799.34 Shopping cart retrieval; records; sign

A. A person who engages in the business of shopping cart retrieval shall retain records showing written authorization from the cart's owner, or an agent of the owner, to retrieve the cart and to be in possession of the carts retrieved.

B. A copy of the record showing written authorization shall be maintained in each vehicle used for shopping cart retrieval.

C. Each vehicle used for the retrieval of shopping carts shall display a sign that clearly identifies the retrieval service.

§ 44-1799.35 Applicability of article; local ordinances

This article does not invalidate an ordinance of, or shall not be construed to prohibit the adoption of an ordinance by a city, town or county that regulates or prohibits the removal of shopping carts from the premises or parking areas of a retail establishment except to the extent any provision of the ordinance expressly conflicts with any provision of this article.

§ 44-1799.36 Violation; classification; applicability

A. A person who violates any provision of this article is guilty of a class 3 misdemeanor.

B. This article is not intended to preclude the application of any other laws relating to prosecution for a criminal offense.

Article 20 Heavy Equipment Rental Agreements

§ 44-1799.41 Heavy equipment rental agreements; requirements; definition

A. A person in the business of renting heavy equipment property located in this state shall include in the rental agreement a one and one-half per cent surcharge of the gross rental receipts for any item of heavy equipment rented by a customer. The total amount of the surcharge that is collected by the business is for the purposes of paying personal property tax that is levied by all taxing jurisdictions against the heavy equipment property.

B. For the purposes of this section, "heavy equipment property" means rental property of an industry that is described under code 532412 or 532490 of the 2002 north American industry classification system as published by the United States census bureau.

Article 21 Solicitations Using Loan Information

§ 44-1799.51 Loan information; solicitations; restrictions; injunction; definition

A. A person shall not reference the trade name or trademark of a lender or a trade name or trademark confusingly similar to that of a lender in a solicitation for the offering of services or products without the consent of the lender unless the solicitation clearly and conspicuously states all of the following in close proximity to and in the same or larger point type as the first and the most prominent use of a lender's trade name or trademark in the solicitation:

1. The name, address and telephone number of the person making the solicitation.

2. That the person making the solicitation is not affiliated with the lender.

3. That the solicitation is not authorized or sponsored by the lender.

4. That the loan information referenced was not provided by the lender.

B. A person shall not reference a loan number, loan amount or other specific loan information that is not publicly available in a solicitation for the purchase of services or products, except that this prohibition does not apply to communications by a lender or its affiliates with a current customer of the lender or with a person who was a customer of the lender during the eighteen months immediately preceding the solicitation.

C. A person shall not reference a loan number, loan amount or other specific loan information that is publicly available in a solicitation for the purchase of services or products unless the communication clearly and conspicuously states all of the following in close proximity to and in the same or larger point type as the first and the most prominent use of a loan number, loan amount or other specific loan information that is publicly available in the solicitation:

1. The name, address and telephone number of the person making the solicitation.

2. That the person making the solicitation is not affiliated with the lender.

3. That the solicitation is not authorized or sponsored by the lender.

4. That the loan information referenced was not provided by the lender.

D. Subsection C does not apply to communications by a lender or its affiliates with a current customer of the lender or with a person who was a customer of the lender during the eighteen months immediately preceding the solicitation.

E. A person shall not use the name of a lender or a name similar to that of a lender in a solicitation directed to consumers if that use could cause a reasonable person to be confused, mistaken or deceived as to either of the following:

1. The lender's sponsorship, affiliation, connection or association with the person using the name.

2. The lender's approval or endorsement of the person using the name or the person's services or products.

F. Any reference to an existing lender, a loan number, loan amount or other specific loan information that appears on the outside of an envelope, that is visible through the envelope window, or that appears on a postcard in connection with any written communication that includes or contains a solicitation for goods or services is prohibited without the consent of the existing lender.

G. It is not a violation of this section for a person to use the trade name of another lender in an advertisement for services or products to compare the services or products offered by the other lender.

H. A lender or owner of a trade name or trademark may seek an injunction against a person who violates this section to stop the unlawful use of the trade name, trademark or loan information. The person seeking the injunction shall not have to prove actual damage as a result of the violation. Irreparable harm and interim harm to the lender or owner shall be presumed. The lender or owner seeking the injunction may seek to recover actual damages and any profits the defendant has accrued as a result of the violation. The prevailing party in any action brought pursuant to this section is entitled to recover costs associated with the action and reasonable attorney fees from the other party.

I. For the purposes of this section, "lender" means a bank, national bank doing business in this state, industrial bank, savings and loan association, savings bank, credit union, finance company, mortgage bank, mortgage broker, loan originator or holder of the loan or other person who makes loans in this state and any affiliate, or any third party operating with the consent of the lender.

Article 22 Amusement Ride Safety

§ 44-1799.61 Definition of amusement ride

In this article, unless the context otherwise requires, "amusement ride":

1. Means a device or a combination of devices or elements that carry, convey or direct a person over or through a fixed or restricted course or in a defined area for the primary purpose of public amusement or entertainment.

2. Does not include:

(a) A coin operated ride that is manually, mechanically or electrically operated, that is customarily placed in a public location and that does not normally require the supervision or services of an operator.

(b) Nonmechanized playground equipment, including swings, seesaws, stationary spring-mounted animal features, rider-propelled merry-go-rounds, climbers, slides, trampolines and physical fitness devices.

(c) Challenge, exercise or obstacle courses.

(d) Inflated devices and elements.

§ 44-1799.62 Municipality and county powers; public inspection exception; violation; classification

A. Municipalities and counties may:

1. Administer and enforce this article for amusement rides in their respective jurisdictions.

2. Establish reasonable and necessary fees to administer and enforce this article. The fees shall not exceed fees charged for business licenses or temporary use permits for similar temporary businesses.

3. Request from each amusement ride owner or operator, a sponsor, lessor or landowner or any other person responsible for an amusement ride information to determine that the insurance required by this article is in effect and that the amusement ride has been inspected at least annually.

4. Review and retain other records necessary to establish compliance with this article, including insurance certificates or policies, inspection certificates and reports, permits, licenses, maintenance records, injury records and operational records. The records listed in this paragraph are not subject to public inspection. Records may be disclosed on written consent of the owner, on receipt of a court order or if required by law. Any person who knowingly discloses any record or other information in violation of this section is guilty of a class 3 misdemeanor.

B. Municipalities and counties that elect to administer and enforce this article shall collect fees and review information at the time of the application for a permit. The application shall be submitted at least thirty days before a scheduled public operation of the amusement ride.

C. A permit is only valid in the municipality or county for which it is issued.

§ 44-1799.63 Amusement ride owners and operators; requirements; denial of entry

A. An amusement ride owner or operator shall:

1. Have the amusement ride inspected at least once a year by an insurer, a person with whom the insurer has contracted or an amusement ride inspector provided by a municipality or county who is experienced and educated in amusement ride inspections in compliance with the amusement rides and devices standards of the American society of testing and materials. If an inspection reveals that the amusement ride does not meet the amusement rides and devices standards of the American society of testing and materials or requires repair or replacement of equipment, the inspector shall notify the owner or operator and shall not issue the written certificate of inspection until the owner or operator meets the standards and makes the repairs or installs the replacement equipment.

2. Maintain at all times a written certificate of the annual inspection.

3. Procure insurance for the amusement ride from an insurer authorized to do business in this state pursuant to section 20-217 or by an insurer on the list of qualified unauthorized insurers pursuant to section 20-413, insuring the owner or operator against liability for injury to persons arising from the use of the amusement ride, in an amount of not less than one million dollars for bodily injury and five hundred thousand dollars for property damage per occurrence or in an amount of two million dollars per occurrence for a combined single limit.

4. Maintain at all times the written permit for operation of the amusement ride issued by the municipality or county.

5. Provide to each sponsor, lessor or property owner of the property where the amusement ride is operated documentation of compliance with the insurance, inspection and permit requirements of this article.

6. Maintain for a period of at least two years accurate records of any governmental action taken in any state relating to the amusement ride, including any operation permits, insurance certificates, inspection reports, incident reports, maintenance and operational records and records documenting the repair or replacement of equipment used in the operation of the amusement ride. A copy of these records shall be provided to the municipality or county at the time of application for a permit under section 44-1799.62.

7. Maintain for a period of at least two years accurate records of serious injuries actually caused by the amusement ride that are consistent with the recording standards of the American society of testing and materials. The injury records are not subject to public inspection except upon demand of a municipal or county peace officer or enforcement official. A copy of these records shall be provided to the municipality or county at the time of application for a permit under section 44-1799.62.

B. An amusement ride operator may deny entry to the amusement ride of any person if, in the opinion of the operator, the entry may jeopardize the safety of the person or any other amusement ride patron.

§ 44-1799.64 Enforcement

A. A municipal or county peace officer or enforcement official may determine compliance with this article, may prohibit the operation of any amusement ride that is not in compliance with this article and may institute an action in a court of competent jurisdiction to enforce this article.

B. A municipal or county peace officer or enforcement official who is experienced and educated in amusement ride inspections in compliance with the amusement rides and devices standards of the American society of testing and materials may enter and inspect without notice any amusement ride at any time.

C. On request, the owner or operator of an amusement ride shall provide the permit, inspection certificate, insurance certificate and other records to a municipal or county peace officer or enforcement official. A copy of the documents may be provided instead of originals.

D. This section does not prohibit the owner or operator of an amusement ride from seeking relief from the enforcement of this article through any appropriate legal means.

Article 23 Public Sale of Animals

§ 44-1799.71 Unlawful public sale of animals; civil penalty; definitions

A. In a county with a population of eight hundred thousand persons or more, a person commits the unlawful public sale of animals by knowingly selling an animal on:

1. Any public highway, street or park or any public property adjacent to a public highway, street or park.

2. Any commercial private property without the express consent of the owner or lessee of the property.

B. Subsection A does not apply to:

1. Retail sales on the premises of a pet store.

2. Sales by a publicly operated or private, charitable nonprofit pound, humane society, animal rescue organization or educational or agricultural organization.

3. Any rodeo, auction market, county fair, stock show or other sanctioned livestock exhibit event.

C. A person who is found responsible for a violation of this section is subject to a civil penalty of not more than fifty dollars.

D. For the purposes of this section:

1. "Animal" means any living species of mammal, bird, amphibian or reptile.

2. "Pet store" has the same meaning prescribed in section 44-1799.

Article 24 Bulk Merchandise Containers

§ 44-1799.81 Recycling, shredding, reselling or destroying plastic or wood bulk merchandise containers; record keeping; civil penalty; violation; classification; definition

A. A person who is in the business of recycling, shredding, reselling or destroying plastic or wood bulk merchandise containers shall not purchase five or more plastic bulk merchandise containers that are marked with a company name or logo or ten or more wood bulk merchandise containers from any other person at one time, unless the person does both of the following:

1. Obtains from the person selling the containers a record that contains:

(a) The name, address and telephone number of the seller or the seller's authorized representative.

(b) A description of the containers, including the number of the containers to be purchased.

(c) The date of the transaction.

(d) The license plate number of any vehicle used in the delivery of the bulk merchandise containers.

2. Verifies and records the identity of the person selling the containers or representing the seller from a driver license or other government issued identification card that includes the person's photograph.

B. A person who is in the business of recycling, shredding, reselling or destroying plastic or wood bulk merchandise containers shall retain the record obtained pursuant to subsection A for one year after the date the containers are purchased or delivered, whichever is later.

C. A person who is in the business of recycling, shredding, reselling or destroying plastic or wood bulk merchandise containers shall not use an artifice to avoid the requirements of this section, including documenting purchases from the same person on the same day as multiple transactions.

D. A person who is in the business of recycling, shredding, reselling or destroying plastic or wood bulk merchandise containers shall be open during business hours for reasonable inspection by a peace officer. Before an inspection takes place a peace officer shall first identify himself and the purpose for the inspection to the business, the business's manager or any other responsible person and comply with all reasonable and customary safety requirements of that business for the premises inspected. The business may require the peace officer to sign an inspection log that includes the officer's name and serial or badge number, agency and the time, the date and the purpose for the inspection.

E. In addition to the penalties imposed under subsection F, a person who violates:

1. Subsection A or B shall pay a civil penalty of up to ten thousand dollars for each violation.

2. Subsection C shall pay a civil penalty of up to thirty thousand dollars for each violation.

F. A violation of this section is:

1. A class 2 misdemeanor if the total purchase price of the plastic or wood bulk merchandise containers is one thousand dollars or more, except that a second or subsequent violation involving a total purchase price of one thousand dollars or more is a class 1 misdemeanor.

2. A petty offense if the total purchase price of the plastic or wood bulk merchandise containers is less than one thousand dollars, except that a second or subsequent violation involving a total purchase price of less than one thousand dollars is a class 2 misdemeanor.

G. For the purposes of this section, "bulk merchandise container" means a plastic or wooden carrier or holder used by a manufacturer or distributor to transport merchandise to wholesale and retail outlets.

Article 25 Direct Primary Care Agreements

§ 44-1799.91 Definitions

In this article, unless the context otherwise requires:

1. "Direct primary care agreement" means a contract between a primary care provider and an individual patient or the patient's legal representative in which the primary care provider agrees to provide primary care services to the individual patient for an agreed periodic fee and period of time.

2. "Direct primary care patient" means a patient who enters into a direct primary care agreement with a primary care provider.

3. "Direct primary care provider" means a primary care provider who enters into a direct primary care agreement with a patient or the patient's legal representative.

4. "Primary care provider":

(a) Means:

(i) A physician who is licensed pursuant to title 32, chapter 13 or 17 and who specializes in family medicine, internal medicine or pediatrics or otherwise treats patients for chronic conditions requiring regular treatment.

(ii) A physician assistant who is licensed pursuant to title 32, chapter 25 and who practices with a physician who specializes in family medicine, internal medicine or pediatrics.

(iii) A registered nurse practitioner who is licensed pursuant to title 32, chapter 15 and who is certified in family practice, adult health, gerontology, women's health or pediatrics.

(iv) A dentist who is licensed pursuant to title 32, chapter 11 and who provides dental services.

(b) Includes a group, entity or practice of primary care providers.

5. "Primary care services" means routine, periodic health care procedures that are ordered and supervised by a primary care provider, including medical visits, laboratory testing, imaging, pathology testing, prescribing and administering medication, diagnosing, treating and managing acute and chronic conditions and other health care procedures provided to patients on a routine, periodic basis that may be performed or supervised by a primary care provider with training and experience in that procedure, or dental services that may be performed or supervised by a dentist who is licensed pursuant to title 32, chapter 11.

§ 44-1799.92 Direct primary care agreements; requirements; notice

A direct primary care agreement shall meet all of the following requirements:

1. Be in writing.

2. Be signed by the primary care provider or an agent of the primary care provider and the individual patient or the patient's legal representative. A copy of the agreement shall be provided to the individual patient or the patient's legal representative.

3. Allow either party to terminate the agreement on a thirty-day written notice to the other party. The agreement shall include terms for relocation and military duty.

4. Describe the scope of primary care services that are covered by the periodic fee.

5. Specify the periodic fee for the agreement and any additional fees outside of the periodic fee for ongoing care under the agreement.

6. Specify the duration of the agreement and any automatic renewal periods.

7. Provide a prominent written disclaimer that the agreement is not health insurance and that reads, in substantially the following form:

Notice: The organization facilitating the direct primary care agreement is not an insurance company and the direct primary care company guidelines and agreement are not an insurance policy. Participation in the direct primary care agreement or a subscription to any of its documents should not be considered to be a health insurance policy. Regardless of whether you receive treatment for health care issues through the direct primary care agreement, you are always personally responsible for paying any additional health care expenses you may incur. If you have health insurance, it may include, at no additional charge, some of the preventive services that are also available under this direct primary care agreement. The primary care provider may not bill your health insurance for primary care services provided under this direct primary care agreement.

§ 44-1799.93 Direct primary care provider; acceptance and discontinuance of patients

A. A direct primary care provider may not decline to accept a new direct primary care patient or discontinue care to an existing patient solely because of the patient's health status. A direct primary care provider may not charge different fees for comparable services based on a patient's health status or gender.

B. A direct primary care provider may decline to accept a patient if the provider has reached maximum capacity or if the patient's medical condition is such that the provider is unable to provide the appropriate level and type of primary care services the patient requires.

C. A direct primary care provider may discontinue care for a direct primary care patient in any of the following circumstances:

1. The patient fails to pay the periodic fee.

2. The patient has performed an act of fraud.

3. The patient repeatedly fails to adhere to the recommended treatment plan.

4. The patient is abusive and presents an emotional or physical danger to the staff or other patients of the direct primary care provider.

5. The direct primary care provider discontinues practicing as a direct primary care provider.

6. The direct primary care provider changes the services offered or the scope of practice provided to patients.

7. The direct primary care provider gives a thirty-day written notice to the patient terminating the direct primary care agreement.

§ 44-1799.94 Direct primary care agreements; fees

A. A direct primary care agreement may not require more than twelve months of the periodic fee to be paid in advance. On discontinuing the agreement all payments prepaid for months following termination of the agreement shall be returned to the patient.

B. A direct primary care agreement shall prohibit the direct primary care provider from submitting a claim for reimbursement to the patient's health care insurer for primary care services that are provided to the patient and that are covered under the direct primary care agreement.

C. A direct primary care agreement may allow the periodic fee and any additional fees for ongoing care under the agreement to be paid by a health care insurer or other third party.

§ 44-1799.95 Direct primary care agreements; dentists

A direct primary care agreement for dental services is limited to services provided within a single professional practice and may not include services offered by dentists in other practice entities.

§ 44-1799.96 Direct primary care agreements; regulation

A direct primary care agreement for medical or dental services does not constitute the transaction of insurance business or a health care services organization in this state for the purposes of regulation under title 20.

Chapter 12 Sales of Securities

Article 1 Definitions

§ 44-1801 Definitions

In this chapter and chapter 13 of this title, unless the context otherwise requires:

1. "Blind pool offering" means an offering in which either:

(a) The offering materials do not describe specific operational plans.

(b) Eighty percent or more of the net offering proceeds are not specifically allocated for the purchase, construction or development of identified property or products, for the payment of indebtedness or overhead expenses, or for other activities set forth in the issuer's business plan.

2. "Commission" means the Arizona corporation commission.

3. "Commodity" means any agricultural, grain or livestock product or by-product, any metal or mineral including a precious metal, any gem or gemstone whether characterized as precious, semiprecious or otherwise, any fuel whether liquid, gaseous or otherwise, any foreign currency and all other goods, articles, products or items of any kind. Commodity does not include a numismatic coin with a fair market value at least fifteen percent higher than the value of the metal it contains, real property or any timber, agricultural or livestock product grown or raised on real property and offered or sold by the owner or lessee of such real property, or any work of art offered or sold by art dealers, at public auction or offered or sold through a private sale by the owner.

4. "Commodity exchange act" means the act of Congress known as the commodity exchange act (7 United States Code, chapter 1).

5. "Commodity futures trading commission" means the independent regulatory agency established by Congress to administer the commodity exchange act.

6. "Commodity investment contract" means any account, agreement or contract for the purchase or sale, primarily for speculation or investment purposes and not for use or consumption by the offeree or purchaser, of one or more commodities, whether for immediate or subsequent delivery or whether delivery is intended by the parties, and whether characterized as a cash contract, deferred shipment or deferred delivery contract, forward contract, futures contract, installment or margin contract, leverage contract or otherwise. Any commodity investment contract offered or sold, in the absence of evidence to the contrary, is presumed to be offered or sold for speculation or investment purposes. A commodity investment contract does not include any contract or agreement that requires, and under which the purchaser receives, within twenty-eight calendar days after the payment in good funds of any portion of the purchase price, physical delivery of the total amount of each commodity to be purchased under the contract or agreement.

7. "Commodity option" means any account, agreement or contract giving a party to the account, agreement or contract the right but not the obligation to purchase or sell one or more commodities or one or more commodity investment contracts, whether characterized as an option, privilege, indemnity, bid, offer, put, call, advance guaranty, decline guaranty or otherwise.

8. "CRD system" means the central registration depository system of the national association of securities dealers, incorporated.

9. "Crowdfunding" means the practice of funding a project or venture by raising many small amounts of money from a large number of people.

10. "Dealer":

(a) Means a person who directly or indirectly engages full-time or part-time in this state as agent, broker or principal in the business of offering, buying, selling or otherwise dealing or trading in securities issued by another person, and who is not a salesman for a registered dealer or is not a bank or savings institution the business of which is supervised and regulated by an agency of this state or the United States.

(b) Means an issuer, other than an investment company, who, directly or through an officer, director, employee or agent who is not registered as a dealer under this chapter, engages in selling securities issued by such issuer.

(c) Does not include a person who sells or offers to sell securities exclusively to dealers registered under this chapter, and who has no place of business within this state.

(d) Does not include a person who buys or sells securities for his own account, either individually or in a fiduciary capacity, but not as part of a regular business.

11. "Director" means the director of the securities division of the commission.

12. "Division" means the securities division of the commission.

13. "Federal covered security" means any security described as a covered security in section 18 of the securities act of 1933.

14. "Issuer" means any person who issues or proposes to issue any security, except:

(a) With respect to certificates of deposit, voting-trust certificates, collateral-trust certificates, certificates of interest or shares in an unincorporated investment trust, whether or not of the fixed, restricted management or unit type, issuer means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such securities are issued.

(b) With respect to equipment-trust certificates or like securities, issuer means the person by whom the equipment or property is or is to be used.

(c) With respect to fractional interests in any oil, gas or other mineral lease, permit, claim or right, issuer means the owner thereof or of any interest therein, whether whole or fractional, fractional interests in which are created for the purpose of a public offering.

15. "Numismatic coin":

(a) Means a coin that has all of the following characteristics:

(i) The coin is of interest primarily to coin collectors rather than to speculators or investors in precious metals.

(ii) The fair market value of the coin is determined primarily by its design, subject matter, limited mintage, rarity and relative condition of preservation from wear rather than by its intrinsic precious metal or bullion content.

(iii) The fair market value of the coin is directly related to an individual inspection and grading of its relative condition according to an established system of numismatic standards promulgated independently of the offerer of the coin.

(iv) With the exception of proof, mint and commemorative coins, the coin is minted or manufactured under authority of the issuing government for the purpose of being used as legal tender.

(b) Does not include a coin that has at least one of the following characteristics:

(i) The coin is minted, manufactured or advertised for sale primarily to persons who seek to invest or speculate in precious metals rather than to coin collectors or for use in commerce as legal tender.

(ii) The coin is advertised or sold with the expectation that it will be purchased or traded for its intrinsic precious metal or bullion content.

(iii) The price of the coin is directly related to the spot market price of its intrinsic precious metal or bullion content.

(iv) The coin is generally not used as legal tender.

(v) The quantity of mintage or manufacture of the coin is based on market demand.

(vi) The coin is not sought for its design, subject matter, limited mintage, rarity or relative condition of preservation from wear, but instead is sought for the value of its intrinsic precious metal or bullion content.

16. "Offer to sell" or "offer for sale" means an attempt or offer to dispose of, or solicitation of an order or offer to buy, a security or interest in a security for value or any sale or offer for sale of a warrant or right to subscribe to another security of the same issuer or of another issuer. Any sale or offer for sale of a security that gives the holder thereof a present or future right or privilege to convert such security into another security of the same issuer or of another issuer shall be deemed an offer to sell the security to be acquired pursuant to such right or privilege, but the existence thereof shall not be construed as affecting the registration or exemption under this chapter of the security to which it attaches.

17. "Person" means an individual, corporation, partnership, association, joint stock company or trust, limited liability company, government or governmental subdivision or agency or any other unincorporated organization.

18. "Precious metal" means the following in either coin, bullion or other form:

(a) Silver.

(b) Gold.

(c) Platinum.

(d) Palladium.

(e) Copper.

19. "Real property investment contract" means a contract for the sale or purchase of a promissory note secured directly or collaterally by a mortgage, deed of trust or other lien on real property, including a contract as defined in section 33-741, or any agreement, arrangement or understanding in connection with such note, lien or contract in which a person agrees, implies to do or does any of the following, whether or not the investor is aware that any of the following actions are contemplated or taken:

(a) Guarantee the note, lien or contract against loss at any time.

(b) Promise to provide a market for the sale of the note, lien or contract, in connection with a sale or purchase.

(c) Offer to accept or accept funds for investment in notes or contracts secured directly or indirectly by a lien on real property, where the real property is unspecified at the time of investment.

(d) Pay any interest or premium for a period before actual purchase and delivery of the note or contract.

(e) Pay any money to an investor if the note or contract is in arrears.

(f) Guarantee that principal or interest will be paid in conformity with the terms of the note or contract.

(g) Accept, from time to time, partial payment toward the purchase of the note or contract.

(h) Promise to repurchase the note or contract, in connection with sale or purchase.

20. "Registered dealer" means a dealer registered under this chapter.

21. "Registered salesman" means a salesman registered under this chapter.

22. "Sale" or "sell" means a sale or any other disposition of a security or interest in a security for value and includes a contract to make such sale or disposition. A security given or delivered with, or as a bonus on account of, a purchase of securities or other thing shall be conclusively presumed to constitute a part of the subject of the purchase and to have been sold for value.

23. "Salesman" means an individual, other than a dealer, employed, appointed or authorized by a dealer to sell securities in this state. The partners or executive officers of a registered dealer shall not be deemed salesmen within the meaning of this definition.

24. "SEC" means the United States securities and exchange commission.

25. "Securities act of 1933" means the act of Congress known as the securities act of 1933.

26. "Securities exchange act of 1934" means the act of Congress known as the securities exchange act of 1934.

27. "Security":

(a) Means any note, stock, treasury stock, bond, commodity investment contract, commodity option, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, viatical or life settlement investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas or other mineral rights, real property investment contract or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

(b) Notwithstanding subdivision (a) of this paragraph, with respect to a virtual coin shall not be construed more broadly than the term security is construed in the securities act of 1933, the securities exchange act of 1934 or any federal regulations relating to either act.

28. "SRO" means any national securities or commodities exchange, registered association or registered clearing agency.

29. "Underwriter" means a person who has acquired from an issuer with a view to, or sells for an issuer in connection with, the distribution of any securities or participates or has a direct or indirect participation in such undertaking, or participates or has a participation in the direct or indirect underwriting of such undertaking. Underwriter does not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributor's or seller's commission.

30. "Viatical or life settlement investment contract" means an agreement for consideration for the purchase, assignment, transfer, sale, devise or bequest of any portion of the death benefit under or ownership of either an insurance policy or certificate of insurance. A viatical or life settlement investment contract does not include:

(a) Any agreement for the original issuance of an insurance policy or certificate of insurance.

(b) An assignment, transfer, sale, devise or bequest of a death benefit under or ownership of either an insurance policy or certificate of insurance by the original owner or a person who has an insurable interest in the insured pursuant to section 20-1104 to any of the following:

(i) The insured.

(ii) A person who has an insurable interest in the insured pursuant to section 20-1104.

(iii) A dealer.

(iv) A person who is engaged in the business of purchasing the death benefit under or ownership of either insurance policies or certificates of insurance.

(c) An assignment of an insurance policy or certificate of insurance to any bank, savings bank, savings and loan association, credit union or other licensed lending institution as collateral for a loan.

(d) The exercise of accelerated benefits pursuant to the life insurance policy.

31. "Virtual coin" means a digital representation of value that can be digitally traded and that functions as a medium of exchange, unit of account and store of value.

32. "Virtual coin offering":

(a) Means an offer for sale of a virtual coin that either:

(i) Meets the definition of a security prescribed in this section.

(ii) The issuer elects to treat as a security by complying with section 44-1844, subsection A, paragraph 22.

(b) Does not include an offer for sale of a virtual coin that both:

(i) Has not been marketed by the issuer as an investment.

(ii) Grants to the purchaser, within ninety days after the purchaser's receipt of the virtual coin, the right to use, contribute to the development of or license the use of a platform using blockchain technology as defined in section 44-7061, including a license to use a product or service on the platform or a discount against fees for use of the platform.

Article 2 Administrative Personnel

§ 44-1811 Director of securities

A. The commission shall appoint a director of securities, subject to removal at the pleasure of the commission, at compensation as determined pursuant to section 38-611, who shall, subject to the authority and under the supervision of the commission, be the administrator of the division. The director of securities shall be a person at least thirty years of age and shall be qualified by any or all of the following:

1. At least five years of experience and training in corporate finance, investment banking, accounting principles or securities.

2. A college or graduate degree in business administration, the major subjects of which have relation to investment banking or corporate finance.

3. A law degree and at least five years of legal experience and training in securities.

B. The director of securities shall devote the director's entire time to the discharge of the duties of the office.

§ 44-1812 Assistant director of securities

The commission shall appoint an experienced assistant to the director of securities whose compensation shall be as determined pursuant to section 38-611 to assist in the proper discharge of the duties imposed upon the securities division.

§ 44-1813 Employment of personnel; criminal records check

A. The director, with the approval of the commission, may employ from time to time examiners, investigators who are commissioned peace officers, clerical employees and other officers and employees necessary for the administration of this chapter, and regulatory officers and employees who are members of the state bar of Arizona who shall be paid at the same rate as the rate established by the department of administration for attorneys, and who shall perform the duties the director requires.

B. The director may obtain criminal history record information regarding applicants for employment for the purpose of hiring personnel. Before making a final offer of employment, the director shall require the preferred applicants to submit a full set of fingerprints. The director shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation.

C. The director shall not disclose information obtained pursuant to subsection B of this section except to the director's or the commission's staff solely for the purpose of the director's employment of the applicant.

§ 44-1814 Travel and other necessary expenses of employees

The director, and any person under the director's supervision shall be paid, in addition to that person's regular compensation, the transportation expense, board, lodging and other necessary traveling expenses actually incurred in the performance of that person's duties. Traveling expenses shall include the expenses of the director in attending the annual convention of the national association of securities administrators.

§ 44-1815 Cooperation with other securities agencies

The director shall cooperate with the administrators of the securities laws of other states and of the United States with a view to achieving maximum uniformity in the interpretation and enforcement of like provisions of the laws administered by them.

Article 3 General Administrative Powers

§ 44-1821 General rule-making power of commission; delegation of authority; limitation

A. The commission may from time to time make, amend and rescind rules and regulations reasonably necessary to carry out the provisions of this chapter.

B. The commission may from time to time in its discretion delegate such authority to the director of securities as is convenient or necessary to the efficient administration of this chapter, except that the commission may not delegate authority to adopt, amend or rescind rules and regulations or to enter any final order of denial or revocation of registration of securities, dealers or salesmen.

§ 44-1822 Investigations

The commission, the director or other agent or agents designated by the commission may make such public or private investigations within or outside of this state as the commission deems necessary to determine whether any person has violated or is about to violate any provisions of this chapter or any rule or order hereunder, or to aid in the enforcement of this chapter, or to aid in prescribing rules and forms hereunder, and may at any time either prior to or subsequent to the registration of any securities or any dealer or salesman, investigate and examine into the affairs of any person issuing or dealing in or selling or buying or intending to issue, deal in or sell or buy securities or into the affairs of any person when the commission believes that such person is or may be issuing or dealing in or selling or buying securities.

§ 44-1823 Power to require testimony and production of records; order of nondisclosure

A. For the purpose of investigations or hearings which, in the opinion of the commission, are necessary and proper for the enforcement of this chapter, any member of the commission, the director or any officer or officers designated by the commission may administer oaths and affirmations, subpoena witnesses, take evidence and require by subpoena duces tecum or by citation the production of books, papers, contracts, agreements or other documents, records or information, whether filed or kept in original form or electronically stored or recorded which the commission deems relevant or material to the inquiry.

B. The commission may issue and apply to enforce a subpoena in this state at the request of a securities agency or administrator of another state if the activities constituting an alleged violation for which the information is sought would be a violation of this chapter if the activities had occurred in this state.

C. In connection with the power to enforce the production of evidence by subpoena vested in the commission by article XV of the Constitution of Arizona and the commission's power to conduct private investigations pursuant to section 44-1822, the commission has the authority to order a financial institution not to disclose the existence or content of the subpoena to persons not affiliated with the financial institution other than to the financial institution's legal counsel. The commission shall exercise such power if the commission finds it necessary or appropriate in the public interest or for the protection of investors.

§ 44-1824 Dealer examination assessment; foreign examination cost; payment

A. The commission shall assess a charge at the rate of two hundred dollars a day for each examiner employed in examining a dealer. For a dealer maintaining an office outside this state, in addition to the examination assessment, the commission shall make an assessment equal to the travel and subsistence expense incurred in the examination of the office in another state or country. Reimbursement for examination assessments and examiners' expenses shall be credited to the state general fund.

B. Examination assessments are due and payable to the commission within thirty days after the date of the notice of assessment. A penalty assessment of fifty dollars shall be made for each day the payment is overdue following the thirty day period. The total penalty assessment shall not exceed twenty-five per cent of the examination assessment.

§ 44-1825 Contempt; penalty

A. In case of contumacy or refusal to obey a subpoena or citation issued by the commission, any member of the commission, the director or any officer designated by the commission, the superior court in Maricopa county, on application by the commission, shall issue to the person an order requiring the person to appear before the commission, the director or the officer designated by the commission to produce documentary evidence if so ordered and to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt of court.

B. In the case of wilful noncompliance with a nondisclosure order included in a subpoena issued pursuant to section 44-1823, on application by the commission, the superior court in Maricopa county may exercise its contempt powers. For the purposes of this subsection, "wilful" has the same meaning as that prescribed to wilfully in section 1-215.

C. The court shall award reasonable expenses, including attorney fees, to the commission if the refusal to obey a subpoena or citation issued by the commission was not substantially justified, unless other circumstances make an award of expenses unjust.

D. Process in any proceeding pursuant to this section may be served on the defendant in any county of this state in which the defendant transacts business or is found.

E. Any expenses, including attorney fees, collected pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

§ 44-1826 No-action requests

A. The director may formally respond to written requests from interested persons for interpretative no-action letters that confirm that the division will not institute enforcement proceedings against certain specified persons for engaging in certain specified activities.

B. A person shall submit a no-action request in writing and a nonrefundable filing fee pursuant to section 44-1861, subsection M. The request shall contain the following:

1. A brief summary of the statutory and regulatory provisions to which the request pertains.

2. A detailed statement of the relevant facts.

3. A detailed discussion and analysis of the law as it relates to the facts.

4. A statement of the legal authority for granting the request.

5. A statement of the reasons a no-action letter is appropriate.

6. A statement explaining any adverse or beneficial effect on the public interest resulting from the granting of the request.

7. A certification that, within the knowledge of the person on whose behalf the request is made, the transaction described is not directly or indirectly the subject of any pending or final judicial, SRO or administrative proceeding.

8. A certification that the transaction described has not been commenced or, if the transaction has commenced, a statement concerning the status.

9. An acknowledgment by the person on whose behalf the request is made that the request, together with any documents or information submitted and any response from the division, is public information that may be released for publication, except as otherwise provided by law.

C. Unless otherwise specified in writing by the division, a no-action letter is limited to the specific security, case, matter, facts, person or transaction described in the request and has no precedential value in any other context.

Article 4 Sale of Securities

§ 44-1841 Sale of unregistered securities prohibited; classification

A. It is unlawful to sell or offer for sale within or from this state any securities unless the securities have been registered pursuant to article 6 or 7 of this chapter or are federal covered securities if the securities comply with section 44-1843.02 or chapter 13, article 12 of this title.

B. A person violating this section is guilty of a class 4 felony.

§ 44-1842 Transactions by unregistered dealers and salesmen prohibited; classification

A. It is unlawful for any dealer to sell or purchase or offer to sell or buy any securities, or for any salesman to sell or offer for sale any securities within or from this state unless the dealer or salesman is registered as such pursuant to the provisions of article 9 of this chapter.

B. A person violating this section is guilty of a class 4 felony.

§ 44-1843 Exempt securities; fee; filing

A. Sections 44-1841 and 44-1842, section 44-1843.02, subsections B and C and sections 44-3321 and 44-3325 do not apply to any of the following classes of securities:

1. Securities issued or guaranteed by the United States, by any state, territory or insular possession of the United States, by any political subdivision of such state, territory or insular possession, by the District of Columbia or by any agency or instrumentality of one or more of any of the foregoing. This exemption shall not apply to securities regulated pursuant to section 44-1843.01.

2. Securities issued by a national bank, a bank or a credit or loan association organized pursuant to an act of Congress and supervised by the United States or an agency of the United States, or issued by a state bank or savings institution the business of which is supervised and regulated by an agency of this state or of the United States.

3. Securities issued by a savings and loan association subject to supervision by an agency of this state.

4. Insurance or endowment policies, variable contracts, annuity contracts or optional annuity contracts issued by a person subject to the supervision of and licensed by the insurance commissioner, the bank commissioner or any agency of the United States, any state or the District of Columbia performing like functions.

5. Securities issued or guaranteed either as to principal, interest or dividend by a railroad or public utility if the issuance of its securities is regulated by an agency of the United States, a state, territory or insular possession of the United States, an agency of the District of Columbia or an agency of the Dominion of Canada or any province of the Dominion of Canada, and also equipment trust certificates in respect to equipment conditionally sold or leased to a railroad or public utility, if other securities issued by such railroad or public utility would be exempt under this paragraph.

6. Securities issued by a person that is organized and operated exclusively for religious, educational, benevolent, fraternal, charitable or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder or individual and securities issued by or any interest or participation in any pooled income fund, collective trust fund, collective investment fund or similar fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of the investment company act of 1940. The exemption prescribed in this paragraph does not apply to any of the following, unless excluded from the definition of an investment company under section 3(c)(10)(B) of the investment company act of 1940:

(a) Securities made liens upon revenue producing property subject to taxation.

(b) Securities issued by a nonprofit organization that is engaged in, intends to engage in, controls, finances or lends funds or property to other entities engaged in the construction, operation, maintenance or management of a hospital, sanitarium, rest home, clinic, medical hotel, mortuary, cemetery, mausoleum or other similar facilities.

(c) Interest bearing or noninterest bearing debt securities except for first mortgage bonds issued by individual churches and affiliated religious schools in an aggregate outstanding amount not to exceed twenty-five million dollars by any one single issuer provided that no commission or remuneration of any kind, other than transfer agent's fees, is paid, directly or indirectly, to any person other than a registered dealer or registered salesman in connection with the offer for sale or sale of such bonds.

(d) Securities whose terms include significant features that are common to debt securities and that the commission finds are the functional equivalent of debt securities.

7. Securities listed or approved for listing upon the issuance thereof upon the New York stock exchange, the American stock exchange, the midwest stock exchange or any other national securities exchange that is registered under the securities exchange act of 1934 and that is designated by the commission as provided in this paragraph, and securities designated or approved for designation on notice of issuance on the national market system of a national securities association registered under the securities exchange act of 1934, and all securities senior or equal in rank to any securities so listed or approved for listing, designated or approved for designation or represented by subscription rights or warrants that have been so listed, designated or approved and any warrant or right to purchase or subscribe to any of the foregoing. In addition to the securities exchanges prescribed in this paragraph, the commission may by order designate any registered national securities exchange if it finds that it would be in the public interest for securities listed on the exchange to be exempt. The commission may at any time by order withdraw a designation of an exchange or association made under this paragraph.

8. Commercial paper that arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, that evidences an obligation to pay cash within nine months of the date of issuance or sale, exclusive of days of grace, or any renewal of such paper that is likewise limited, or any guarantee of such paper or of any such renewal.

9. Securities issued or guaranteed by any foreign government with which the United States is at the time of the sale maintaining diplomatic relations, or securities issued or guaranteed by a political subdivision of such foreign government having the power of taxation, if none of the securities of the foreign government or political subdivision are in default either as to principal or interest, and which securities when offered for sale in this state are acknowledged as valid obligations by the foreign government or political subdivision and registered under the securities act of 1933.

10. Notes or bonds secured by a mortgage or deed of trust on real estate or chattels, or a contract or agreement for the sale of real estate or chattels, if the entire mortgage, contract or agreement together with all notes or bonds secured thereby is sold or offered for sale as a unit, except for real property investment contracts.

11. Mortgage related securities, as defined in section 3(a)(41) of the securities exchange act of 1934.

B. Issuers of securities that are exempt under subsection A, paragraphs 6, 7 and 9 of this section, within thirty days after the first sale of the securities in this state, shall pay to the commission a fee of two hundred dollars for each offering, and the commission shall deposit the fees in the office of economic opportunity operations fund established by section 41-5302.

C. Any securities that are offered and sold pursuant to section 4(5) of the securities act of 1933 or that are mortgage related securities as the term is defined in section 3(a)(41) of the securities exchange act of 1934 are not preempted by federal law. These instruments, commonly referred to as private mortgage backed securities, may be exempt from the registration requirements of this chapter if the transaction or the securities are otherwise exempt under this chapter. This subsection specifically overrides the preemption of state law contained in section 106(c) of the secondary mortgage market enhancement act of 1984 (P.L. 98-440).

D. Noncompliance with the requirements in subsection B of this section to pay fees shall not result in the loss of the exemption allowed by this section.

§ 44-1843.01 Nonexempt government securities; covered securities; exemptions

A. Notwithstanding section 44-1843, subsection A, paragraph 1, sections 44-1841 and 44-1842 apply to the following classes of securities that are issued by a person who is located in this state, unless the requirements of subsection B or C of this section are met. The requirements of subsection C of this section apply to the following classes of securities that are described as covered securities in section 18(b)(4)(C) of the securities act of 1933:

1. Any obligations or securities that are industrial development bonds as defined in section 103 of the United States internal revenue code of 1954, as amended, with no exception for the small issue exemptions contained in section 103(b)(6) or 103(d), except that the provisions of this paragraph shall not apply to any issue where substantially all of the proceeds are to be used to provide residential real property for family units, airports, docks, wharves, mass commuting facilities, parking facilities, sewage or solid waste disposal facilities, air or water pollution control facilities, or facilities for the furnishing of water if available on reasonable demand to members of the general public.

2. Bond anticipation notes authorized pursuant to title 48, chapter 6, article 1.

3. Improvement district bonds authorized pursuant to title 48, chapter 6, article 2.

4. Bonds of issuers located outside the state secured only by special assessments.

5. Securities of public subdivisions used to provide monies to finance the acquiring, constructing, improving, equipping or furnishing of medical office buildings, sanitariums, clinics, medical hotels, mortuaries, cemeteries, mausoleums, rest homes, nursing homes, skilled nursing facilities or other similar facilities for use by corporations or entities other than municipal which bonds or notes are not fully secured by payments to be made by an entity owning or operating, repurchasing or leasing a hospital from a political subdivision.

B. Sections 44-1841 and 44-1842 do not apply to the securities that are issued by a person who is located in this state and to which subsection A of this section applies if the following conditions are met:

1. With respect to the nongovernmental entity responsible for making the payments pledged to repay the obligations, there shall be filed with the commission a notice of the proposed offering, the trust indenture, if any, a two hundred dollar filing fee and an official statement or prospectus which includes the financial disclosures required by section 44-1894. The filing shall be by the nongovernmental user with respect to obligations to which subsection A, paragraphs 1 and 5 of this section apply and by the underwriter or dealer with respect to obligations to which subsection A, paragraph 2, 3 or 4 of this section applies. The trust indenture, official statement or prospectus may be filed in draft form if substantially complete. In the case of special assessment bonds to which this section applies, the commission may waive the requirement for filing an official statement or prospectus, modify the information to be contained in the official statement or prospectus or permit the filing of information concerning the bonds in lieu of an official statement or prospectus. The notice, among other things, shall include a statement as to whether a rating on the securities will be sought and from whom the rating will be sought.

2. On the receipt of the notice and official statement or prospectus, the exemption shall be effective within twenty days, or less than twenty days if accelerated by order of the director for good cause shown. The exemption shall not become effective if, within such twenty-day period, the commission issues an order to show cause why the exemption should not be denied. If such order to show cause is issued, the applicant shall be given notice and opportunity to be heard pursuant to article 11 of this chapter. The commission may deny an exemption if it finds that the official statement or prospectus is incomplete, inaccurate or misleading.

C. For securities to be offered in this state that are described as covered securities in section 18(b)(4)(C) of the securities act of 1933 a person shall file all of the following with the commission:

1. A cover letter that describes the offering to be made in this state.

2. Any documents that are filed with the SEC and that are required by the commission.

3. A filing fee of two hundred dollars.

§ 44-1843.02 Special filing requirements for certain exempt or federal covered securities

A. Any advertising and sales material, other than the notices required by law to be published or posted, that is used in connection with offers or sales to the public of any of the securities to which section 44-1843.01, subsection A applies shall be filed with the division three business days before its proposed use. The filing required by this section shall be made by the nongovernmental user, dealer or underwriter.

B. Issuers of securities that are described as covered securities in section 18(b)(3) of the securities act of 1933 shall file concurrently with the commission any document filed with the SEC under the securities act of 1933. If the issuer is not a corporation or other entity organized under the laws of this state, the issuer shall file a consent to service of process that complies with section 44-1862. At the time of the issuer's initial filing with the commission, the issuer shall pay a fee of one hundred dollars.

C. Issuers of securities that are described as covered securities in section 18(b)(4)(D) of the securities act of 1933 shall file with the commission not later than fifteen calendar days after the first sale of securities in or from this state one copy of a notice on form D. The notice on form D shall contain a manual or facsimile signature of a person duly authorized by the issuer and is considered filed with the commission on receipt at the commission's Phoenix office or as of the date on which the notice is mailed by United States registered or certified mail to the commission's Phoenix office if the notice is delivered to that office after the date on which the notice is required to be filed. The issuer shall pay the initial filing fee prescribed in section 44-1861, subsection E.

D. Section 44-1842 applies to federal covered securities transactions unless an exemption is available under another provision of this chapter.

§ 44-1844 Exempt transactions

A. Except as provided in subsections B and C of this section, sections 44-1841 and 44-1842, section 44-1843.02, subsections B and C and sections 44-3321 and 44-3325 do not apply to any of the following classes of transactions:

1. Transactions by an issuer not involving any public offering.

2. The sale of securities by an executor, administrator, guardian or conservator or by a bank the business of which is supervised and regulated by an agency of this state or of the United States, as trustee under a will or trust agreement, or by a receiver or trustee in insolvency or bankruptcy approved by a court of competent jurisdiction of this state or the United States.

3. The sale in good faith and not for the purpose of avoiding the provisions of this chapter by a pledgee of securities pledged for a bona fide debt.

4. The sale in good faith and not for the purpose of avoiding the provisions of this chapter of securities, including securities that when originally issued were exempt pursuant to paragraph 22 of this subsection, by the bona fide owner of such securities, other than an issuer or underwriter, in an isolated transaction, in which the securities are sold either directly or through a dealer as agent for the owner but where the sales are not made in the course of repeated or successive transactions of similar character by the owner and are not made directly or indirectly for the benefit of the issuer or an underwriter of the securities. For the purposes of this paragraph, the sale is not considered to be made in the course of repeated or successive transactions of similar character by the owner if both of the following apply:

(a) The sale is of a security that when originally issued was exempt pursuant to paragraph 22 of this subsection.

(b) At least six months have passed after the date of the last sale of the security by the issuer to a resident of this state.

5. The distribution by a corporation of capital stock or other securities to its stockholders or other security holders as a stock dividend or other distribution out of retained earnings.

6. Any transaction or series of transactions incident to a statutory or judicially approved reorganization, merger, triangular merger, consolidation, or sale of assets, incident to a vote by securities holders pursuant to the articles of incorporation, the applicable corporate statute or other controlling statute, a partnership agreement or the controlling agreement among securities holders.

7. The exchange of securities by an issuer with its existing security holders exclusively, where no commission or remuneration is paid or given, directly or indirectly, for soliciting the exchange, if such exchange has been duly authorized and has been approved by the holders of not less than a majority of the outstanding securities of each class affected by the exchange.

8. An offer or sale of securities to a bank, a savings institution, a trust company, an insurance company, an investment company as defined in the investment company act of 1940, a pension or profit sharing trust or other financial institution or institutional buyer or a dealer whether the purchaser is acting for itself or in a fiduciary capacity.

9. The issuance and delivery of securities in exchange for other securities of the same issuer pursuant to a right of conversion entitling the holder of the securities surrendered in exchange to make such conversion.

10. The issuance and delivery of securities of a corporation, limited liability company or limited partnership to the original incorporators, organizers or general partners, not exceeding ten in number, where the securities are not acquired by the incorporators, organizers or general partners for the purpose of sale to others and are not directly or indirectly sold to a third party within twenty-four months unless an incorporator, organizer or general partner experiences a bona fide change of financial circumstances within such time period, providing original incorporators, organizers or general partners are notified of their right pursuant to title 10 or 29 to review the financial books and records of the corporation, limited liability company or limited partnership at reasonable times.

11. A nonissuer transaction in an outstanding security, including the sale by a dealer, including an underwriter no longer acting as an underwriter in respect to the securities involved, of securities sold and distributed to the public, but not including securities constituting an unsold allotment to or subscription by the dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter, if the class of security has been outstanding in the hands of the public for not less than ninety days preceding the date of the transaction and a recognized manual of securities designated by the commission by rule or order at the time of sale contains the names of the issuer's officers and directors, a statement of financial condition of the issuer as of a date within eighteen months of the date of the sale and a statement of income or operations for each of the two fiscal years next before the date of the statement of financial condition or for the period from the commencement of the issuer's existence to the date of the statement of financial condition if the period is less than two years.

12. The sale by a dealer, including an underwriter no longer acting as an underwriter in respect to the securities involved, of securities of an issue sold and distributed to the public, but not including securities constituting an unsold allotment to or subscription by the dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter, if securities of such issue have been registered by description under sections 44-1871 through 44-1875 or registered by qualification under sections 44-1891 through 44-1902.

13. The sale of commodity investment contracts traded on a commodities exchange recognized by the commission at the time of sale.

14. The sale or issuance of any investment contract or other security in connection with an employee's pension, profit sharing, stock purchase, stock bonus, savings, thrift, stock option or other similar employee benefit plan that meets the requirements for qualification under the United States internal revenue code.

15. Transactions within the exclusive jurisdiction of the commodity futures trading commission as granted under the commodity exchange act.

16. Transactions involving the purchase of one or more precious metals that require, and under which the purchaser receives, within seven calendar days after the payment in good funds of any portion of the purchase price, physical delivery of the quantity of the precious metals purchased by such payment. For the purposes of this paragraph, physical delivery is deemed to have occurred if, within such seven day period, the quantity of precious metals purchased by such payment is delivered, whether in specifically segregated or fungible bulk form, into the possession of a depository other than the seller which is a financial institution, a depository the warehouse receipts of which are recognized for delivery purposes for any commodity on a contract market designated by the commodity futures trading commission or a storage facility licensed or regulated by the United States or any agency of the United States and such depository or other person that qualifies as a depository issues and the purchaser receives a certificate, document of title, confirmation or other instrument evidencing that such quantity of precious metals has been delivered to the depository and is being and will continue to be held by the depository on the purchaser's behalf, free and clear of all liens and encumbrances, other than liens of the purchaser, tax liens, liens agreed to by the purchaser, or liens of the depository for fees and expenses, that have previously been disclosed to the purchaser. For the purposes of this paragraph, "financial institution" means a bank, savings institution or trust company organized under, or supervised pursuant to, the laws of the United States or of this state.

17. Transactions involving a commodity investment contract solely between persons engaged in producing, processing, using commercially or handling as merchants each commodity subject to the contract or any by-product.

18. A nonissuer transaction in an outstanding security, including the sale by a dealer, including an underwriter no longer acting as an underwriter in respect to the securities involved, of securities sold and distributed to the public, but not including securities constituting an unsold allotment to or subscription by the dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter if both of the following apply:

(a) The class of security has been outstanding in the hands of the public for not less than ninety days preceding the date of the transaction.

(b) The securities are listed on an automated quotation system of a national securities association registered under the securities exchange act of 1934.

19. Transactions involving the sale of securities to persons who are not residents of this state and are not present in this state if all of the following conditions are met:

(a) The securities being offered are not blind pool offerings.

(b) At least ten days before the offering date:

(i) The issuer certifies that the securities being offered will be offered and sold in compliance with the securities act of 1933 and the laws and regulations of those states in which the offers and sales will be made.

(ii) The issuer files as a notice filing one copy of any offering materials that may be required by the SEC or the laws and rules of those states in which the offers and sales will be made.

(iii) The issuer submits a filing fee of $200.

(c) Within ten working days of completion of the offering the issuer files a description of the actions taken as to compliance with the securities act of 1933 and the laws and rules of those states in which the offers and sales were made.

(d) The transaction complies with any rule adopted by the commission further restricting the exemption created by this paragraph to prevent any fraudulent practices.

20. Transactions involving offers or sales of one or more promissory notes directly secured by a first lien on a single parcel of real estate on which is located a dwelling or other residential or commercial structure and participation interest in those notes that are exempt under section 4(5) of the securities act of 1933.

21. Offerings of securities of not more than $1,000,000 or the limit established under 17 Code of Federal Regulations section 230.504 as follows:

(a) An unlimited number of sophisticated purchasers may be involved.

(b) Written offering documents providing full and adequate disclosure of material facts must be provided to each purchaser.

(c) Advertising is not allowed without a waiver from the director.

(d) The sum of the following amounts may not exceed the greater of $1,000,000 or the limit established under 17 Code of Federal Regulations section 230.504:

(i) The dollar value for the amount of securities being offered.

(ii) The aggregate offering price of all securities of the issuer sold within the twelve months before the date of the offering.

(iii) The aggregate offering price of all securities of the issuer sold during the course of the offering if the securities were sold in reliance on 15 United States Code section 77c(b) or in violation of 15 United States Code section 77e(a).

(e) Provisions on offerings to sophisticated purchasers are as follows:

(i) An offering to sophisticated purchasers under this section allows sales to either an accredited investor as defined in 17 Code of Federal Regulations section 230.501 or a person, acting alone or with a purchaser representative, who the dealer reasonably believes has the knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the proposed investment. The dealer must reasonably believe that the person has knowledge and experience before a person becomes a purchaser.

(ii) The issuer shall display the following notice on the cover page of the disclosure document in a conspicuous manner in at least twelve-point boldface type:

In making an investment decision, investors shall rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended by any federal or state securities commission or division or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offense. These securities are subject to restrictions on transferability and resale and may not be transferred or resold, except as allowed by 17 Code of Federal Regulations and applicable state securities laws, pursuant to registration or exemption from registration. Investors must be aware that they are required to bear the financial risks of this investment for an indefinite period of time.

(f) One copy of the notice on form D filed with the SEC is filed with the commission not later than fifteen calendar days after the first sale of securities in or from this state.

(g) An offering to purchasers under this section allows all of the following:

(i) Sales to be made only by a dealer who is not the issuer and who is registered in this state.

(ii) The dealer to conduct the sales if the dealer reasonably believes that adequate diligence and review have been applied in connection with the offering and the dealer adequately determines the suitability of the offering to a purchaser.

(iii) Sales if the dealer reasonably believes that the security is suitable for the purchaser after reasonable inquiry concerning the purchaser's investment objectives, financial situation and needs and after consideration of any other information known by the dealer.

(h) The exemption may not be used if an issuer or person affiliated with the issuer or offering is subject to disqualification pursuant to any of the following:

(i) This chapter.

(ii) A rule or order of the commission.

(iii) The securities act of 1933 (15 United States Code section 77c(a)(11)).

(iv) The securities act of 1933, 17 Code of Federal Regulations section 230.262.

(i) The commission may set aside disqualification if:

(i) On a showing of good cause and without prejudice to any other action by the commission, the commission determines that it is not necessary that an exemption be denied under the circumstances.

(ii) The issuer establishes that it made a factual inquiry into whether any disqualification existed under subdivision (h) of this paragraph but did not know and could not have known with the exercise of reasonable care that a disqualification existed. The nature and scope of the requisite inquiry will vary based on the circumstances of the subject issuer and the other offering participants.

22. Transactions involving an intrastate offering, including crowdfunding or virtual coin offerings, if all of the following conditions are met:

(a) The issuer is authorized to do business in this state.

(b) The transaction meets the requirements of the federal exemption for intrastate offerings under 15 United States Code section 77c(a)(11) or 17 Code of Federal Regulations section 230.147 or 230.147A, or any subsequently amended or expanded versions of those sections. For the purposes of this chapter, a corporation, partnership, trust or other form of business organization is not deemed to be organized for the specific purpose of acquiring securities offered under 17 Code of Federal Regulations section 230.147 or 230.147A if the corporation, partnership, trust or other form of business organization either:

(i) Was created before January 1, 2018.

(ii) Invests ninety-five percent or less of its investable assets in offerings authorized by this chapter.

(c) The issuer obtains from each prospective purchaser evidence that the prospective purchaser is a resident of this state and, if applicable, is an accredited investor. A prospective purchaser's residence shall be determined in accordance with 17 Code of Federal Regulations section 230.147(d) or 230.147A(d). If the purchaser is an entity, an affirmative representation made by the entity that the entity is a resident of this state is sufficient evidence that the entity is a resident of this state if the entity also submits proof that the entity is incorporated or organized in this state, is qualified as a resident pursuant to any of the categories identified in 17 Code of Federal Regulations section 230.147(c)(1) or 230.147A(c)(1) or uses an internet protocol address originating from this state to purchase the offering. If the purchaser is an individual, an affirmative representation made by the individual that the individual is a resident of this state is sufficient evidence that the individual is a resident of this state if the individual also submits proof of any of the following:

(i) The individual has a valid driver license or nonoperating identification license issued pursuant to title 28.

(ii) The individual is registered to vote in this state.

(iii) General property tax records show the individual owns and occupies property in this state as the individual's principal residence.

(iv) The individual uses an internet protocol address originating from this state to purchase the offering.

(d) The issuer informs all purchasers that the securities have not been registered and that the securities are subject to the limitation on resales contained in either:

(i) 17 Code of Federal Regulations section 230.147(e), in the manner described in 17 Code of Federal Regulations section 230.147(f).

(ii) 17 Code of Federal Regulations section 230.147A(e), in the manner described in 17 Code of Federal Regulations section 230.147A(f).

(e) Before an offer is made in reliance on this exemption, the issuer pays a filing fee to be prescribed by the director and files a notice with the director, in writing or in electronic form, that contains all of the following:

(i) The name of the issuer, including the issuer's type of entity and the address and telephone number of the issuer's principal office.

(ii) The intended use of the offering proceeds, including any amounts to be paid, as compensation or otherwise, to any owner, executive officer, director, managing member or other person occupying a similar status or performing similar functions on behalf of the issuer.

(iii) The identity of all persons who will be involved in the offer or sale of securities on behalf of the issuer.

(iv) The identity of each person that owns more than ten percent of the ownership interests of any class of securities of the issuer.

(v) The identity of the executive officers, directors and managing members of the issuer and any other individuals who occupy similar status or perform similar functions in the name of and on behalf of the issuer.

(vi) Notice that the issuer is claiming this exemption for the transaction.

(vii) The name and location, whether physical or virtual, of the bank, institution or other repository in which investor monies or proceeds, or both, from the offering will be deposited.

(f) If the information contained on the notice required in subdivision (e) of this paragraph becomes inaccurate for any reason, the issuer files an amendment in writing with the director within thirty days.

(g) All dollar-denominated monies received from investors are deposited into a bank or depository institution authorized to do business in this state, and all such monies are used in accordance with representations made to investors.

(h) The sum of all cash and other consideration to be received as a result of an offering under this exemption does not exceed $5,000,000 in a twelve-month period.

(i) The issuer and any persons affiliated with the issuer or offering are not subject to disqualification pursuant to this chapter, a rule or order of the director, 15 United States Code section 77c(a)(11) or 17 Code of Federal Regulations section 230.262. The director may set aside disqualification if both of the following apply:

(i) On a showing of good cause and without prejudice to any other action by the director, the director determines that it is not necessary that an exemption be denied under the circumstances.

(ii) The issuer establishes that the issuer made a factual inquiry into whether any disqualification existed and did not know and could not have known in the exercise of reasonable care that a disqualification existed. The nature and scope of the requisite inquiry will vary based on the circumstances of the subject issuer and the other offering participants.

(j) The issuer does not accept more than $10,000 from any single purchaser unless the purchaser is an accredited investor under 17 Code of Federal Regulations section 230.501.

23. Transactions by an issuer, its parent or subsidiary companies, and their respective directors, managers, general partners, officers and employees acting as such to offer or sell securities of the issuer pursuant to Regulation A, 17 Code of Federal Regulations section 230.251(a)(2), in which the sum of the aggregate offering price and aggregate sales does not exceed $75,000,000, including not more than $22,500,000 offered by all selling security holders that are affiliates of the issuer.

B. Subsection A, paragraph 11 of this section does not apply to either of the following:

1. Sales by a dealer or salesman who is not registered in this state.

2. Solicited sales to or purchases from a resident of this state by a dealer who does not have, before the initial solicitation, a written new account form signed by the resident or a customer agreement signed by the resident and a previous sale or purchase of a security with the resident.

C. The commission may by order revoke or suspend the exemption under subsection A, paragraph 11 or 18 of this section with respect to any securities or the use of the exemption under subsection A, paragraph 11 of this section by any dealer if it finds that the further sale in this state of the securities or by the dealer would work, or tend to work, a fraud or deceit on the purchaser.

D. A purchaser engaging in an offering that complies with subsection A, paragraph 22 of this section shall not be considered an underwriter, unless the purchaser purchases more than fifty percent of the securities or virtual coins offered for sale in the offering.

E. The issuer and all other parties involved in an offering that complies with subsection A, paragraph 22 of this section may agree that any controversy or claim arising out of or relating to the offering shall be resolved by private arbitration between the parties and the agreement shall be enforceable by the laws of this state.

F. Notwithstanding any other provision of this chapter, the director may enter into agreements with federal, state or foreign regulators to allow securities issued or sold in this state to be sold in another jurisdiction and securities issued or sold in another jurisdiction to be issued or sold in this state.

G. Except as provided in subsection H of this section, a person who facilitates the exchange of a virtual coin shall not be deemed to be a dealer or a person who otherwise deals in securities under this chapter and is not subject to this chapter or chapter 13 of this title due to the exchanged virtual coin if both of the following are met:

1. The person has a reasonable and good faith belief that the virtual coin subject to exchange does not meet the definition of a virtual coin offering.

2. The person takes reasonably prompt action to terminate the person's facilitation of the exchange of the virtual coin after obtaining knowledge that the virtual coin meets the definition of a virtual coin offering.

H. Sections 44-1991 and 44-3241 apply to a person described in subsection G of this section.

I. The director may adopt rules based on 17 Code of Federal Regulations section 230.504 and revise the rules as necessary to keep them current with the federal law.

§ 44-1845 Exemption or special registration of certain securities and transactions by commission rule

A. The commission may by its rules, and subject to the terms and conditions prescribed in those rules, add any class of securities or transactions to the securities or transactions exempted as provided by sections 44-1843, 44-1843.01 and 44-1844, if it finds that registration of such securities under this chapter is not necessary in the public interest and for the protection of investors by reason of the special characteristics of the securities or transactions, the small amount involved or the limited character of the offering.

B. The commission by its rules, and subject to the terms and conditions prescribed in those rules, may, if it finds that registration is not necessary for the public interest and for the protection of investors, exempt or provide special registration for the following transactions:

1. Any transactions, including resales, involving securities offered and sold in reliance on rule 504 of regulation D (17 Code of Federal Regulations section 230.504) or any other exemption under section 3(b) or section 3(a)(11) of the securities act of 1933 or involving a small business issuer under the securities act of 1933 to accredited investors or to other investors meeting lesser net worth or suitability requirements established by the commission.

2. Any solicitations of interest in securities that may be offered and sold pursuant to this chapter.

C. Special registrations pursuant to this section may be exempt from any or all of the provisions of sections 44-1876, 44-1877, 44-1878 and 44-1921, or any rule adopted pursuant to those sections.

§ 44-1846 Powers of commission to exempt certain securities or transactions

A. The commission may grant, in accordance with rules adopted by the commission, exemptions from registration of securities under articles 6 and 7 of this chapter on written petition and on a showing by the issuer satisfactory to the commission that registration is not essential to the public interest or for the protection of investors by reason of the special characteristics of the securities or transactions or the limited character and duration of the offering or the special characteristics or limited number of the offerees or investors.

B. The rules adopted by the commission pursuant to subsection A of this section shall require, but not be limited to:

1. A disclosure document as prescribed by the commission.

2. A financial statement.

3. Minimum standards for investor suitability.

4. A final confidential report of the offering to be made within thirty days of the conclusion of the offering.

C. Exemptions granted under this section shall each relate to a specific issuer and issue and shall not add any class of securities or transactions to those exempt under sections 44-1843, 44-1843.01 and 44-1844, shall be revocable at the discretion of the commission and shall not relieve the issuer from the application of any of the provisions of this chapter except sections 44-1841 and 44-1842.

D. A petition filed under this section shall be accompanied by a fee as provided in section 44-1861.

§ 44-1847 Power of commission to exempt certain securities or transactions of regulated issuers

The commission may from time to time, by rules and regulations and subject to terms and conditions prescribed therein, add any class of securities or transactions to the securities or transactions exempted as provided in sections 44-1843, 44-1843.01 and 44-1844, if it appears to the commission that registration of such securities under this chapter is not essential to public interest or for the protection of investors by reason of authority conferred by law upon an agency of the state empowering such agency to regulate or supervise the issuance of securities of, or the business conducted or to be conducted by, any issuer of securities or any class or classes of issuers of securities.

§ 44-1848 Registration of dealers and salesmen dealing with certain exempt securities or engaging in certain exempt transactions; exemptions

A. A dealer or salesman who engages in transactions involving variable contracts, which are exempt under section 44-1843, subsection A, paragraph 4, must register with the commission pursuant to article 9 of this chapter.

B. Notwithstanding any other law, the commission may by rule require that any dealer or salesman who engages in transactions involving securities exempt under section 44-1843, subsection A, paragraph 1, 7 or 9, who engages in transactions involving securities issued by a nonprofit organization which is engaged in, intends to engage in, controls, finances, or lends funds or property to other entities engaged in the construction, operation, maintenance or management of a hospital, sanitarium, rest home, clinic, medical hotel, mortuary, cemetery, mausoleum or other similar facilities or who engages in transactions described in section 44-1844, subsection A, paragraph 1, 4, 11 or 18 or section 44-1845 shall be registered under article 9 of this chapter.

C. Any rule adopted pursuant to this section shall require registration of a dealer or salesman engaged in transactions described in section 44-1844, subsection A, paragraph 1 only if such dealer or salesman is engaged principally and primarily in the business of making a series of private offerings. For the purposes of this subsection, "series" means in excess of four private offerings in any consecutive twelve-month period.

D. Subsection B of this section does not apply to transactions involving the following securities:

1. Securities issued by those financial institutions and enterprises licensed and regulated pursuant to title 6.

2. Stock and stock options issued pursuant to an employee stock option plan.

3. Promissory notes issued in the normal course of business.

4. Securities issued to corporations not formed for the purpose of evasion of this section.

5. Securities issued in exchange for all or substantially all of the capital stock of another corporation.

6. Such other securities transactions as the commission may exempt by rule.

§ 44-1849 Real property investment contracts; recording

Before the disbursement of funds to any person, a dealer or issuer of a real property investment contract shall cause to be recorded with the recorder of the county in which the real property is located those documents necessary to secure the contract or note being made or sold.

§ 44-1850 Viatical or life settlement investment contracts

A. Section 44-1841 does not apply to viatical or life settlement investment contracts if either:

1. The person who assigns, transfers, sells, devises or bequests any portion of the death benefit under or ownership of either an insurance policy or certificate of insurance does not enter into more than three viatical or life settlement investment contracts in any calendar year.

2. All of the following apply:

(a) At least ten days before the initial sale of a viatical or life settlement investment contract within or from this state, and every twelve months after the initial filing date if the issuer continues to offer securities within or from this state, the issuer files with the commission all of the following:

(i) A notice of the issuer's intent to sell securities pursuant to this section that includes the issuer's name, the issuer's type of organization, the state in which the issuer is organized, the date the issuer intends to begin selling securities within or from this state, the issuer's principal business and mailing address and a statement that the issuer is not prohibited pursuant to subsection E of this section from claiming an exemption pursuant to this subsection. An authorized officer of the issuer shall sign the notice and the signature shall be notarized.

(ii) A consent to service of process.

(iii) An audit report of an independent certified public accountant together with a balance sheet and related statements of income or operations, stockholders' equity or retained earnings and cash flows that reflect the issuer's financial position, the results of operations and cash flows as of a date within fifteen months before the date of filing the notice prescribed in this subdivision. The financial statements listed in this subdivision shall be prepared in conformity with generally accepted accounting principles and shall be examined in accordance with generally accepted auditing standards. If the date of the audit report is more than one hundred twenty days before the date of filing the notice prescribed in this subdivision, the issuer shall provide unaudited interim financial statements prepared in conformity with generally accepted accounting principles.

(b) The issuer discloses to the offeree in writing all of the following:

(i) The purchaser's right to rescind or cancel the investment and receive a refund.

(ii) The name, address and telephone number of the issuing insurance company.

(iii) The total value of the policy and the percentage of the policy the purchaser will own.

(iv) The policy number, issue date and type.

(v) If a group policy, the name, address and telephone number of the group and, if applicable, the material terms and conditions of converting the policy to an individual policy, including the amount of increased premiums.

(vi) If a term policy, the term and the name, address and telephone number of the person who will be responsible for renewing the policy if necessary.

(vii) Whether the policy is contestable.

(viii) If a contestable policy, the risk that the insurance company may cancel the policy or refuse to pay a claim made during the contestable period.

(ix) The policy premiums and terms of policy payments.

(x) The amount of the purchaser's monies that will be set aside to pay premiums.

(xi) The name, address and telephone number of the person who will be the policy owner and the person who will be responsible for paying premiums.

(xii) The date on which the purchaser will be required to pay premiums if necessary and the amount of the premium.

(xiii) The separate amounts of the purchaser's monies that will be used to pay the seller's commission, purchase the policy and pay administrative expenses and other transaction costs.

(xiv) Any other disclosure required by the commission.

B. At least ten days before use within this state, an issuer shall file with the commission all advertising and sales materials that will be published, exhibited, broadcast or otherwise used, directly or indirectly, in the offer or sale of a viatical or life settlement investment contract.

C. A purchaser of a viatical or life settlement investment contract that was purchased pursuant to this section may rescind or cancel the viatical or life settlement investment contract pursuant to this section. The purchaser may rescind or cancel the investment at any time before seven calendar days after the date the purchaser pays the required consideration to the issuer or the issuer's agent or the date the purchaser receives the written disclosures required under subsection A of this section, whichever is later. The purchaser shall notify the issuer or the issuer's agent in writing of the rescission or cancellation. No specific form is required for the rescission or cancellation. The rescission or cancellation is effective when personally delivered, deposited in the United States mail or deposited with a commercial courier or delivery service. The issuer shall refund all the purchaser's money within seven calendar days after receiving the notice of rescission or cancellation.

D. The commission may deny or revoke an exemption pursuant to subsection A of this section. A denial or revocation of the exemption is effective on the date the commission signs the notice of denial or revocation. The commission may deny or revoke the exemption if the commission finds any of the following:

1. The notice filing, advertising materials, sales materials or disclosures made to offerees are incomplete, inaccurate or misleading.

2. The sale of the securities operates or would operate as a fraud or deceit on investors.

3. The issuer is insolvent or is in an unsound financial condition.

4. The issuer has refused to allow the commission to examine the issuer's affairs or has failed or refused to provide information to the commission that is required by this chapter or any rule or order of the commission.

5. The issuer has failed to reasonably supervise the issuer's salesmen.

6. The issuer has knowingly retained a salesman after notice that the salesman has committed an offense under this chapter or has been convicted of an offense or is subject to an order or judgment as described in subsection E of this section.

E. The securities of an issuer are not exempt pursuant to subsection A of this section if the issuer or any of its affiliates, directors, officers, general partners or beneficial owners of at least ten per cent of any class of its equity securities or managing underwriter of the securities:

1. Has been convicted of a felony involving racketeering or a transaction in securities or of which fraud is an essential element or of any offense listed in section 13-2301, subsection D, paragraph 4.

2. Has been convicted within the ten years before or at any time after the filing of a notice of intent to sell securities pursuant to this section of a misdemeanor involving racketeering or a transaction in securities or of which fraud or dishonesty is an essential element.

3. Is subject to an order or judgment of a court of competent jurisdiction or any state or federal administrative tribunal entered within ten years before or at any time after the filing of a notice of intent to sell securities pursuant to this section and that either:

(a) Enjoins or restrains that person from engaging in or continuing any conduct or practice in connection with the sale or purchase of securities or the business of insurance.

(b) Involves fraud, deceit, racketeering or consumer protection laws.

4. Is subject to the reporting requirements of the securities exchange act of 1934 and has not filed all required reports during the twelve calendar months before the filing of a notice of intent to sell securities pursuant to this section.

5. Is subject to an order of an administrative tribunal, an SRO or the SEC denying, suspending or revoking for at least six months a membership, registration or license to do any of the following:

(a) Act as a broker, dealer or salesman of securities.

(b) Act as an investment adviser or investment adviser representative as defined in section 44-3101.

F. The commission at its discretion may waive any disqualification caused by subsection E of this section if the waiver would not be contrary to the public interest. A disqualification under subsection E of this section ceases to exist if the basis for the disqualification has been removed by the jurisdiction that created it.

G. Subsection E, paragraph 3, subdivision (a) of this section does not exclude securities from the exemption provided in subsection A of this section, but may be a basis for denial or revocation pursuant to subsection D of this section, if all of the following apply:

1. The order of judgment is related to a viatical or life settlement investment contract.

2. The issuer provides the commission with a copy of the order or judgment at the time the initial notice is filed pursuant to subsection A, paragraph 2, subdivision (a) of this section or within twenty business days after entry of the order or judgment, whichever occurs last.

3. At the time the order or judgment is entered, the law of the issuing jurisdiction does not include a specific statute, regulation, rule or controlling judicial decision that requires the registration of a viatical or life settlement investment contract or its equivalent as a security.

H. Attempted compliance with this section does not act as an exclusive election.

Article 5 Fees, Form of Consent to Service of Process and Securities Filings

§ 44-1861 Fees; deposit; abandonment

A. By the affirmative vote of at least four commissioners, the commission may establish by rule an annual fee for the registration of a dealer or a salesman. The fee shall be remitted on or before the last working day of December, and the commission shall deposit the fee, pursuant to sections 35-146 and 35-147, in the securities regulatory and enforcement fund established by section 44-2039.

B. The registration fee for any dealer who deals exclusively in securities of which the dealer is the issuer is one hundred dollars.

C. For registration of securities by description, there shall be paid to the commission a nonrefundable registration fee of one-tenth of one percent of the aggregate offering price of the securities that are to be sold in this state, but in no event shall the registration fee be less than two hundred dollars nor more than two thousand dollars. The amount by which a registration fee exceeds one thousand five hundred dollars shall be allocated to the office of economic opportunity operations fund established by section 41-5302.

D. By the affirmative vote of at least four commissioners, the commission may establish by rule a transfer fee for a salesman transferring the salesman's registration from one registered dealer to another registered dealer. The commission shall deposit the fee, pursuant to sections 35-146 and 35-147, in the securities regulatory and enforcement fund established by section 44-2039.

E. The initial filing of a form required for safe harbor exemptions provided for in the securities act of 1933 (15 United States Code section 77(a) et seq.) pursuant to the rules of the commission shall be accompanied by a filing fee of two hundred fifty dollars, of which fifty dollars shall be allocated to the office of economic opportunity operations fund established by section 41-5302. The final filing of the form, if separate from the initial filing, shall be accompanied by a filing fee of one hundred dollars that is allocated to the office of economic opportunity operations fund established by section 41-5302.

F. For a name change of securities registered by qualification or description, a filing fee of one hundred dollars is payable to the commission.

G. For filing a notice required by the commission by rule pursuant to section 44-1845, a filing fee of one hundred dollars is payable to the commission.

H. For filing a petition pursuant to section 44-1846, a filing fee of two hundred fifty dollars is payable to the commission.

I. Except as provided in subsections A, C, D, E and P of this section, section 44-1843 and section 44-1892, paragraph 3, all fees collected under this chapter shall be deposited in the state general fund.

J. An issuer who sells securities in this state in excess of the aggregate amount of securities registered in this state, while the registration is still effective, may apply to register the excess securities by paying three times the difference between the initial registration fee paid and the registration fee required under subsection C of this section or section 44-1892, paragraph 3. Registration of the excess securities, if granted, is effective retroactively to the date of the existing registration.

K. An application for registration of securities or registration of a dealer or salesman or an incomplete notice filing is deemed abandoned if both:

1. The application or notice filing has been on file with the commission for at least six months or the applicant or notice filer has failed to respond to a request for information for at least two months after the date of the request.

2. The applicant or notice filer has failed to respond to the commission's notice of warning of abandonment within sixty calendar days after the date of the warning.

L. The commission shall retain fees collected in connection with abandoned applications or notice filings for deposit in the state general fund.

M. The nonrefundable filing fee for a request for a no-action letter from the securities division is two hundred dollars.

N. The nonrefundable filing fee for an application for registration pursuant to section 44-1902 is two hundred fifty dollars.

O. The fee for submitting fingerprint cards to the department of public safety is the fee required by that department.

P. Any securities exchange established in this state shall pay to the commission on or before March 15 of each calendar year an exchange registration fee in an amount equal to two-tenths of one cent for each share, bond or option or any other single unit of a security that is exchanged during each preceding calendar year. The commission shall deposit the fee, pursuant to sections 35-146 and 35-147, in the securities regulatory and enforcement fund established by section 44-2039 for the purpose of regulating the securities exchange. The commission, by rule, may exempt any sale of securities or any class of sales of securities from the fee imposed by this subsection if it finds that an exemption is consistent with the public interest and the equal regulation of the market and brokers and dealers.

§ 44-1862 Consent to service of process; service on commission

A. If consent to service of process is required under this chapter, such consent shall be in the form prescribed by the commission, shall be irrevocable and shall provide that actions arising out of or involving the sale or purchase of any securities in violation of this chapter may be commenced in any court of competent jurisdiction and proper venue within this state against the person executing the consent by the service of process or pleadings on the commission. The consent to service of process shall appoint the commission.

B. Service of the process or pleading in such action against a person who has filed a consent to service with the commission shall be made by service of duplicate copies, one of which shall be filed in the office of the director and the other immediately forwarded by the director by certified mail to the person against whom the process or pleading is directed at his latest address on file in the office of the director.

§ 44-1863 Receipt of electronic securities filings

An electronic method acceptable to the commission may be used to make any filings relating to the sale or offer for sale of securities. The filing of documents and information using an electronic method is equivalent to paper filing of documents and information with the commission.

Article 6 Registration of Securities by Description

§ 44-1871 Securities that may be registered by description

A. Securities, except real property investment contracts, may be registered by description in the manner provided in sections 44-1872 through 44-1875 if either of the following applies:

1. If such securities are commodity investment contracts or commodity option contracts and the financial condition of the party filing the registration statement meets the requirements specified by any rule of the commission.

2. If securities are of an issuer that both:

(a) Has been in continuous operation for not less than three years.

(b) Has shown, for a period of not less than three years during the five years prior to the date of registration, average annual net income adjusted by adding back interest expenses net of applicable income tax benefits arising therefrom of securities to be retired out of the proceeds of sale, as follows:

(i) In the case of interest-bearing securities, not less than one and one-half times the annual interest charges on the securities and on all other outstanding interest-bearing securities of equal rank.

(ii) In the case of securities having a specified dividend rate, not less than one and one-half times the annual dividend requirements on the securities and on all outstanding securities of equal rank.

(iii) In the case of securities wherein no dividend rate is specified, not less than five per cent calculated by dividing the adjusted average annual net income by the product of the number of all outstanding securities of equal rank at the completion of the offering and the maximum price at which any of the securities are to be offered for sale.

B. An issuer who owns more than fifty per cent of the outstanding voting stock of a corporation is permitted to include the earnings of the corporation applicable to the payment of dividends on the stock so owned in the earnings of the issuer of the securities being registered by description.

§ 44-1872 Procedure for registration by description; registration statement; consent to service of process

Securities qualified under section 44-1871 for registration by description shall be registered by payment of the registration fee prescribed in section 44-1861, subsection C, and filing of the following with the commission by the issuer or a registered dealer:

1. A registration statement signed and verified under oath by the issuer or dealer filing the statement and including the following together with other information prescribed by the commission:

(a) Name and business address of the person filing the statement.

(b) Name and business address of issuer, and address of issuer's principal office in this state, if any.

(c) Title of securities being registered, total amount of securities to be offered, offering price per unit and in the aggregate, amount of underwriting discounts or commissions or other selling expense per unit and in the aggregate and the net amount to be received by the issuer per unit and in the aggregate.

(d) Amount of securities to be offered in this state, offering price per unit and in the aggregate and the amount of the registration fee computed in accordance with section 44-1861, subsection C.

(e) If the securities are registered under the securities act of 1933, a copy of the definitive prospectus filed with the SEC.

(f) A statement of the facts showing that the securities are entitled to be registered by description, including an audit report of an independent certified public accountant for the last three fiscal years together with a balance sheet and related statements of income or operations, stockholders' equity or retained earnings and cash flows that reflect the issuer's financial position, the results of operations and cash flows, which if the securities being registered are commodity investment contracts or commodity option contracts may be those of either the issuer or of the dealer filing the statement, meeting the standards of section 44-1871. The financial statements required by this subdivision must be prepared in conformity with generally accepted accounting principles and examined in accordance with generally accepted auditing standards.

(g) The commission, or the director of securities if proper authority has been delegated to the director, may require that an offering circular describing the securities and containing other information prescribed by the commission or the director be filed with the statement and be delivered to each offeree of such securities by the person filing the statement.

2. If the person who is registering the securities is not a registered dealer or is not a corporation organized under the laws of this state, a consent to service of process conforming to the requirements of section 44-1862.

§ 44-1873 Recording of registration; effective date of registration; renewal; eligibility of registered securities for sale

A. Upon the receipt of a registration statement and the registration fee, and, if required, a consent to service of process, the director shall record the registration of the securities by description in a register of securities. A registration statement filed under the provisions of section 44-1872 shall be effective when filed with the commission.

B. The registration shall be effective for a period of one year and may be renewed for additional periods of one year, if the securities are entitled to registration by description under section 44-1871 at the time of renewal, by the filing of a new registration statement under section 44-1872 together with payment of the fee prescribed in subsection C of section 44-1861.

C. When registered by description as provided in this section, the securities may be sold in this state by any registered dealer or by any registered salesman employed by a registered dealer.

§ 44-1874 Registration of additional securities by description

Additional amounts of securities registered by description under sections 44-1871 through 44-1873 may with the consent of the commission be registered by payment of an additional registration fee, which shall be computed as provided in subsection C of section 44-1861 as a separate fee for each additional amount registered.

§ 44-1875 Filing of additional information

If at any time in the opinion of the commission or the director the information set forth in a registration statement filed under section 44-1872 is insufficient to establish the fact that the securities described therein are entitled to registration by description, the commission or the director may require the issuer or dealer who filed the statement to file further information necessary to establish that the securities are entitled to registration by description.

§ 44-1876 Escrow of certain securities; restrictive sales agreement

A. Except as provided in section 44-1901, as a condition to registration of securities under this chapter, the commission may in its discretion by order require that securities issued for or which are intended to be issued for a patent right, copyright, trademark, process, formula, goodwill, option, lease, assignment, service, or other intangible asset, or for fees or expenses in connection with the promotion or organization of the issuer, shall be subject to a restrictive sales agreement or shall be deposited in escrow in some depository satisfactory to the commission under an escrow agreement subject to the orders of the commission as to withdrawal or termination, and whereby the owners of the securities shall not be entitled to sell or transfer the securities without the consent of the commission. Any security that is subject to a restrictive sales agreement shall have a legend on the back of the security that states that the security is subject to a restrictive sales agreement.

B. In the event of dissolution or insolvency of the issuer during the time such securities are held in escrow, the owners of the securities shall not participate in any distribution of assets until after the owners of all other securities have been paid in full.

§ 44-1877 Escrow of treasury stock; restrictive sales agreement

Except as provided in section 44-1901, the commission may in its discretion by order require as a condition to registration of securities under this chapter that all treasury stock of the issuer, or other securities issued and thereafter acquired by the issuer, shall be subject to a restrictive sales agreement or shall be deposited in escrow in a suitable depository, subject to the terms and conditions as to release from the restrictive sales agreement or the escrow as the commission deems necessary. Any treasury stock or other security that is subject to a restrictive sales agreement shall have a legend on the back of the treasury stock or other security that states that the treasury stock or other security is subject to a restrictive sales agreement.

§ 44-1878 Impoundment of funds from sale of speculative securities

A. Except as provided in section 44-1901, as a condition to registration under this chapter of securities of a speculative nature the commission may by order impose reasonable restrictions and conditions upon the use and disbursement of funds to be derived from the sale of such securities, including impoundment of such funds in a depository satisfactory to the commission, subject to the orders of the commission and to such terms and conditions as to release as the commission deems necessary.

B. If the commission imposes impoundment of funds derived from such securities sales, and if the registrant fails to comply with other terms and conditions imposed by the commission pursuant to this section or fails to comply with the other provisions of, or rules adopted pursuant to, this chapter, then the commission may order such impounded funds returned to the investors purchasing such securities at their election.

C. For the purpose of this section, an issue of a speculative nature means one in which the business or earnings of the issuer are based upon future developments and potentials rather than on current tangible assets.

Article 7 Registration of Securities by Qualification

§ 44-1891 Registration by qualification

Securities required to be registered by qualification under this chapter before they may be sold in this state shall be registered as provided in this article.

§ 44-1892 Documents required for application for registration by qualification; fee

Application for registration of securities by qualification shall be made by the issuer of the securities by filing with the commission the following documents:

1. An application for registration of securities by qualification as provided by section 44-1893.

2. A prospectus as provided by section 44-1894, except as provided in section 44-1901.

3. A nonrefundable registration fee of one-tenth of one percent of the aggregate offering price of securities to be sold in this state, but the registration fee shall not be less than two hundred nor more than two thousand dollars. The amount by which a registration fee exceeds one thousand five hundred dollars shall be allocated to the office of economic opportunity operations fund established by section 41-5302.

4. A consent to service of process as provided by section 44-1862, if the issuer is not domiciled in this state and is not an entity organized under the laws of this state.

§ 44-1893 Application for registration of securities by qualification; contents; accompanying documents; signature and verification

A. The application for registration of securities by qualification as required under sections 44-1892 and 44-1901 shall include the following, together with other information the commission prescribes:

1. Name and address of issuer, and address of issuer's principal office in this state, if any.

2. Title or descriptive name of securities to be registered and total amount of each class of such securities to be offered in this state and elsewhere.

3. Amount of each class of securities to be offered in this state, offering price per unit and in the aggregate, and the amount of the registration fee.

4. If a registration statement as to the securities has been filed under the securities act of 1933, the date on which the registration statement was filed to register the securities under that act, and the effective date of the registration statement, if effective.

5. Eligibility of securities for sale in the following states as of the date of application:

(a) States in which it is proposed to offer the securities for sale to the public.

(b) States, if any, in which the securities are eligible for sale to the public.

(c) States, if any, which have refused, by order or otherwise, to authorize the sale of securities to the public, or have revoked or suspended the right to sell the securities, or in which an application for qualification has been withdrawn.

B. There shall be submitted as part of the application for registration of securities by qualification a copy of:

1. The issuer's charter or other instrument of organization and bylaws, together with all amendments thereto.

2. The indenture and all supplements thereto under which the securities are to be issued.

3. The basic underwriting agreement, if any, and any agreement or agreements among underwriters and dealers pertaining to the distribution of the securities within this state.

4. The opinion of counsel as to the validity of issuance of the securities.

5. A specimen certificate of each security to be registered.

C. Any of the documents required by subsection B of this section may be submitted in preliminary form whereupon a definitive copy of each shall be filed promptly after execution.

D. The application for registration of securities by qualification shall be signed and verified under oath by the issuer. If the issuer is a corporation, trust or other unincorporated association, the application shall be signed by its principal executive officers, and shall be accompanied by a certified copy of a resolution approved by the requisite majority of the board of directors or other governing body.

§ 44-1894 Prospectus; contents; use of consolidated financial statements; amendment or supplement to prospectus required to show material change

A. Except as provided in section 44-1901, the prospectus required by section 44-1892 shall be filed with the application, and shall include the following, together with other information the commission requires:

1. The name and address of the issuer, date of incorporation or organization, general character of the business transacted or to be transacted and a description of the principal assets of the issuer.

2. The name and address and business experience of each officer and director of the issuer, if a corporation or unincorporated association, of each trustee or other fiduciary, if a trust, or of each partner, if a partnership.

3. The total authorized capital of the issuer, the total amount of each class of securities authorized and the total amount of securities of each class issued and outstanding.

4. The total amount of each class of securities held by each officer or director, if a corporation or unincorporated association, by each trustee or other fiduciary, if a trust, by each partner, if a partnership, and by each beneficial owner of ten per cent or more of any class of securities.

5. The total amount of securities of each class issued or to be issued for options, contracts, leases, patents, assignments, services or expenses, goodwill or other intangible assets, the name and address of each person to whom the securities have been or are to be issued and the consideration received or to be received by the issuer therefor.

6. The title or descriptive name and amount of the securities to be offered, the offering price per unit and in the aggregate, the name and address of the principal underwriter and the nature of the underwriting commitment, the amount of underwriting discounts or commissions or other selling expenses per unit and in the aggregate and the net per unit and in the aggregate to be received by the issuer. The statement of underwriting discounts or commissions or other selling expense shall include the maximum amount to be paid by the issuer in cash or otherwise, directly or indirectly, in connection with the sale of the securities.

7. The specific purposes for which funds to be derived from the sale of the securities are to be used and the approximate amount to be devoted to each purpose.

8. A description of all material contracts to which the issuer is a party and of all material litigation involving the issuer.

9. A balance sheet that reflects the issuer’s financial position as of a date not more than one hundred twenty days before the date of filing, and, if the balance sheet is not certified, also a certified balance sheet as of a date not more than one year before the date of filing unless the fiscal year of the issuer has ended within one hundred twenty days before the date of filing, in which case the certified balance sheet may be as of the end of the preceding fiscal year.

10. Statements of income or operations, stockholders' equity or retained earnings and cash flows that reflect the issuer’s results of operations and cash flows for each of the three fiscal years preceding the date of the most recent balance sheet filed and for the period, if any, between the close of the most recent of such fiscal years and the date of the most recent balance sheet filed, or other financial information the commission establishes by order or rule. If the issuer has been in existence for less than three fiscal years, statements of income or operations, stockholders' equity or retained earnings and cash flows shall be for the period of the issuer's existence.

B. If the issuer has one or more subsidiaries, the commission or the director may require, in addition to the balance sheet and related statements of income or operations, stockholders' equity or retained earnings and cash flows required by subsection A, paragraphs 9 and 10 of this section, a consolidated balance sheet and related consolidated statements of income or operations, stockholders' equity or retained earnings and cash flows that reflect the consolidated financial position, results of operations and cash flows for the issuer and its subsidiaries as of the same dates as required by subsection A, paragraphs 9 and 10 of this section.

C. If any material change occurs in the matters set forth in the prospectus filed under section 44-1892 and this section, or if any material change occurs in the plan of business of the issuer as set forth in the prospectus, each change shall be included in an amended prospectus or in a supplement to the prospectus which shall be promptly filed with the commission.

D. In connection with the registration of real property investment contracts, in addition to other information required by this chapter, the prospectus shall include the following:

1. A legal description or address of the property subject to the lien securing the note or contract being made or sold.

2. The name and address of the fee owner of the property subject to the lien securing the note or contract being made or sold.

3. Such information relative to the ability of the person liable on the obligation to meet the contractual payments, as the commission may require.

4. The existence of any improvements on the property or any utilities on or adjacent to the property which will service the property.

5. Terms and conditions of the contract or note being made or sold, including the principal balance owed, and the status of the principal and interest payments on the contract or note.

6. The terms and conditions of all prior recorded encumbrances which constitute liens on the property, the principal balance of such encumbrances and the status of principal and interest payments on the encumbrances.

7. Any assessments and tax liens of record on the property securing the contract or note being sold.

8. An independent appraisal of the value of the property subject to the lien securing the note or contract being made or sold. The appraisal shall state the value of the property as it exists on the date the appraisal is made.

9. The qualifications of the appraiser and the methods used in making the appraisal.

10. The loan to value ratio.

11. A description and amount of all fees paid by the borrower and investor.

12. A description of the method by which the yield is calculated.

E. Notwithstanding the provisions of this section, nothing in this section prevents the commission from entering into formal or informal agreements with the administrators of the securities laws of other states, Canada or Mexico and, as deemed appropriate by the commission, with the North American securities administrators association for the establishment of an international, national or regional coordinated uniform review of equity, debt or any other class of securities to reduce the regulatory burden and expense of registering public offerings in multiple states, Canada and Mexico.

§ 44-1895 Preparation of required financial statements

Financial statements required under this article for registration of securities by qualification shall be:

1. Prepared in conformity with generally accepted accounting principles.

2. Examined in accordance with generally accepted auditing standards.

3. If reporting is necessary, reported on by an independent certified public accountant.

§ 44-1896 Substitution of prospectus filed under or complying with standards of form prescribed by or under securities act of 1933 for prospectus required by sections 44-1892 and 44-1894

A. If the securities being registered by qualification have been or are to be registered under the securities act of 1933, there may be filed in lieu of the prospectus prescribed in section 44-1894 the definitive prospectus of the issuer filed under the securities act of 1933, if dated within thirty days of the application for registration under section 44-1892.

B. A prospectus or an offering circular, the standards of form or content of which are prescribed by any provision of the securities act of 1933, or rules and regulations promulgated thereunder, may be accepted as a prospectus in lieu of that prescribed by section 44-1894 in connection with an application for registration, the registration or the renewal of registration of securities by qualification, but the director shall determine that the nature and scope of the information disclosed in respect to any issuer is substantially equivalent in informative value to that prescribed under section 44-1894.

§ 44-1897 Amendment or withdrawal of application, prospectus or other documents

In the absence of proceedings under section 44-1901 or article 8 of this chapter for denial, suspension or revocation of the registration of the securities, or with the consent of the commission after the institution of such proceedings, an applicant may at any time amend or withdraw an application for registration, prospectus, financial statement or other exhibit filed with the commission. Any document withdrawn shall be marked as withdrawn but retained among the records of the commission.

§ 44-1898 Registration in securities register of securities complying with requirements for registration by qualification; sale of registered securities authorized; delivery of prospectus to purchasers

A. Except as provided in section 44-1901, the director shall within a reasonable time examine an application for registration of securities by qualification and all documents and exhibits filed therewith. When an applicant has fully complied with the provisions of this article relating to registration by qualification, and the rules of the commission thereunder, the director shall register the securities in a register of securities, subject to the limitations and conditions imposed by the commission in accordance with this chapter, unless the commission finds cause for denial as provided in section 44-1901 or article 8 of this chapter.

B. The director shall, by mail, give notice to the issuer of the effective date of registration.

C. After such registration, the securities may be sold by any registered dealer or by any registered salesman employed by a registered dealer.

D. There shall be delivered to each purchaser of securities registered by qualification, before the conclusion of any contract of sale of such securities, a copy of the prospectus meeting the requirements of section 44-1894, 44-1896, 44-1899 or 44-1901 if the prospectus is used more than one year from the effective date of registration of the securities.

§ 44-1899 Renewal of registration by qualification

Registration by qualification under this article shall be effective for a period of one year and may be renewed for additional periods of one year by filing, by a date not later than fifteen days prior to expiration of the registration, of a prospectus meeting the requirements of section 44-1894 or 44-1901 and containing information as of a date not more than ninety days before the date of filing, together with the payment of a fee computed pursuant to section 44-1892, paragraph 3.

§ 44-1900 Registration of additional securities by qualification

Additional amounts of securities registered by qualification under this article may with the consent of the commission be registered by payment of an additional registration fee, which shall be computed as provided in paragraph 3 of section 44-1892 as a separate fee for each additional amount registered.

§ 44-1901 Registration of certain securities by qualification; definitions

A. Subject to the limitations provided in subsections G and I of this section, securities shall be registered by qualification at the time prescribed in subsection K of this section if the requirements of subsections B, E and F of this section are met.

B. To be registered by qualification under this section, securities must satisfy either of the following:

1. An offering of shares, warrants, options or other rights to purchase shares must meet all of the following conditions:

(a) The offering must be made through a firm commitment underwriting by one or more securities broker-dealers who are all of the following:

(i) Members of a national securities association registered under the securities exchange act of 1934.

(ii) Registered as dealers in this state.

(iii) Not affiliates of the issuer.

(b) If the offering is of shares, or units, whose direct or indirect constituents are shares or warrants, options or other rights to purchase shares, both of the following must be true:

(i) The initial offering price for each share, after attributing all consideration paid in the initial offering to the shares, is not less than five dollars.

(ii) The exercise or conversion price for each share, for all warrants, options or other rights to purchase shares, is not less than five dollars.

(c) No securities may be sold in units for the purpose of avoiding the requirements of subdivision (b) of this paragraph.

(d) The total amount of securities offered and sold, in or out of this state, is not less than three million dollars.

(e) The issuer shall provide to the commission undertakings that for four years after the registration:

(i) The issuer will not engage in any transaction with a promoter or an affiliate of a promoter unless the transaction is approved by a majority of the outside directors after full disclosure or is on terms no less favorable to the issuer than would be available from an unaffiliated third party.

(ii) The issuer will not issue to any promoter or an affiliate of any promoter any shares, options, warrants or other rights to purchase shares at a price per share less than the market price as of the close of business on the day before the proposed issuance of the shares, options, warrants or other rights to purchase shares. Nothing in this item alters corporate or other law with respect to fiduciary duties, conflicts of interest or the duty of officers and directors to a corporation and its shareholders.

(f) The issuer's most recent audit report on its financial statements filed with its registration statement or the footnotes accompanying the financial statements do not express reservations about the issuer's ability to continue in business as a going concern and the most recent financial statements filed with its registration statement do not show that the issuer has both negative shareholders' equity and negative working capital.

2. Except as provided in subsection D of this section, an offering of limited partnership interests may be made under this paragraph if:

(a) All securities sold to purchasers in this state are sold only to purchasers who represent in writing that the investment represents not more than ten per cent of the purchaser's net worth less the value of the purchaser's other investments in limited partnership interests and the purchaser has any of the following:

(i) An annual gross income of at least seventy-five thousand dollars and a net worth of at least seventy-five thousand dollars, exclusive of home, car and home furnishings.

(ii) A net worth of at least two hundred twenty-five thousand dollars exclusive of home, car and home furnishings.

(iii) In the case of sales to qualified pension or profit sharing plans or trusts, keogh plans or individual retirement accounts, that the net worth and income requirements set forth in item (i) or (ii) of this paragraph are met by the fiduciary account or by the donor who directly or indirectly supplies the monies for the purchase of the securities.

(b) The issuer has a reasonable basis to believe that each purchaser in this state, along or with one or more representatives, advisors or agents has the knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the offering.

(c) The issuer, the general partners of the issuer and the general partners or other persons liable directly or indirectly for the obligations of the general partners, in the aggregate, have a net worth of not less than one million dollars, as demonstrated by audited financial statements in the case of the issuer or any other entity and by reviewed financial statements in the case of an individual.

C. Nothing in subsection B, paragraph 2 of this section changes the duties enumerated in any rule adopted by a national securities association or national securities exchange registered under the securities exchange act of 1934.

D. The commission may prescribe greater income and net worth requirements than those set forth in subsection B, paragraph 2 of this section if it appears to the commission that the different limitations are in the public interest or in the interest of investors. The income and net worth requirements of subsection B, paragraph 2, of this section are presumptively appropriate and may be raised only if the commission finds that unusual circumstances, such as the speculative nature of the securities, require an increase. If the commission intends to require an increase, the commission shall notify the issuer of that fact and of the maximum increase the commission may require within fifteen business days after the filing of the issuer's initial application under this section or within six business days after the filing of an amendment pursuant to subsection K, paragraph 2 of this section.

E. The issuer or underwriter of the securities shall make an application for registration pursuant to this section by filing with the commission the following:

1. An application for registration of the securities by qualification, in the form prescribed by the commission pursuant to section 44-1892, demonstrating eligibility for registration under this section.

2. The documents required for registration of securities by qualification pursuant to section 44-1892.

3. One copy of the prospectus on file with the SEC in its most recent form as of the date of the filing under this section.

4. One copy of all amendments or any supplements to the prospectus.

5. A final prospectus.

F. The front cover or a sticker attached to the front cover, or the inside front cover, of any prospectus delivered to a purchaser in this state shall contain a conspicuous notice as follows or a notice that is substantially equivalent in plain and concise language:

These securities are registered under the securities act of Arizona, but the fact of the registration is not to be deemed a finding by the Arizona corporation commission or the director of the securities division that this prospectus is true or accurate, nor does the registration mean that the commission or the director has passed on the merits of or otherwise approved the securities described in this prospectus.

G. Except as provided in subsection H of this section, a registration pursuant to this section is not available for the securities of an issuer if the issuer or any of its predecessors, affiliates, directors, officers, general partners or beneficial owners of ten per cent or more of any class of its equity securities, or the managing underwriter of the securities:

1. Has been convicted of a felony involving racketeering or a transaction in securities or of which fraud is an essential element or offenses listed in section 13-2301, subsection D, paragraph 4.

2. Has been convicted within the ten years before the filing of the application under this section, or at any time thereafter, of a misdemeanor involving racketeering or a transaction in securities or of which fraud or dishonesty is an essential element.

3. Is subject to an order, judgment or decree of a court of competent jurisdiction entered within ten years of the date of filing of the application under this section enjoining or restraining him from engaging in or continuing any conduct or practice in connection with the sale or purchase of securities or involving fraud, deceit, racketeering or consumer protection laws.

4. Has been subject to any state or federal administrative order or judgment in connection with the purchase or sale of securities entered within five years before the filing of the application under this section or at any time thereafter.

5. Is subject to the reporting requirements of the securities exchange act of 1934 and has not filed all required reports during the twelve calendar months before the filing of the application under this section.

6. Is subject to an order of an administrative tribunal, an SRO or the SEC denying, suspending or revoking membership or registration as a broker or dealer in securities or an investment adviser or investment adviser representative for at least six months.

H. The commission may by order allow registration pursuant to this section if, in the opinion of the commission, the only reason for disqualification is that the applicant is disqualified pursuant to subsection G of this section and the commission finds that the circumstances do not justify disqualification. A disqualification under subsection G of this section ceases to exist if the basis for the disqualification has been removed by the jurisdiction creating it.

I. An offering of securities pursuant to this section is subject to section 44-1876 only if the offering is made pursuant to subsection B, paragraph 1 and either:

1. The issuer has negative shareholders' equity or negative working capital as shown on its most recent financial statements filed with its registration statement.

2. The issuer has no public market for its shares and has no significant earnings.

J. An offering of securities pursuant to this section is not subject to sections 44-1877 and 44-1878.

K. Unless the commission or the director of the division declares registration under this section effective at an earlier time, a registration of securities under this section becomes effective on the latter of the following:

1. Twenty business days after filing the documents required by subsection E, paragraphs 1, 2 and 3 of this section, except that if an application is filed with the commission more than ten days after the initial registration statement is filed with the SEC, this period shall be extended by the number of days between ten days after the filing of the initial registration statement with the SEC and the filing of an application with the commission.

2. In the case of an offering of limited partnership interests, ten business days after filing any amendment under subsection E, paragraph 4 of this section, containing such material changes to the registration statement that recirculation of the prospectus would be required if a preliminary prospectus was circulated.

3. Concurrently with effectiveness of the registration statement under the securities act of 1933.

4. A later date as the issuer requests.

L. No registration of securities pursuant to this section may be denied, revoked or suspended pursuant to article 8 of this chapter. The commission may enter an order, after a hearing or notice of and opportunity for a hearing, denying, suspending or revoking a registration under this section if it finds that either:

1. The conditions established in this section are not met, the application for registration, prospectus or any financial statement or any document or exhibit filed with the application or any amendment or supplement to the application is incomplete, inaccurate or misleading or the issuer has failed or refused to furnish information required to establish that the conditions of this section are met.

2. Grounds exist for denial of registration under section 44-1921, paragraph 2 or 44-1991.

The commission shall promptly send notice to the issuer of any order entered under this subsection.

M. For the purposes of this section:

1. "Firm commitment underwriting" means that the dealers contract in a principal capacity to purchase at least the minimum amount of securities if any are purchased.

2. "Promoter" means any person who is an officer, director or owner, directly or indirectly, of ten per cent or more of the issuer's outstanding shares before, or on the day of, the registration of the offering, but does not include an affiliated institutional investor which owns less than twenty per cent of the shares to be outstanding upon completion of the proposed offering.

3. "Significant earnings" include earnings per share over the issuer's past two years of operations, or the shorter period of its operations, equal to not less than five per cent per annum of the per share total of stated and additional paid in capital of the issuer during the period. A calculation of significant earnings shall be submitted to the commission and may be computed by the issuer's chief financial officer based on the issuer's financial statements.

4. "Unaffiliated institutional investor" means any unaffiliated bank, investment company registered under the investment company act of 1940, business development company as defined in section 2(a)(48) of the investment company act of 1940, small business investment company licensed by the United States small business administration under section 301 of the small business investment act of 1958, employee benefit plan within the meaning of title I of the employee retirement income security act of 1974, insurance company, private business development company as defined in section 202(a)(22) of the investment adviser act of 1940 or comparable business entity engaged as a substantial part of its business in the purchase and sale of securities.

§ 44-1902 Power of the commission to register certain securities by uniform limited offering registration

A. In accordance with rules adopted by the commission, the commission may register under this article certain securities in an aggregate amount not exceeding five million dollars in any twelve month period.

B. The rules adopted by the commission pursuant to subsection A of this section shall include:

1. That the issuer shall submit a completed small company offering registration form as adopted by the North American securities administrators association, inc., or other disclosure document as prescribed by the commission.

2. That the offering is not a blind pool offering.

3. That the issuer is not an investment company subject to the investment company act of 1940.

4. That the issuer is not subject to the reporting requirements of section 13 or section 15(d) of the securities exchange act of 1934.

5. That the issuer of debt offerings can demonstrate ability to service its debt.

6. That the application for a uniform limited offering registration is accompanied by a nonrefundable fee as provided in section 44-1861.

7. That financial statements and other financial information, if any, required for registration shall be prepared in the manner prescribed in the rules adopted by the commission pursuant to subsection A of this section, notwithstanding any other provision of this chapter.

Article 8 Denial, Revocation or Suspension of Securities by Registration

§ 44-1921 Denial of registration by qualification

Except as provided in section 44-1901, the commission may enter an order denying the registration of any securities to be registered by qualification, if, after a hearing or notice and opportunity for hearing as provided by article 11 of this chapter, it finds that:

1. The application for registration, prospectus, any financial statement, or any document or exhibit filed with the application, or any amendment or supplement thereto, is incomplete, inaccurate or misleading, or the information contained therein is insufficient for a true appraisal of the securities.

2. The issuer or any dealer or salesman designated to engage in the sale of the securities has violated any provision of this chapter, or any rule or order of the commission thereunder.

3. The sale of the securities works or would tend to work a fraud or deceit upon the purchasers thereof, or is or would be unfair or inequitable to the purchasers.

4. The issuer is insolvent, or is in an unsound financial condition.

5. The issuer has refused to permit the commission to examine its affairs, or has failed or refused to furnish information required by this chapter, or any rule or order of the commission thereunder.

6. The issuer, any officer or director of the issuer, if a corporation or unincorporated association, any trustee or other fiduciary of the issuer, if a trust, any partner of the issuer, if a partnership, or any person controlling, controlled by or under common control with the issuer:

(a) Has been convicted within five years preceding the filing of the application for registration of securities, or at any time thereafter, of a felony or misdemeanor involving a transaction in securities, or of which fraud is an essential element.

(b) Is subject to an order, judgment or decree of an administrative tribunal, a court of competent jurisdiction, an SRO or the SEC that is entered within three years preceding the date of filing the application or any time thereafter, and that enjoins or restrains the person from engaging in or continuing any conduct or practice in connection with the sale or purchase of securities.

§ 44-1922 Revocation of registration by qualification or description; grounds

Except for securities registered by qualification pursuant to section 44-1901, the commission may revoke the registration of any securities registered under this chapter if, after a hearing or notice and opportunity for hearing as provided by article 11 of this chapter, it finds that:

1. Any of the grounds for denial specified in section 44-1921 exists.

2. Securities registered by description are not entitled to registration by description.

§ 44-1923 Order denying or revoking registration; notice to issuer and dealers

A. If, after a hearing or notice and opportunity for hearing as provided by article 11 of this chapter, the commission finds grounds for denying or revoking registration of securities, it may enter an order denying or revoking the registration. The order shall state specifically the grounds for its issuance.

B. On the entry of an order denying or revoking the registration of securities, the director shall send notice of the order by certified mail to the issuer of the securities and to all registered dealers engaged in the sale of the securities.

§ 44-1924 Order suspending registration; grounds; hearing; notice

A. Except for securities registered by qualification pursuant to section 44-1901, if the commission has reasonable grounds to believe that the registration of any securities under this chapter should be revoked on any ground specified in section 44-1921 or 44-1922 it may enter an order suspending the registration of such securities pending an examination into the affairs of the issuer or pending a hearing or opportunity for hearing as provided by article 11 of this chapter. No suspension of registration shall be effective for more than thirty days, except with the consent of the registrant. The suspension order shall specify the grounds upon which it is issued.

B. Upon entry of an order suspending the registration of any securities, or an order withdrawing a suspension order previously issued, the director shall send notice of the order to the issuer of the securities and to all registered dealers engaged in the sale thereof.

Article 9 Registration of Dealers and Salesmen

§ 44-1941 Application for registration as dealer; contents; filing; consent to service of process; fee; exemption

A. Application for registration as a dealer may be made by any person. An application for registration shall be signed by the applicant. The application shall be filed with the commission and shall contain the following, together with other information the commission prescribes:

1. The name of the applicant.

2. The address of the principal place of business of the applicant and the addresses of all branch offices, if any, of the applicant in this state.

3. The character of business organization of the applicant and the date of organization.

4. The names and business addresses of all members, partners, officers, directors, trustees or managers of the applicant, a statement of the limitations, if any, of the liability of any partner, member, manager or trustee and a statement setting forth in chronological order the business history of each partner, member, officer, director, trustee or manager during the preceding ten years.

5. A brief description of the general character of the business conducted or to be conducted by the applicant.

6. A list of each state in which the applicant is registered as a dealer and whether or not the registration of the applicant as a dealer has been refused, cancelled, suspended or withdrawn in any state and, if so, a complete statement of the facts with respect thereto.

7. A statement showing whether the applicant is registered as a dealer under the securities exchange act of 1934 and whether any such registration of the applicant has been denied, revoked or suspended or made the subject of proceedings for denial, revocation or suspension by the SEC.

8. The name of each organization of dealers of which the applicant is a member, or before which any application for membership on the part of the applicant is pending, and whether any such membership of the applicant has been denied, revoked or suspended or made the subject of proceedings for denial, revocation or suspension.

9. The name of each securities exchange of which the applicant or any of its partners, officers, directors, trustees, members, managers or employees is a member and whether any such membership has been denied, revoked or suspended or made the subject of proceedings for denial, revocation or suspension.

10. For an applicant that is subject to the securities exchange act of 1934, any financial information that is required to be provided to the SEC or its designee, under the securities exchange act of 1934 to the extent requested by the commission. All other applicants shall provide an audit report of an independent certified public accountant together with a balance sheet and related statements of income or operations, stockholders' equity or retained earnings and cash flows that reflect the dealer's financial position, results of operations and cash flows. The financial statements listed in this subsection must be prepared in conformity with generally accepted accounting principles and examined in accordance with generally accepted auditing standards as of the most recent practicable date before the date of the application or the financial information established by the commission by rule.

11. A statement showing whether the applicant or an officer, director, partner, member, trustee or manager of the applicant has within the past ten years been convicted of or charged with a felony or misdemeanor of which fraud is an essential element, or a felony or misdemeanor involving the purchase or sale of securities or arising out of the conduct of the business of the applicant as a dealer in securities, and, if so, a complete statement of the facts with respect to the felony or misdemeanor.

12. A statement showing whether the applicant, or any officer, director, partner, member, trustee or manager of the applicant, has been enjoined or restrained by a court of competent jurisdiction in connection with any transaction involving the purchase or sale of securities and, if so, a complete statement of the facts with respect to the transaction.

B. An application for registration as a dealer shall be accompanied by a written consent to service of process on the commission in actions against that dealer, conforming to the requirements of section 44-1862, and payment of the registration fee prescribed by section 44-1861, subsection A or B.

C. The commission by rule or order may provide limited registration requirements for any dealer or class of dealers or exempt any dealer or class of dealers from registration under this article if the commission determines that registration is not necessary to protect the public interest due to the special characteristics of the securities or transactions in which the dealer or class of dealers is involved.

§ 44-1942 Power of commission or director to require filing of additional information

The commission or the director may require submission of additional information as to applicant's previous history, record or business experience as deemed necessary to determine whether applicant should be registered as a dealer or salesman.

§ 44-1943 Power of commission to require bond from dealer

A. The commission may require that any dealer, other than a dealer that is registered under the securities exchange act of 1934, that is registered or making application for registration under this article deliver a bond, payable to the state with sureties, conditioned on the faithful compliance with this chapter by the dealer, and providing that on failure to comply the dealer shall be liable to any person entitled to recovery by reason thereof. The amount of bond shall be determined by the commission and predicated on the character and size of the business to be conducted, the financial condition and business reputation of the dealer and other factors the commission deems pertinent in the circumstances, but in no instance shall any bond exceed twenty-five thousand dollars in respect to any dealer.

B. The commission shall recognize and may require the continuance, or increase in amount, of bonds under its jurisdiction.

§ 44-1944 Registration in register of dealers and salesmen of applicant complying with requirements

A. When an applicant has fully complied with this article and the rules of the commission thereunder, the director shall register the applicant as a dealer in a register of dealers and salesmen, unless the commission finds cause for denial as provided for in article 10 of this chapter.

B. When the director has registered an applicant as a dealer the director shall promptly notify the applicant of the registration by mail or by the CRD system.

§ 44-1945 Application for registration as salesman; filing; contents; exemptions

A. Any individual may apply for registration as a salesman. An application for registration as a salesman shall be signed by the applicant and by the registered dealer employing or intending to employ the applicant and shall be duly verified by oath. The application accompanied by the registration fee prescribed by section 44-1861, subsection A shall be filed with the commission and shall include the following, together with other information the commission prescribes:

1. Name, residence address and business address of the applicant.

2. Name of the dealer employing or intending to employ the applicant.

3. Age and education of the applicant.

4. The nature of employment and name and address of each employer of the applicant for the ten years immediately preceding the date of application.

5. A statement showing whether the applicant has been registered as a dealer in or salesman of securities under laws of other states or as a broker or dealer under the securities exchange act of 1934 and whether or not such registration has been denied, cancelled, suspended or revoked and, if so, a complete statement of the facts with respect to the denial, cancellation, suspension or revocation.

6. A statement showing whether the applicant has, within the past ten years, been convicted of or charged with a felony or misdemeanor of which fraud is an essential element, or a felony or misdemeanor involving the purchase or sale of securities and, if so, a complete statement of the facts with respect to the conviction.

7. A statement showing whether the applicant has been enjoined or restrained by a court of competent jurisdiction in connection with the purchase or sale of securities and, if so, a complete statement of the facts with respect to the enjoinder.

8. If the applicant's fingerprints are not on file with the division, the CRD system or the investment adviser registration depository operated by the national association of securities dealers, a full set of fingerprints. The commission shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation.

B. By rule or order, the commission may provide limited registration requirements for any salesman or class of salesmen or exempt any salesman or class of salesmen from registration under this article if the commission determines that registration is not necessary to protect the public interest due to the special characteristics of the securities or transactions in which the salesman or class of salesmen is involved.

C. Any salesman effecting transactions in this state limited solely to those transactions described in sections 15(h)(2) and (3) of the securities exchange act of 1934 is exempt from registration under this article.

§ 44-1946 Registration in register of dealers and salesmen of applicant complying with requirements

A. If an applicant has fully complied with the provisions of this article and the rules of the commission thereunder the director shall register the applicant as a salesman in a register of dealers and salesmen, unless the commission finds cause for denial as provided for in article 10 of this chapter.

B. When the director has registered an applicant as a salesman he shall promptly notify the applicants of the registration by mail or by the CRD system.

§ 44-1947 Register of dealers and salesmen; recording registration and orders; transfer or expiration of registration

A. The names and addresses of all persons who have been registered as dealers or salesmen, and all orders with respect thereto, shall be recorded in a register of dealers and salesmen in the office of the director.

B. The registration of a dealer who deals exclusively in securities of which the dealer is the issuer shall expire one year from the effective date of registration. All other registrations expire on December 31 of each calendar year unless renewed before expiration.

C. A salesman may transfer the salesman's registration to a registered dealer by filing a completed application for registration and remitting a transfer fee to the commission. The commission may transfer the registration of a registered salesman in accordance with the terms of a temporary agent transfer program utilized by the CRD system.

D. The expiration provisions described in subsection B of this section do not affect the right of the commission to suspend or revoke the registration of a dealer or salesman.

§ 44-1948 Reporting requirements of dealers and salesmen; real property records

A. Dealers and salesmen shall retain registration by filing:

1. A supplemental statement showing changes in the facts set forth in the original application for registration as supplemented or amended as such changes occur or within ninety days after the change.

2. In the case of a dealer that is registered under the securities exchange act of 1934 and to the extent requested by the commission, any financial information that is required to be provided to the SEC or its designee under the securities exchange act of 1934. The dealer shall simultaneously file the same financial information with the commission.

3. In the case of a dealer that is not registered under the securities exchange act of 1934, annually and within ninety days of the audit report date, the audit report of an independent certified public accountant, together with a balance sheet and related statements of income or operations, stockholders' equity or retained earnings and cash flows that reflect the dealer’s financial position, the results of operations and cash flows prepared in conformity with generally accepted accounting principles and examined in accordance with generally accepted auditing standards.

B. Dealers shall maintain files in connection with transactions involving real property investment contracts that include listings, deposit receipts, cancelled checks, copies of contracts, agreements and sellers' statements, documents concerning appraisals and credit investigations and all other correspondence relating to the purchase and sale of real property investment contracts. Dealers shall maintain books, records and accounts in conformity with generally accepted accounting principles, showing the receipt and disbursement of funds received by dealers and salesmen in connection with the purchase and sale of real property investment contracts. Dealers shall maintain files and records relating to transactions involving real property investment contracts for five years from the date the registration expires. The files and records are subject to inspection at all times by authorized representatives of the commission.

§ 44-1949 Duty of dealer to give notice of termination of employment of salesman; automatic suspension of salesman's registration; notice of employment of salesman

Each registered dealer shall promptly notify the director of the termination of the employment of a registered salesman. The registration of the salesman shall automatically be suspended from the time of termination of the employment until the salesman is again employed by a registered dealer and the director is notified by the dealer in writing or by the CRD system, and the registered dealer is notified of approval of the registration by the director or the CRD system or the salesman has complied with all requirements in accordance with a temporary agent transfer program utilized by the CRD system and the commission.

§ 44-1950 Active military duty; compensation

A salesman who is registered under this chapter and who is a member of the Arizona national guard, the United States armed forces reserves or the regular component of the United States armed forces shall remain eligible to receive compensation for transactions under this chapter while the salesman is on federal active duty or while temporarily with a disability following federal active duty if the salesman's registration is in approved status or has been placed in a specially designated inactive status by the financial industry regulatory authority.

Article 10 Denial, Revocation or Suspension of Registration as Dealer or Salesman

§ 44-1961 Grounds for denial, revocation or suspension of dealer registration; administrative remedies

A. After a hearing or notice and opportunity for a hearing as provided in article 11 of this chapter, the commission may enter an order suspending for a period of not to exceed one year, denying or revoking the registration of a dealer if the commission finds that:

1. The application for registration of the dealer, any financial statement, document or other exhibit filed with the application or any supplement or amendment to the application is incomplete, inaccurate or misleading.

2. The dealer is insolvent or is in an unsound financial condition.

3. The dealer has violated this chapter or any rule or order of the commission under this chapter.

4. The dealer purchases or sells securities at such variations from current market prices as, in the light of all the circumstances, are unconscionable.

5. The dealer has failed to file with the commission any record, report, financial statement or other information required under this chapter or any rule or order of the commission under this chapter or has refused to allow an examination into the dealer's affairs.

6. The dealer is not qualified by training or experience.

7. The dealer has knowingly retained a salesman after notice that the salesman has committed an offense under this chapter.

8. The dealer has been convicted within ten years preceding the date of filing the application for registration as a dealer, or at anytime thereafter, of a felony or misdemeanor involving a transaction in securities, of which fraud is an essential element or arising out of the conduct of any business in securities.

9. The dealer is permanently or temporarily enjoined by order, judgment or decree of an administrative tribunal or a court of competent jurisdiction from engaging in or continuing any conduct or practice in connection with the sale or purchase of securities.

10. The dealer is subject to an order of an administrative tribunal, an SRO or the SEC denying, suspending or revoking membership or registration as a broker or dealer in securities or an investment adviser or investment adviser representative for at least six months.

11. The dealer has been guilty of any fraudulent act or practice in connection with the purchase or sale of securities.

12. The dealer has failed to reasonably supervise its salesmen.

13. The dealer has engaged in dishonest or unethical practices in the securities industry.

14. The dealer has engaged in dishonest or unethical practices in business or financial matters.

B. In addition to denying, revoking or suspending the registration, if the commission finds that a dealer has engaged in an act, practice or transaction described in subsection A, paragraph 4, 12 or 13 of this section, the commission may do one or more of the following:

1. Assess administrative penalties.

2. Order the dealer to cease and desist from engaging in the act, practice or transaction or doing any other act in furtherance of the act, practice or transaction.

3. Take appropriate affirmative action, as prescribed by the commission, to correct the conditions resulting from the act, practice or transaction, including a requirement to provide restitution.

C. It is sufficient cause for denial, revocation or suspension of registration of a dealer as provided in this section, if the dealer is a partnership, corporation, unincorporated association or trust, that a member of the partnership, an officer or director of the corporation or unincorporated association, a trustee or other fiduciary of such trust or a person controlling, controlled by or under common control with the dealer has been guilty of any act or omission that would be a sufficient ground for denying or revoking the registration of an individual dealer.

D. If the registration of a dealer is revoked or denied, that dealer may not file with the commission an application for registration under this chapter or for licensure under chapter 13 of this title for at least one year after the date of the revocation or denial.

§ 44-1962 Grounds for denial, revocation or suspension of registration of salesman; administrative remedies

A. After a hearing or notice and opportunity for a hearing as provided by article 11 of this chapter, the commission may enter an order suspending for a period of not to exceed one year, denying or revoking the registration of a salesman if the commission finds that:

1. The application for registration of the salesman, any statement, document or other exhibit filed with the application or any supplement or amendment to the application is incomplete, inaccurate or misleading.

2. The salesman has violated this chapter or any rule or order of the commission under this chapter.

3. The salesman has failed to file with the commission any record, report or other information required under this chapter or any rule or order of the commission under this chapter or has refused to allow an examination into the salesman's affairs.

4. The salesman is not qualified by training or experience.

5. The salesman is not employed by a registered dealer.

6. The salesman has been convicted within ten years preceding the date of filing the application for registration as a salesman, or at anytime thereafter, of a felony or misdemeanor involving a transaction in securities, of which fraud is an essential element or arising out of the conduct of any business in securities.

7. The salesman is permanently or temporarily enjoined by order, judgment or decree of an administrative tribunal or a court of competent jurisdiction from engaging in or continuing any conduct or practice in connection with the sale or purchase of securities.

8. The salesman is subject to an order of an administrative tribunal, an SRO or the SEC denying, suspending or revoking membership or registration as a broker or dealer in securities or an investment adviser or investment adviser representative for at least six months.

9. The salesman has been guilty of any fraudulent act or practice in connection with the purchase or sale of securities.

10. The salesman has engaged in dishonest or unethical practices in the securities industry.

11. The salesman has failed to reasonably supervise salesmen under the salesman's supervisory control.

12. The salesman has engaged in dishonest or unethical practices in business or financial matters.

B. In addition to denying, revoking or suspending the registration, if the commission finds that a salesman has engaged in an act, practice or transaction described in subsection A, paragraph 10 or 11 of this section, the commission may do one or more of the following:

1. Assess administrative penalties.

2. Order the salesman to cease and desist from engaging in the act, practice or transaction or doing any other act in furtherance of the act, practice or transaction.

3. Take appropriate affirmative action, as prescribed by the commission, to correct the conditions resulting from the act, practice or transaction, including a requirement to provide restitution.

C. If the registration of a salesman is revoked or denied, that salesman may not file with the commission an application for registration under this chapter or for licensure under chapter 13 of this title for at least one year after the date of the revocation or denial.

§ 44-1963 Entry of order of denial, revocation or suspension

A. If, after A hearing or notice and opportunity for A hearing as provided by article 11 of this chapter, the commission finds grounds to deny, revoke or suspend the registration of a dealer or salesman, the director shall enter an order in the register of dealers and salesmen denying, revoking or suspending the registration of the dealer or salesman. The order shall state specifically the grounds for its issuance.

B. A copy of the order shall be sent by certified mail to the dealer or salesman whose registration is denied, revoked or suspended and, if the denial, revocation or suspension of the registration is of a salesman, to the registered dealer who employs the salesman.

C. Denial, suspension or revocation of the registration of a dealer shall also suspend or revoke the registration of all of the dealer's salesmen, but suspension or revocation of the registration of a salesman solely because the salesman was employed by a dealer whose registration was denied, suspended or revoked shall not prejudice subsequent applications for registration by the salesman.

D. A dealer or salesman that has voluntarily terminated or allowed the dealer's or salesman's registration to lapse continues to be subject to actions by the commission under this article in connection with conduct that began before the termination or lapse of the registration. The commission shall begin any action under this article against the dealer or salesman within two years after the termination or lapse of the registration.

§ 44-1964 Temporary suspension orders

A. If the commission has reasonable grounds to believe that a registered dealer or salesman has been guilty of any act or omission which would be sufficient ground for denying or revoking the registration of the dealer or salesman, it may enter an order temporarily suspending the registration of the dealer or salesman pending an examination into his affairs, or pending a hearing or notice and opportunity for hearing as provided by article 11 of this chapter, but no temporary suspension order shall be effective for more than thirty days except with consent of the registrant. The suspension order shall state specifically the grounds for its issuance.

B. On entry of the temporary suspension order, or of an order withdrawing a temporary suspension order previously entered, the director shall send a copy of the order, by certified mail, to the dealer or salesman whose registration is affected at the dealer's or salesman's business address, and, if the order affects the registration of a salesman, to the registered dealer who employs the salesman.

Article 11 Hearings

§ 44-1971 Initiation of hearing; purpose of hearing

Hearings may be ordered by the commission on the commission's own initiative or at the written request of any interested person:

1. For the purpose of administering or obtaining information necessary in the enforcement of this chapter or the rules, regulations or orders of the commission thereunder.

2. To enable the commission to take appropriate action in connection with any pending application for registration of any securities, dealer or salesman.

3. To modify the terms and conditions of any registration.

4. To determine whether the registration of any securities or of any dealer or salesman should be denied, suspended or revoked.

§ 44-1972 Notice of and opportunity for hearing; time of hearing

A. Before entering an order denying or revoking the registration of any securities as provided in section 44-1901 or article 8 of this chapter the commission shall send to the issuer of the securities, and, if the application for registration of the securities was filed by a registered dealer, to the dealer, a notice of hearing or notice of opportunity for hearing.

B. Before entering an order denying, revoking or suspending except temporarily the registration of a dealer or salesman as provided in article 10 of this chapter, the commission shall send to the dealer or salesman, and, if a salesman, to the registered dealer who employs or intends to employ the salesman, a notice of hearing or notice of opportunity for a hearing.

C. Before entering an order to cease and desist or an order for rescission, restitution or penalties, the commission shall serve on each respondent a notice of a hearing or a notice of an opportunity for a hearing. The commission by rule may provide for temporary cease and desist orders where the public welfare requires immediate action.

D. Notices of hearing or notices of opportunity for a hearing shall be served as prescribed by rules adopted by the commission for service of subpoenas and cease and desist orders. The notice shall contain a statement of the matters to be considered and, if a notice of opportunity for a hearing, shall set forth that the person to whom the notice is sent will be afforded a hearing upon request to the commission if the request is made in writing within ten days after receipt of the notice.

E. When a person requests a hearing in accordance with this article, the commission shall set a date, time and place for the hearing and shall promptly notify the person requesting the hearing. The date set for the hearing shall be within sixty days, but not earlier than twenty days, after the request for a hearing has been made, unless otherwise agreed to by both the commission and the person requesting the hearing. If the hearing is initiated by the commission, the notice of hearing shall specify the date, time and place of the hearing.

§ 44-1973 Conduct of hearing

A. Any hearing under this article may be held before the commission, a member thereof, the director, or other authorized officer of the commission as the commission directs.

B. Conduct of the hearing shall be governed by this section, and by the rules of practice and procedure which may be adopted by the commission. Neither the commission nor any member thereof, nor the director, nor other authorized officer of the commission, shall be bound by the technical rules of evidence in the conduct of hearings under this article, and no informality in any proceeding, as in the manner of taking testimony, shall invalidate any order, decision, rule or regulation made, approved or confirmed by the commission.

C. A stenographic record of all proceedings and testimony shall be made of each hearing by a shorthand reporter appointed by the commission, and the record shall be reduced to writing and filed with the commission.

§ 44-1974 Rehearings

The commission may institute or grant rehearings on application made within twenty calendar days after entry of an order or decision. Unless otherwise ordered, filing an application for rehearing does not stay the commission's decision or order. If the commission does not grant a rehearing within twenty calendar days, the application is considered to be denied. Rehearings are subject to the provisions of this article.

Article 12 Appeals

§ 44-1981 Judicial review

Decisions of the commission pursuant to this chapter shall be subject to judicial review in the Maricopa county superior court pursuant to title 12, chapter 7, article 6.

Article 13 Fraudulent Practices

§ 44-1991 Fraud in purchase or sale of securities

A. It is a fraudulent practice and unlawful for a person, in connection with a transaction or transactions within or from this state involving an offer to sell or buy securities, or a sale or purchase of securities, including securities exempted under section 44-1843 or 44-1843.01 and including transactions exempted under section 44-1844, 44-1845 or 44-1850, directly or indirectly to do any of the following:

1. Employ any device, scheme or artifice to defraud.

2. Make any untrue statement of material fact, or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

3. Engage in any transaction, practice or course of business which operates or would operate as a fraud or deceit.

B. In a private action brought pursuant to subsection A, paragraph 2 of this section or section 44-1992, if the person who offered or sold the security proves that any portion or all of the amount recoverable under subsection A, paragraph 2 of this section or section 44-1992 represents an amount other than the depreciation in value of the subject security resulting from the part of the prospectus or oral communication, with respect to which the liability of the person is asserted, not being true or omitting to state a material fact required to be stated or necessary to make the statement not misleading, then the amount shall not be recoverable. This subsection does not apply to any actions based on allegations of activities constituting dishonest or unethical practices in the securities industry.

§ 44-1992 Filing of misleading information with commission

It is a fraudulent practice and unlawful:

1. For a person to subscribe to or make or cause to be made an untrue statement of a material fact in an application, registration statement, prospectus, financial statement or document required to be filed under any provision of this chapter or any rule, regulation or order of the commission thereunder.

2. To omit or cause to be omitted from any such application, registration statement, prospectus, financial statement, or other statement or document, a material fact or statement necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

§ 44-1993 Misrepresentation of effect of registration of securities

Neither the fact that securities are registered by description under article 6 of this chapter or by qualification under article 7 of this chapter, nor the fact that registration of the securities has not been denied, suspended or revoked shall be deemed a finding by the commission or by the director that the registration statement, application for registration, prospectus, or any financial statement, or other document or exhibit filed therewith is true or accurate, or does not contain untrue statements of material facts, or omit material facts, or to mean that the commission or the director has passed upon the merits of or otherwise approved the securities so registered. It is a fraudulent practice and unlawful for a person to make or cause to be made to a prospective purchaser of the securities a statement or other representation contrary to this section.

§ 44-1994 Misrepresentation of effect of registration of dealers or salesmen

Neither the fact that a dealer or salesman is registered under article 9 of this chapter, nor the fact that the registration of the dealer or salesman has not been denied, suspended or revoked shall be deemed a finding by the commission or by the director that the dealer or salesman is of good business reputation, or is not lacking in integrity, or is not insolvent, or that the application for registration of the dealer or salesman, or any financial statement, document or exhibit filed therewith is true or accurate, or does not contain untrue statements of material facts or omit material facts. It is a fraudulent practice and unlawful for a dealer or salesman in connection with any transaction involving the purchase or sale of securities to make a statement or other representation contrary to this section.

§ 44-1995 Violation; classification

A person violating a provision of this article is guilty of a class 4 felony.

§ 44-1996 Prohibition of referral fees

A dealer, salesman, agent or person associated with a dealer, salesman or agent shall not directly or indirectly solicit or accept remuneration for assisting an attorney in obtaining the representation of any person in any private action arising under this chapter, the securities act of 1933 (15 United States Code sections 77a through 77bbbb) or the securities exchange act of 1934 (15 United States Code sections 78a through 78ll).

§ 44-1997 False registration statement; liability

A. If any part of the registration statement filed under any federal or Arizona securities laws relating to securities offered or sold within or from this state contained, at the time the part became effective, an untrue statement of a material fact or omitted to state a material fact required to be stated or necessary to make the statement not misleading, any person acquiring the securities may commence in any court or administrative forum of competent jurisdiction an action against any of the following persons unless it is proved that at the time of the acquisition the purchaser knew of the untruth or omission:

1. Every person who signed the registration statement.

2. Every person who was a director or person performing similar functions of the issuer or partner in the issuer at the time of the filing of the part of the registration statement.

3. Every person who consents to be and is named in the registration statement as being or about to become a director, person performing similar functions or partner.

4. Every accountant, engineer or appraiser or any person whose profession gives authority to a statement made by the person who with the person's consent has been named as having prepared or certified any part of the registration statement or as having prepared or certified any report or valuation that is used in connection with the registration statement, with respect to the statement in the registration statement, report or valuation, that purports to have been prepared or certified by the person.

5. Every underwriter with respect to the security.

B. If a person acquires the security after the issuer has made generally available to its security holders an earnings statement covering a period of at least twelve months beginning after the effective date of the registration statement, the right of recovery under subsection A is conditioned on proof that the person acquired the security relying on the untrue statement in the registration statement or relying on the registration statement and not knowing of the omission. Reliance may be established without proof that the person read the registration statement.

C. No person other than the issuer is liable under subsections A and B who proves any of the following:

1. Before the effective date of the part of the registration statement for which liability is asserted the person both:

(a) Had resigned from or had taken steps permitted by law to resign from, or had ceased or refused to act in every office, capacity or relationship in which the person was described in the registration statement as acting or agreeing to act.

(b) Had advised the issuer and either the commission or the SEC in writing that the person had taken the action and that the person would not be responsible for that part of the registration statement.

2. If that part of the registration statement became effective without the person's knowledge, on becoming aware of that fact the person promptly acted and advised either the commission or the SEC, in accordance with paragraph 1 of this subsection and gave reasonable public notice that the part of the registration statement had become effective without the person's knowledge.

3. Regarding any part of the registration statement:

(a) Not purporting to be made on the authority of an expert and not purporting to be a copy of or extract from a report or valuation of an expert, and not purporting to be made on the authority of a public official document or statement, the person after reasonable investigation had reasonable grounds to believe and did believe at the time that part of the registration statement became effective, that the statements in that part of the registration statement were true and that there was no omission to state a material fact required to be stated or necessary to make the statements not misleading.

(b) Purporting to be made on the person's authority as an expert or purporting to be a copy of or extract from a report or valuation of the person as an expert either of the following:

(i) The person had after reasonable investigation reasonable grounds to believe and did believe at the time that part of the registration statement became effective that the statements contained in that part of the registration statement were true and that there was no omission to state a material fact required to be stated or necessary to make the statements not misleading.

(ii) That part of the registration statement did not fairly represent the person's statement as an expert or was not a fair copy of or extract from the person's report or valuation as an expert.

(c) Purporting to be made on the authority of another expert or purporting to be a copy of or extract from a report or valuation of another expert, the person had no reasonable grounds to believe and did not believe at the time that part of the registration statement became effective that the statements in that part of the registration statement were untrue or that there was an omission to state a material fact required to be stated or necessary to make the statements not misleading, or that part of the registration statement did not fairly represent the statement of the expert or was not a fair copy of or extract from the report or valuation of the expert.

(d) Purporting to be a statement made by an official or purporting to be a copy of or extract from a public official document, the person had no reasonable grounds to believe and did not believe at the time that part of the registration statement became effective that the statements were untrue or that there was an omission to state a material fact required to be stated or necessary to make the statements not misleading, or that part of the registration statement did not fairly represent the statement made by the official or was not a fair copy of or extract from the public official document.

D. In determining for the purposes of subsection C, paragraph 3 what constitutes reasonable investigation and reasonable grounds for belief, the standard of reasonableness is the standard required of a prudent person in the management of the person's own property.

E. If any person becomes an underwriter of the security after the part of the registration statement with respect to which the person's liability is asserted becomes effective, for the purposes of subsection C, paragraph 3 that part of the registration statement shall be considered effective with respect to the person as of the date the person became an underwriter.

F. If the defendant proves that any portion or all of the damages represents an amount other than the depreciation in value of the security resulting from the statement described in subsection A, the portion or all of the damages are not recoverable. The action authorized under subsection A or B may be to recover the damages represented by the difference between the amount paid for the security, not to exceed the price at which the security was offered to the public, and any of the following:

1. The value of the security as of the time the action was brought.

2. The price at which the security was disposed of in the market before the action was brought.

3. The price at which the security was disposed of after the action but before judgment if the damages are less than they would be if determined under paragraph 1 of this subsection.

G. Unless the underwriter has knowingly received directly or indirectly from the issuer for acting as an underwriter some benefit in which all other underwriters similarly situated did not share in proportion to their respective interests in the underwriting, the underwriter is not liable in any action or as a consequence of an action brought under subsection A for damages greater than the total price at which the securities underwritten by the underwriter and distributed to the public were offered to the public.

H. In any action under this section the court may require an undertaking for the payment of the costs of the action, including reasonable attorney fees. If judgment is rendered against a party on the motion of the other party, the costs may be assessed in favor of the party whether or not the undertaking has been required if the court believes the action or the defense to have been without merit, in an amount sufficient to reimburse the party for the reasonable expenses incurred by the party in connection with the action. The costs awarded are taxable in the manner usually provided for taxing of costs in the court in which the action was heard.

I. Any or all of the persons specified in subsection A shall be jointly and severally liable. Every person who becomes liable for any payment under this section may recover contribution from any person who, if sued separately, would have been liable for the same payment, unless the person who has become liable also is guilty of fraudulent misrepresentation under federal securities laws and the other person is not.

J. The amount recoverable under this section shall not exceed the price at which the security was offered to the public.

§ 44-1998 Offers and sales; liability

A. In any case relating to securities offered or sold within or from this state, any person who offers or sells a security by means of a prospectus or oral communication that includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading is liable to the purchaser of the security from that person, as long as the purchaser did not know of the untruth or omission, as provided by this section. The purchaser may bring an action in any court or administrative forum of competent jurisdiction to recover the consideration paid for the security with interest, minus the amount of any income received from the security, on the tender of the security, or for damages if the purchaser no longer owns the security. The person has the burden of proof that the person did not know and in the exercise of reasonable care could not have known of the untruth or omission. If the person meets the burden of proof, the person is not liable. This subsection applies notwithstanding any exemption under section 77c of the securities act of 1933 (15 United States Code sections 77a through 77bbbb), except for an exemption under subsection A, paragraph 2 of that section, and notwithstanding any exemption under article 4 or 7 of this chapter, except for section 44-1843, subsection A, paragraph 1.

B. In an action under subsection A of this section, if the person who offered or sold the security proves that any portion or all of the amount recoverable under subsection A of this section represents an amount other than the depreciation in value of the subject security resulting from the asserted untruth or omission the portion or amount is not recoverable.

§ 44-1999 Controlling persons; liability

A. Every person who, by or through stock ownership, agency or otherwise or who pursuant to or in connection with an agreement or understanding with one or more other persons by or through stock ownership, agency or otherwise controls any person liable under this article, other than section 44-1991 or 44-1992, is liable jointly and severally with and to the same extent as the controlled person to any person to whom the controlled person is liable, unless the controlling person had no knowledge of or reasonable grounds to believe in the existence of the facts by reason of which the liability of the controlled person is alleged to exist.

B. Every person who, directly or indirectly, controls any person liable for a violation of section 44-1991 or 44-1992 is liable jointly and severally with and to the same extent as the controlled person to any person to whom the controlled person is liable unless the controlling person acted in good faith and did not directly or indirectly induce the act underlying the action.

§ 44-2000 Contrary stipulations void

Any condition, stipulation or provision binding any person acquiring any security to waive compliance with this chapter or chapter 13 of this title or of the rules of the commission is void.

Article 14 Civil Remedies and Liabilities

§ 44-2001 Voidable sale or contract for sale of securities; remedy

A. A sale or contract for sale of any securities to any purchaser in violation of section 44-1841 or 44-1842 or article 13 of this chapter is voidable at the election of the purchaser, and the purchaser may bring an action in a court of competent jurisdiction to recover the consideration paid for the securities, with interest, taxable court costs and reasonable attorney fees, less the amount of any income received by dividend or otherwise from ownership of the securities, on tender of the securities purchased or the contract made, or for damages if the purchaser no longer owns the securities.

B. A person against whom an action for a violation of section 44-1991 is brought is not liable under subsection A of this section if the person sustains the burden of proof that the person did not know and in the exercise of reasonable care could not have known of the untrue statement or misleading omission.

§ 44-2002 Remedy for voidable purchases

A. A purchase or contract for purchase from a seller of securities made in violation of section 44-1842, 44-1991 or 44-1994 is voidable at the election of the seller of the securities, and the seller may bring an action in a court of competent jurisdiction to recover the amount of the seller's damages, with interest, taxable court costs and reasonable attorney fees.

B. A person against whom an action for a violation of section 44-1991 is brought is not liable under subsection A of this section if the person sustains the burden of proof that the person did not know and in the exercise of reasonable care could not have known of the untrue statement or misleading omission.

§ 44-2003 Joint and several liability; proportionate liability; determination of responsibility; uncollectible share; settlement discharge; limitation on actions; definitions

A. Subject to the provisions of this section, an action brought under section 44-2001, 44-2002 or 44-2032 may be brought against any person, including any dealer, salesman or agent, who made, participated in or induced the unlawful sale or purchase, and such persons shall be jointly and severally liable to the person who is entitled to maintain such action. No person shall be deemed to have participated in any sale or purchase solely by reason of having acted in the ordinary course of that person's professional capacity in connection with that sale or purchase.

B. Any covered person against whom a final judgment is entered in a private action is jointly and severally liable for damages only if the trier of fact determines that the covered person recklessly or knowingly committed a violation of this chapter.

C. A covered person against whom a final judgment is entered in a private action is liable solely for the portion of the judgment that corresponds to the percentage of responsibility of the covered person as prescribed in subsection D of this section. In any case in which a contractual relationship permits, a covered person who prevails in any private action may recover the attorney fees and costs of that covered person for the private action.

D. The court in a private action shall instruct the jury to answer special interrogatories, or if there is no jury, make findings, for each covered person and any other person the parties claim to have caused or contributed to the loss incurred by the plaintiff, including any person who has entered into a settlement with the plaintiff or plaintiffs, concerning each of the following:

1. Whether the person committed a violation of this chapter.

2. The percentage of responsibility of the person, measured as a percentage of the total fault of all persons who caused or contributed to the loss incurred by the plaintiff.

3. Whether the person knowingly committed a violation of this chapter.

E. The responses to the interrogatories or findings under subsection D of this section shall specify the total amount of damages that the plaintiff is entitled to recover and the percentage of responsibility of each covered person found to have caused or contributed to the loss incurred by the plaintiff or plaintiffs. In determining the percentage of responsibility under this section, the trier of fact shall consider both the nature and extent of:

1. The conduct of each covered person found to have caused or contributed to the loss incurred by the plaintiff or plaintiffs.

2. The causal relationship between the conduct of each covered person and the damages incurred by the plaintiff or plaintiffs.

F. Notwithstanding subsection C of this section, on a motion made within six months after a final judgment is entered in any private action, if the court determines that all or part of the share of the judgment of the covered person is not collectible against that covered person and is also not collectible against a covered person described in subsection B of this section, each covered person described in subsection C of this section is liable for the uncollectible share as follows:

1. Each covered person is jointly and severally liable for the uncollectible share if the plaintiff establishes that the plaintiff is an individual whose recoverable damages under the final judgment are greater than ten per cent of the net worth of the plaintiff, and the plaintiff's net worth is less than two hundred thousand dollars, excluding the value of the plaintiff's owned primary residence.

2. With respect to any plaintiff not described in paragraph 1 of this subsection, each covered person is liable for the uncollectible share in proportion to the percentage of responsibility of that covered person, except that the total liability of a covered person under this subsection may not exceed fifty per cent of the proportionate share of that covered person, as determined under subsection E of this section.

G. For purposes of subsection F of this section, net worth is determined as of the date immediately preceding the date of the purchase or sale by the plaintiff of the security that is the subject of the action and is equal to the fair market value of assets, minus liabilities, including the net value of the plaintiff's investments in real and personal property and personal residences.

H. The total payments required pursuant to subsection F of this section shall not exceed the amount of the uncollectible share. A covered person against whom judgment is not collectible is subject to contribution and to any continuing liability to the plaintiff on the judgment.

I. To the extent that a covered person is required to make an additional payment pursuant to subsection F of this section, the covered person may recover contribution from any of the following or any combination of the following:

1. The covered person originally liable to make the payment.

2. Any covered person liable jointly and severally pursuant to subsection B of this section.

3. Any covered person who is held proportionately liable pursuant to this section, who is liable to make the same payment and who has paid less than the person's proportionate share of that payment.

4. Any other person who is responsible for the conduct giving rise to the payment and who would have been liable to make the same payment.

J. The standard for allocation of damages under subsections B, C and D of this section and the procedure for reallocation of uncollectible shares under subsection F of this section shall not be disclosed to members of the jury.

K. If a covered person settles any private action at any time before a final verdict or judgment, the court shall enter an order discharging the covered person from all claims for contribution brought by other persons. On entry of the settlement by the court, the court shall enter a bar order constituting the final discharge of all obligations to the plaintiff of the settling covered person arising out of the action. The order bars all future claims for contribution arising out of the action by:

1. Any person against the settling covered person.

2. The settling covered person against any person, other than a person whose liability has been extinguished by the settlement of the settling covered person.

L. If a covered person enters into a settlement with the plaintiff before a final verdict or judgment, the verdict or judgment shall be reduced by the greater of either:

1. The amount that corresponds to the percentage of responsibility of that covered person.

2. The amount paid to the plaintiff by that covered person.

M. Except as provided in subsection K of this section, a covered person who becomes jointly and severally liable for damages in any private action may recover contribution from any other person who, if joined in the original action, would have been liable for the same damages. A claim for contribution shall be determined based on the percentage of responsibility of the claimant and of each person against whom a claim for contribution is made.

N. In any private action determining liability, an action for contribution shall be brought within six months after the entry of a final, nonappealable judgment in the action, except that an action for contribution brought by a covered person who was required to make an additional payment pursuant to subsection F of this section may be brought within six months after the date on which the payment was made.

O. For purposes of this section, reckless conduct by a covered person does not constitute a knowing violation of this chapter by the covered person.

P. For the purposes of this section:

1. "Covered person" means a defendant in any private action arising under sections 44-1991 and 44-1992 or a defendant who is an outside director in a private action arising under section 44-1997.

2. "Knowingly committed a violation of this chapter" means either:

(a) In an action that is based on an untrue statement of material fact or omission of a material fact necessary to make the statement not misleading, the covered person makes an untrue statement of a material fact with actual knowledge that the representation is false or omits the statement of a fact necessary in order to make the statement made not misleading, with actual knowledge that, as a result of the omission, one of the material representations of the covered person is false and other persons are likely to reasonably rely on that misrepresentation or omission.

(b) In an action that is based on any conduct that is not described in subdivision (a), the covered person engages in conduct with actual knowledge of the facts and circumstances that make the conduct of that covered person a violation of this chapter.

§ 44-2004 Limitation of civil actions

A. No civil action shall be maintained under this article to enforce any liability based on a violation of section 44-1841 or 44-1842 unless brought within one year after the violation occurs.

B. Except as provided in subsection C of this section, no civil action shall be brought under this article to enforce any liability based on a violation of article 13 of this chapter unless brought within two years after discovery of the fraudulent practice on which the liability is based, or after the discovery should have been made by the exercise of reasonable diligence.

C. No civil action shall be brought under this article to enforce any liability based on a violation of section 44-1997 or 44-1998 unless brought within two years after the discovery of the untrue statement or the omission. No action shall be brought to enforce a liability created under section 44-1997 more than five years after a bona fide offer of the security to the public or under section 44-1998 more than five years after the sale of the security.

§ 44-2005 Remedy not exclusive

Nothing in this article shall limit any statutory or common law right of any person in any court for any act involved in the sale of securities.

Article 15 Conservators and Receivers

§ 44-2011 Petition for appointment of conservator or receiver

If an act, practice or transaction constituting a violation of section 44-1841 or 44-1842 or article 13 of this chapter is alleged in a complaint filed by this state or any agency of this state, the commission may petition the superior court in Maricopa county for the appointment of a conservator to reorganize the affairs of, or a receiver to wind up the affairs of, the violator. The commission may also transmit any evidence it has available concerning the act, practice or transaction to the attorney general. On receipt of the evidence, the attorney general may petition the superior court in Maricopa County for the appointment of a conservator to reorganize the affairs of, or a receiver to wind up the affairs of, the violator. Process in actions filed pursuant to this section may be served on the defendant in any county in this state in which the defendant transacts business or is found.

§ 44-2012 Complaint; contents

A complaint filed in the superior court of Maricopa county for the appointment of a conservator to reorganize, or a receiver to wind up, the affairs of a violator of this chapter shall set out the alleged violations with particularity and shall be verified by the director or assistant director of securities.

§ 44-2013 Preliminary injunction; appointment of temporary conservator or receiver

A. The superior court may, after the complaint is filed, issue a preliminary injunction restraining the defendant named in the complaint from removing, encumbering or otherwise disposing of his property located within this state, and the court may in its discretion appoint a temporary conservator or receiver to take possession of the books, records and assets of every description of the defendant, pending further order of the court.

B. The court shall set a time, not more than ten days from the date of the preliminary injunction, for a hearing on the complaint and any response filed thereto, or response to the preliminary injunction.

§ 44-2014 Permanent injunction; permanent conservator or receiver

A. The complaint, together with the order of the court setting the time of hearing, shall be served upon the defendant together with the notice of the time of hearing.

B. The court, upon the hearing and after hearing the evidence, may dismiss the complaint or make the preliminary injunction permanent, restraining the defendant from removing, encumbering or otherwise disposing of his property, and may make permanent the order of the temporary appointment of a conservator or receiver.

§ 44-2015 Conservator; bond; powers and duties

A. A temporary or permanent conservator shall be an officer of the court and shall give bond in the amount and conditioned as ordered by the court. The conservator has all the rights, powers and privileges of a receiver and is subject to the obligations, penalties and orders of the court to which receivers are subject.

B. In all matters relating to the rights, powers, privileges, obligations and penalties of a conservator, and the powers of the court in respect thereto, equitable rights and remedies shall govern when applicable.

C. A conservator appointed under this article shall act at the direction or with the approval of the court in the administration of the properties and affairs of a violator to conserve, protect and preserve, or to effect a reorganization of such properties and affairs, and to do all things necessary in furtherance thereof to protect the rights of persons having a direct interest in the properties and affairs of the violator.

§ 44-2016 Duration of appointment of conservator; distributing assets; winding up affairs of violator

A. A permanent conservator shall administer the affairs until, in the opinion of the court, the appointment is no longer necessary to conserve, protect and preserve, reorganize or further administer the properties and affairs in his possession to protect the rights of all persons in interest. At such time the court shall make a finding to that effect and cause an order to be entered accordingly, and may direct delivery of all the properties and assets in the possession of the conservator to the persons legally entitled thereto.

B. If it appears to the court at any time that the affairs of the violator are incapable of reorganization or that reorganization is not advisable, the court shall make a finding to that effect and cause an order to be entered accordingly, and may provide that the conservator shall thereafter proceed as a receiver for the purpose of winding up the affairs of the violator.

§ 44-2017 Compensation of conservators and other personnel

A conservator may incur expenses and employ engineers, accountants, attorneys or other persons in connection with his duties as the court approves. The compensation of the conservator and personnel appointed shall be fixed by the court and paid from assets in possession of the conservator.

Article 16 Enforcement

§ 44-2031 Jurisdiction and venue of offenses and actions; joinder of spouse

A. The superior court in this state shall have jurisdiction over violations of this chapter, the rules and orders of the commission under this chapter and all actions brought to enforce any liability or duty created under this chapter, except actions or proceedings brought under section 44-2032, paragraph 2, 3 or 4 or appeals filed under article 12 of this chapter, over which the superior court in Maricopa county shall have exclusive jurisdiction.

B. Any action authorized by this chapter may be brought in the county in which the defendant is found, is an inhabitant or transacts business, or in the county where the transaction took place, and in such cases, process may be served in any other county in which the defendant is an inhabitant or in which the defendant is found.

C. The commission may join the spouse in any action authorized by this chapter to determine the liability of the marital community. This subsection does not authorize the commission to join any individual who is divorced from the defendant at the time an action authorized by this chapter is filed.

§ 44-2032 Cease and desist orders; civil penalty; injunctions; civil restitution; prosecutions for violations

If it appears to the commission, either on complaint or otherwise, that any person has engaged in, is engaging in or is about to engage in any act, practice or transaction that constitutes a violation of this chapter, or any rule or order of the commission under this chapter, the commission, in its discretion may:

1. Issue an order directing such person to cease and desist from engaging in the act, practice or transaction, or doing any other act in furtherance of the act, practice or transaction, and to take appropriate affirmative action within a reasonable period of time, as prescribed by the commission, to correct the conditions resulting from the act, practice or transaction including, without limitation, a requirement to provide restitution as prescribed by rules of the commission. If a person fails to comply with an order issued under this paragraph, the superior court in Maricopa county, on application by the commission, shall:

(a) Issue an order to show cause why the person has not complied with the commission's order. On a showing that the person has violated the commission's order, the court may exercise its contempt powers and impose a civil penalty of not more than twenty thousand dollars for each violation as the court considers to be just and proper.

(b) Award reasonable costs, including attorney fees, to the commission, unless other circumstances make an award of costs unjust. Any costs, including attorney fees, collected pursuant to this paragraph shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

2. Apply to the superior court in Maricopa county or any federal court for an injunction restraining the person from the violation, and on a showing by the commission that the person has engaged in, is engaging in or is about to engage in an act, practice or transaction in violation of this chapter or any rule or order of the commission, a temporary restraining order, preliminary injunction or permanent injunction shall be granted without bond. Process in those actions may be served on the defendant in any county of this state in which the defendant transacts business or is found.

3. Apply to the superior court in Maricopa county or any federal court for an order restoring to any person in interest any monies or property, real or personal, that may have been acquired or transferred in violation of this chapter.

4. Petition the superior court in Maricopa county or transmit any evidence available concerning the act, practice or transaction to the attorney general and the attorney general may petition the superior court in Maricopa county for the appointment of a conservator to reorganize the affairs of, or a receiver to wind up the affairs of, the violator. Process in those actions may be served on the defendant in any county in this state where the defendant transacts business or may be found.

5. Transmit any evidence available concerning the act, practice or transaction to a county attorney, the attorney general or the United States attorney who may, with or without the transmittal, directly institute or cause to be instituted any criminal proceedings as the evidence warrants.

6. If the joinder authorized by section 44-2031 or 44-3291 is inapplicable because the defendant and the defendant's spouse are divorced, apply to the superior court in Maricopa county or any federal court for an order restoring to any person in interest that former spouse's portion of any monies or property, real or personal, including noncash proceeds as defined in section 47-9102, that may have been acquired or transferred by the defendant in violation of this chapter. Any order issued pursuant to this paragraph must be supported by clear and convincing evidence.

§ 44-2033 Burden of proof of exemptions

In any action, civil or criminal, when a defense is based upon any exemption provided for in this chapter, the burden of proving the existence of the exemption shall be upon the party raising the defense, and it shall not be necessary to negative the exemption in any petition, complaint, information or indictment, laid or brought in any proceeding under this chapter.

§ 44-2034 Evidence of registration or notice filing; lack of registration or notice filing

A certificate signed by the chairman or a member of the commission or by the director and under seal of the commission showing that a notice filing has or has not been filed pursuant to article 4 of this chapter or chapter 13, article 12 of this title or that securities have or have not been registered by description as provided in article 6 of this chapter or registered by qualification as provided by article 7 of this chapter, or that a dealer or salesman has or has not been registered as provided in article 9 of this chapter, shall constitute evidence of the facts so certified and shall be admissible in evidence in any civil or criminal action or proceeding in which the question of such notice filing or registration may be at issue.

§ 44-2035 Evidence of record of proceedings

A certificate signed by the chairman or any member of the commission or by the director, and under seal of the commission, in regard to the record of any proceeding under this chapter for denial, revocation or suspension of the registration of securities or the registration of any dealer or salesman shall constitute evidence of such record and shall be admissible in any proceeding, civil or criminal, in which such record may be at issue.

§ 44-2036 Administrative penalty

A. A person who, in an administrative action, is found to have violated any provision of this chapter or any rule or order of the commission may be assessed an administrative penalty by the commission, after a hearing, in an amount of not to exceed five thousand dollars for each violation.

B. Any penalties collected pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

C. If judicial review has not been sought under title 12, chapter 7, article 6, a certified copy of any commission order requiring the payment of restitution or administrative penalties may be filed in the office of the clerk of the superior court in any county of this state. The clerk shall treat the commission order in the same manner as a judgment of the superior court. A commission order so filed has the same effect as a judgment of the superior court and may be recorded, enforced or satisfied in like manner. No filing fee is required under this section.

§ 44-2037 Civil penalties

A. A person who, in a civil proceeding, is found to have violated any provision of this chapter or any rule or order of the commission shall pay a civil penalty in an amount of not to exceed five thousand dollars for each violation.

B. The commission, or the attorney general at the commission's request, may bring an action in Maricopa county in the same manner as the filing of other such actions. On the finding of a violation of this chapter or any rule or order of the commission by the defendant in any such action, the court may impose the civil penalty provided by this section in an amount it deems appropriate for each such violation. Nothing in this section shall be construed to limit the right of a party in an action under this section to a trial by jury.

C. If an administrative penalty has been imposed pursuant to section 44-2036 for violation of the same provision, rule or order arising out of the same circumstances and has been paid by the person against whom the civil penalty is imposed, the court shall reduce the civil penalty by the amount of the administrative penalty paid.

D. A person who violates any order or injunction issued by a court of competent jurisdiction pursuant to this chapter, in addition to any other penalty or remedy for contempt of court, shall pay to this state a civil penalty of not more than twenty thousand dollars for each violation as the court deems just and proper. For the purpose of this section, the superior court issuing any order or injunction shall retain jurisdiction and the cause shall be continued. The commission or the attorney general acting in the name of this state may petition for recovery of civil penalties pursuant to this section.

§ 44-2038 Costs recoverable

In an action brought under the provisions of this article, the commission or the attorney general is entitled to recover costs, which in the discretion of the court may include an amount representing reasonable attorney fees and investigative expenses for the services rendered, for the use of this state.

§ 44-2039 Securities regulatory and enforcement fund; purpose

A. The securities regulatory and enforcement fund is established and shall be administered by the commission under the conditions and for the purposes provided by this section. Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing.

B. Fees collected pursuant to section 44-1861, subsections A, D and P and section 44-3324 shall be deposited, pursuant to sections 35-146 and 35-147, in the securities regulatory and enforcement fund, except as provided in subsection D of this section and except that all other revenues collected in each fiscal year in excess of the amount appropriated from the fund by the legislature shall be deposited in the state general fund.

C. Monies in the fund are subject to legislative appropriation. The commission shall use the monies in the fund for education and regulatory, investigative and enforcement operations in the securities division and a part of general administrative and hearing expenses of the commission.

D. On February 1 and June 30 of each year, monies deposited in the securities regulatory and enforcement fund pursuant to section 44-3324 are transferred to the state general fund.

§ 44-2040 Violation; classification

A person who knowingly violates any provision of this chapter or any rule, regulation or order of the commission thereunder for which a penalty is not provided is guilty of a class 1 misdemeanor.

§ 44-2041 Continuance of prior law for certain purposes

A. All laws which were repealed by Laws 1951, chapter 18, section 25, shall remain in force for the prosecution and punishment of any person who, prior to June 17, 1951, committed an offense contrary to the provisions of any law in force at the time the offense was committed, and such person may be prosecuted and punished under the law as it existed when the violation occurred.

B. Sales, contracts or agreements made prior to June 17, 1951, and all rights and liabilities of the parties thereto, shall continue as provided by the law as it existed at the time such sales, contracts or agreements were made. All laws or parts thereof repealed by Laws 1951, chapter 18, section 25, shall remain in force for the enforcement of such rights and liabilities.

§ 44-2042 Confidentiality

A. The names of complainants and all information or documents obtained by any officer, employee or agent of the commission, including the shorthand reporter or stenographer transcribing the reporter's notes, in the course of any examination or investigation are confidential unless the names, information or documents are made a matter of public record. An officer, employee or agent of the commission shall not make the confidential names, information or documents available to anyone other than a member of the commission, another officer or employee of the commission, an agent who is designated by the commission or director, the attorney general or law enforcement or regulatory officials, except pursuant to any rule of the commission or unless the commission or the director authorizes the disclosure of the names, information or documents as not contrary to the public interest.

B. The commission shall not disclose the home address, home telephone number and social security number of a salesman unless the commission or the director authorizes the disclosure of the information as not contrary to the public interest.

Article 17 Capital Markets

§ 44-2051 Advancement of economic development and capital formation

In order to foster the economic development of this state, the commission, when acting pursuant to this chapter, shall consider measures, consistent with investor protection, to increase the availability of and access to capital by companies in this state, to lower the cost of such capital and to foster the development in this state of a diverse financial services industry providing a full range of financial services, including efficient capital markets.

§ 44-2052 Exchange operation; commission rules

A. If instructed by the commission the director shall seek to facilitate the formation, pursuant to title 10, chapter 2, article 1, of one or more private corporations to operate one or more securities exchanges in Arizona.

B. The governing board of a corporation operating a securities exchange shall establish exchange procedures and rules including procedures and rules governing the conduct of members and prohibiting deceptive, manipulative, abusive or fraudulent practices. The procedures and rules established by the board shall be as similar as practicable to the procedures and rules established by the midwest stock exchange, incorporated. In its discretion, the board may deviate from the procedures and rules of the midwest stock exchange if it deems it necessary to do so.

C. The governing board of a corporation operating a securities exchange shall establish listing and delisting standards and criteria for the exchange. Such standards and criteria shall not be less stringent than the entry and maintenance standards, in effect on March 8, 1991, for companies listed on the national association of securities dealer automated quotation system. These standards and criteria may not be waived unless permitted by order of the commission. On certification by the president that a company desiring to list its securities for trading on the exchange meets all formal listing requirements, the board shall make a determination whether the proposed listing is in the public interest. In making its determination, the board shall consider the financial condition of the company and any probable changes in the company, the experience, quality, character and integrity of the management of the company, the company's present and anticipated markets for its products or services and competition in these markets, and the company's prior compliance with all applicable laws and rules. The board shall deny listing to any company that in its sole judgment is not suitable for listing. The board shall seek to repress manipulation, fraud and abusive practices in connection with the trading of listed or unlisted securities and to avoid instances of insolvency of companies whose securities are traded on the exchange.

D. The commission shall adopt rules for the regulation of any securities exchange located in this state. Shares of common stock whose price at the time of listing or initial unlisted trading is less than five dollars per share shall not be listed or traded on an Arizona securities exchange, unless permitted by order of the commission. A procedure, rule, listing or delisting standard or criteria for a securities exchange in Arizona adopted by the governing board pursuant to subsection B or C shall be consistent with rules adopted by the commission. All procedures, rules, standards and criteria adopted by the governing board of a corporation operating a securities exchange in Arizona pursuant to subsections B and C shall be submitted to and approved by the commission before they become effective.

§ 44-2053 Limitation on liability

Neither the state nor any political subdivision, nor the commission, the Arizona commerce authority, nor any state officer, agent or employee acting in good faith, except as otherwise explicitly provided by statute, shall be liable for any injury or damage to investors, exchange members, their subsidiaries, affiliates or employees or the general public resulting from any actual or opportunity losses suffered through the activities of the securities exchange. For these purposes, the term "activities" is to be construed as any actual and anticipated exchange matter.

§ 44-2055 Securities public reference rooms

In order to make information about Arizona public companies more available to investors, dealers, securities analysts, financial journalists and other interested persons, the commission shall establish in this state one or more public reference rooms that provide access to public information about publicly traded companies whose corporate headquarters or principal place of business is in this state or that are listed on an Arizona exchange.

§ 44-2056 Free trade

In order to enhance and enlarge the capital markets for companies in this state, the commission may negotiate formal or informal agreements with the administrators of the securities laws of other states, especially in the western United States, Canada and Mexico, and, as deemed appropriate by the commission, with the North American securities administrators association with the intention of reducing the regulatory burden and expense of registering public securities offerings in multiple states, Canada and Mexico.

Article 18 Private Securities Litigation

§ 44-2081 Private securities class action litigation

A. This section applies in each private action that arises under this chapter and that is brought as a plaintiff class action pursuant to the Arizona rules of civil procedure or any federal or other jurisdictional counterpart to the rules.

B. Each plaintiff seeking to serve as a representative party on behalf of a class shall provide a sworn certification to the court that is signed by the plaintiff, filed with the complaint and includes a statement that:

1. The plaintiff has reviewed the complaint and has authorized its filing.

2. The plaintiff did not purchase the security that is the subject of the complaint at the direction of the plaintiff's counsel or in order to participate in any private action arising under this chapter.

3. The plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at a deposition or trial.

4. Sets forth all of the plaintiff's transactions involving the security that is the subject of the complaint during the class period specified in the complaint.

5. Identifies any other action under this chapter, the securities act of 1933 (15 United States Code sections 77a through 77bbbb) or the securities exchange act of 1934 (15 United States Code sections 78a through 78ll) filed within three years before the plaintiff signs the certification in which the plaintiff has sought to serve as a representative party on behalf of a class.

6. The plaintiff will not accept any payment for serving as a representative party on behalf of a class beyond the plaintiff's pro rata share of any recovery, except as ordered or approved by the court in accordance with subsection J.

C. The certification filed pursuant to subsection B is not a waiver of the attorney-client privilege.

D. Within twenty days after the date on which the complaint is filed, the plaintiff or plaintiffs shall publish, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class of the pendency of the action, the claims asserted and the purported class period. The notice shall include a statement that, within sixty days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class. If more than one action on behalf of a class asserting substantially the same claim or claims arising under this article is filed, only the plaintiff or plaintiffs in the first filed action are required to publish the notice. The notice is in addition to any notice required pursuant to the Arizona rules of civil procedure or any federal or other jurisdictional counterpart to the rules. Notwithstanding this subsection, the court may narrow the geographic scope of the publication of the notice required by this subsection, if the court finds that substantially all members of the class would receive notice.

E. Within ninety days after the date on which a notice is published under subsection D the court shall consider any motion made by a purported class member in response to the notice, including any motion by a class member who is not individually named as a plaintiff in the complaint or complaints, and shall appoint the most adequate plaintiff as lead plaintiff. The most adequate plaintiff is that member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members in accordance with this subsection. Subject to subsection F, the court shall adopt a presumption that the most adequate plaintiff in any private action arising under this chapter is the person or group of persons that has either filed the complaint or made a motion in response to a notice under subsection D, in the determination of the court has the largest financial interest in the relief sought by the class and otherwise satisfies the requirements of rule 23 of the Arizona rules of civil procedure or any federal or other jurisdictional counterpart to the rules.

F. The presumption prescribed in subsection E may be rebutted only on proof by a member of the purported plaintiff class that the presumptively most adequate plaintiff will not fairly and adequately protect the interests of the class or is subject to unique defenses that render that plaintiff incapable of adequately representing the class. A plaintiff may conduct discovery relating to whether a member or members of the purported plaintiff class are the most adequate plaintiff if the plaintiff demonstrates a reasonable basis for a finding that the presumptively most adequate plaintiff is incapable of adequately representing the class.

G. If more than one action on behalf of a class asserting substantially the same claim or claims arising under this chapter has been filed, and any party has sought to consolidate those actions for pretrial purposes or for trial, the court shall not make the determination required by subsection E until after the decision on the motion to consolidate is rendered. As soon as practicable after the decision is rendered, the court shall appoint the most adequate plaintiff as lead plaintiff for the consolidated actions in accordance with this section.

H. Subject to the approval of the court, the most adequate plaintiff shall select and retain counsel to represent the class.

I. Except as the court permits and consistent with the purposes of this section, a person may be a lead plaintiff, or an officer, director or fiduciary of a lead plaintiff, in not more than five class actions during any three consecutive years brought as plaintiff class actions pursuant to the Arizona rules of civil procedure or any federal counterpart to the rules.

J. The share of any final judgment or of any settlement that is awarded to a representative party serving on behalf of a class shall be equal on a per share basis to the portion of the final judgment or settlement awarded to all other members of the class. Nothing in this subsection limits the award of reasonable costs and expenses, including lost wages, directly relating to the representation of the class to any representative party serving on behalf of a class.

K. The terms and provisions of any settlement agreement of a class action shall not be filed under seal, except that on a motion by any party to the settlement, the court may order filing under seal for those portions of a settlement agreement as to which good cause is shown for filing under seal. For purposes of this subsection, good cause exists if publication of a term or provision of a settlement agreement would cause direct and substantial harm to any party.

L. Attorney fees and costs awarded by the court to counsel for the plaintiff class shall not exceed a reasonable percentage of the amount of any damages and prejudgment interest actually paid to the class.

M. Any proposed or final settlement agreement that is published or disseminated to the class shall include a cover page summarizing the information contained in the settlement agreement and:

1. The amount of the settlement proposed to be distributed to the parties to the action, determined in the aggregate and on an average per share basis.

2. If the settling parties agree on the average amount of damages per share that would be recoverable if the plaintiff prevailed on each claim alleged under this chapter, a statement concerning the average amount of the potential damages per share.

3. If the parties do not agree on the average amount of damages per share that would be recoverable if the plaintiff prevailed on each claim alleged under this chapter, a statement from each settling party concerning the issue or issues on which the parties disagree.

4. If any of the settling parties or their counsel intends to apply to the court for an award of attorney fees or costs from any fund established as part of the settlement, a statement indicating which parties or counsel intends to make the application, the amount of fees and costs that will be sought, including the amount of the fees and costs determined on an average per share basis, and a brief explanation supporting the fees and costs sought. The cover page of any notice to a party of any proposed or final settlement agreement shall include a clear summary of the information prescribed by this paragraph.

5. The name, telephone number and address of one or more representatives of counsel for the plaintiff class who will be reasonably available to answer questions from class members concerning any matter contained in any notice of settlement published or disseminated to the class.

6. A brief statement explaining the reasons why the parties are proposing the settlement.

7. Other information required by the court.

N. A statement made in accordance with subsection M, paragraph 2 or 3 concerning the amount of damages is not admissible in any federal or state judicial action or administrative proceeding, other than an action or proceeding arising out of the statement.

O. In any private action arising under this chapter that is certified as a class action pursuant to the Arizona rules of civil procedure or any federal or other jurisdictional counterpart to the rules, the court may require an undertaking from the attorneys for the plaintiff class or the plaintiff class, or both, or from the attorneys for the defendant or the defendant, or both, in those proportions and at those times as the court determines are just and equitable, for the payment of fees and expenses that may be awarded under this section.

P. If a plaintiff class is represented by an attorney who directly owns or otherwise has a beneficial interest in the securities that are the subject of the litigation, the court shall make a determination of whether the ownership or other interest constitutes a conflict of interest sufficient to disqualify the attorney from representing the plaintiff class.

§ 44-2082 Requirements for securities fraud actions involving misleading statements or omissions

A. In any private action arising under section 44-1991 or 44-1992 in which the plaintiff alleges that the defendant made an untrue statement of a material fact or omitted a statement of a material fact necessary in order to make the statements made, in the light of the circumstances in which they were made, not misleading, the complaint shall specify each alleged untrue statement or material omission and the reason or reasons why the statement or omission is misleading or the omission is material and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.

B. In any private action arising under section 44-1991 or 44-1992 in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, for each act or omission that allegedly violates section 44-1991 or 44-1992, the complaint shall state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.

C. In any private action arising under section 44-1991 or 44-1992:

1. On any defendant's motion, the court shall dismiss the complaint if the requirements of subsections A and B of this section are not met.

2. All discovery and other proceedings shall be stayed during the pendency of any motion to dismiss pursuant to rule 12 of the Arizona rules of civil procedure, unless the court finds on the motion of any party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party.

D. During the pendency of any stay of discovery pursuant to subsection C of this section, unless ordered by the court, any party to the action with actual notice of the allegations contained in the complaint shall treat all documents, data compilations, including electronically recorded or stored data, and tangible objects that are in the custody or control of that person and that are relevant to the allegations as if they were the subject of a continuing request for production of documents from an opposing party under the Arizona rules of civil procedure or any applicable federal or other jurisdictional counterpart to the rules. A party aggrieved by the wilful failure of an opposing party to comply with this subsection may apply to the court for an order awarding appropriate sanctions.

E. Except as provided in section 44-1991, subsection B, including actions based on allegations of activities constituting dishonest or unethical practices in the securities industry, in any private action arising under this chapter, the plaintiff has the burden of proving that the act or omission of the defendant alleged to violate the section under which the private action is brought caused the loss for which the plaintiff seeks to recover damages.

§ 44-2083 Sanctions for abusive litigation

A. In any private action arising under this chapter, on final adjudication of the action, unless the parties stipulate otherwise, the court shall include in the record specific findings regarding compliance by each party and each attorney representing any party with each requirement of rule 11(b) of the Arizona rules of civil procedure or any applicable federal or other jurisdictional counterpart to the rules as to any complaint, responsive pleading or dispositive motion. If the federal or other jurisdictional rules of civil procedure do not have a counterpart to rule 11(b) of the Arizona rules of civil procedure, rule 11(b) of the Arizona rules of civil procedure applies.

B. If the court makes a finding under subsection A that a party or attorney violated any requirement of rule 11(b) of the Arizona rules of civil procedure or any federal or other jurisdictional counterpart to the rules as to any complaint, responsive pleading or dispositive motion, the court shall impose sanctions on that party or attorney in accordance with rule 11 of the Arizona rules of civil procedure or any federal or other jurisdictional counterpart to the rules. Before making a finding that any party or attorney has violated the applicable rules, the court shall give that party or attorney notice and an opportunity to respond.

C. Subject to subsections D and E, for the purposes of subsection B, the court shall adopt a presumption that the appropriate sanctions for:

1. Failure of any responsive pleading or dispositive motion to comply with any requirement of rule 11(b) of the Arizona rules of civil procedure or any applicable federal or other jurisdictional counterpart to the rules is an award to the opposing party of reasonable attorney fees and other expenses incurred as a direct result of the violation.

2. Substantial failure of any complaint to comply with any requirement of rule 11(b) of the Arizona rules of civil procedure or any federal or other jurisdictional counterpart to the rules is an award to the opposing party of reasonable attorney fees and other expenses incurred in the action.

D. The presumption prescribed in subsection C may be rebutted only on proof by the party or attorney against whom sanctions are to be imposed that either of the following applies:

1. The award of attorney fees and other expenses will impose an unreasonable burden on that party or attorney and would be unjust, and the failure to make an award would not impose a greater burden on the party in whose favor sanctions are to be imposed.

2. The violation of rule 11(b) of the Arizona rules of civil procedure or federal or other jurisdictional counterpart to the rules was de minimis.

E. If the party or attorney against whom sanctions are to be imposed meets the burden prescribed by subsection D, the court shall award the sanctions that the court deems appropriate pursuant to rule 11 of the Arizona rules of civil procedure or any applicable federal or other jurisdictional counterpart to the rules.

§ 44-2084 Right to written interrogatories

In any private action arising under this chapter in which the plaintiff may recover money damages, if requested by a defendant, the court shall submit to the jury a written interrogatory on the issue of each defendant's state of mind at the time of the alleged violation.

§ 44-2085 Limitation on damages; definition

A. Except as provided in subsection B of this section, in any private action arising under section 44-1991 or 44-1992 in which the plaintiff seeks to establish damages by reference to the market price of a security, the award of damages to the plaintiff shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the security and the mean trading price of that security during the ninety days beginning on the date on which the information correcting the misstatement or omission that is the basis for the action is disseminated to the market.

B. In any private action arising under section 44-1991 or 44-1992 in which the plaintiff seeks to establish damages by reference to the market price of a security, if the plaintiff sells or repurchases the security before the expiration of the ninety day period prescribed in subsection A of this section, the plaintiff's damages shall not exceed the difference between the purchase or sale price paid or received by the plaintiff for the security and the mean trading price of the security during the period beginning immediately after dissemination of information correcting the misstatement or omission and ending on the date on which the plaintiff sells or repurchases the security.

C. This section shall not apply to damages caused by a violation of section 44-1841 or 44-1842.

D. For purposes of this section, "mean trading price of the security" means an average of the daily trading price of that security, determined as of the close of the market each day during the relevant period.

§ 44-2086 Attorney fees paid from disgorgement monies; prohibition

Disgorged monies resulting from a judicial or administrative action brought by the commission shall not be distributed as payment for attorney fees or expenses incurred by private parties seeking distribution of the disgorged monies, except as otherwise ordered by the court on a motion by the commission or, in the case of an administrative action, as otherwise ordered by the commission.

§ 44-2087 Application of safe harbor for forward-looking statements; definitions

A. This section only applies to a forward-looking statement made by:

1. At the time that the statement is made, an issuer that is subject to the reporting requirements of section 13(a) or section 15(d) of the securities exchange act of 1934 (15 United States Code section 78m(a) or section 78o(d)).

2. A person acting on behalf of an issuer described in paragraph 1 of this subsection.

3. An outside reviewer who is retained by an issuer described in paragraph 1 of this subsection and who is making a statement on behalf of that issuer.

4. An underwriter of an issuer described in paragraph 1 of this subsection who uses information provided by the issuer or information derived from information provided by the issuer.

B. Except if specifically provided by rule or order of the commission, this section does not apply to a forward-looking statement if the statement is:

1. Made in connection with the issuer's business or operations and if any of the following applies to the issuer:

(a) At any time during the three consecutive years before the date on which the statement was first made, the issuer was convicted of a felony or misdemeanor pursuant to section 44-1961, subsection A, paragraph 8, or clauses (i) through (iv) of section 15(b)(4)(B) of the securities exchange act of 1934 (15 United States Code section 78o(b)(4)(B)), has been found to have violated or been made subject to an order, judgment or decree under section 44-1961, subsection A, paragraph 9, 10 or 11, or has been made the subject of a judicial or administrative decree or order arising out of a governmental action that prohibits future violations of the antifraud provisions of the federal, Arizona or other jurisdictions' securities laws, requires that the issuer cease and desist from violating the antifraud provisions of the federal, Arizona or other jurisdictions' securities laws or determines that the issuer violated the antifraud provisions of the federal, Arizona or other jurisdictions' securities laws.

(b) The issuer makes the forward-looking statement in connection with an offering of securities by a blank check company.

(c) The issuer issues penny stock.

(d) The issuer makes the forward-looking statement in connection with a roll up transaction.

(e) The issuer makes the forward-looking statement in connection with a going private transaction.

2. Included in a financial statement prepared in accordance with generally accepted accounting principles.

3. Contained in a registration statement of or issued by an investment company.

4. Made in connection with a tender offer.

5. Made in connection with an initial public offering.

6. Made in connection with an offering by or relating to the operations of a partnership, a limited liability company or a direct participation investment program.

7. Made in a disclosure of beneficial ownership in a report required to be filed with the SEC pursuant to section 13(d) of the securities exchange act of 1934 (15 United States Code section 78m(d)).

C. Except as provided in subsection B of this section, in any private action that arises under this chapter and that is based on an untrue statement of a material fact or an omission of a material fact necessary to make the statement not misleading, pursuant to subsection A of this section, a person, issuer, outside reviewer or underwriter is not liable for any written or oral forward-looking statement if and to the extent that either of the following exists:

1. The forward-looking statement is identified as a forward-looking statement and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement or the statement is immaterial.

2. The plaintiff fails to prove that the forward-looking statement if made by a natural person was made with actual knowledge by that person that the statement was false or misleading, or if made by a business entity, was made by or with the approval of an executive officer of that entity and was made or approved by that officer with actual knowledge by that officer that the statement was false or misleading.

D. In the case of an oral forward-looking statement made by an insurer that is subject to the reporting requirements of section 13(a) or section 15(d) of the securities exchange act of 1934, (15 United States Code section 78m(a) or section 78o(d)) or by a person acting on behalf of the issuer, the requirement set forth in subsection C, paragraph 1 of this section is satisfied if both of the following are true:

1. The oral forward-looking statement is accompanied by a cautionary statement that the oral statement is a forward-looking statement and that the actual results could differ materially from those projected in the forward-looking statement.

2. If the oral forward-looking statement is accompanied by an oral statement that additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statement is contained in a readily available written document, the oral statement shall identify the document or the portion of the document that contains the additional information about those factors relating to the forward-looking statements and the written document shall contain a cautionary statement that satisfies the standard established in subsection C, paragraph 1 of this section.

E. Any document that is filed with the commission or the SEC or that is generally disseminated is readily available for purposes of subsection D of this section.

F. The exemption provided for in subsection C of this section is in addition to any exemption that the commission may establish by rule under subsection J of this section.

G. Nothing in this section imposes on any person a duty to update a forward-looking statement.

H. On any motion to dismiss based on subsection C of this section, the court shall consider any statement cited in the complaint and any cautionary statement that is not subject to material dispute and that is cited by the defendant accompanying the forward-looking statement.

I. In any private action arising under this chapter, the court shall stay discovery, other than discovery that is specifically directed to the applicability of the exemption provided by this section, during the pendency of any motion by a defendant for summary judgment that is based on the grounds that the statement or omission on which the complaint is based is a forward-looking statement within the meaning of this section and the exemption provided by this section precludes a claim for relief.

J. In addition to the exemptions provided by this section, the commission by rule may provide exemptions from or under any provision of this chapter, including liability that is based on a statement, projections or other forward-looking information, if the exemption is consistent with the public interest and the protection of investors, as determined by the commission.

K. Nothing in this section limits, either expressly or by implication, the authority of the commission to exercise similar authority or to adopt similar rules for forward-looking statements under any other statute under which the commission exercises rule making authority.

L. For the purposes of this section, unless the context otherwise requires:

1. "Forward-looking statement" means any of the following:

(a) A statement containing a projection of revenues, income, income loss, earnings, earnings per share, loss per share, capital expenditures, dividends, capital structure or other financial items.

(b) A statement of the plans and objectives of management for future operations, including plans or objectives relating to the products or services of the issuer.

(c) A statement of future economic performance, including any statement contained in a discussion and analysis of financial condition by the management or in the results of operations included pursuant to the rules of the commission or the rules and regulations of the SEC.

(d) Any statement of the assumptions underlying or relating to any statement described in subdivision (a), (b) or (c) of this paragraph.

(e) Any report issued by an outside reviewer retained by an issuer, to the extent that the report assesses a forward-looking statement made by the issuer.

(f) A statement containing a projection or estimate of other items specified by commission rule.

2. "Going private transaction" has the same meaning prescribed in the rules and regulations of the SEC issued pursuant to section 13(e) of the securities exchange act of 1934 (15 United States Code section 78m(e)).

3. "Investment company" has the same meaning prescribed in section 3(a) of the investment company act of 1940 (15 United States Code section 80a-3(a)).

4. "Person acting on behalf of an issuer" means any officer, director or employee of the issuer.

5. "Tender offer" has the same meaning prescribed in section 14(d) of the securities exchange act of 1934 (15 United States Code section 78n(d)).

6. The following terms have the same meaning prescribed in the rules of the commission:

(a) "Direct participation investment program".

(b) "Executive officer of an entity".

(c) "Initial public offering".

(d) "Limited liability company".

(e) "Partnership".

(f) "Penny stock".

(g) "Roll up transaction".

Article 19 Audits

§ 44-2121 Definition of illegal act

In this article, unless the context otherwise requires, "illegal act" means an act or omission that violates any law or any rule having the force of law.

§ 44-2122 Audit requirements

Unless exempted by the commission, an independent certified public accountant who audits the financial statements of an issuer in an audit required pursuant to this chapter shall include, in accordance with generally accepted auditing standards as modified or supplemented by the commission:

1. Procedures designed to provide reasonable assurance of detecting illegal acts that would have a direct and material effect on the determination of financial statement amounts.

2. Procedures designed to identify related party transactions that are material to the financial statements or otherwise require disclosure.

3. An evaluation of whether there is substantial doubt about the ability of the issuer to continue as a going concern during the next fiscal year.

§ 44-2123 Audit discoveries; required responses

A. In the course of conducting an audit to which this article applies, if the independent certified public accountant detects or becomes aware of information indicating that an illegal act, whether or not perceived to have a material effect on the issuer's financial statements, has or may have occurred, the independent certified public accountant, in accordance with generally accepted auditing standards, as modified or supplemented by the commission, shall:

1. Determine whether it is likely that an illegal act has occurred and, if so, shall determine and consider the possible effect of the illegal act on the financial statements of the issuer, including any contingent monetary effects such as fines, penalties and damages.

2. As soon as practicable, inform the appropriate level of the issuer's management and ensure that the issuer's audit committee or board of directors in the absence of an audit committee is adequately informed about any illegal acts that have been detected or have otherwise come to the attention of the certified public accountant in the course of the audit, unless the illegal act is clearly inconsequential.

B. After determining that the audit committee or board of directors is adequately informed pursuant to subsection A, as soon as practicable, the independent certified public accountant shall report the accountant's conclusions to the board of directors if the independent certified public accountant concludes that all of the following have occurred:

1. The illegal act has a material effect on the financial statements of the issuer.

2. The senior management has not taken, and the board of directors has not caused senior management to take, timely and appropriate remedial actions with respect to the illegal act.

3. The failure to take remedial action is reasonably expected to warrant departure from a standard report of the auditor, when made, or warrant resignation from the audit engagement.

C. Unless exempted by the commission by rule or order, an issuer whose board of directors receives a report pursuant to subsection B shall inform the commission by written notice within one business day after receiving the report and shall furnish the independent certified public accountant making the report with a copy of the written notice. If the independent certified public accountant fails to receive a copy of the notice within the required period, the independent certified public accountant, within one business day after the failure to receive a copy of the notice, shall resign from the engagement, give the commission a copy of the accountant's report or give the commission the documentation of any oral report.

D. If an independent certified public accountant resigns from an engagement pursuant to subsection C, the independent certified public accountant, within one business day after the failure to receive a copy of the notice, shall give the commission a copy of the accountant's report or the documentation of any oral report.

§ 44-2124 Auditor liability limitation

No independent certified public accountant is liable in a private action for any finding, conclusion or statement expressed in a report made pursuant to section 44-2123, subsection C or D, including any rule adopted by the commission pursuant to that section.

§ 44-2125 Civil penalties in cease and desist proceedings

After notice and an opportunity for a hearing in a proceeding instituted pursuant to article 16 of this chapter, if the commission finds that an independent certified public accountant has wilfully violated section 44-2123, subsection C or D, in addition to entering an order pursuant to article 16 of this chapter, the commission may impose a civil penalty against the independent certified public accountant and any other person that the commission finds was a cause of the violation.

§ 44-2126 Preservation of existing authority

Nothing in this article limits or otherwise affects the authority of the commission under this chapter.

Chapter 13 Investment Management

Article 1 Definitions

§ 44-3101 Definitions

In this chapter, unless the context otherwise requires:

1. "Closed-end company" means any management company other than an open-end company or unit investment trust.

2. "Depository institution" means a bank, savings and loan association or trust company whose business is supervised and regulated by an agency of this state or the United States, or an employee, as defined in title 10, chapter 1, of any such bank, savings and loan association or trust company while acting within the scope of the employee's employment.

3. "Federal covered adviser" means an investment adviser registered under the investment advisers act of 1940.

4. "IARD" means the investment adviser registration depository operated by the national association of securities dealers.

5. "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. Investment adviser includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation. Investment adviser does not include:

(a) An investment adviser representative.

(b) A depository institution.

(c) A lawyer, law firm, certified public accountant or accounting firm whose performance of the investment advisory services is solely incidental to the practice of the person's profession or who does not do any of the following:

(i) Exercise investment discretion with respect to the assets of clients or maintain custody of the assets of clients for the purpose of investing the assets, except if the person is acting in a bona fide fiduciary capacity such as an executor, trustee, personal representative, estate or trust agent, guardian or conservator.

(ii) Accept or receive directly or indirectly any commission, fee or other remuneration contingent on the purchase or sale of any specific security by a client of the person.

(iii) Give advice on the purchase or sale of specific securities other than advice about specific securities that is based on financial statement analysis or tax considerations that are reasonably related to and in connection with the person's profession.

(d) A publisher, employee or columnist of any newspaper, news column, newsletter, news magazine or business or financial publication or service, whether communicated in hard copy form, by electronic means or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client.

(e) An insurance company or insurance producer that is licensed or authorized by the department of insurance and financial institutions to transact the business of insurance, including the sale of annuities, whose performance of the investment advisory services is solely incidental to the conduct of business as an insurance company or insurance producer and that receives no special compensation for providing investment advisory services.

(f) A real estate salesperson or real estate broker who is licensed or authorized by the state real estate department to transact the business of real estate, whose performance as an investment adviser is solely incidental to the conduct of the individual's business as a broker or salesman and who receives no special compensation for providing investment advisory services.

(g) Any officer, director, partner or employee of an entity engaged in selling interest in entities that invest in real property, including partnerships, corporations or sole proprietorships, if such transactions are otherwise subject to the securities laws of the United States or this state.

(h) Mortgage brokers or mortgage bankers who are licensed by the department of insurance and financial institutions to transact the business of a mortgage broker or mortgage banker, and their employees, whose performance of any investment advisory service is solely incidental to the conduct of the business of a mortgage broker or mortgage banker and who receives no special compensation for providing investment advisory services.

6. "Investment adviser representative" means any partner, officer or director of an investment adviser, any individual who occupies a status or performs functions similar to a partner, officer or director of an investment adviser or any other individual who is employed by or associated with an investment adviser, except clerical or ministerial personnel, and who does any of the following:

(a) Makes any recommendations or otherwise renders advice regarding securities.

(b) Manages accounts or portfolios of clients.

(c) Determines which recommendation or advice regarding securities should be given to a client if the individual is a member of the investment adviser's investment committee that determines general investment advice to be given to clients or the individual determines general client advice if the investment adviser has no investment committee, except that if an investment adviser has more than five individuals who make recommendations or give advice, only the supervisors of those individuals are investment adviser representatives.

(d) Solicits, offers or negotiates for the sale of or sells investment advisory services.

(e) Directly supervises employees who perform any of the acts described in this paragraph.

7. "Investment advisers act of 1940" means the act of Congress known as the investment advisers act of 1940 (15 United States Code section 80b).

8. "Investment company" means any company that is registered under the investment company act of 1940.

9. "Investment company act of 1940" means the act of Congress known as the investment company act of 1940 (15 United States Code section 80a).

10. "Licensed investment adviser" means an investment adviser licensed under this chapter.

11. "Licensed investment adviser representative" means an investment adviser representative licensed under this chapter.

12. "Open-end company" means a management company that is offering for sale or has outstanding any redeemable security of which it is the issuer.

13. "Solely incidental to the practice of the person's profession" and "solely incidental to the conduct of the person's business" means that the person does not hold itself out to the public as a provider of investment advisory services, the investment advisory services are rendered in connection with and reasonably related to the professional services or business transactions being provided or consummated and the fee charged for the investment advisory services is based on the same factors used by the person to determine the fees for the person's professional or business services.

14. "Unit investment trust" means an investment company that is organized under a trust indenture, contract of custodianship or agency or similar instrument, that does not have a board of directors and that issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities, but does not include a voting trust.

§ 44-3102 Interpretations by commission

In interpreting the definitions prescribed in section 44-3101 and other terms and phrases used in this chapter, the commission may refer to identical terms or phrases in the investment advisers act of 1940 and investment company act of 1940 including regulations or interpretive releases promulgated under those acts and chapter 12 of this title and any rules adopted under that chapter.

Article 2 Administrative Personnel

§ 44-3111 Director of securities

The director of securities appointed pursuant to section 44-1811 shall administer this chapter.

§ 44-3112 Assistant director of securities

The assistant director of securities appointed pursuant to section 44-1812 shall assist in administering this chapter.

§ 44-3113 Employment of personnel

The director may employ personnel for the administration of this chapter as prescribed in section 44-1813.

§ 44-3114 Travel and other necessary expenses of employees

The director and any person under the director's supervision shall be paid travel and other necessary expenses as provided in section 44-1814.

§ 44-3115 Cooperation with other agencies

The director shall cooperate with the administrators of investment adviser, investment company and management and similar laws of other states and of the United States and with the national association of securities dealers, inc. with a view to achieving maximum uniformity in the interpretation and enforcement of like provisions of the laws administered by them.

Article 3 General Administrative Powers

§ 44-3131 General rule making power of commission; delegation of authority; limitation

A. The commission may adopt rules pursuant to title 41, chapter 6 that are reasonably necessary to carry out the purposes of this chapter.

B. The commission may delegate such authority to the director of securities as is convenient or necessary for the efficient administration of this chapter, except that the commission may not delegate authority to adopt rules or to enter any final order of denial or revocation of licenses of investment advisers or investment adviser representatives.

§ 44-3132 Investigations

The commission, the director or any other agent or agents designated by the commission may:

1. Make private or public investigations within or outside this state that the commission deems necessary to determine whether any person has violated or is about to violate this chapter or any rule or order adopted or issued under this chapter, to aid in the enforcement of this chapter or to aid in adopting rules and forms under this chapter.

2. At any time either before or after the licensure of any investment adviser or investment adviser representative, investigate and examine the affairs of any person engaged in the provision of investment advisory services or the affairs of any person if the commission believes that the person is or may be engaged in the provision of investment advisory services.

§ 44-3133 Power to require testimony and production of records; order of nondisclosure

A. For the purpose of investigations or hearings that, in the opinion of the commission, are necessary and proper for the enforcement of this chapter, any member of the commission, the director or any officer or officers designated by the commission may administer oaths and affirmations, subpoena witnesses, take evidence and require by subpoena duces tecum or by citation the production of books, papers, contracts, agreements or other documents, records or information, whether filed or kept in original form or electronically stored or recorded, that the commission deems relevant or material to the inquiry.

B. The commission may issue and apply to enforce a subpoena in this state at the request of a securities agency or administrator of another state if the activities constituting an alleged violation for which the information is sought would be a violation of this chapter if the activities had occurred in this state.

C. In connection with the power to enforce the production of evidence by subpoena vested in the commission by article XV of the Constitution of Arizona and the commission's power to conduct private investigations pursuant to section 44-3132, the commission has the authority to order a financial institution not to disclose the existence or content of the subpoena to persons not affiliated with the financial institution other than to the financial institution's legal counsel. The commission shall exercise such power if the commission finds it necessary or appropriate in the public interest or for the protection of investors.

§ 44-3134 Contempt; penalty

A. If a person refuses to obey a subpoena or citation issued by the commission, any member of the commission, the director or any officer designated by the commission, the superior court in Maricopa county, on application by the commission, shall issue to the person an order requiring that person to appear before the commission, the director or the officer designated by the commission to produce documentary evidence if so ordered and to give evidence concerning the matter under investigation or in question. The court may punish failure to obey the order of the court as contempt.

B. In the case of wilful noncompliance with a nondisclosure order included in a subpoena issued pursuant to section 44-3133, on application by the commission, the superior court in Maricopa county may exercise its contempt powers. For the purposes of this subsection, "wilful" has the same meaning as that prescribed to wilfully in section 1-215.

C. The court shall award reasonable expenses, including attorney fees, to the commission if the refusal to obey a subpoena or citation issued by the commission was not substantially justified, unless other circumstances make an award of expenses unjust.

D. Process in any proceeding pursuant to this section may be served on the defendant in any county of this state in which the defendant transacts business or is found.

E. Any expenses, including attorney fees, collected pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

§ 44-3135 No-action letters

The director may formally respond to written requests from interested persons for interpretative no-action letters as provided in section 44-1826.

Article 4 Licensure of Investment Advisers and Investment Adviser Representatives

§ 44-3151 Licensure required; exclusion; violation; classification

A. A person shall not transact business in this state as an investment adviser or investment adviser representative unless any of the following applies:

1. The person is licensed under this article.

2. The person is a federal covered adviser and has made a notice filing under this article.

3. The person is exempt from licensure.

4. The person is a federal covered adviser and is not subject to the notice filing requirements prescribed in section 44-3153.

B. The licensure requirements of this article do not apply to any federal covered adviser or a person that is excluded from the definition of an investment adviser under section 202(a)(11) of the investment advisers act of 1940.

C. An investment adviser that is required to be licensed shall not employ an investment adviser representative unless the investment adviser representative is licensed under this article. The licensure of an investment adviser representative is not effective during any period of time that the investment adviser representative is not employed by a licensed investment adviser or by a federal covered adviser that has made a notice filing pursuant to section 44-3153, subsection E. A licensed investment adviser shall promptly notify the commission when an investment adviser representative begins or terminates employment with the investment adviser by filing a completed form U-4 or form U-5 or any other form as the director may designate.

D. An investment adviser representative shall not conduct business on behalf of a federal covered adviser unless that investment adviser representative is licensed under this article. A federal covered adviser shall notify the commission if any investment adviser representative begins or terminates employment with that federal covered adviser by filing a completed form U-4, form U-5 or any other form the director designates for that purpose.

E. A person who knowingly violates this section is guilty of a class 1 misdemeanor.

§ 44-3152 Exemption of certain investment advisers and investment adviser representatives; private fund adviser exemption; definitions

A. An investment adviser is not required to be licensed or make a notice filing under this chapter if that investment adviser does not have a place of business in this state and either:

1. Its only clients in this state are investment companies, other investment advisers, dealers, depository institutions, insurance companies, employee benefit plans with assets of not less than $1,000,000 and governmental agencies or instrumentalities, whether acting for themselves or as trustees with investment control.

2. During the preceding twelve months it had fewer than six clients who are residents of this state other than those clients specified in paragraph 1 of this subsection.

B. An investment adviser is not required to be licensed or make a notice filing under this chapter if that investment adviser is a private fund adviser that:

1. Satisfies each of the following conditions:

(a) The private fund adviser or any of its advisory affiliates are not subject to an event that would disqualify an issuer under SEC rule 262 of regulation A (17 Code of Federal Regulations section 230.262).

(b) The private fund adviser to a qualifying private fund that is not a venture capital company files with the commission each report and each report amendment that the investment adviser is required to file with the SEC pursuant to SEC rule 204-4 (17 Code of Federal Regulations section 275.204-4). The private fund adviser shall electronically file the reports with the commission through the IARD. A report is deemed filed when the report and the fee required by subdivision (c) of this paragraph are accepted by the IARD on this state's behalf.

(c) The private fund adviser to a qualifying private fund that is not a venture capital company has paid a fee of $125 to the commission for each calendar year in which it relies on the exemption provided by this subsection.

2. Except as provided in subsection H of this section, advises at least one retail buyer fund and that complies with paragraph 1 of this subsection and all of the following requirements with respect to each retail buyer fund advised by the private fund adviser:

(a) The private fund adviser only advises those retail buyer funds whose outstanding securities, other than short-term paper, are beneficially owned entirely by either:

(i) Any person that, at the time that the securities are sold, the private fund adviser reasonably believes to be an accredited investor as defined in SEC rule 501(a) of regulation D (17 Code of Federal Regulations section 230.501(a)) or that is a manager, director, officer or employee of the private fund adviser.

(ii) Any person that obtains the security through a transfer not involving a sale of that security.

(b) At or before the time of purchase of any security of a retail buyer fund, the private fund adviser discloses in writing to the purchaser of the security both of the following:

(i) All services, if any, to be provided by the investment adviser to a purchaser of securities of the retail buyer fund and to the retail buyer fund itself.

(ii) All duties, if any, that the investment adviser owes to a purchaser of securities of the retail buyer fund and to the retail buyer fund itself.

(c) The private fund adviser obtains on an annual basis audited financial statements of each retail buyer fund that is advised by the private fund adviser and delivers a copy of the audited financial statements to each purchaser of securities of the retail buyer fund. This subdivision does not apply to a limited retail buyer fund with respect to any annual period for which each owner of outstanding securities of the limited retail buyer fund has waived the application of this subdivision after the beginning of the annual period to which the waiver applies.

C. If a private fund adviser is registered with the SEC, the private fund adviser is not eligible for the exemption provided by subsection B of this section.

D. A person is not required to be licensed or to make a notice filing under this chapter if the person is employed by or associated with an investment adviser that is not required to be licensed or make a notice filing under this chapter pursuant to subsection B of this section and the person does not otherwise act as an investment adviser representative.

E. An investment adviser that becomes ineligible for the exemption provided by subsection B of this section must comply with all applicable laws and rules requiring licensing or notice filing within ninety days after the date that the investment adviser's eligibility for the exemption ceases.

F. Subsection B, paragraph 1, subdivision (a) of this section does not apply on a showing of good cause and without prejudice to any other commission action if the commission determines that it is not necessary under the circumstances that an exemption be denied.

G. Compliance with subsection B, paragraph 2, subdivision (b) of this section does not relieve a private fund adviser of any disclosure obligation under any other state or federal law.

H. An investment adviser to a retail buyer fund that existed before September 1, 2016 and that does not satisfy the conditions prescribed by subsection B, paragraph 2, subdivision (a) of this section on September 1, 2016 may be eligible for the exemption prescribed by subsection B, paragraph 1 of this section if all of the following conditions are satisfied:

1. Beginning on September 1, 2016, the retail buyer fund ceases to sell securities to persons other than the persons described in subsection B, paragraph 2, subdivision (a), item (i) of this section.

2. The investment adviser discloses in writing the information described in subsection B, paragraph 2, subdivision (b) of this section to each purchaser of securities of the retail buyer fund by December 1, 2016.

3. For every fiscal year ending after August 31, 2016, the investment adviser delivers audited financial statements to each owner of securities of the retail buyer fund as required by subsection B, paragraph 2, subdivision (c) of this section.

I. If the commission determines that it is not necessary for any investment adviser or class of investment advisers or investment adviser representative or class of investment adviser representatives to be licensed to protect the public interest because of the special characteristics of the securities or transactions in which the investment adviser or investment adviser representative may be involved, the commission may by rule or order provide limited licensure requirements or exempt these persons from licensure under this article.

J. A dealer or salesman that is registered with the commission pursuant to chapter 12, article 9 of this title is not required to be licensed, make a notice filing or comply with reporting requirements under this article.

K. The authorized use of the designation "chartered financial consultant" by an insurance producer licensed by the department of insurance and financial institutions does not in and of itself constitute holding oneself out to the public as an investment adviser or require a license under this article.

L. Subsection B of this section does not exempt an investment adviser that has custody of any securities or funds of any client from complying with commission rules relating to the custody of client funds or securities by investment advisers.

M. For the purposes of this section:

1. "Advisory affiliate" has the same meaning prescribed in the glossary of terms to form ADV, which is the uniform application for investment adviser registration (17 Code of Federal Regulations section 279.1) or its successor form.

2. "Affiliated person" means a person that controls, is controlled by or is under common control with the other specified persons.

3. "Control" means possessing, directly or indirectly, the power to direct or cause the direction of management and policies.

4. "Derivative investment" means an acquisition of securities by a venture capital company in the ordinary course of its business in exchange for an existing venture capital investment, either on the exercise or conversion of the existing venture capital investment or in connection with a public offering of securities or the merger or reorganization of the operating company to which the existing venture capital investment relates.

5. "Entity" means a partnership, corporation, trust, limited liability company, limited liability partnership, sole proprietorship or other organization.

6. "Family member":

(a) Means a lineal descendant, including a child related by adoption or blood and an individual who was a minor when another family member became the individual's legal guardian, of a common ancestor who is living or deceased if the common ancestor is not more than ten generations removed from the youngest generation of family members.

(b) Includes:

(i) A spouse of the lineal descendant described in subdivision (a) of this paragraph.

(ii) A stepchild and the stepchild's spouse.

(iii) A foster child and the foster child's spouse.

7. "Former family member" means a spouse or stepchild who was a family member but who is no longer a family member.

8. "Limited retail buyer fund" means a retail buyer fund that satisfies all of the following conditions:

(a) Has no more than, or the private fund adviser reasonably believes that the fund has no more than, fifteen purchasers of securities, individually or collectively with all other limited retail buyer funds, that are advised by the private fund adviser or an affiliated person. For the purposes of calculating the number of purchasers under this subdivision, a purchaser that is an entity shall be counted as the number of individuals who are directly or indirectly beneficial owners in the entity, except that all individuals who are family members or former family members shall be counted as a single purchaser.

(b) When the securities are sold the private fund adviser reasonably believes that each purchaser of securities from the limited retail buyer fund that is not a qualified purchaser, as defined in section 2(a)(51) of the investment company act of 1940, is a qualified client as defined in 17 Code of Federal Regulations section 275.205-3.

(c) The private fund adviser and any affiliated person do not hold themselves out to the public as an investment adviser and the private fund adviser and any affiliated person do not act as an investment adviser to any investment company registered under the investment company act of 1940.

(d) The private fund adviser and any affiliated person have not offered or sold any securities of the limited retail buyer fund by any form of general solicitation or general advertising.

9. "Management rights" means the right, obtained contractually or through ownership of securities, either through one person alone or in conjunction with one or more persons acting together or through an affiliated person, to substantially participate in, substantially influence the conduct of or provide or offer to provide significant guidance and counsel concerning the management, operations or business objectives of the operating company in which the venture capital investment is made.

10. "Operating company":

(a) Means an entity that is primarily engaged, directly or through a majority-owned subsidiary, in the production or sale, including any research or development, of a product or service other than the management or investment of capital.

(b) Does not include an individual or sole proprietorship.

11. "Person" means an individual or an entity.

12. "Private fund adviser" means an investment adviser that provides advice solely to one or more qualifying private funds.

13. "Qualifying private fund" means an issuer that qualifies for the exclusion from the definition of an investment company under section 3(c)(1), 3(c)(5) or 3(c)(7) of the investment company act of 1940.

14. "Retail buyer fund" means a qualifying private fund that is neither a venture capital company nor a qualifying private fund that qualifies for the exclusion from the definition of an investment company under section 3(c)(7) of the investment company act of 1940.

15. "Venture capital company" means an entity that satisfies at least one of the following conditions:

(a) The entity is a venture capital fund as defined in SEC rule 203(l)-1 (17 Code of Federal Regulations section 275.203(l)-1).

(b) The entity is a venture capital operating company as defined in SEC rule 2510.3-101(d) (29 Code of Federal Regulations section 2510.3-101(d)).

(c) On at least one occasion during the annual period commencing with the date of its initial capitalization, and on at least one occasion during each annual period thereafter, at least fifty percent of its assets other than short-term investments pending long-term commitment or distribution to investors, valued at cost, are venture capital investments or derivative investments.

16. "Venture capital investment" means an acquisition of securities of an operating company as to which the investment adviser, the entity advised by the investment adviser or an affiliated person of either has or obtains management rights.

§ 44-3153 Application for licensure as investment adviser; notice filings by federal covered advisers

A. Any person may apply for licensure as an investment adviser. The applicant shall sign an application for licensure.

B. An application for licensure as an investment adviser shall be filed with the commission through the IARD. If the IARD does not provide for receipt of a filing, the filing may be made with the commission by mail or any other method that is reasonably acceptable to the commission.

C. An application for licensure shall contain the following, together with other information the commission prescribes:

1. A completed uniform application for investment adviser registration under the investment advisers act of 1940 together with other forms designated by the director.

2. Proof of compliance with written examination requirements.

3. Financial reports as required by the commission.

4. A notarized affidavit of any officer, director, partner, member, trustee or manager of the applicant that states:

(a) That a review of the records of the investment adviser has been conducted.

(b) Whether any investment adviser activity has been conducted with residents of this state before licensure as an investment adviser.

5. If the applicant intends to have a branch office in this state, the address and name of a contact individual at that branch office.

6. If the applicant is an individual and the applicant's fingerprints are not on file with the division, the CRD system or the IARD, a full set of fingerprints. The commission shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation.

D. An application for licensure as an investment adviser shall be accompanied by payment of the licensure fee prescribed in section 44-3181.

E. A federal covered adviser may transact business in this state as an investment adviser if the federal covered adviser makes a notice filing with the commission through the IARD. If the IARD does not provide for receipt of a filing, the filing may be made with the commission by mail or any other method that is reasonably acceptable to the commission.

F. The notice filing shall consist of all of the following:

1. Copies of those documents that are filed with the SEC and that the commission requires to be filed.

2. A consent to service of process.

3. A notice filing fee as prescribed in section 44-3181.

G. A notice filing is effective on compliance with the requirements of subsection E of this section and remains effective until December 31 unless it is renewed before that time by filing with the commission any renewal documents prescribed by the commission along with the notice filing fee prescribed in section 44-3181.

H. A federal covered adviser may terminate a notice filing by notifying the commission of that termination through the IARD. If the IARD does not provide for receipt of a filing, the filing may be made with the commission by mail or any other method that is reasonably acceptable to the commission.

§ 44-3154 Licensure application; additional information

The commission or the director may require submission of additional information regarding an applicant's previous history, record or business experience as the commission or director deems necessary to determine whether an applicant should be licensed as an investment adviser or investment adviser representative in this state.

§ 44-3155 Investment adviser license; notification

A. If an applicant for licensure as an investment adviser fully complies with this article and commission rules adopted under this article, the director shall license the applicant as an investment adviser, unless the commission finds cause for denial as provided in article 6 of this chapter.

B. After the director has licensed an applicant as an investment adviser or has received a complete notice filing from a federal covered adviser, the director shall promptly notify the applicant or the federal covered adviser through the IARD, by mail or by any other method that is reasonably acceptable to the commission.

§ 44-3156 Application for licensure as investment adviser representative

A. Any individual may apply for licensure as an investment adviser representative. An application for licensure as an investment adviser representative shall be signed by the applicant and by the licensed or federal covered adviser employing or intending to employ the applicant.

B. An application for licensure as an investment adviser representative shall be filed with the commission through the IARD. If the IARD does not provide for receipt of a filing, the filing may be made with the commission by mail or any other reasonable method that is acceptable to the commission.

C. An application for licensure shall include the following, together with other information the commission prescribes:

1. A completed form U-4 or any other form as the director may designate. An applicant that has a current form U-4 filed with this state may submit a brief written request for licensure with the commission.

2. Proof of compliance with written examination requirements.

3. If the applicant's fingerprints are not on file with the division, the CRD system or the IARD, a full set of fingerprints. The commission shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation.

D. An application for licensure as an investment adviser representative shall be accompanied by payment of the licensure fee prescribed in section 44-3181.

§ 44-3157 Investment adviser representative license; notification

A. If an applicant for licensure as an investment adviser representative fully complies with this article and commission rules adopted under this article, the director shall license the applicant as an investment adviser representative, unless the commission finds cause for denial as provided in article 6 of this chapter.

B. After the director has licensed an applicant as an investment adviser representative, the director shall promptly notify the applicant of the licensure by mail, through the IARD or by any other method that is reasonably acceptable to the commission.

§ 44-3158 Expiration, renewal or transfer of licensure; automatic suspension

A. All licenses expire on December 31 of each year unless renewed before expiration by payment through the IARD of the fees prescribed by section 44-3181. If the IARD does not provide for receipt of a filing, the filing may be made with the commission by mail or any other reasonable method that is acceptable to the commission.

B. An investment adviser representative may transfer that investment adviser representative's license to an investment adviser that is either licensed by the commission or that has made a notice filing with the commission by filing a completed application for licensure and remitting a transfer fee to the commission through the IARD. If the IARD does not provide for receipt of a filing, the filing may be made with the commission by mail or any other reasonable method that is acceptable to the commission. The license of an investment adviser representative will automatically be suspended from the time of termination of employment with an investment adviser until the investment adviser representative is employed by another licensed or federal covered adviser, the director is notified of the employment by the investment adviser in writing and the investment adviser is notified of approval of the licensure by the director by mail, through the IARD or by any other reasonable method established by the commission or the investment adviser representative has complied with all requirements in accordance with a temporary investment adviser representative transfer program. The commission may adopt rules providing for temporary transfer of licensure of investment adviser representatives.

§ 44-3159 Reporting requirements

A. In order to retain licensure, licensed investment advisers and investment adviser representatives shall file the following with the commission through the IARD:

1. A supplemental statement showing any material changes in the facts contained in the original application for licensure as supplemented or amended as the changes occur or within thirty days after the change.

2. If a licensed investment adviser requires payment of advisory fees six months or more in advance and in excess of five hundred dollars for each client, an audited balance sheet as of the end of the investment adviser's fiscal year. Each balance sheet shall be:

(a) Prepared in conformity with generally accepted accounting principles and examined in accordance with generally accepted auditing standards.

(b) Audited by an independent certified public accountant.

(c) Accompanied by an opinion of the independent certified public accountant as to the report of financial position, and by a note stating the principles used to prepare the report, the basis of included securities and any other explanations required for clarity.

B. If the IARD does not provide for receipt of a filing, the filing may be made with the commission by mail or any other reasonable method that is acceptable to the commission.

C. The financial statements prescribed in subsection A shall be filed with the commission within ninety days after the end of the investment adviser's fiscal year.

D. Any licensed investment adviser that has its principal place of business in another state is exempt from the requirements prescribed in subsection A if all of the following apply:

1. The investment adviser is registered as an investment adviser with the state in which it maintains its principal place of business.

2. The investment adviser has complied with the financial reporting requirements, if any, of the state in which it maintains its principal place of business.

3. If prescribed by the commission, the investment adviser files with the commission a copy of the financial reports it files with the state in which it maintains its principal place of business.

Article 5 Fees

§ 44-3181 Fees; penalties; abandonment

A. The annual nonrefundable license fee for each licensed investment adviser and investment adviser representative and the annual nonrefundable notice filing fee for each federal covered adviser shall be paid to the commission on or before the last working day of December. The annual nonrefundable license fee for each investment adviser and the annual nonrefundable notice filing fee prescribed in section 44-3153, subsection F are two hundred fifty dollars and the annual nonrefundable license fee for each investment adviser representative is forty dollars.

B. An investment adviser that fails to timely renew an annual investment adviser or investment adviser representative license or notice filing shall pay a penalty of twenty-five dollars per business day until the appropriate documents and fee are filed, up to a maximum of forty business days. Failure to timely renew is not a violation of section 44-3151 if the license or notice filing fee and penalty are paid within forty business days. Failure to renew within forty business days may result in additional sanctions as provided in this chapter.

C. The transfer fee for an investment adviser representative transferring that investment adviser representative's license from one investment adviser to another investment adviser is forty dollars.

D. All applications, withdrawals, terminations, transfers, renewals or other filings with the IARD shall be on the forms required by the IARD and shall be accompanied by any reasonable costs charged by the IARD for processing the filings. Any person who is required to pay a fee pursuant to this section may transmit the fee to the commission through the IARD.

E. The commission shall retain any notice filing or licensure fees that are collected in connection with abandoned applications or notice filings. A notice filing or an application for licensure is deemed abandoned if both:

1. The notice filing or application has been on file with the commission for at least six months or the applicant or notice filer has failed to respond to a request for information for at least two months after the date of the request.

2. The applicant or notice filer has failed to respond to the commission's notice of warning of abandonment within sixty calendar days after the date of the warning.

F. The fee for submitting fingerprints is the fee that is required by the federal government and the department of public safety.

Article 6 Denial, Revocation or Suspension of License

§ 44-3201 Grounds for denial, revocation or suspension of license; administrative remedies

A. After a hearing or notice and an opportunity for a hearing as provided in article 7 of this chapter, the commission may enter an order suspending for a period of not more than one year, denying or revoking the license of an investment adviser or investment adviser representative if the commission finds that it is in the public interest and any one or a combination of the following:

1. The application for licensure of the investment adviser or investment adviser representative, any financial statement, document or other exhibit filed with an application or any supplement or amendment to an application is incomplete, inaccurate or misleading.

2. The investment adviser is insolvent or is in an unsound financial condition.

3. The investment adviser or investment adviser representative violates this chapter or any rule or order of the commission adopted or issued under this chapter.

4. The investment adviser or investment adviser representative fails to file with the commission any record, report, financial statement or other information required under this chapter or any rule or order of the commission adopted or issued under this chapter or refuses to permit an examination pursuant to section 44-3132.

5. The investment adviser knowingly retains an unlicensed investment adviser representative who is required to be licensed under this chapter.

6. The investment adviser permits any person to render investment advice in violation of this chapter.

7. The investment adviser representative is not employed by a licensed or federal covered adviser.

8. The investment adviser or investment adviser representative has been convicted within ten years preceding the date of filing an application for licensure as an investment adviser or investment adviser representative, or at any time after the date of filing an application, of a felony or misdemeanor involving a transaction in securities, of which fraud is an essential element or arising out of the conduct of any business involving securities or any aspect of the securities business.

9. The investment adviser or investment adviser representative is permanently or temporarily enjoined by order, judgment or decree of an administrative tribunal or a court of competent jurisdiction from engaging in or continuing any conduct or practice involving a violation of any federal or state securities laws or a violation of any other regulatory licensing requirements.

10. The investment adviser or investment adviser representative is subject to an order of an administrative tribunal, an SRO or the SEC denying, revoking or suspending membership, licensure or registration as a broker or dealer in securities or as an investment adviser or investment adviser representative for at least six months.

11. The investment adviser or investment adviser representative has been found civilly or criminally liable, by any court of competent jurisdiction or other governmental authority in a civil or criminal action not subsequently reversed, suspended or vacated, for any fraudulent act or practice in connection with any aspect of the securities business.

12. The investment adviser fails to reasonably supervise its investment adviser representatives or employees to assure their compliance with this chapter.

13. The investment adviser or investment adviser representative engages in dishonest or unethical practices in the securities industry.

14. The investment adviser or investment adviser representative engages in dishonest or unethical practices in business or financial matters.

B. In addition to denying, revoking or suspending the license, if the commission finds that an investment adviser or investment adviser representative has engaged in an act, practice or transaction described in subsection A, paragraph 6, 12 or 13, the commission may do one or more of the following:

1. Assess administrative penalties.

2. Order the investment adviser or investment adviser representative to cease and desist from engaging in the act, practice or transaction or doing any other act in furtherance of the act, practice or transaction.

3. Take appropriate affirmative action, as prescribed by the commission, to correct the conditions resulting from the act, practice or transaction, including a requirement to provide restitution.

C. If the investment adviser is a partnership, corporation, unincorporated association, limited liability company or trust, it is sufficient cause for denial of licensure if a member of the partnership, an officer or director of the corporation or unincorporated association, a manager of a limited liability company, a trustee or any other fiduciary of a trust or a person controlling, controlled by or under common control with the investment adviser has been found civilly or criminally liable, by any court of competent jurisdiction or other governmental authority in a civil or criminal action not subsequently reversed, suspended or vacated, for any act or omission that would be sufficient grounds for denying the licensure of an individual investment adviser.

D. If the license of an investment adviser or investment adviser representative is revoked or denied, that investment adviser or investment adviser representative may not file with the commission for licensure under this chapter or for registration under chapter 12 of this title for at least one year from the date of the revocation or denial.

§ 44-3202 Entry of order of denial, suspension or revocation

A. If, after a hearing or notice and an opportunity for a hearing as provided in article 7 of this chapter, the commission finds grounds to deny, suspend or revoke the license of an investment adviser or investment adviser representative, the director shall enter an order denying, suspending or revoking the license of the investment adviser or investment adviser representative. The order shall state specifically the grounds for its issuance and shall be filed with docket control of the commission.

B. A copy of the order shall be sent by certified mail to the investment adviser or investment adviser representative whose license is denied, suspended or revoked, and if the denial, suspension or revocation of the license is of an investment adviser representative, to the licensed investment adviser who employs the investment adviser representative.

C. Denial, suspension or revocation of the license of an investment adviser also suspends or revokes the license of all of the investment adviser's investment adviser representatives, but suspension or revocation of the license of an investment adviser representative solely because the investment adviser representative was employed by an investment adviser whose license was denied, suspended or revoked does not prejudice subsequent applications for licensure by the investment adviser representative.

D. An investment adviser or investment adviser representative that has voluntarily terminated or allowed the adviser's or representative's license to lapse shall continue to be subject to actions by the commission under this article in connection with conduct that began before the termination or lapse of the license. Any action by the commission under this article against an investment adviser or investment adviser representative shall begin within two years after termination or lapse of the license.

Article 7 Hearings

§ 44-3211 Initiation of hearing; purpose of hearing

The commission may order a hearing on its own initiative or at the written request of any interested person, either before or after licensure of an investment adviser or investment adviser representative:

1. For the purpose of administering or obtaining information necessary in the enforcement of this chapter or the rules or orders of the commission adopted or issued under this chapter.

2. To enable the commission to take appropriate action in connection with any pending application for licensure of any investment adviser or investment adviser representative.

3. To modify the terms and conditions of any license, order or notice filing.

4. To determine whether the license of any investment adviser or investment adviser representative should be denied, suspended or revoked.

§ 44-3212 Notice of an opportunity for a hearing; time of hearing

A. Before entering an order denying, suspending or revoking the license of an investment adviser or investment adviser representative pursuant to article 6 of this chapter, the commission shall send to the investment adviser or investment adviser representative, and, if an investment adviser representative, to the investment adviser who employs or intends to employ the investment adviser representative, a notice of a hearing or notice of an opportunity for a hearing.

B. Before entering an order to cease and desist or an order for rescission, restitution or penalties, the commission shall serve on each respondent a notice of a hearing or a notice of an opportunity for a hearing. The commission by rule may provide for temporary cease and desist orders if the public welfare requires immediate action.

C. Notice of a hearing or notice of an opportunity for a hearing shall be served as prescribed by rules adopted by the commission for service of subpoenas and cease and desist orders. The notice shall contain a statement of the matters to be considered. A notice of an opportunity for a hearing shall state that the person to whom the notice is sent will be afforded a hearing on request to the commission if the request is made in writing within ten days after receipt of the notice.

D. If a person requests a hearing in accordance with this article, the commission shall set a date, time and place for the hearing and shall immediately notify the person requesting the hearing of the date, time and place for the hearing. The date set for the hearing shall be within sixty days, but not earlier than twenty days after the request for a hearing has been made, unless otherwise agreed to by both the commission and the person requesting the hearing.

E. If the hearing is initiated by the commission the notice of the hearing shall specify the date, time and place of the hearing and the date of the hearing shall be within twenty days of the date of the notice of the hearing.

§ 44-3213 Conduct of hearing

A. Any hearing under this article may be held before the commission, a member of the commission, the director or any other authorized officer of the commission as the commission directs.

B. Conduct of the hearing is governed by this section and by the rules of practice and procedure adopted by the commission. The commission, a member of the commission, the director and any other authorized officers of the commission are not bound by the technical rules of evidence in the conduct of hearings under this article, and no informality in any proceeding, as in the manner of taking testimony, invalidates any order, decision or rule made, approved or confirmed by the commission.

C. The commission shall appoint a shorthand reporter to make a stenographic record of all proceedings and testimony of each hearing, and the record shall be reduced to writing and filed with the commission.

§ 44-3214 Rehearings

The commission may institute or grant rehearings on application made within twenty calendar days after entry of an order or decision. Unless otherwise ordered, filing an application for rehearing does not stay the commission’s decision or order. If the commission does not grant a rehearing within twenty calendar days, the application is considered to be denied. Rehearings are subject to this article.

Article 8 Appeals

§ 44-3231 Judicial review

Decisions of the commission pursuant to this chapter are subject to judicial review in superior court in Maricopa county pursuant to title 12, chapter 7, article 6.

Article 9 Fraudulent Practices

§ 44-3241 Fraud in provision of investment advisory services; liability; violation; classification

A. It is a fraudulent practice and unlawful for a person, in connection with a transaction or transactions within or from this state involving the provision of investment advisory services, directly or indirectly, to do any of the following:

1. Employ any device, scheme or artifice to defraud.

2. Make any untrue statement of material fact, or fail to state any material fact necessary in order to make the statement made, in the light of the circumstances under which it was made, not misleading.

3. Misrepresent any professional qualifications with the intent that the client rely on the misrepresentation.

4. Engage in any transaction, practice or course of business that operates or would operate as a fraud or deceit.

B. A person who violates this section is liable to any person for all losses incurred by that person as a result of the violation, together with interest on losses incurred, court costs and reasonable attorney fees. A civil action under this section is barred unless it is brought within three years after the violation or within two years after discovery of the facts constituting the violation, whichever occurs first.

C. A person who violates this section is guilty of a class 4 felony.

Article 10 Conservators and Receivers

§ 44-3271 Petition for appointment of conservators and receivers

If an act, practice or transaction that constitutes a violation of section 44-3151 or article 9 of this chapter is alleged in a complaint filed by this state or an agency of this state, the commission may petition the superior court in Maricopa county for the appointment of a conservator to reorganize the affairs of, or a receiver to wind up the affairs of, the violator. The commission may transmit any evidence it has available concerning the act, practice or transaction to the attorney general. On receipt of the evidence, the attorney general may petition the superior court in Maricopa county for the appointment of a conservator to reorganize the affairs of, or a receiver to wind up the affairs of, the violator. Process in these actions may be served on the defendant in any county in this state in which the defendant transacts business or is found.

§ 44-3272 Conservators and receivers

Sections 44-2012 through 44-2017 apply to this chapter.

Article 11 Enforcement

§ 44-3291 Jurisdiction and venue of offenses and actions; joinder of spouse

A. The superior court has jurisdiction over violations of this chapter, the rules and orders of the commission adopted or issued under this chapter and all actions brought to enforce any liability or duty created under this chapter, except actions or proceedings brought under section 44-3292, paragraph 2, 3 or 4 or appeals filed under article 8 of this chapter, over which the superior court in Maricopa county has exclusive jurisdiction.

B. Any action authorized by this chapter may be brought in the county in which the defendant is found, is an inhabitant or transacts business or in the county in which the transaction took place. Process may be served on any defendant in any county of this state in which the defendant is an inhabitant or in which the defendant is found.

C. The commission may join the spouse in any action authorized by this chapter to determine the liability of the marital community. This subsection does not authorize the commission to join any individual who is divorced from the defendant at the time an action authorized by this chapter is filed.

§ 44-3292 Cease and desist orders; injunctions; civil restitution; prosecutions for violations

If it appears to the commission, either on complaint or otherwise, that any person has engaged in, is engaging in or is about to engage in any act, practice or transaction that constitutes a violation of this chapter or any rule or order of the commission adopted or issued under this chapter, the commission may:

1. Issue an order directing the person to cease and desist from engaging in the act, practice or transaction, or doing any act in furtherance of the act, practice or transaction, and to take appropriate affirmative action within a reasonable period of time, as prescribed by the commission, to correct the conditions resulting from the act, practice or transaction including a requirement to provide restitution as prescribed by rules of the commission. If a person fails to comply with an order issued under this paragraph, the superior court in Maricopa county, on application by the commission, shall:

(a) Issue an order to show cause why the person has not complied with the commission’s order. On a showing that the person has violated the commission’s order, the court may exercise its contempt powers and impose a civil penalty of not more than twenty thousand dollars for each violation as the court considers to be just and proper.

(b) Award reasonable costs, including attorney fees, to the commission unless other circumstances make an award of costs unjust. Any costs, including attorney fees, collected pursuant to this paragraph shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

2. Apply to the superior court in Maricopa county or any federal court for an injunction restraining the person from any violation, and on a showing by the commission that the person has engaged in, is engaging in or is about to engage in an act, practice or transaction in violation of this chapter or any rule or order of the commission, a temporary restraining order, preliminary injunction or permanent injunction shall be granted without bond. Process in these actions may be served on the defendant in any county of this state in which the defendant transacts business or is found.

3. Apply to the superior court in Maricopa county or any federal court for an order restoring to any person in interest any monies or property, real or personal, that may have been acquired or transferred in violation of this chapter.

4. Petition the superior court in Maricopa county or transmit any evidence available concerning the act, practice or transaction to the attorney general, and the attorney general may petition the superior court in Maricopa county for the appointment of a conservator to reorganize the affairs of, or a receiver to wind up the affairs of, the violator. Process in these actions may be served on the defendant in any county in this state in which the defendant transacts business or is found.

5. Transmit any evidence available concerning such act, practice or transaction to a county attorney, the attorney general or the United States attorney who, with or without such transmittal, may directly institute or cause to be instituted such criminal proceedings as the evidence warrants.

§ 44-3293 Burden of proof of exemptions

If a defense in any civil or criminal action is based on any exemption provided for in this chapter, the burden of proving the existence of the exemption is on the party raising the defense, and it is not necessary to negate the exemption in any petition, complaint, information or indictment made or brought in any proceeding under this chapter.

§ 44-3294 Evidence of licensure or lack of licensure

A certificate signed by the director and under seal of the commission showing that a notice filing has or has not been filed as provided in article 4 of this chapter or that an investment adviser or investment adviser representative has or has not been licensed as provided in article 4 of this chapter constitutes evidence of the facts so certified and is admissible in evidence in any civil or criminal action or proceeding in which the question of the notice of filing or licensure may be at issue.

§ 44-3295 Evidence of record of proceedings

A certificate signed by the director, and under seal of the commission, in regard to the record of any proceeding under this chapter for denial, suspension or revocation of the license of any investment adviser or investment adviser representative constitutes evidence of the record and is admissible in any civil or criminal proceeding in which the record may be at issue.

§ 44-3296 Administrative penalty

A. A person who, in an administrative action, is found to have violated this chapter or any rule or order of the commission may be assessed an administrative penalty by the commission, after a hearing, of not more than one thousand dollars for each violation.

B. Any administrative penalties collected pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

C. If judicial review has not been sought under title 12, chapter 7, article 6, a certified copy of any commission order requiring the payment of restitution or administrative penalties may be filed in the office of the clerk of the superior court in any county of this state. The clerk shall treat the commission order in the same manner as a judgment of the superior court. A commission order so filed has the same effect as a judgment of the superior court and may be recorded, enforced or satisfied in like manner. No filing fee is required under this section.

§ 44-3297 Costs recoverable

In an action brought under this article, the commission or the attorney general is entitled to recover costs that in the discretion of the court may include an amount representing reasonable attorney fees and investigative expenses for services rendered.

§ 44-3298 Investment management regulatory and enforcement fund; purpose

A. An investment management regulatory and enforcement fund is established and shall be administered by the commission under the conditions and for the purposes provided by this section. Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

B. Fees and costs collected pursuant to this chapter, unless otherwise designated, shall be deposited, pursuant to sections 35-146 and 35-147, in the fund.

C. The commission shall use the monies in the fund for education and regulatory, investigative and enforcement operations in the securities division.

D. If the amount of monies in the fund exceeds one hundred thousand dollars on December 31 of any calendar year, the amount in excess of one hundred thousand dollars reverts to the state general fund. Beginning with the fiscal year starting on July 1, 1996, monies in the fund are subject to annual legislative appropriation.

§ 44-3299 State liability; limitation

Except as otherwise provided by law, this state, any political subdivision of this state, the commission, the director or any state officer, agent or employee acting in good faith is not liable for any injury or damage to investors or the general public resulting from any actual or opportunity losses suffered through the activities of investment advisers or investment adviser representatives.

§ 44-3300 Confidentiality

A. The names of complainants and all information or documents obtained by any officer, employee or agent of the commission, including the shorthand reporter or stenographer transcribing the reporter's notes, in the course of any examination or investigation are confidential unless the names, information or documents are made a matter of public record. An officer, employee or agent of the commission shall not make the confidential names, information or documents available to anyone other than a member of the commission, another officer or employee of the commission, an agent who is designated by the commission or director, the attorney general or law enforcement or regulatory officials, except pursuant to any rule of the commission or unless the commission or the director authorizes the disclosure of the names, information or documents as not contrary to the public interest.

B. The commission shall not disclose the home address, home telephone number and social security number of an individual investment adviser or an investment adviser representative unless the commission or the director authorizes the disclosure of the information as not contrary to the public interest.

Article 12 Notice Filings of Certain Investment Companies

§ 44-3321 Notice filings by open-end companies and unit investment trusts

A. Securities that are issued by an open-end company or unit investment trust may be offered for sale and sold in this state if the commission receives all of the following:

1. The documents that are filed with the SEC and that are required by the commission.

2. A consent to service of process.

3. The sales reports that are required by this article.

4. A notice filing fee computed pursuant to section 44-3324.

B. A notice filing is effective and renewable as provided in section 44-3322.

C. Securities that are exempt pursuant to section 44-1843 or that are sold in a transaction that is exempt pursuant to section 44-1844 are exempt from the requirements of this section.

§ 44-3322 Amount and term of securities subject to notice filing

A. An open-end company or a unit investment trust shall file a notice in order to offer for sale or sell an indefinite amount of securities with the commission.

B. The initial notice filing of an open-end company is effective from the later of receipt by the commission or the effective date with the SEC until two months after the end of the issuer's current fiscal year. After that period, the notice filing may be renewed by filing the following with the commission no later than the expiration date of the current notice period:

1. The appropriate documents required by chapter 12 of this title and by the commission, by rule or otherwise.

2. The sales report described in section 44-3323.

3. The notice filing fees required by section 44-3324, subsection B.

C. On timely completion of the renewal notice filing for an open-end company, the renewal is automatically effective from the end of the expiring notice period until two months after the end of the issuer's current fiscal year.

D. The initial notice filing of a unit investment trust is effective for one year from the effective date of the registration with the SEC, regardless of when the notice filing was received in this state. After that period, the notice filing may be renewed by filing the following with the commission no later than the expiration of the current notice period:

1. The appropriate documents required by chapter 12 of this title and by the commission, by rule or otherwise.

2. The notice filing fees required by section 44-3324, subsection E, paragraph 1.

E. On timely completion of the renewal notice filing for unit investment trusts, the renewal is automatically effective for one year from the end of the expiring notice period.

F. The commission may adopt rules with respect to notice filings for investment companies other than open-end companies or unit investment trusts.

§ 44-3323 Sales reports

A. The sales report filed with the commission shall specify the total amount of sales made to persons in this state during the time periods specified in this section together with such other information the commission designates by rule or otherwise.

B. An issuer that elected to pay the maximum fee provided in section 44-3324 is not required to file a sales report with the commission when renewing or terminating the notice filing.

C. When renewing its notice filing, an open-end company that elected to pay the minimum fee prescribed in section 44-3324 for the expiring notice period shall file a sales report within two months after its fiscal year ends to report the sales made to persons in this state during the prior fiscal year.

D. An open-end company that elected to pay the minimum fee prescribed in section 44-3324 for the expiring notice period and that does not renew the notice filing shall file a final sales report within two months of the expiration of the notice period to report the sales made to persons in this state during the prior fiscal year and during the two month period from the end of the prior fiscal year to the expiration of the notice period.

E. When renewing its notice filing, a unit investment trust that elected to pay the minimum fee prescribed in section 44-3324 for the expiring notice period shall file a sales report within two months after the end of the expiring notice period to report the sales made to persons in this state during the prior notice period.

F. A unit investment trust that elected to pay the minimum fee prescribed in section 44-3324 and that does not renew the notice filing shall file a final sales report within two months after the expiration of the notice period to report the sales made to persons in this state during the notice period.

§ 44-3324 Notice filing fees

A. When filing its initial notice filing, an open-end company shall pay a nonrefundable notice filing fee for sales to be made during the initial notice period. The open-end company may elect to pay either a minimum fee of two hundred dollars or a maximum fee of three thousand five hundred dollars. If paying the maximum fee, an open-end company is not required to file a sales report at the expiration of the notice period.

B. An open-end company that renews its notice filing in accordance with section 44-3322, subsection B shall pay both of the following nonrefundable notice filing fees no later than the expiration of the current notice period:

1. For sales to be made during the current fiscal year, the open-end company may elect to pay either a minimum fee of two hundred dollars or a maximum fee of three thousand five hundred dollars. If paying the maximum fee, an open-end company is not required to file a sales report at the time of its next renewal notice filing.

2. A fee for sales that occurred during the prior fiscal year, as those sales are reported pursuant to section 44-3323, subsection C. The fee is equal to one-tenth of one percent of the aggregate dollar amount of securities actually sold in this state during the prior fiscal year minus two hundred dollars, but in no event more than three thousand three hundred dollars. If the maximum fee was previously paid for the prior fiscal year, the open-end company is not required to pay any additional fees under this paragraph.

C. An open-end company that does not renew its notice filing in accordance with section 44-3322, subsection B and that did not previously pay the maximum fee for the notice period shall pay a nonrefundable notice filing fee no later than two months after the expiration of its current notice period for sales that occurred during the prior fiscal year and during the two month period from the end of the prior fiscal year to the expiration of the notice period, as those sales are reported pursuant to section 44-3323, subsection D. The fee is equal to one-tenth of one percent of the aggregate dollar amount of securities actually sold in this state during the prior fiscal year and during the two month period from the end of the prior fiscal year to the expiration of the notice period minus two hundred dollars, but in no event more than three thousand three hundred dollars. If the maximum fee was previously paid for the prior fiscal year, the open-end company is not required to pay any additional fees under this subsection.

D. When filing its initial notice filing, a unit investment trust shall pay a nonrefundable notice filing fee for sales to be made during the initial notice period. The unit investment trust may elect to pay either a minimum fee of two hundred dollars or a maximum fee of three thousand five hundred dollars. If paying the maximum fee, the unit investment trust is not required to file a sales report at the end of the expiration of the notice period.

E. A unit investment trust that elects to renew its notice filing in accordance with section 44-3322, subsection C shall pay both of the following nonrefundable notice filing fees:

1. For sales to be made during the renewal notice period, a unit investment trust may elect to pay either a minimum fee of two hundred dollars or a maximum fee of three thousand five hundred dollars. The fee shall be paid no later than the expiration date of the current notice period. If paying the maximum fee, a unit investment trust is not required to file a sales report within two months after the expiration of the renewal notice period.

2. A fee for sales that occurred during the expiring notice period, as those sales are reported pursuant to section 44-3323, subsection E. The fee shall be equal to one-tenth of one percent of the aggregate dollar amount of securities actually sold in this state by the unit investment trust during the prior notice period minus two hundred dollars, but in no event more than three thousand three hundred dollars. The fee shall be paid no later than two months after the expiration date of the prior notice period. If the maximum fee was previously paid for the expiring notice period, the unit investment trust is not required to pay any additional fees under this paragraph.

F. A unit investment trust that does not renew its notice filing in accordance with section 44-3322, subsection C and that did not previously pay the maximum fee for the notice period shall pay, within two months after the expiration of the notice period, a nonrefundable notice filing fee for sales that occurred during the prior notice period as such sales are reported pursuant to section 44-3323, subsection F. The fee is equal to one-tenth of one percent of the aggregate dollar amount of securities actually sold in this state by the unit investment trust during the prior notice period minus two hundred dollars, but in no event more than three thousand three hundred dollars. If the maximum fee was previously paid for the expiring notice period, the unit investment trust is not required to pay any additional fees under this subsection.

G. An issuer that fails to timely file any sales report required by section 44-3323 shall pay a late filing fee in the amount of two hundred dollars. An issuer that fails to timely pay any notice filing fees required pursuant to this section shall pay the required notice filing fee together with a late payment fee equal to one-half of the amount of the required notice filing fee.

H. The fees collected pursuant to this section shall be deposited as follows:

1. Eighty percent in the securities regulatory and enforcement fund established by section 44-2039.

2. Ten percent in the office of economic opportunity operations fund established by section 41-5302.

3. Ten percent in the investment management regulatory and enforcement fund established by section 44-3298.

§ 44-3325 Notice filings by closed-end companies

A. Securities that are issued by a closed-end company may be offered for sale and sold in this state if the commission receives all of the following from the closed-end company:

1. The documents that are filed with the SEC and that are required by the commission.

2. A consent to service of process.

3. A notice filing fee calculated pursuant to this section.

B. A notice filing is effective and renewable on the filing date with the commission or the effective date with the SEC, whichever occurs last, and the notice filing is effective for one year from that date.

C. A closed-end company shall include with the company's notice filing a notice filing fee of one-tenth of one percent of the aggregate offering price of securities sold in this state, but the fee shall not be less than two hundred dollars and not more than two thousand dollars. The amount by which a notice filing fee exceeds one thousand five hundred dollars shall be allocated to the office of economic opportunity operations fund established by section 41-5302.

D. A closed-end company shall file a report of all sales of securities to persons in this state during the period of the notice filing. The closed-end company shall file the report with the commission within sixty days after the termination date of the offering within this state or the expiration date of the notice filing, whichever occurs first. A closed-end company that fails to timely file a report of sales shall pay a late filing fee of two hundred dollars.

Chapter 15 Home Solicitations and Referral Sales

Article 1 In General

§ 44-5001 Definitions

In this chapter, unless the context otherwise requires:

1. "Home solicitation sale":

(a) Means a sale of goods or services in which the seller or the seller's representative personally solicits the sale without prior invitation, appointment or consent and the buyer's agreement or offer to purchase is made at a home other than that of the person soliciting the same and that agreement or offer to purchase is there given to the seller or the seller's representative.

(b) Includes a cash sale that otherwise meets the definition of a home solicitation sale if the seller makes or provides a loan to the buyer or obtains or assists in obtaining a loan for the buyer to pay the purchase price.

(c) Does not include a sale that is pursuant to a preexisting account with a seller whose primary business is selling goods or services at a fixed location or that is made pursuant to prior negotiations between the parties at a business establishment at a fixed location where goods or services are offered or exhibited for sale.

2. "Person":

(a) Includes a corporation, company, partnership, firm, association, society or natural person.

(b) When used to designate the party whose property may be the subject of a criminal or public offense, includes the United States, this state or any territory, state or country, any political subdivision of this state that may lawfully own any property, or a public or private corporation, partnership or association.

(c) When used to designate the violator or offender of any law, includes a corporation, a partnership or any association of persons.

§ 44-5002 Cancellation period; method of cancellation; intent; waiver void

A. In addition to any right otherwise to revoke an offer, the buyer may cancel a home solicitation sale until midnight of the third business day after the day on which the buyer signs an agreement subject to the provisions of this chapter. For the purposes of this chapter, "business day" does not include Sundays or the federal holidays of New Year's Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day, Christmas Day, or Washington's Birthday.

B. Cancellation shall occur when the buyer gives written notice of cancellation in person or by telegram to the seller at the address specified for notice of cancellation provided by the seller or when such written notice bearing such address is deposited in the United States mail by either ordinary mail or registered mail.

C. Notice of cancellation given by the buyer is effective if it indicates the intention on the part of the buyer not to be bound by the home solicitation sale.

D. Any provision of a contract, offer or agreement that waives a buyer's right of cancellation under this section is void and has no effect.

§ 44-5003 Referral sales, rebate or discount violations

No seller in a home solicitation sale shall offer to pay a commission or give a rebate or discount to the buyer in consideration of the buyer's giving to the seller the names of prospective purchasers or otherwise aiding the seller in making a sale to another person, if the earning of the commission, rebate or discount is contingent upon an event that is to happen subsequent to the time the buyer agrees to buy. Any sale made in respect to which a commission, rebate or discount is offered in violation of the provisions of this chapter shall be voidable at the option of the buyer.

§ 44-5004 Agreement requirements

A. No agreement of the buyer in a home solicitation sale shall be effective unless the contract, receipt and all other documents pertaining to the contract are written in the same language used in the oral sales presentation. If a language which cannot be written is used in the oral sales presentation, such documents may be in English.

B. No agreement of the buyer in a home solicitation sale shall be effective unless it is dated, signed by the buyer and contains a conspicuous notice in the language used in the oral sales presentation which if in English would be as follows:

NOTICE TO BUYER

1. Do not sign this agreement if any of the spaces intended for the agreed terms to the extent of then available information are left blank.

2. You are entitled to a copy of this agreement at the time you sign it.

3. You may pay off the full unpaid balance due under this agreement at any time, and in so doing you shall be entitled to a full rebate of the unearned finance and insurance charges.

4. You may cancel this agreement any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.

5. It shall not be legal for the seller to enter your premises unlawfully or commit any breach of the peace to repossess goods purchased under this agreement.

C. No agreement of the buyer in a home solicitation sale shall be effective unless the following completed form, in duplicate and in the language used in the oral sales presentation which, if in English, would be in the form set forth in this subsection, is attached to the contract or receipt:

NOTICE OF CANCELLATION

/enter date of transaction/

(date)

You may cancel this transaction, without any penalty or obligation, within three business days from the above date.

If you cancel, any property traded in, any payments made by you under the contract or sale and any negotiable instrument executed by you will be returned within ten business days following receipt by the seller of your cancellation notice and any security interest arising out of the transaction will be cancelled.

If you cancel, you must make available to the seller at your residence in substantially as good condition as when received, any goods delivered to you under this contract or sale; or you may, if you wish, comply with the instructions of the seller regarding the return shipment of the goods at the seller's expense and risk.

If you do make the goods available to the seller and the seller does not pick them up within twenty days of the date of your notice of cancellation, you may retain or dispose of the goods without any further obligation. If you fail to make the goods available to the seller, or if you agree to return the goods to the seller and fail to do so, then you remain liable for performance of all obligations under the contract.

To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice or any other written notice, or send a telegram, to {name of seller}, at {address of seller's place of business} not later than midnight of ____________________.

(date)

I hereby cancel this transaction.

---

(date)

---

(buyer's signature)

§ 44-5005 Transfer

A. A note or other evidence of indebtedness given by a buyer in respect of a home solicitation sale shall be dated not earlier than the date of the agreement or offer to purchase. Any transfer of a note or other evidence of indebtedness bearing the statement required by subsection B of this section shall be deemed an assignment only and any right, title or interest which the transferee may acquire thereby shall be subject to all claims and defenses of the buyer against the seller pursuant to the provisions of this chapter and sections 44-144 and 44-145.

B. Each note or other evidence of indebtedness given by a buyer in respect of a home solicitation sale shall bear on its face a conspicuous statement as follows: "This instrument is based upon a home solicitation sale, which is subject to the provisions of title 44, chapter 15. This instrument is not negotiable."

C. Compliance with the requirements of this section shall be a condition precedent to any right of action by the seller or any transferee of an instrument bearing the statement required under subsection B of this section against the buyer upon such instrument and shall be pleaded and proved by any person who may institute an action or suit against a buyer in respect thereof.

§ 44-5006 Time limitation; disposition of goods

A. Except as provided in this section, within ten days after a home solicitation sale has been canceled, the seller shall tender to the buyer any payments made by the buyer and any note or other evidence of indebtedness.

B. If the down payment includes goods traded in, the goods shall be tendered in substantially as good condition as when received. If the seller fails to tender the goods as provided by this section, the buyer may elect to recover an amount equal to the trade-in allowance stated in the agreement.

C. The buyer may retain possession of goods delivered to him by the seller and has a lien on the goods for any recovery to which he is entitled until the seller has complied with the obligations imposed by this section.

§ 44-5007 Buyer responsibility; services

A. Except as provided in subsection C of section 44-5006, within twenty days after a home solicitation sale has been canceled, the buyer upon demand shall tender to the seller any goods delivered by the seller pursuant to the sale, but he is not obligated to tender at any place other than his own address. If the seller fails to take possession of such goods within twenty days after cancellation the goods shall become the property of the buyer without obligation to pay for them.

B. The buyer shall take reasonable care of the goods in his possession both prior to cancellation and during the following twenty-day period. During the twenty-day period after cancellation, except for the buyer's duty of care, the goods are at the seller's risk.

C. If the seller has performed any services pursuant to a home solicitation sale prior to its cancellation, the seller is entitled to a cancellation fee of five per cent of the cash price, fifteen dollars, or the amount of the cash down payment, whichever is less. If the seller's services result in the alteration of property of the buyer, the seller shall restore the property to substantially as good condition as it was in at the time the services were rendered.

D. The buyer may not cancel a home solicitation sale if he requests the seller to provide goods or services without delay because of an emergency and the seller in good faith makes a substantial beginning of performance before notice of cancellation, and the goods cannot be returned to the seller in substantially as good condition as when the buyer received them.

§ 44-5008 Violation; classification

Any person who violates any provision of this chapter shall be guilty of a class 3 misdemeanor.

Chapter 15.1 Residential Property

Article 1 General Provisions

§ 44-5101 Wholesale buyers; wholesale sellers; disclosure; unlawful practice; definitions

A. Before the parties enter into any binding agreement:

1. A wholesale buyer of residential real property shall disclose in writing to the seller that the buyer is a wholesale buyer.

2. A wholesale seller of residential real property shall disclose in writing to the buyer that the seller is a wholesale seller that holds an equitable interest in the real property and that the wholesale seller may not be able to convey title to the property.

B. Notwithstanding any other provisions contained in the contract for sale, if a wholesale buyer violates this section, the seller may cancel the contract for sale at any time prior to the close of escrow without penalty and may retain any earnest money paid by the wholesale buyer.

C. Notwithstanding any other provisions contained in the contract for sale, if a wholesale seller violates this section, the buyer may cancel the contract for sale at any time prior to the close of escrow without penalty and shall be refunded all earnest money paid by the buyer.

D. For the purposes of this section:

1. "Residential real property" means real property with fewer than five dwelling units.

2. "Wholesale buyer" means a person or entity that enters into a purchase contract for residential real property as the buyer and assigns that same contract to another person or entity.

3. "Wholesale seller" means a person or entity that enters into a purchase contract for residential real property as the seller, that does not hold legal title to that real property and that assigns that same contract to another person or entity.

Chapter 16 Restrictions on Deficiency Judgments in Consumer Credit Sales

Article 1 In General

§ 44-5501 Restrictions

A. This section applies to a consumer credit sale of goods or services.

B. Notwithstanding any agreement to the contrary, if the seller or his assignee retakes goods which were the subject of the sale, the buyer shall not be personally liable for the unpaid balance of the price if the sales price were one thousand dollars or less. If the fair market value of retaken goods exceeds the unpaid balance, the buyer shall be entitled to the difference between the unpaid balance, after first deducting all unearned finance charges, and the fair market value of the goods at the time of retaking, less the seller's or assignee's reasonable costs and expenses as provided in title 47, chapter 9, article 6. However, the buyer may be liable in damages to the seller or his assignee if the buyer has wrongfully damaged the collateral or if, after default and demand, the buyer has wrongfully failed to make the collateral available to the seller or his assignee.

C. Neither the seller of consumer goods or services nor his assignee may take any other security for a consumer credit sale other than (1) a security interest in goods sold or as to which services have been rendered and (2) in the realty to which such goods may be affixed. If the seller or assignee elects not to retake the goods, but brings an action for the unpaid balance, the goods may not thereafter be retaken and are not subject to judicial process to enforce any judgment obtained therein.

D. "Fair market value" means the price arrived at in good faith which a knowledgeable and willing buyer would pay and a knowledgeable and willing seller would ask for the goods in question. "Good faith" shall be defined as set forth in section 47-1201.

Chapter 17 Retail Installment Sales Transactions

Article 1 In General

§ 44-6001 Definitions

In this chapter, unless the context otherwise requires:

1. "Cash sale price" means the price stated in a retail installment contract or other memorandum furnished by a retail seller to a retail buyer in connection with a retail charge account agreement, for which the seller would have sold and the buyer would have bought the goods or services which are the subject matter of a retail installment transaction, if the sale had been a sale for cash. The cash sale price may include any taxes and charges for delivery, installation, servicing, repairs, alterations or improvements.

2. "Finance charge" means the amount payable by the buyer for the privilege of purchasing goods or services under a retail installment transaction. It does not include the amount, if any, charged for insurance premiums, delinquency charges, attorneys' fees, court costs or official fees.

3. "Goods" means all tangible chattels, except motor vehicles, money, things in action or intangible personal property other than merchandise certificates or coupons as described in this chapter. The term includes chattels which are to be affixed to real property as to become a part of it whether or not severable from it and merchandise certificates or coupons, issued by a retail seller, not redeemable in cash and to be used in the face amount instead of cash for goods or services sold by such seller.

4. "Holder" means:

(a) The retail seller of goods or services under a retail installment contract or retail charge account agreement.

(b) A person to whom a retail buyer owes an obligation arising from a retail installment transaction, whether directly or by assignment or other transfer.

(c) Any person entitled to the rights of a retail seller under a retail installment contract or retail charge account agreement.

5. "Motor vehicle" means any self-propelled device in, upon or by which any person or property is or may be transported or drawn on a public highway, except:

(a) Devices which move upon or are guided by a track or travel through the air.

(b) The following, if not designed primarily for highway transportation, but which may incidentally be operated on a public highway:

(i) Tractors.

(ii) Buses.

(iii) Trucks.

(iv) Power shovels.

(v) Road machinery.

(vi) Agricultural machinery.

6. "Official fees" means:

(a) The amount of the fees prescribed by law for filing, recording or otherwise perfecting and releasing or satisfying a retained title, lien or other security interest created by a retail installment transaction.

(b) The premium for insurance in lieu of perfecting a security interest to the extent that the premium does not exceed the amount described in subdivision (a) of this paragraph that otherwise would be payable.

7. "Principal balance" means the cash sale price of the goods or services which are the subject matter of a retail installment contract plus any amounts included, if a separate identified charge is made and stated in the contract, for insurance and official fees, less the amount of the buyer's down payment in money or goods, or both.

8. "Retail buyer" or "buyer" means a person who buys goods or services from a retail seller.

9. "Retail charge account agreement" means an arrangement prescribing the terms of retail installment transactions which may be made from time to time in which a retail buyer purchases goods or services and in which a finance charge or delinquency charge may be computed in relation to the buyer's balance in the account.

10. "Retail installment contract" means an arrangement for a retail installment transaction except a retail charge account agreement or memorandum reflecting a sale made pursuant to such agreement. "Retail installment contract" may include a chattel mortgage, a conditional sale contract, any security agreement or any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for the use of the bailed or leased goods a sum substantially equivalent to or in excess of the value of the goods and if it is agreed that the bailee or lessee is bound to or has the option of becoming the owner of the goods for no other or a nominal consideration upon full compliance with the provisions of the bailment or lease.

11. "Retail installment transaction" means any transaction in which a retail buyer purchases goods or services, excluding services purchased in connection with a lease, from a retail seller pursuant to a retail installment contract or a retail charge account agreement and under which the buyer agrees to pay for the goods and services in more than four installments or for which the payment of a finance charge may be required.

12. "Retail seller" or "seller" means a person regularly and principally engaged in the business of selling goods or services to retail buyers.

13. "Services" means work, labor, or services of any kind.

§ 44-6002 Retail installment contracts; retail charge account agreements; definitions

A. Under a retail installment contract, other than a retail charge account agreement, a finance charge not to exceed a rate set by contract may be charged and received. The finance charge may be computed either at the single annual percentage rate using the actuarial method or it may be precomputed on the assumption that all payments will be made in the amount and on the dates scheduled. If the finance charge is precomputed, the fact that payments are made either before or after the date due does not affect the amount of finance charge which the seller or holder may charge or receive. If such precomputed contract balance is prepaid in full by cash, a new loan, refinancing or otherwise, the seller or holder shall charge only for the finance charge which has been earned and unpaid late or delinquency charges as of the date of prepayment and the buyer shall receive a rebate of that portion of the precomputed finance charge which is the difference between the total precomputed finance charges and the charges at the contract finance charge rate computed on the unpaid principal balance based on the number of days or months to maturity based on either a thirty day month - three hundred sixty day year or daily three hundred sixty-five or three hundred sixty-six day year on the number of days remaining to maturity. The amount of such rebate shall not be computed pursuant to the method commonly known as the "rule of 78's". To simplify the calculation of earned finance charge, it is permissible to assume that all payments were made as originally scheduled or as otherwise mutually agreed.

B. It is permissible to calculate the finance charge on an annual basis of twelve months of thirty days each, or on a daily basis if a day is counted either as 1/360th, 1/365th, or 1/366th of a year, as the purchaser and seller or holder may agree by writing. The seller or holder may also charge a late payment or delinquency charge, in addition to all finance charges permitted, on each installment not paid in full upon the tenth day after its due date in an amount not to exceed five dollars on an installment of twenty-five dollars or less and ten dollars on an installment greater than twenty-five dollars.

C. A retail installment contract which otherwise conforms to the requirements of this chapter may contain provisions which relate to additional goods and services authorizing any of the following:

1. The seller may add subsequent purchases made by the buyer to the contract.

2. The total price of the goods or services covered by the contract may be increased by the price of such additional goods or services.

3. The seller may increase proportionately all finance charges and installment payments.

4. All terms and conditions of the contract may apply equally to such additional goods or services.

5. The contract may provide for a consolidation of subsequent purchases with one or more of the previous contracts or may provide for a series of sales transactions made pursuant to an agreement providing for the addition of the principal balance, plus the finance charge for the current sale, to an existing balance.

6. The goods purchased under the previous contract or contracts may be security for the goods purchased under the subsequent contract, but only until such time as the total of payments under the previous contract or contracts is fully paid.

D. Under a retail charge account agreement a rate of finance charge not to exceed the maximum rate set by contract may be charged and received on an amount not in excess of the greatest of any of the following:

1. The average daily balance in the account in the billing cycle period.

2. The balance in the account at the beginning of the billing cycle period, after first deducting payments and credits received during the billing cycle period.

3. The median amount within a ten dollar range in which the balance as computed under paragraph 1 or 2 of this subsection falls if the seller applies the same finance charge to all such balances within such range.

E. As used in this section, month need not be a calendar month but may, instead, be a regular billing cycle period. If the finance charge for the billing cycle period is less than fifty cents, a minimum finance charge not in excess of fifty cents may be charged for the period.

F. The seller or holder may also charge a late payment or delinquency charge, in addition to all finance charges permitted, on each installment not paid in full upon the tenth day after its due date in an amount not to exceed five dollars on an installment of twenty-five dollars or less and ten dollars on an installment greater than twenty-five dollars. As an alternative, if a seller or holder does not charge, collect or receive a finance charge as permitted in this chapter, he is entitled to charge, collect and receive a delinquency charge determined by applying any rate of interest to the delinquent balance if such interest charge is provided for in the retail charge account agreement.

G. Notwithstanding the late payment or delinquency charge provided in subsection B or F, in a commercial transaction, the seller or holder may charge a late payment or delinquency charge, in addition to all finance charges permitted, on each installment not paid in full upon the tenth day after its due date in an amount of not more than five per cent of the unpaid balance of the installment.

H. A seller or holder who receives a check, draft, negotiable order of withdrawal or similar instrument which is drawn on a bank or other depository institution and which is offered by a buyer in payment of an installment may, if the instrument is not paid or is dishonored by the institution, charge and collect from the buyer a bad check charge in the amount of either ten dollars or the actual charge made to the seller or holder by the depository institution for the return of the unpaid or dishonored instrument, whichever is greater.

I. A retail charge account agreement may also provide for the payment of court costs and for reasonable attorneys' fees if it is referred for collection to an attorney other than a salaried employee of the holder of the retail charge account agreement.

J. In this section:

1. "Actuarial method" means the method of allocating payments made on a debt between the unpaid principal balance and the finance charge pursuant to which a payment is applied first to the finance charge due and any remainder is subtracted from the unpaid principal balance.

2. "Commercial transaction" means a transaction in which the goods or services are intended by the borrower for use primarily for other than personal, family or household purposes.

§ 44-6004 Assignment or transfers

A. The provisions of this section shall apply notwithstanding any law to the contrary.

B. An assignee may purchase or acquire any retail installment contract or retail charge account agreement or any outstanding balance under either from a seller or holder on terms, conditions and price as may be mutually agreed upon.

C. Notice to the buyer of the assignment and any requirement that the transferor be deprived of dominion over payments upon a retail installment contract or retail charge account agreement or over the goods if returned to or repossessed by the seller or holder, is not necessary to the validity of a written assignment of the retail installment contract or retail charge account agreement or any outstanding balance under either as against creditors, subsequent purchasers, pledgees, mortgagees or lien claimants of the transferor.

D. Unless the buyer has notice of the assignment of his retail installment contract, retail charge account agreement or any outstanding balance under either, payment made by the buyer to the holder last known to him is binding upon all subsequent holders.

E. A holder may acquire from a retail seller or another holder invoices or other memoranda evidencing retail sales on such terms, conditions and price, discount or other charge as may be mutually agreed upon. Such price, discount or other charge is not a part of the time price differential or delinquency charge permitted.

§ 44-6005 Periodic statements required

Except where the seller or holder deems an account pursuant to a retail charge account agreement to be uncollectible or where delinquency collection procedures have been instituted with respect to such an account, the seller or holder of the account shall, within a reasonable time after the end of the periodic billing cycle, mail or deliver to the buyer who is obligated pursuant to the terms of such agreement, for each billing cycle at the end of which there is an outstanding balance in excess of one dollar in that account or with respect to which a finance charge is imposed, a statement or statements which the buyer may retain. A reasonable time after the end of the billing cycle is presumed to be fifteen days.

§ 44-6006 Violation; bar to recovery

A seller or holder who violates any provision of this chapter is barred from recovery of any finance charge, official fees and delinquency charge under or in connection with the related retail installment contract or the related retail charge account agreement for as long as the violation continues. This section does not bar the seller or holder from recovery from the buyer of an amount equal to the cash price of the goods or services and the cost to the seller or holder of any insurance included in the transaction.

Chapter 18 Foreign Trade Zones

Article 1 In General

§ 44-6501 Authorization to apply for foreign trade zone

The state of Arizona and any county, city or town within the state or a public or private corporation or any combination thereof may apply to the foreign trade zones board, United States department of commerce, for the right to establish, operate and maintain a foreign trade zone and subzones and may acquire land for the purposes of this section. For the purposes of this section, such foreign trade zone or subzone may be incorporated outside the boundaries of a municipality or be made up of areas from adjoining counties.

Chapter 19 Solicitation of Funds for Charitable Purposes

Article 1 General Provisions

§ 44-6551 Definitions

In this article, unless the context otherwise requires:

1. "Charitable organization" means either of the following:

(a) A person determined by the internal revenue service to be a tax exempt organization pursuant to section 501(c)(3) of the internal revenue code.

(b) A person who is or who is held out to be established for a benevolent, educational, philanthropic, humane, scientific, patriotic, social welfare or advocacy, public health, environmental conservation, civic or other eleemosynary purpose or a person who in any manner employs a charitable appeal as the basis of a solicitation.

2. "Contracted fund raiser" means a person who for profit either solicits directly or employs, procures or engages another person to solicit for a charitable organization. A contracted fund raiser does not include a lawyer, investment counselor or banker who advises a person to make a charitable contribution, a bona fide salaried officer, employee or volunteer of a charitable organization or a person the contracted fund raiser employs, procures or engages to solicit.

3. "Independent solicitor" means a person who for profit engages to solicit on behalf of a charitable organization or on behalf of a contracted fund raiser.

4. "Solicit" and "solicitation" means a request of any kind for a contribution or a request for the purchase of goods, tickets or services for a charitable purpose.

§ 44-6561 Unlawful acts or practices; violation; classification; civil penalty

A. The following acts and practices are unlawful as applied to the planning, conduct or execution of a solicitation and constitute unlawful practices under section 44-1522 that the attorney general may investigate and for which the attorney general may take appropriate action as prescribed by chapter 10, article 7 of this title:

1. Knowingly using an emblem, device or printed matter belonging to or associated with a charitable organization without first being authorized in writing to do so by the charitable organization.

2. Knowingly using a name, symbol or statement so closely related or similar to that used by another charitable organization for the purpose of misleading a solicited person.

3. Knowingly making a misrepresentation to a person that the person on whose behalf a solicitation is being conducted is a charitable organization.

4. Knowingly making a representation to a person that another person sponsors, endorses or approves the solicitation if the other person has not given consent in writing to the use of that person's name for these purposes.

5. Knowingly failing to post in a clear and conspicuous manner at a location in which a charitable organization or other business entity receives donated items for the purpose of reselling the items to financially benefit a charitable organization one of the following statements:

(a) This collection site is owned by [name of charity], a charitable organization. Donated items received at this location will support the charitable mission of [name of charity].

(b) This collection site is owned by [name of company], a for-profit company. Donated items received at this location will be sold by [name of company] with a portion of the proceeds benefiting [name of charity].

6. Knowingly making a misrepresentation to a person that a donation is any of the following:

(a) Tax deductible.

(b) Going to a nonprofit corporation.

(c) Enabling the person to receive a tax credit.

B. A contracted fund raiser who knowingly conducts any act or practice proscribed in subsection A of this section is guilty of a class 6 felony.

C. An independent solicitor who knowingly conducts any act or practice proscribed in subsection A of this section is guilty of a class 1 misdemeanor.

D. In addition to the criminal offenses provided in subsections B and C of this section, if a person conducts an act or practice proscribed in subsection A of this section, the attorney general may recover from the person on behalf of the state a civil penalty of not more than one thousand dollars per violation. The civil penalty prescribed by this subsection is in lieu of the penalty prescribed by section 44-1531.

E. For the purposes of subsection A, paragraph 5 of this section, an entity owns a collection site if the entity receives at least fifty-one percent of the proceeds generated by the retail sale of the donated items received at the collection site.

Chapter 20 Equipment Dealers

Article 1 General Provisions

§ 44-6701 Definitions

In this chapter, unless the context otherwise requires:

1. "Dealer agreement" means an oral or written contract or agreement of definite or indefinite duration between a supplier and an equipment dealer that prescribes the rights and obligations of each party with respect to the purchase or sale of equipment.

2. "Equipment" means machines designed for or adapted and used for agriculture, livestock, grazing, light industrial and utility purposes. Equipment does not include earthmoving and heavy construction equipment, mining equipment or forestry equipment.

3. "Equipment dealer" or "dealer" means any person, partnership, corporation, association or other form of business enterprise that is primarily engaged in the retail sale of equipment.

4. "Net cost" means the price the equipment dealer pays to the supplier for equipment, including the freight costs from the supplier's location to the equipment dealer's location, minus all applicable discounts allowed by the supplier.

5. "Net price" means the price listed for repair parts in the supplier's price list or catalog minus all applicable discounts allowed by the supplier.

6. "Supplier" means any person, partnership, corporation, association or other business enterprise that is engaged in the manufacturing, assembly or wholesale distribution of equipment or repair parts, or both, and includes any successor in interest, including a purchaser of assets or stock, or a surviving corporation that results from a merger, liquidation or reorganization of the original supplier.

§ 44-6702 Prohibited acts of supplier

A. It is a violation of this chapter for a supplier to do any of the following:

1. Coerce or compel an equipment dealer to enter into a written or oral agreement that is supplementary to an existing dealer agreement with the supplier unless that agreement is imposed on all other similarly situated dealers in this state.

2. Refuse to deliver, within a reasonable time after receipt of an order, equipment covered by the dealer agreement specifically represented by the supplier to be available for immediate delivery if this equipment is available in reasonable quantities unless this failure is due to any of the following:

(a) Restrictions on the extension of credit by the supplier to the equipment dealer.

(b) A breach of or a default under the agreement by the equipment dealer.

(c) An act of God.

(d) Work stoppage or delay due to a strike or labor difficulty.

(e) A bona fide shortage of materials.

(f) Other causes over which the supplier has no control.

3. Terminate, cancel or fail to renew a dealer agreement or to substantially change the competitive circumstances of the dealer agreement without cause.

4. Require as a condition of renewal or extension of a dealership agreement that the dealer complete substantial renovation of the dealer's place of business or to acquire new or additional space to serve as the dealer's place of business unless the supplier provides at least one year's written notice of the conditions that states all of the grounds supporting this condition. The supplier shall provide the dealer with a reasonable time to complete the renovation or acquisition after this period expires.

5. Discriminate in the prices charged for equipment of like grade and quality sold by the supplier to similarly situated dealers in this state. This paragraph does not:

(a) Prevent the use of differentials that result from the differing quantities in which equipment is sold or delivered and does not prevent a supplier from offering a lower price in order to meet a competitor's equally low price or the services or facilities furnished by a competitor.

(b) Apply to sales to an equipment dealer for resale to a unit or agency of the United States government, this state or its political subdivisions, a major fleet account or an organization for testing or demonstration purposes.

6. Prevent by any means an equipment dealer from changing the capital structure of the equipment dealership or the means by which the dealership is financed if the dealer at all times meets reasonable capital standards imposed by the supplier or as otherwise agreed to between the dealer and the supplier and this change does not cause a change of the controlling interest in the executive management or the board of directors or of a guarantor of the dealership.

7. Prevent by any means an equipment dealer or any officer, member, partner or stockholder of a dealer from selling or transferring any part of the interest of any of them to any other person. No dealer, officer, partner, member or stockholder may sell, transfer or assign the equipment dealership or power of management or control of the dealership without the written consent of the supplier. If a supplier determines that the designated transferee is not acceptable, the supplier shall provide the dealer with written notice of the supplier's objection and the specific reasons for withholding its consent.

8. Require an equipment dealer to assent to a release, assignment, novation, waiver or estoppel that would relieve a person from complying with this section.

9. If an equipment dealer or the principal owner of the dealership dies, unreasonably withhold consent to the transfer of the dealer's interest in the dealership to a member of the dealer's or the principal owner's family if that family member meets the reasonable financial, business ability, experience and character standards of the supplier. If the supplier determines that a family member does not meet these standards, the supplier shall provide the dealer's representative with written notice of the supplier's specific objections. A supplier has ninety days to consider a request to make a transfer. For the purposes of this paragraph, "family member" means a spouse, parent, sibling, child, stepchild, son-in-law or daughter-in-law and lineal descendants and includes adopted children and their lineal descendants.

B. Notwithstanding subsection A, paragraph 9, if a supplier and dealer have executed an agreement concerning succession rights before the dealer's death and that agreement has not been revoked or otherwise terminated by either party, that agreement controls the terms of succession.

C. Notwithstanding subsection A, paragraph 7 or 9, a supplier may withhold consent to a transfer of interest in a dealership if the dealer's area of responsibility or trade area does not afford sufficient sales potential to reasonably support the dealer. The supplier has the burden of demonstrating this fact.

§ 44-6703 Dealer agreements; cancellation

A. Unless one or more of subsection B, paragraphs 1 through 10 apply, a supplier shall give an equipment dealer ninety days' written notice of the supplier's intent to terminate, cancel or not renew a dealer agreement or to change the competitive circumstances of that agreement. The notice shall state the reasons for this action and that the dealer has sixty days to cure any claimed deficiency. If the dealer cures the deficiency to the supplier's satisfaction within that time, the supplier may not terminate, cancel, refuse to renew or change the competitive circumstances of the agreement for the reasons specified in the notice. The agreement's terms do not expire and the supplier shall not change the competitive circumstances of the agreement before the end of the ninety day period without the dealer's written consent.

B. A supplier, either directly or through an agent, shall not terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without cause. For the purposes of this subsection, "cause" means that a dealer:

1. Fails to comply with the terms of the agreement if these requirements are not different from those imposed on other similarly situated dealers in this state.

2. Transfers a controlling ownership interest in the dealership without the supplier's consent. The supplier shall not withhold consent without good reason.

3. Makes a material misrepresentation or falsification of a record.

4. Files a voluntary petition in bankruptcy or has an involuntary petition in bankruptcy filed against him that has not been discharged within sixty days after it was filed.

5. Is insolvent or in receivership.

6. Pleads guilty to or is convicted of a felony.

7. Fails to operate in the normal course of business for seven consecutive business days or terminates the business.

8. Relocates or establishes a new or additional equipment dealer's place of business without the supplier's consent.

9. Fails to satisfy a payment obligation as it comes due and payable to the supplier.

10. Fails to promptly account to the supplier for any proceeds from the sale of equipment or to hold these proceeds in trust for the supplier's benefit.

11. Consistently engages in business practices that are detrimental to the consumer or the supplier including excessive pricing, misleading advertising or failing to provide service and replacement parts or to perform warranty obligations.

12. Consistently fails to meet the supplier's market penetration requirements based on available record information and after receiving notice from the supplier of the supplier's requirements.

13. Consistently fails to meet building and housekeeping requirements.

14. Consistently fails to provide adequate sales, service or parts personnel commensurate with the dealer agreement.

15. Consistently fails to comply with the applicable licensing laws pertaining to the products and services the dealer represents as being for and on the supplier's behalf.

§ 44-6704 Surplus parts inventory; credits

A. Unless this section is specifically waived in writing by the dealer, a supplier shall allow a dealer to periodically, or at least once every twelve months, return a portion of the dealer's surplus parts inventory for credit. The supplier shall notify the dealer of a time period when a dealer may submit the dealer's surplus parts list and return this inventory. The designated return period shall be at least ninety days. A supplier may stagger return periods for its dealers.

B. If a supplier has not notified its dealer of a specific time period for returning surplus parts within the preceding twelve months, it shall allow the dealer to return surplus parts within sixty days of receiving the dealer's request to make this return.

C. A supplier shall allow surplus parts return on a dollar value of parts equal to ten per cent of the total dollar value of all parts purchased by the dealer from the supplier during either the twelve month period immediately preceding the supplier's notification to the dealer of the supplier's return program or, if subsection B applies, the month the dealer makes a return request. The dealer may elect to return a dollar value of the surplus parts equal to less than ten per cent of the total dollar value of the parts the dealer purchased during the preceding twelve months.

D. A dealer may not return obsolete or superseded parts. However, a dealer may return for credit a part found in the supplier's current returnable parts list or a superseded part that is not the subject of either the supplier's parts return program as of the date the supplier notifies the dealer or, if subsection B applies, as of the date the equipment dealer made a return request.

E. A dealer shall return only new and unused parts to the supplier of these parts.

F. The minimum credit allowed for returned parts is ninety-five per cent of the net price as listed in the supplier's current returnable parts list as of the date that the supplier provides notice of its return program or, if subsection B applies, the date that the dealer submits a request for return.

G. A supplier shall issue credit within ninety days after receiving a return part.

H. This section does not prevent a supplier from charging back to the dealer's account amounts previously paid or credited as a discount incident to the dealer's purchase of goods.

§ 44-6705 Cancellation of dealer agreement; repurchase

A. If a dealer agreement is cancelled or not renewed, the supplier shall repurchase the dealer's remaining inventory. The supplier shall also repurchase any specific data processing hardware that the supplier required the dealer to purchase, including computer systems equipment the supplier required for communications purposes. The supplier shall repurchase this equipment at its fair market value.

B. The supplier shall repurchase specialized repair tools purchased by the dealer pursuant to the supplier's requirements. The specialized repair tools shall be unique to the supplier product line and shall be complete and in usable condition. The supplier shall repurchase the specialized repair tools at a price equal to seventy-five per cent of the total invoice amount charged by the supplier to the dealer.

C. The supplier shall pay the dealer one hundred per cent of the net cost of all new, unsold, undamaged and complete equipment that is resalable. The supplier may deduct a reasonable allowance for depreciation due to the dealer's usage and deterioration caused by weather conditions at the dealer's location. The supplier may also deduct all programs and discounts it previously allowed.

D. The supplier shall pay the dealer ninety-five per cent of the current net price of all new, unused and undamaged repair parts and accessories that are listed in the supplier's effective price list or catalog. In computing the amount owed to the dealer the supplier may deduct from the current net price all programs and discounts previously allowed by the supplier to the dealer.

E. The supplier shall pay the dealer five per cent of the current net price on all new, unused and undamaged repair parts the dealer returns to cover the cost of handling, packing and loading. The supplier may perform the handling, packing and loading itself instead of paying this amount. The dealer shall make available to the supplier all equipment previously purchased by the dealer. The dealer shall make this equipment available at the dealer's place of business or at those places where the equipment is located.

F. This section does not require a supplier to repurchase any of the following:

1. A repair part that has a limited storage life or that is subject to deterioration.

2. A single repair part that is priced as a set of two or more items.

3. A repair part that, because of its condition, is not resalable as a new part without being repaired or reconditioned.

4. Inventory for which the equipment dealer is unable to furnish evidence, to the supplier's satisfaction, of good title that is free and clear of all claims, liens and encumbrances.

5. Inventory that the dealer wishes to keep, including lease or rental equipment, if the dealer has a contractual right to do so.

6. Equipment that is not in new, unused, undamaged and complete condition.

7. Equipment that has been used by the dealer or has deteriorated because of weather conditions at the dealer's location unless the supplier receives an allowance for this usage or deterioration. Previously unsold demonstrated equipment that has less than fifty hours of use and that is equipped with an hour meter is new equipment.

8. Repair parts that are not in new, unused and undamaged condition.

9. Inventory that the dealer ordered on or after the date the dealer received the notification of the supplier's termination of the dealer agreement.

10. Inventory that the dealer acquired from any source other than the supplier or the supplier's successor in interest.

G. If a supplier fails or refuses to repurchase inventory as prescribed by this section, the supplier is liable for one hundred ten per cent of the current net price of the inventory plus any freight charges paid by the dealer, interest at the highest legal rate from the date of shipment to the supplier and five per cent of the inventory's current net price to cover handling, packing and loading.

§ 44-6706 Repurchase; title; security interest

Upon payment of the repurchase amount to the equipment dealer, the title and right to possession of the repurchased inventory shall transfer or be transferred to the supplier and the equipment dealer shall have a continuing perfected security interest in the inventory until payment by the supplier. The security interest shall be perfected without the filing of a financing statement for a period of six years.

§ 44-6707 Death of equipment dealer; definition

A. If an equipment dealer dies or becomes incapacitated, the supplier shall repurchase the inventory from the estate pursuant to the inventory repurchase provisions of section 44-6705 as if the supplier had terminated the dealer agreement. The guardian, the executor or, if the dealer died intestate, the heirs have six months from the date of the dealer's incapacity or death to submit inventory for repurchase.

B. This section does not require a supplier to repurchase inventory if the supplier and a dealer's family member have entered into a new dealer agreement.

C. This section does not entitle a guardian, heir or personal representative of an incapacitated or deceased dealer to operate a dealership for more than six months after the dealer's incapacity or death.

D. This section is supplemental to an agreement between the dealer and the supplier that covers the return of equipment, attachments and repair parts.

E. This section does not limit the right of a supplier to charge back to the dealer's account amounts previously paid or credited as a discount pertaining to the equipment dealer's purchase of inventory.

F. For the purposes of this section, "dealer" means an owner, an equal or majority partner or the majority stockholder of a corporation who operates as an equipment dealer.

§ 44-6708 Cause of action; remedies

A. An equipment dealer may bring an action against a supplier in any court of competent jurisdiction for damages sustained by the dealer as a consequence of the supplier's violation of the provisions of this chapter. The dealer may also recover costs and reasonable attorney fees.

B. An equipment dealer may be granted injunctive relief against unlawful termination, cancellation, nonrenewal or change in competitive circumstances.

C. The remedies provided by this section are in addition to any other remedies permitted by law and do not affect laws relating to product liability actions.

§ 44-6709 Current agreements; effect of law; void provisions

A. This chapter applies to dealer agreements in effect on the effective date of this chapter at the time the agreements are extended, revised, modified or changed in any manner and applies to all dealer agreements entered into or renewed on or after the effective date of this chapter.

B. A provision in any contract or agreement with respect to a supplier that requires jurisdiction or venue outside of this state or requires the application of the laws of another state or country is void with respect to a claim otherwise enforceable under this chapter.

Chapter 21 Investment of Pension Funds

Article 1 General Provisions

§ 44-6751 Investment of pension funds

Notwithstanding any other law, the investment managers of public and private pension funds deposited in this state shall not be required to invest in any type of investment dictated or required by any entity of the federal government that is intended to fund economic development projects, public works or social programs, but investment managers may consider such economically targeted investments pursuant to their fiduciary responsibility.

Chapter 22 Rental-Purchase Agreements

Article 1 General Provisions

§ 44-6801 Definitions

In this chapter, unless the context otherwise requires:

1. "Advertisement" means a commercial message in any medium that solicits a consumer to enter into a rental-purchase agreement.

2. "Cash price" means the price at which the lessor would have sold the property to the consumer for cash on the date of the rental-purchase agreement.

3. "Consumer" means an individual who rents personal property under a rental-purchase agreement to be used primarily for personal, family or household purposes.

4. "Consummation" means the date on which a consumer becomes contractually obligated under a rental-purchase agreement or on the date the first payment is made, whichever is earlier.

5. "Cost of rental" means the difference between the total of all periodic payments necessary to acquire ownership under the rental-purchase agreement and the cash price of the rental property that is subject to the rental-purchase agreement.

6. "Fee" means any charge, fee, cost or expense, however denominated, other than a rental payment.

7. "Lessor" means a person that, in the ordinary course of business, regularly leases, offers to lease or arranges for the leasing of property under a rental-purchase agreement.

8. "Rental-purchase agreement" means an agreement that is for the use of personal property by an individual for personal, family or household purposes, that is for an initial period of four months or less, that is automatically renewable with each payment after the initial period and that allows the consumer to become the owner of the property but that does not obligate or require the consumer to continue leasing or using the property beyond the initial period.

9. "Rental-purchase property" means personal property that is owned by the lessor at the time it is physically displayed and offered for rental-purchase to the consumer and before execution of a rental-purchase agreement.

§ 44-6802 Applicability

A. This chapter does not apply to the following:

1. Rental-purchase agreements primarily for business, commercial or agricultural purposes.

2. Rental-purchase agreements with governmental agencies or instrumentalities or with organizations.

3. A lease of a safe deposit box.

4. A lease or bailment of personal property that is incidental to the lease of real property and that provides that the consumer has no option to purchase the leased property.

5. A lease of a motor vehicle, manufactured home, mobile home, factory-built building or recreational vehicle.

B. Notwithstanding section 44-6001, paragraphs 9, 10 and 11, chapter 17 of this title does not apply to a rental-purchase agreement.

C. Notwithstanding section 47-1201, subsection B, paragraph 35, that paragraph and title 47, chapter 9 do not apply to a rental-purchase agreement.

D. Chapter 10, article 7 of this title applies to a rental-purchase agreement.

E. Unless a consumer's offer or agreement to enter into a rental-purchase agreement is made in a telephone communication initiated by the consumer, chapter 15 of this title applies to a rental-purchase agreement.

F. This chapter does not apply to:

1. The owner or publisher of any newspaper, magazine or other publication of printed matter in which an advertisement appears or to the owner or operator of a radio or television station or computer information service that disseminates the advertisement if the owner, publisher or operator does not have knowledge of the intent, design or purpose of the advertiser.

2. Any advertisement that is subject to and complies with the rules and regulations of and the statutes administered by the federal trade commission.

§ 44-6803 General requirements of disclosure

A. A lessor shall disclose to a consumer the information prescribed in section 44-6804. In a transaction involving more than one lessor, only one lessor is required to make the disclosures prescribed in section 44-6804, but all lessors are bound by the disclosures made.

B. The disclosures shall be made on or before the consummation of the rental-purchase agreement.

C. The disclosure shall be made clearly and conspicuously in writing, and a completed copy of the rental-purchase agreement shall be provided to the consumer upon signature of the consumer and lessor. The disclosures prescribed in section 44-6804 shall be made on the face of the agreement above the line for the consumer's signature.

D. If a disclosure becomes inaccurate as a result of any act, occurrence or agreement by the consumer after delivery of the required disclosures, the resulting inaccuracy does not violate this chapter.

E. If any portion of the transaction is conducted in any language other than English, the disclosures prescribed in section 44-6804 shall be made in the language other than English.

§ 44-6804 Disclosures

For each rental-purchase agreement, a lessor shall disclose in the agreement, or as otherwise required in this section, the following items:

1. The frequency with which periodic payments are to be made, the dollar amount of each periodic payment and the total number and total dollar amount of all periodic payments necessary to acquire ownership of the property.

2. A statement that the consumer does not own the rental property until the consumer has paid the total amount necessary to acquire ownership.

3. A statement advising the consumer whether the consumer is liable for loss of or damage to the rental property, and, if so, a statement that this liability does not exceed the fair market value of the rental property as of the time it is lost or damaged.

4. A brief description of the rental property that is sufficient to identify the rental property to the consumer and the lessor, including an identification number, if applicable, and a statement indicating whether the rental property is new or used.

5. The cash price of the rental property.

6. The total of initial payments paid or required on or before consummation of the rental-purchase agreement or delivery of the rental property, whichever is later.

7. A statement that the total amount of payments does not include fees. All fees shall be separately disclosed in the rental-purchase agreement.

8. A statement advising the consumer that the consumer may exercise an early purchase option. The statement shall include a clear summary of the terms of the early purchase option and shall be accompanied by a statement or chart showing the amount required to exercise the consumer's early purchase option after each periodic payment is made pursuant to the rental-purchase agreement. A lessor may disclose the amounts required to exercise an early purchase option either by attaching to the rental-purchase agreement a statement or chart showing all early purchase option amounts if periodic payments are made as scheduled or by providing the consumer with a written statement of each early purchase option amount at the time each periodic payment is made.

9. A statement identifying the party responsible for maintaining or servicing the property while it is being leased and a description of that responsibility.

10. A statement that if any part of a manufacturer's expressed warranty covers the rental property at the time the consumer acquires ownership of the property, it shall be transferred to the consumer, if allowed by the terms of the warranty.

11. The date of the transaction and the identities of the lessor and consumer.

12. A statement that the consumer may terminate the rental-purchase agreement without penalty by voluntarily surrendering or returning the rental property, but any liability for past due rental payments and any damage to the rental property, reasonable wear and tear excepted, survive termination of the rental-purchase agreement.

13. Notice of the right to reinstate a rental-purchase agreement as provided in this chapter.

14. The amount and purpose of any payment, charge or fee in addition to the periodic payments.

15. The cost of rental.

§ 44-6805 Prohibited rental-purchase agreement terms; practices

A. A rental-purchase agreement shall not contain any of the following:

1. A confession of judgment.

2. A negotiable instrument.

3. A security interest or any other claim of a property interest in any property of the consumer.

4. A wage assignment.

5. A waiver by the consumer of claims or defenses.

6. A provision authorizing the lessor or a person acting on the lessor's behalf to enter the consumer's premises without permission or to commit any breach of the peace in the repossession of rental property.

7. A provision requiring the purchase of insurance or a liability damage waiver from the lessor for the rental property that is the subject of the rental-purchase agreement.

8. A provision that states that mere failure to return rental property constitutes probable cause for a criminal action.

9. A provision requiring the consumer to make a payment in addition to regular rental payments to acquire ownership of the rental property, or a provision requiring the consumer to make rental payments totalling more than the dollar amount necessary to acquire ownership as disclosed pursuant to section 44-6804.

10. A provision requiring a reinstatement fee unless a periodic payment is late more than seven days under a rental-purchase agreement with periodic payments made monthly or more than two days under a rental-purchase agreement with payments made more frequently than monthly.

11. A provision requiring a reinstatement fee of more than five dollars.

12. A provision requiring more than one reinstatement fee on any one periodic payment regardless of the period of time that it remains unpaid.

13. A provision requiring a late charge or any other type of charge or penalty for reinstating a rental-purchase agreement other than a reinstatement fee, except that a lessor may use the term "late charge" or a similar term to refer to a reinstatement fee.

14. A provision requiring that a consumer who rents multiple items in a single rental-purchase agreement pay an amount to acquire ownership of the items that exceeds the combined total amounts required to acquire ownership of the items if rented separately for the same term.

B. A lessor shall not engage in any unfair, unlawful or deceptive act or practice or make any false or misleading statement in connection with a rental-purchase agreement.

§ 44-6806 Collection practices

A. A lessor shall not engage in any unlawful or deceptive conduct or make any untrue or misleading statement in connection with the collection of any payment owed by a consumer or the repossession of any rental property.

B. All of the following apply to any communication by a lessor with any person other than the consumer for the purpose of acquiring information about the location of a consumer or of any rental property:

1. The lessor shall identify itself and state that the lessor is confirming or correcting location information concerning the consumer.

2. The lessor shall not communicate with any person more than once unless requested to do so by the person or unless the lessor reasonably believes that the earlier response is erroneous or incomplete and that the person now has correct or complete location information.

3. The lessor shall not communicate by postcard.

4. The lessor shall not use any language or symbol on any envelope or in the contents of any communication that indicates that the communication relates to the collection of any payment or the recovery or repossession of rental property.

5. The lessor shall not communicate with any person other than the consumer's attorney after the lessor knows the consumer is represented by an attorney and has knowledge of, or can readily ascertain, the attorney's name and address, unless the attorney fails to respond within a reasonable period of time to communication from the lessor or unless the attorney consents to direct communication with the consumer.

C. Without the prior consent of the consumer given directly to the lessor or the express permission of a court of competent jurisdiction, a lessor shall not communicate with a consumer in connection with the collection of any payment or the recovery or repossession of rental property at any of the following:

1. The consumer's place of employment.

2. Any unusual time or place or a time or place known or that should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a lessor shall assume that the convenient time for communication with a consumer is after 8:00 a.m. and before 9:00 p.m., local time, at the consumer's location.

D. A lessor shall not communicate, in connection with the collection of money or repossession of property under a rental-purchase agreement, with any person other than the consumer, the consumer's attorney or the lessor's attorney, except to the extent the communication is any of the following:

1. Reasonably necessary to acquire location information concerning the consumer or the rental property as provided in subsection B.

2. On the prior consent of the consumer given directly to the lessor.

3. On the express permission of a court of competent jurisdiction.

4. Reasonably necessary to effectuate a postjudgment judicial remedy.

E. If a consumer notifies the lessor in writing that the consumer wishes the lessor to cease further communication with the consumer, the lessor shall not communicate further with the consumer with respect to the rental-purchase agreement, except for any of the following:

1. To advise the consumer that the lessor's further efforts are being terminated.

2. To notify the consumer that the lessor may invoke specified remedies allowable by law that are ordinarily invoked by the lessor.

3. If necessary to effectuate any postjudgment judicial remedy.

F. A lessor shall not harass, oppress or abuse any person in connection with a rental-purchase agreement, including engaging in any of the following conduct:

1. Using or threatening the use of violence or any criminal means to harm the physical person, reputation or property of any person.

2. Using obscene, profane or abusive language.

3. Causing a telephone to ring, or engaging any person in a telephone conversation, repeatedly or continuously with intent to annoy, abuse or harass any person.

4. Placing telephone calls without disclosure of the caller's identity.

G. A lessor shall not report any late payment, default or repossession to a consumer reporting agency, if the lessor either:

1. Advertises "no credit check" or otherwise states or implies that no inquiry will be made of a consumer credit history or creditworthiness.

2. Does not obtain a consumer credit report or investigative consumer report on a person before entering into a rental-purchase agreement with that person.

§ 44-6807 Reinstatement

A. A consumer who fails to make a timely rental payment may reinstate the rental-purchase agreement, without losing any rights or options that exist under the rental-purchase agreement, by paying the following charges within seven days after the renewal date of the rental-purchase agreement:

1. All past due rental payments.

2. If the rental property has been picked up, the reasonable cost of pickup and any redelivery.

3. Any applicable reinstatement fee.

B. A consumer who has paid less than sixty per cent of the total amount necessary to acquire ownership of rental property is entitled to an extended reinstatement period of at least sixty days if the consumer voluntarily surrenders the rental property, other than through judicial process, within seven days after the consumer's receipt of a written demand for the return of the rental property providing notice of the consumer's opportunity to obtain the extended reinstatement period.

C. A consumer who has paid sixty per cent or more of the total amount necessary to acquire ownership of rental property is entitled to an extended reinstatement period of at least one hundred eighty days if the consumer voluntarily surrenders the rental property, other than through judicial process, within fourteen days after the consumer's receipt of a written demand for the return of the rental property providing notice of the consumer's opportunity to obtain the extended reinstatement period.

D. Nothing in this section prevents a lessor from attempting to repossess rental property during the applicable reinstatement period, but the repossession does not affect the consumer's right to reinstate. If the consumer reinstates after the lessor has repossessed the rental property, the lessor shall provide the consumer with the same property, if available, or with substitute property of comparable quality and condition.

§ 44-6808 Receipts

On request by the consumer, a lessor shall provide the consumer with a written receipt for each payment made by cash or money order.

§ 44-6809 Renegotiations

A. A renegotiation occurs if any term of a rental-purchase agreement that is required to be disclosed by section 44-6804 is changed by agreement by the lessor and consumer. A renegotiation is considered to be a new rental-purchase agreement requiring the lessor to give all of the disclosures required by section 44-6804.

B. A renegotiation shall not include any of the following:

1. Reinstatement of a rental-purchase agreement in accordance with section 44-6807, subsection A.

2. A lessor's waiver or failure to assert any claim against the consumer.

3. A deferral, extension or waiver of a portion of a periodic payment or of one or more periodic payments.

4. A change, made at the consumer's request, of the day of the week or month on which periodic payments are to be made.

§ 44-6810 Advertising

A. If an advertisement for a rental-purchase agreement refers to or states the dollar amount of any periodic payment and the right to acquire ownership of a specific item, the advertisement shall also clearly and conspicuously state the following, as applicable:

1. That the transaction advertised is a rental-purchase agreement.

2. The total number and total amount of periodic payments necessary to acquire ownership of the item.

3. That the consumer acquires no ownership rights unless the total amount necessary to acquire ownership is paid.

B. Except as provided in subsection C of this section, each item of rental-purchase property that is displayed or offered under a rental-purchase agreement shall bear a tag or card that clearly and conspicuously indicates in Arabic numerals, which are readable and understandable by visual inspection, each of the following:

1. The cash price of the item.

2. The amount of the periodic payment.

3. The total number and total amount of periodic payments necessary to acquire ownership.

4. The cost of rental.

C. If rental-purchase property is displayed or offered online and a consumer is able to enter into a rental-purchase agreement for the rental-purchase property online or remotely through electronic commerce, a lessor may electronically disclose the information described in subsection B of this section. The information must be:

1. Clearly and conspicuously indicated in Arabic numerals that are readable and understandable by visual inspection.

2. Disclosed to the lessee before any of the disclosures required by section 44-6804.

D. If a lessor offers personal property for rental-purchase and the personal property is not owned by the lessor when it is displayed or offered for rental-purchase, the lessor shall electronically disclose the information described in subsection B of this section. The information must be:

1. Clearly and conspicuously indicated in Arabic numerals that are readable and understandable by visual inspection.

2. Disclosed to the lessee before any of the disclosures are made in the rental-purchase agreement as prescribed in section 44-6804.

§ 44-6811 Enforcement; penalties

A. A lessor who fails to comply with the requirements of this chapter is liable to the consumer damaged by the lessor's failure to comply:

1. In an amount equal to the greater of either:

(a) The actual damages sustained by the consumer as a result of the lessor's failure to comply with this chapter.

(b) Twenty-five per cent of the total of payments necessary to acquire ownership, but at least one hundred dollars and not more than one thousand dollars.

2. For court costs and expenses and reasonable attorney fees as determined by the court.

B. A consumer shall not take any action to offset the amount for which a lessor is potentially liable under subsection A against any amount owed by the consumer, unless the amount of the lessor's liability has been determined by judgment in an action in which the lessor was a party. This subsection does not bar a consumer in default on an obligation from asserting a violation of this chapter as an original action or as a defense or counterclaim to an action brought by a lessor against the consumer.

C. The rights and remedies prescribed under this section are cumulative with any other rights or remedies available in this state.

D. A consumer or lessor shall not bring an action under this chapter more than two years after the date the consumer made the consumer's last rental payment or more than two years after the date of the occurrence of the violation that is the subject of the suit, whichever is later.

E. A violation of this chapter constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

§ 44-6812 Lessor's defenses; definition

A. If a lessor establishes by a preponderance of the evidence that a violation of this chapter was unintentional or the result of a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid these errors, a court shall not impose a penalty prescribed in section 44-6811 and validity of the transaction is not affected.

B. A lessor is not liable under this chapter for any failure to comply with any requirement imposed under this chapter if within sixty days after discovering an error, and before the institution of an action under this chapter or the receipt of written notice of the error from the consumer, the lessor notifies the consumer of the error and makes whatever adjustments in the appropriate account that are necessary to correct the error.

C. For the purposes of this section, "bona fide errors" includes clerical errors, calculation errors, errors due to unintentional, improper computer programming or data entry and printing errors but does not include an error of legal judgment with respect to a lessor's obligations under this chapter.

§ 44-6813 Assignment of a rental-purchase agreement

If a lessor assigns or transfers a rental-purchase agreement to a third party, all of the consumer's rights created by the rental-purchase agreement and this chapter are preserved.

§ 44-6814 Notices

A written notice required or permitted by this chapter is:

1. Deemed to have been received on personal delivery to the consumer or lessor.

2. Presumed to have been received on the third day after mailing to the consumer's or lessor's last known address.

Chapter 23 Dishonored Check Fees

Article 1 General Provisions

§ 44-6851 Definitions

In this chapter, unless the context otherwise requires:

1. "Check" means a draft that is payable on demand and drawn on a financial institution, a cashier's check or a teller's check.

2. "Draft" means an item, other than an instrument, that is an order.

3. "Drawer" means a person who signs or is identified in a draft as a person ordering payment.

4. "Financial institution" means a bank, savings and loan association or credit union that is chartered and supervised under state or federal law.

5. "Holder" means a person, including this state, who is entitled to enforce an instrument.

6. "Maker" means a person who signs or is identified in a note as a person undertaking to pay.

7. "Order" means a written instruction to pay money that is signed by the person giving the instruction. The instruction may be addressed to any person, including this state or the person giving the instruction, or to one or more persons, including this state, jointly or in the alternative but not in succession.

8. "Payee" means a person, including this state, in whose favor an instrument is drawn or made payable.

§ 44-6852 Dishonored checks; service fee

Notwithstanding any other law and except as provided in section 32-507, the holder, payee or assignee of the holder or payee of a dishonored check, draft, order or note may charge and collect from the maker or drawer a service fee of not more than $25 plus any actual charges assessed by the financial institution of the holder, payee or assignee of the holder or payee as a result of the dishonored instrument.

Chapter 25 Senior Residential Entrance Fee Contracts

Article 1 General Provisions

§ 44-6951 Definitions

In this chapter, unless the context otherwise requires:

1. "Audited financial report" means a financial report on a provider that is prepared by an independent certified public accountant.

2. "Department" means the department of insurance and financial institutions.

3. "Director" means the director of the department of insurance and financial institutions.

4. "Entrance fee" means an initial or deferred transfer to a provider of a facility of a sum of money or property by a person entering into a senior residential entrance fee contract that in amount or value is at least six hundred percent of the periodic fee charged to a resident, all or a portion of which may be refunded to that resident, a benefactor or a beneficiary on the resident's termination of residence in the facility.

5. "Facility" means a place or places in which a provider undertakes to provide a resident with a living unit pursuant to a senior residential entrance fee contract. Facility does not include any provider that is regulated by the department of insurance and financial institutions pursuant to title 20, chapter 8.

6. "Living unit" means any apartment, room or other area in a facility set aside for the exclusive use of one or more identified residents.

7. "Periodic fee" means the monthly calculated amount charged to a resident for lodging in a living unit provided pursuant to a senior residential entrance fee contract.

8. "Provider" means a person who provides lodging to seniors in a living unit pursuant to a senior residential entrance fee contract.

9. "Resident" means an individual who enters into a senior residential entrance fee contract with a provider or who is designated in a senior residential entrance fee contract to receive lodging.

10. "Senior residential entrance fee contract" means a contract to provide a living unit in a facility for the duration of a resident's life or for a term of more than one year that is conditioned on the transfer of an entrance fee to the provider in addition to or in lieu of the payment of periodic charges for the living unit and that is further conditioned on the resident's ability to live independently.

§ 44-6952 Senior residential entrance fee contracts; provider registration; registration fee

A. Before a provider solicits, enters into or extends the term of a senior residential entrance fee contract the provider shall register with the department on a form prescribed by the department. The form shall include at least the following information:

1. The name of the provider.

2. The name, business address and business telephone number of each person holding at least a ten per cent ownership interest in the provider.

3. The business address, telephone number and fax number of the provider.

4. The mailing and street addresses for each of the provider's facilities.

5. The name, business address and business telephone number of the chief administrator for each facility.

6. The fiscal year-end date for the provider.

B. The director shall charge each provider a registration fee. The provider shall submit the registration form and fee to the department together with a copy of the provider's most recent audited financial report and a copy of the provider's disclosure statement prescribed in section 44-6954, subsection D, paragraph 2.

§ 44-6953 Maintaining valid registration

A. To maintain a valid registration, within one hundred eighty days following the conclusion of each fiscal year each provider shall file its annual financial report for the previous fiscal year with the department. If a provider fails to timely file its annual financial report, the department shall notify the provider in writing. If the provider fails to file its annual financial report within thirty days after the date of the written notice, the department shall cancel the provider's registration and send written notice of the cancellation to the provider and the consumer fraud section of the attorney general's office.

B. A provider shall also file with the department any amendments to its disclosure statement prescribed in section 44-6954, subsection D, paragraph 2 within fourteen days after making the amendment. The department shall notify the provider and the consumer fraud section of the attorney general's office if the department finds that the provider is using a disclosure form or amended disclosure form that has not been filed with the department.

C. The department shall forward to the consumer fraud section of the attorney general's office a copy of any provider's audited financial report that contains a qualified opinion or a statement that the auditors have substantial doubt about the provider's ability to continue as a going concern. The department shall notify the provider that the department has forwarded the financial report to the attorney general.

§ 44-6954 Senior residential entrance fee contracts; offer; rescission; disclosure

A. A person shall not solicit or enter into or extend the term of a senior residential entrance fee contract as a provider except pursuant to this chapter and after registering with the department as provided in section 44-6952.

B. The senior residential entrance fee contract, or an application agreement if a contract is contemplated to be signed thereafter, shall provide that any person who enters into the contract or application agreement has a period of seven days to rescind the contract or application agreement without penalty or further obligation. The seven days begins on the first full calendar day after the last to occur of any of the following events:

1. The execution of the contract or application agreement, whichever occurs first, if the proposed form of contract is provided to the person at the time the application agreement is executed.

2. The payment of an initial sum of money as a deposit or application fee.

3. Receipt of the disclosure statements and contents prescribed in subsection D of this section.

C. If a rescission occurs, the provider shall fully refund all monies or property paid or transferred by the person. A facility shall not require a person to move into a facility until after the expiration of the seven day rescission period.

D. At or before the execution of a senior residential entrance fee contract and the transfer of any money or other property to a provider pursuant to a contract, the provider shall deliver to the person who is executing the senior residential entrance fee contract both of the following:

1. A copy of the provider's most recent certified statement of operations and balance sheet prepared according to generally accepted accounting principles.

2. A disclosure statement that is not longer than two printed pages, that is in plain English and that provides in clear and conspicuous type the following information:

(a) The name of the facility.

(b) The name of the owner of the facility.

(c) The amount of the entrance fee.

(d) The portion of the entrance fee that is or may be refundable to the resident and the terms on which the refund is to be made.

(e) Whether, and by what method, the refundable portion of the entrance fee is insured, guaranteed, secured or otherwise provided for.

(f) A statement that a person who has complaints about an entrance fee contract may contact the consumer fraud section of the attorney general's office.

Chapter 26 Electronic Transactions

Article 1 General Provisions

§ 44-7001 Short title

This chapter may be cited as the Arizona electronic transactions act.

§ 44-7002 Definitions

In this chapter, unless the context otherwise requires:

1. "Agreement" means the bargain of the parties in fact, as found in their language or inferred from other circumstances and from rules, regulations and procedures that are given the effect of agreements under laws otherwise applicable to a particular transaction.

2. "Automated transaction" means a transaction that is conducted or performed, in whole or in part, by electronic means or electronic records and in which the acts or records of one or both parties are not reviewed by an individual in the ordinary course in forming a contract, performing under an existing contract or fulfilling an obligation that is required by the transaction.

3. "Computer program" means a set of statements or instructions to be used directly or indirectly in an information processing system in order to bring about a certain result.

4. "Contract" means the total legal obligation resulting from the parties' agreement as affected by this chapter and any other applicable law.

5. "Electronic" means relating to technology that has electrical, digital, magnetic, wireless, optical or electromagnetic capabilities or similar capabilities.

6. "Electronic agent" means a computer program or an electronic or other automated means that is used independently to initiate an action or respond to electronic records or performances, in whole or in part, without review or action by an individual.

7. "Electronic record" means a record that is created, generated, sent, communicated, received or stored by electronic means.

8. "Electronic signature" means an electronic sound, symbol or process that is attached to or logically associated with a record and that is executed or adopted by an individual with the intent to sign the record.

9. "Governmental agency" means an executive, legislative or judicial agency, department, board, commission, authority, institution or instrumentality of the federal government or a state or of a county or municipality or other political subdivision of a state.

10. "Information" means data, text, images, sounds, codes, computer programs, software or databases or similar items.

11. "Information processing system" means an electronic system for creating, generating, sending, receiving, storing, displaying or processing information.

12. "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, governmental agency or public corporation or any other legal or commercial entity.

13. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and that is retrievable in perceivable form.

14. "Security procedure" means a procedure that is employed to verify that an electronic signature, record or performance is that of a specific person or to detect changes or errors in the information in an electronic record. Security procedure includes a procedure that requires the use of algorithms or other codes, identifying words or numbers or encryption, callback or other acknowledgment procedures.

15. "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States. State includes an Indian tribe or band or Alaskan native village that is recognized by federal law or formally acknowledged by another state.

16. "State agency" means any department, commission, board, institution or other agency of the state that receives, expends or disburses state funds or incurs obligations of the state, including the Arizona board of regents but excluding the universities under the jurisdiction of the Arizona board of regents, the community college districts and the legislative or judicial branches.

17. "Transaction" means an action or set of actions occurring between two or more persons relating to the conduct of business, commercial or governmental affairs.

§ 44-7003 Scope

A. Except as otherwise provided in subsections B and C of this section, this chapter applies to any electronic record and electronic signature relating to a transaction.

B. For the purposes of this article and articles 2, 3 and 4 of this chapter, this chapter does not apply to a transaction to the extent the transaction is governed by:

1. Title 14 as it relates to the creation and execution of wills, codicils or testamentary trusts.

2. Title 19, chapter 1 as it relates to the signing of referendum petitions and initiative petitions.

3. Title 47, other than title 47, chapters 2 and 2A and section 47-1306 and as otherwise provided in section 44-7016.

C. Article 5 of this chapter applies only to title 10 and transactions governed by title 47, chapters 2, 2A and 7.

D. This chapter applies to an electronic record or electronic signature otherwise excluded from the application of this chapter under subsection B or C of this section to the extent the record or signature is governed by a law other than those laws described in subsection B or C of this section.

E. Any transaction subject to this chapter is also subject to any other applicable substantive law.

§ 44-7004 Prospective application

This chapter applies to any electronic record or electronic signature created, generated, sent, communicated, received or stored on or after the effective date of this chapter.

§ 44-7005 Use of electronic records and signatures; variation by agreement

A. This chapter does not require a record or signature to be created, generated, sent, communicated, received or stored or otherwise processed or used by electronic means or in electronic form.

B. This chapter applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties' conduct.

C. A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. The right granted by this subsection may not be waived by agreement.

D. Except as provided in subsection C and otherwise provided in this chapter, the effect of any of the provisions of this chapter may be varied by agreement. The words "unless otherwise agreed", or other similar words, as used in this chapter do not imply that the effect of other provisions may not be varied by agreement.

E. Whether an electronic record or electronic signature has legal consequences is determined by this chapter and any other applicable law.

§ 44-7006 Construction; application

This chapter shall be construed and applied to:

1. Facilitate electronic transactions consistent with other applicable law.

2. Be consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices.

3. Effectuate its general purpose to make uniform the law of this state with respect to the subject of this chapter for intrastate, interstate and international transactions.

§ 44-7007 Legal recognition of electronic records, signatures and contracts; definition

A. A record or signature in electronic form cannot be denied legal effect and enforceability solely because the record or signature is in electronic form.

B. A contract formed by an electronic record cannot be denied legal effect and enforceability solely because an electronic record was used in its formation.

C. An electronic record satisfies any law that requires a record to be in writing or to be retained, or both.

D. An electronic signature satisfies any law that requires a signature.

E. For the purposes of this section, "law" includes a governmental agency's policy.

§ 44-7008 Provision of information in writing; presentation of records

A. If the parties to a transaction have agreed to conduct the transaction by electronic means and a law requires a person to provide, send or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent or delivered, as the case may be, in an electronic record that is capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or the sender's information processing system inhibits the ability of the recipient to print or store the electronic record.

B. If a law other than this chapter requires a person to post or display a record in a certain manner, to send, communicate or transmit a record by a specified method or to format information in a record in a certain manner, the following requirements apply:

1. The record shall be posted or displayed in the manner prescribed in that law.

2. Except as otherwise provided in subsection D, paragraph 2, the record shall be sent, communicated or transmitted by the method prescribed in that law.

3. The record shall contain the information formatted in the manner prescribed in that law.

C. If a sender inhibits the ability of a recipient to store or print an electronic record, the electronic record is not enforceable against the recipient.

D. The parties to the transaction shall not vary the requirements of this section, except that to the extent a law other than this chapter requires:

1. Information to be provided, sent or delivered in writing but allows that requirement to be varied by agreement, the parties may agree to vary the requirement prescribed in subsection A that the information be in the form of an electronic record capable of retention.

2. A record to be sent, communicated or transmitted by postage prepaid first class mail or regular mail but allows that requirement to be varied by agreement, the parties may agree to vary the requirement to the extent allowed by the other law.

§ 44-7009 Attribution and effect of electronic record and signature

A. An electronic record or electronic signature is attributable to a person if the record or signature was the act of the person or the person's electronic agent. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.

B. The effect of an electronic record or electronic signature that is attributed to a person under subsection A is determined from the context and surrounding circumstances at the time the record or signature was created, executed or adopted, including the parties' agreement, if any, and as otherwise provided by law.

§ 44-7010 Effect of change or error

A. The following apply to any change or error in an electronic record that occurs in a transmission between the parties to a transaction:

1. If the parties have agreed to use a security procedure to detect changes or errors and one party has conformed to the procedure but the other party has not, and the nonconforming party would have detected the change or error had that party also conformed, the conforming party may avoid the effect of the changed or erroneous electronic record.

2. In an automated transaction that involves an individual, the individual may avoid the effect of an electronic record that resulted from an error made by the individual in dealing with the electronic agent of another person if the electronic agent did not provide an opportunity for the prevention or correction of the error and, at the time the individual learns of the error, the individual:

(a) Promptly notifies the other person of the error and that the individual did not intend to be bound by the electronic record received by the other person.

(b) Takes reasonable steps, including steps that conform to the other person's reasonable instructions, to return to the other person or, if instructed by the other person, to destroy the consideration received, if any, as a result of the erroneous electronic record.

(c) Has not used or received any benefit or value from the consideration, if any, received from the other person.

B. If subsection A, paragraphs 1 and 2 do not apply, the change or error has the effect provided by other applicable law, including the law of mistake, and the parties' contract, if any.

C. The parties to the transaction shall not agree to vary the requirements prescribed in subsection A, paragraph 2 and subsection B.

§ 44-7011 Notarization; acknowledgment

If a law requires a signature or record to be notarized, acknowledged, verified or made under oath, that requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record.

§ 44-7012 Electronic records retention; originals; definition

A. If a law requires that a record be retained, the requirement is satisfied by retaining an electronic record of the information in the record that:

1. Accurately reflects the information prescribed in the record after the record was first generated in its final form as an electronic record or otherwise.

2. Remains accessible for later reference.

B. A person may satisfy subsection A of this section by using the services of another person to satisfy subsection A of this section.

C. If a law requires:

1. A record to be presented or retained in its original form, or provides consequences if the record is not presented or retained in its original form, that law is satisfied by an electronic record retained according to subsection A of this section.

2. Retention of a check, that requirement is satisfied by retention of an electronic record of the information on the front and back of the check according to subsection A of this section.

D. A record retained as an electronic record pursuant to subsection A of this section satisfies a law that requires a person to retain a record for evidentiary, audit or like purposes, unless a law that is enacted after July 18, 2000 prohibits the use of an electronic record for the specified purpose.

E. For the purposes of this section, "law" includes a governmental agency's policy.

§ 44-7013 Admissibility in evidence

In any proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.

§ 44-7014 Automated transaction contracts

A. In any automated transaction, the parties may form a contract by the interaction of:

1. Electronic agents of the parties, even if no individual was aware of or reviewed the electronic agents' actions or the resulting terms and agreements.

2. An electronic agent and an individual who acts on the individual's own behalf or for another person, including by an interaction in which the individual performs actions that the individual may refuse to perform and in which the individual knows or has reason to know will cause the electronic agent to complete the transaction or performance.

B. In addition to subsection A, paragraphs 1 and 2, the terms of any contract are determined by the substantive law that applies to that contract.

§ 44-7015 Time and place of sending and receipt

A. Unless otherwise agreed to by the sender and the recipient, an electronic record is sent if the record:

1. Is properly addressed or otherwise properly directed to an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record.

2. Is in a form that is capable of being processed by the information processing system described in paragraph 1 of this subsection.

3. Enters an information processing system that is outside the control of the sender or of a person that sent the electronic record on behalf of the sender or enters a region of the information processing system that is designated or used by the recipient and that is under the control of the recipient.

B. Unless otherwise agreed to by the sender and the recipient, an electronic record is received if the record:

1. Enters an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record.

2. Is in a form that is capable of being processed by the information processing system described in paragraph 1 of this subsection.

C. Subsection B applies even if the information processing system is located in a different place from the place the electronic record is deemed to be received pursuant to subsection D.

D. Unless otherwise expressly provided in the electronic record or agreed to by the sender and the recipient, an electronic record is deemed to be sent from the sender's place of business and to be received at the recipient's place of business. If the sender or recipient has more than one place of business, the place of business of that person is the place that has the closest relationship to the underlying transaction. If the sender or the recipient does not have a place of business, the place of business is the sender's or recipient's residence, as applicable.

E. An electronic record is received pursuant to subsection B even if no individual is aware of its receipt.

F. Receipt of an electronic acknowledgment from an information processing system described in subsection B establishes that a record was received but, by itself, does not establish that the content sent corresponds to the content received.

G. If a person is aware that an electronic record was purportedly sent as prescribed in subsection A or purportedly received as prescribed in subsection B, but was not actually sent or received, the legal effect of the sending or receipt is determined by other applicable law. Except to the extent allowed by the other law, the parties may not agree to vary the requirements of this subsection.

§ 44-7016 Transferable records; definition

A. A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.

B. A system complies with subsection A and a person has control of a transferable record if the transferable record is created, stored and assigned in such a manner that all of the following are true:

1. A single authoritative copy of the transferable record exists that is unique, identifiable and, except as otherwise provided in paragraphs 4, 5 and 6 of this subsection, unalterable.

2. The authoritative copy identifies the person asserting control as either:

(a) The person to which the transferable record was issued.

(b) If the authoritative copy indicates that the transferable record has been transferred, the person to which the transferable record was most recently transferred.

3. The authoritative copy is communicated to and maintained by the person asserting control or the person's designated custodian.

4. Copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control.

5. Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy.

6. Any revision of the authoritative copy is readily identifiable as authorized or unauthorized.

C. Except as otherwise agreed, a person that has control of a transferable record is the holder as defined in section 47-1201 of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing pursuant to title 47 including, if the applicable requirements under section 47-3302, subsection A or section 47-7501 or 47-9308 are satisfied, the rights and defenses of a holder in due course, a holder to which a negotiable document of title has been duly negotiated or a purchaser, respectively. Delivery, possession and indorsement are not required to obtain or exercise any of the rights under this subsection.

D. Except as otherwise agreed, an obligor under a transferable record has the same rights and defenses as an equivalent obligor under equivalent records or writings under title 47.

E. If requested by a person against which enforcement is sought, the person seeking to enforce the transferable record shall provide reasonable proof that the person is in control of the transferable record. Proof may include access to the authoritative copy of the transferable record and related business records that are sufficient to review the terms of the transferable record and to establish the identity of the person that has control of the transferable record.

F. For the purposes of this section, "transferable record" means an electronic record that both:

1. Would be a note pursuant to title 47, chapter 3 or a document pursuant to title 47, chapter 7 if the electronic record were in writing.

2. The issuer has expressly agreed the electronic record is a transferable record.

Article 2 Secure Electronic Records and Signatures

§ 44-7031 Secure electronic signatures

A signature is a secure electronic signature if, through the application of a security procedure, it can be demonstrated that the electronic signature at the time the signature was made was all of the following:

1. Unique to the person using it.

2. Capable of verification.

3. Under the sole control of the person using it.

4. Linked to the electronic record to which it relates in such a manner that if the record were changed the electronic signature would be invalidated.

§ 44-7032 Secure electronic records

If, through the ongoing application of a security procedure, it can be demonstrated that an electronic record signed by a secure electronic signature has remained unaltered since a specified time, the record is a secure electronic record from that time of signing forward.

§ 44-7033 Presumptions

A. There is a rebuttable presumption that a secure electronic record has not been altered since the specific time to which the secure status relates.

B. There is a rebuttable presumption that the secure electronic signature is the electronic signature of the party to whom it relates.

C. In the absence of a secure electronic record or a secure electronic signature, this chapter does not create any presumption regarding the authenticity and integrity of an electronic record or an electronic signature.

§ 44-7034 Electronic notarization; acknowledgment

If a law requires a signature or record to be notarized, acknowledged, verified or made under oath, that requirement is satisfied if all of the following are true:

1. A secure electronic signature of the individual who is authorized to perform those acts and all other information that is required to be included pursuant to any other applicable law are applied to a secure electronic record.

2. The secure electronic record has a time stamp token that is both:

(a) Created by a party recognized by the secretary of state.

(b) In a form that is accepted by the secretary of state to do all of the following:

(i) Reasonably verify the validity of the signing party's secure electronic signature.

(ii) Reasonably establish the time of signing.

3. The secure electronic record cannot be altered without invalidating the time stamp token.

Article 3 Governmental Electronic Records

§ 44-7041 Creation; retention; conversion of written records

A. Each governmental agency shall determine if, and the extent to which, the governmental agency will create and retain electronic records and convert written records to electronic records. Any governmental agency that is subject to the management, preservation, determination of value and disposition of records requirements prescribed in sections 41-151, 41-151.12, 41-151.13, 41-151.14, 41-151.15, 41-151.16, 41-151.17 and 41-151.19 and the permanent public records requirements prescribed in section 39-101 shall comply with those requirements.

B. State agencies shall comply with the standards adopted by the department of administration pursuant to title 18, chapter 1.

C. All governmental agencies shall comply with the policies that are established pursuant to section 18-106 and that apply to the use of electronic signatures.

§ 44-7042 Sending and accepting electronic records; exemption

A. Except as otherwise provided in section 44-7012, subsection D, and this subsection, each governmental agency, except state agencies, shall determine if, and the extent to which, the governmental agency will send and accept electronic records and electronic signatures to and from other persons and otherwise create, generate, communicate, store, process, use and rely on electronic records and electronic signatures. State agencies shall accept electronic records and electronic signatures and shall comply with the appropriate standards and policies adopted or established by the department of administration pursuant to title 18, chapter 1.

B. To the extent that a governmental agency uses electronic records and electronic signatures pursuant to subsection A of this section, the governmental agency after giving due consideration to security may specify:

1. The manner and format in which the electronic records must be created, generated, sent, communicated, received and stored and the systems established for those purposes.

2. If electronic records must be signed by electronic means, the type of electronic signature required, the manner and format in which the electronic signature must be affixed to the electronic record and the identity of or criteria that must be met by any third party used by a person filing a document to facilitate the process.

3. Control processes and procedures as appropriate to ensure adequate preservation, disposition, integrity, security, confidentiality and ability to perform audits of electronic records.

4. Any other required attributes for electronic records that are specified for corresponding nonelectronic records or that are reasonably necessary under the circumstances.

C. This section does not apply to the judicial branch.

§ 44-7043 Interoperability

Technology standards adopted by the governmental information technology agency, electronic signature use policies adopted by the secretary of state or any other similar standards adopted by any other governmental agency pursuant to section 44-7042 shall encourage and promote consistency and interoperability with similar requirements adopted by other governmental agencies, other states, the federal government and nongovernmental persons that interact with governmental agencies. If deemed appropriate by the entity adopting the standards, the standards may allow for differing levels of standards from which governmental agencies may choose in implementing the most appropriate standard for a particular application.

Article 4 Miscellaneous Provisions

§ 44-7051 Consumer protection

A. Nothing in this chapter diminishes the parties' consumer protection rights prescribed in chapter 10, article 7 of this title or any other federal or state law relating to consumers.

B. If a consumer law, other than this chapter, requires a paper record or notice of the transaction, the parties to the transaction may request that the record or notice be provided in an electronic format and that record or notice shall comply with this chapter. Even if before completing a consumer transaction by an electronic method that complies with this chapter, a party to the transaction requests that a record or notice of the transaction be delivered in electronic form, that party may subsequently change that preference and request that all future records or notices relating to that transaction be sent in paper form to an appropriate address. Withdrawal of consent does not affect the enforceability of electronic records or notices previously provided or made available to that party in accordance with this chapter.

C. A nonelectronic consumer contract or agreement may not contain a provision that authorizes any transaction or part of any transaction pursuant to that contract or agreement by electronic means unless all of the following apply:

1. The consumer makes a separate and express assent or signing either manually or electronically that specifies that the consumer agrees that certain transactions or parts of transactions will be conducted by electronic means.

2. The contract or agreement indicates which transactions or parts of transactions that may be conducted by electronic means and the manner in which those transactions or parts of transactions shall be conducted.

3. The consumer agrees, as part of the assent, to provide the other party with the consumer's electronic address that complies with section 44-7015.

4. The consumer agrees, as part of the assent, to notify the other party, either manually or electronically, of any change in the electronic address prescribed in paragraph 3 or the consumer's withdrawal of consent to electronic transactions.

§ 44-7052 Electronic delivery of written communications; exception; definition

A. Any law requiring an entity, a government agency, a government official or any person acting with official government authority to communicate with a person in writing or by mail may be satisfied by use of a secure electronic delivery service.

B. This section does not apply to ballots, sample ballots, publicity pamphlets or other similar governmental communication regarding an election.

C. For the purposes of this section, "secure electronic delivery service" means a service that both:

1. Employs security procedures to provide, send, deliver or otherwise communicate electronic records to their intended recipients by means that use either:

(a) Security methods such as passwords, encryption and matching an electronic address to a person's physical United States postal address.

(b) Other security methods that are consistent with applicable law or industry standards.

2. Operates subject to otherwise applicable requirements of the electronic signatures in global and national commerce act (15 United States Code chapter 96) or this chapter and that allows information to be provided, sent, delivered or otherwise communicated by or from an entity, a government agency, a government official or any person acting with official government authority to a person in the form of an electronic record.

Article 5 Blockchain Technology

§ 44-7061 Signatures and records secured through blockchain technology; smart contracts; ownership of information; definitions

A. A signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.

B. A record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic record.

C. Smart contracts may exist in commerce. A contract relating to a transaction may not be denied legal effect, validity or enforceability solely because that contract contains a smart contract term.

D. Notwithstanding any other law, a person that, in or affecting interstate or foreign commerce, uses blockchain technology to secure information that the person owns or has the right to use retains the same rights of ownership or use with respect to that information as before the person secured the information using blockchain technology. This subsection does not apply to the use of blockchain technology to secure information in connection with a transaction to the extent that the terms of the transaction expressly provide for the transfer of rights of ownership or use with respect to that information.

E. For the purposes of this section:

1. "Blockchain technology" means distributed ledger technology that uses a distributed, decentralized, shared and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless. The data on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth.

2. "Smart contract" means an event-driven program, with state, that runs on a distributed, decentralized, shared and replicated ledger and that can take custody over and instruct transfer of assets on that ledger.

Chapter 27 Tobacco Product Manufacturers Escrow Accounts

Article 1 Model Statute

§ 44-7101 Tobacco product manufacturers escrow accounts; model statute

This state enacts the model statute described in the master settlement agreement entered into on November 23, 1998 between this state and certain United States tobacco product manufacturers as exhibit T as follows:

Section 1. Findings and Purpose.

(a) Cigarette smoking presents serious public health concerns to the state and to the citizens of the state. The surgeon general has determined that smoking causes lung cancer, heart disease and other serious diseases, and that there are hundreds of thousands of tobacco-related deaths in the United States each year. These diseases most often do not appear until many years after the person in question begins smoking.

(b) Cigarette smoking also presents serious financial concerns for the state. Under certain health-care programs, the state may have a legal obligation to provide medical assistance to eligible persons for health conditions associated with cigarette smoking, and those persons may have a legal entitlement to receive such medical assistance.

(c) Under these programs, the state pays millions of dollars each year to provide medical assistance for these persons for health conditions associated with cigarette smoking.

(d) It is the policy of the state that financial burdens imposed on the state by cigarette smoking be borne by tobacco product manufacturers rather than by the state to the extent that such manufacturers either determine to enter into a settlement with the state or are found culpable by the courts.

(e) On November 23, 1998, leading United States tobacco product manufacturers entered into a settlement agreement, entitled the "master settlement agreement," with the state. The master settlement agreement obligates these manufacturers, in return for a release of past, present and certain future claims against them as described therein, to pay substantial sums to the state (tied in part to their volume of sales); to fund a national foundation devoted to the interests of public health; and to make substantial changes in their advertising and marketing practices and corporate culture, with the intention of reducing underage smoking.

(f) It would be contrary to the policy of the state if tobacco product manufacturers who determine not to enter into such a settlement could use a resulting cost advantage to derive large, short-term profits in the years before liability may arise without ensuring that the state will have an eventual source of recovery from them if they are proven to have acted culpably. It is thus in the interest of the state to require that such manufacturers establish a reserve fund to guarantee a source of compensation and to prevent such manufacturers from deriving large, short-term profits and then becoming judgment-proof before liability may arise.

Section 2. Definitions.

(a) "Adjusted for inflation" means increased in accordance with the formula for inflation adjustment set forth in exhibit C to the master settlement agreement.

(b) "Affiliate" means a person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, another person. Solely for purposes of this definition, the terms "owns," "is owned" and "ownership" mean ownership of an equity interest, or the equivalent thereof, of ten percent or more, and the term "person" means an individual, partnership, committee, association, corporation or any other organization or group of persons.

(c) "Allocable share" means allocable share as that term is defined in the master settlement agreement.

(d) "Cigarette" means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains (1) any roll of tobacco wrapped in paper or in any substance not containing tobacco; or (2) tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or (3) any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in clause (1) of this definition. The term "cigarette" includes "roll-your-own" (i.e., any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes). For purposes of this definition of "cigarette," 0.09 ounces of "roll-your-own" tobacco shall constitute one individual "cigarette."

(e) "Master settlement agreement" means the settlement agreement (and related documents) entered into on November 23, 1998 by the state and leading United States tobacco product manufacturers.

(f) "Qualified escrow fund" means an escrow arrangement with a federally or state chartered financial institution having no affiliation with any tobacco product manufacturer and having assets of at least $1,000,000,000 where such arrangement requires that such financial institution hold the escrowed funds' principal for the benefit of releasing parties and prohibits the tobacco product manufacturer placing the funds into escrow from using, accessing or directing the use of the funds' principal except as consistent with section 3(B)(2) of this act.

(g) "Released claims" means released claims as that term is defined in the master settlement agreement.

(h) "Releasing parties" means releasing parties as that term is defined in the master settlement agreement.

(i) "Tobacco product manufacturer" means an entity that after the date of enactment of this act directly (and not exclusively through any affiliate):

(1) Manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer (except where such importer is an original participating manufacturer (as that term is defined in the master settlement agreement) that will be responsible for the payments under the master settlement agreement with respect to such cigarettes as a result of the provisions of subsection II(MM) of the master settlement agreement and that pays the taxes specified in subsection II(Z) of the master settlement agreement, and provided that the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States);

(2) Is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or

(3) Becomes a successor of an entity described in paragraph (1) or (2).

The term "tobacco product manufacturer" shall not include an affiliate of a tobacco product manufacturer unless such affiliate itself falls within any of (1)-(3) above.

(j) "Tribal luxury taxes" means those taxes referenced in section 42-3302, subsection C.

(k) "Units sold" means the number of individual cigarettes sold to a consumer in the state by the applicable tobacco product manufacturer (whether directly or through a distributor, retailer or similar intermediary or intermediaries) during the year in question, regardless of whether state excise taxes were due or collected. For cigarettes for which a state or tribal excise, luxury or similar tax is collected or precollected or that have a department of revenue cigarette tax stamp affixed to the package, the sale occurs at the earlier of the time that any tax is collected or precollected or that the tax stamp is affixed. The department of revenue shall adopt such rules as are necessary to ascertain the units sold of such tobacco product manufacturer for each year.

Section 3. Requirements.

Any tobacco product manufacturer selling cigarettes to consumers within the state (whether directly or through a distributor, retailer or similar intermediary or intermediaries) after the date of enactment of this act shall do one of the following:

(a) Become a participating manufacturer (as that term is defined in section II(jj) of the master settlement agreement) and generally perform its financial obligations under the master settlement agreement; or

(b) (1) place into a qualified escrow fund by April 15 of the year following the year in question the following amounts (as such amounts are adjusted for inflation):

2000: $.0104712 per unit sold after the date of enactment of this act;

For each of 2001 and 2002: $.0136125 per unit sold;

For each of 2003 through 2006: $.0167539 per unit sold;

For each of 2007 and each year thereafter: $.0188482 per unit sold.

(2) A tobacco product manufacturer that places funds into escrow pursuant to paragraph (1) shall receive the interest or other appreciation on such funds as earned. Such funds themselves shall be released from escrow only under the following circumstances:

(a) To pay a judgment or settlement on any released claim brought against such tobacco product manufacturer by the state or any releasing party located or residing in the state. Funds shall be released from escrow under this subparagraph (i) in the order in which they were placed into escrow and (ii) only to the extent and at the time necessary to make payments required under such judgment or settlement;

(b) To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow on account of units sold in the state in a particular year was greater than the master settlement agreement payments, as determined pursuant to section IX(i) of that agreement including after final determination of all adjustments, that such manufacturer would have been required to make on account of such units sold had it been a participating manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer; or

(c) To the extent not released from escrow under subparagraphs (a) or (b), funds shall be released from escrow and revert back to such tobacco product manufacturer twenty-five years after the date on which they were placed into escrow.

(3) Each tobacco product manufacturer that elects to place funds into escrow pursuant to this subsection shall annually certify to the attorney general that it is in compliance with this subsection. The attorney general may bring a civil action on behalf of the state against any tobacco product manufacturer that fails to place into escrow the funds required under this section. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this section shall:

(a) Be required within 15 days to place such funds into escrow as shall bring it into compliance with this section. The court, upon a finding of a violation of this subsection, may impose a civil penalty to be paid to the general fund of the state in an amount not to exceed 5 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 100 percent of the original amount improperly withheld from escrow;

(b) In the case of a knowing violation, be required within 15 days to place such funds into escrow as shall bring it into compliance with this section. The court, upon a finding of a knowing violation of this subsection, may impose a civil penalty to be paid to the general fund in an amount not to exceed 15 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 300 percent of the original amount improperly withheld from escrow; and

(c) In the case of a second knowing violation, be prohibited from selling cigarettes to consumers within the state (whether directly or through a distributor, retailer or similar intermediary) for a period not to exceed 2 years.

Each failure to make an annual deposit required under this section shall constitute a separate violation and the violator shall pay to the attorney general the costs and attorney fees incurred during a successful prosecution under paragraph (3).

(c) Notwithstanding subparagraph (b), paragraph 2 of this section, a tobacco product manufacturer that elects to place funds into escrow pursuant to subparagraph (b), paragraph 1 of this section may make an irrevocable assignment of its interest in the funds to the benefit of this state. The assignment shall be permanent and apply to all funds in the escrow account or that may subsequently come into the account, including those funds deposited into the escrow account before the assignment is executed, those funds deposited into the escrow account after the assignment is executed and interest or other appreciation on the funds. The tobacco product manufacturer, the attorney general and the financial institution where the escrow account is maintained may make amendments to the qualified escrow account agreement as may be necessary to effectuate an assignment of rights executed pursuant to this subparagraph or a withdrawal of monies from the escrow account pursuant to subparagraph (b), paragraph 2 of this section. An assignment of rights executed pursuant to this subparagraph shall be in writing, shall be signed by a duly authorized representative of the tobacco product manufacturer making the assignment and shall become effective on delivery of the assignment to the attorney general and the financial institution where the escrow account is maintained. An assignment of escrow funds shall not be made by a tobacco product manufacturer unless and until the attorney general provides written approval to the tobacco product manufacturer.

(d) Notwithstanding subparagraph (b), paragraph 2 of this section, any escrow funds assigned to the state pursuant to subparagraph (c) of this section shall be withdrawn by the state on the approval of the attorney general. Any funds withdrawn pursuant to this subparagraph shall be deposited in the consumer protection-consumer fraud revolving fund established by section 44-1531.01 and shall be calculated on a dollar-for-dollar basis as a credit against any judgment or settlement described in subparagraph (b), paragraph 2 of this section that may be obtained against the tobacco product manufacturer that has assigned the funds in the escrow account. This section does not relieve a tobacco product manufacturer from any past, current or future obligations that the manufacturer may have pursuant to this section or section 44-7111.

Section 4. Effect of judicial action.

If section 3, subparagraph (b), paragraph 2, subdivision (b) is held by a court of competent jurisdiction to be unconstitutional, the following provisions apply in its place:

To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow in a particular year was greater than the state's allocable share of the total payments that such manufacturer would have been required to make in that year under the master settlement agreement (as determined pursuant to section IX(i)(2) of the master settlement agreement, and before any of the adjustments or offsets described in section IX(i)(3) of that agreement other than the inflation adjustment) had it been a participating manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer; or

Any holding of unconstitutionality or the repeal of section 3, subparagraph (b), paragraph 2, subdivision (b) of this statute does not impair or invalidate any other portion of this statute or the application of this statute to any other person or circumstance and the remaining portions of this statute continue in full force and effect.

Any holding that federal law preempts or prohibits the application of any other provision of section 44-7101 in one or more circumstances does not impair or invalidate the statute's application in any other circumstance.

Article 2 Model Nonparticipating Manufacturers Legislation

§ 44-7111 Tobacco; nonparticipating manufacturers; civil penalty; violation; classification

This state enacts the model nonparticipating manufacturers legislation as follows:

Section 1. Findings and Purpose.

The legislature finds that violations of section 44-7101 threaten the integrity of the tobacco master settlement agreement, the fiscal soundness of the state and the public health. The legislature finds that enacting procedural enhancements will aid the enforcement of section 44-7101 and thereby safeguard the master settlement agreement, the fiscal soundness of the state and the public health.

Section 2. Definitions.

(a) "Brand family" means all styles of cigarettes sold under the same trade mark and differentiated from one another by means of additional modifiers or descriptors, including, but not limited to, "menthol", "lights", "kings" and "100s", and includes any brand name (alone or in conjunction with any other word), trademark, logo, symbol, motto, selling message, recognizable pattern of colors or any other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes.

(b) "Cigarette" has the same meaning prescribed in section 44-7101.

(c) "Department" means the department of revenue.

(d) "Director" means the director of the department.

(e) "Distributor" has the same meaning prescribed in section 42-3001.

(f) "Master settlement agreement" has the same meaning prescribed in section 44-7101.

(g) "Nonparticipating manufacturer" means any tobacco product manufacturer that is not a participating manufacturer.

(h) "Participating manufacturer" has the meaning given that term in section II(jj) of the master settlement agreement and all amendments thereto.

(i) "Qualified escrow fund" has the same meaning prescribed in section 44-7101.

(j) "Tobacco product manufacturer" has the same meaning prescribed in section 44-7101.

(k) "Units sold" has the same meaning prescribed in section 44-7101.

Section 3. Certifications; Directory; Tax Stamps.

(a) Certification. Every tobacco product manufacturer whose cigarettes are sold in this state, whether directly or through a distributor, retailer or similar intermediary or intermediaries, shall execute and deliver on a form prescribed by the attorney general a certification to the attorney general not later than the thirtieth day of April each year, certifying that, as of the date of the certification, the tobacco product manufacturer either is a participating manufacturer or is in full compliance with section 44-7101, section 3(b), including all quarterly installment payments required by regulations as may be promulgated by the attorney general pursuant to section 5(f) of this article. As to all certifications required by this article, if the certification is rejected due to incompleteness or incorrectness, the tobacco product manufacturer may not submit supplemental documentation to try to cure the rejection and must execute and deliver an entirely new certification to the attorney general.

(1) A participating manufacturer shall include in its certification a list of its brand families. The participating manufacturer shall update the list thirty days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the attorney general.

(2) A nonparticipating manufacturer shall include in its certification (i) a list of all of its brand families and the number of units sold for each brand family that were sold in the state during the preceding calendar year, (ii) a list of all of its brand families that have been sold in the state at any time during the current calendar year, (iii) indicating by an asterisk, any brand family sold in the state during the preceding calendar year that is no longer being sold in the state as of the date of the certification and (iv) identifying by name and address any other manufacturer of the brand families in the preceding or current calendar year and (v) for each of the current calendar year and the preceding calendar year, a list of all of this state's resident and nonresident distributors that the manufacturer sold cigarettes to or that the manufacturer believes or has reason to believe purchased or received any of the manufacturer's cigarettes from another source. The nonparticipating manufacturer must execute and deliver a supplemental certification to the attorney general to request any addition to or modification of its brand families. The supplemental certification requesting the addition or modification does not relieve the brand families from the prohibitions set forth in sections 3(c) and 6(d) until the request is approved by the attorney general and the addition or modification to the brand families is listed or made in the directory.

(3) In the case of a nonparticipating manufacturer, the certification shall further certify:

(a) That the nonparticipating manufacturer is registered to do business in the state or has appointed a resident agent for service of process and provided notice thereof as required by section 4.

(b) That the nonparticipating manufacturer (i) has established and continues to maintain a qualified escrow fund and (ii) has executed a qualified escrow agreement that has been reviewed and approved by the attorney general and that governs the qualified escrow fund.

(c) That the nonparticipating manufacturer is in full compliance with section 44-7101, section (3)(b) and this article, and any regulations promulgated pursuant thereto;

(d) (i) The name, address and telephone number of the financial institution where the nonparticipating manufacturer has established the qualified escrow fund required pursuant to section 44-7101, section 3(b) and all regulations promulgated pursuant thereto, (ii) the account number of the qualified escrow fund and any subaccount number for the state, (iii) the amount the nonparticipating manufacturer placed in the fund for cigarettes sold in the state during the preceding calendar year, the date and amount of each deposit and such evidence or verification as may be deemed necessary by the attorney general to confirm the foregoing and (iv) the amount of and date of any withdrawal or transfer of funds the nonparticipating manufacturer made at any time from the fund or from any other qualified escrow fund into which it ever made escrow payments pursuant to section 44-7101, section 3(b) and all regulations promulgated pursuant thereto.

(e) Unless the nonparticipating manufacturer or its affiliate is licensed as a tobacco distributor in this state, that all sales or shipments made by the nonparticipating manufacturer or its affiliate within or into this state are made to a tobacco distributor that is licensed in this state.

(f) All other information and materials specifically requested by this section or the attorney general in the course of enforcing this section.

(4) A tobacco product manufacturer may not include a brand family in its certification unless (i) in the case of a participating manufacturer, the participating manufacturer affirms that the brand family is to be deemed to be its cigarettes for purposes of calculating its payments under the master settlement agreement for the relevant year, in the volume and shares determined pursuant to the master settlement agreement, and (ii) in the case of a nonparticipating manufacturer, the nonparticipating manufacturer affirms that the brand family is to be deemed to be its cigarettes for purposes of section 44-7101, section 3(b). Nothing in this section shall be construed as limiting or otherwise affecting the state's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the master settlement agreement or for purposes of section 44-7101.

(5) Tobacco product manufacturers shall maintain all invoices and documentation of sales and other information relied upon for the certification for a period of five years, unless otherwise required by law to maintain them for a greater period of time.

(6) A tobacco product manufacturer that is not currently listed in the directory must submit an initial certification subject to the same requirements and review process set forth in this article for annual certifications. The tobacco product manufacturers brand families remain subject to the prohibitions set forth in sections 3(c) and 6(d) until listed in the directory.

(b) Directory of cigarettes approved for stamping and sale. Not later than ninety days after the effective date of this article, the attorney general shall develop and publish on the attorney general's web site a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of section 3(a) and all brand families that are listed in those certifications (the "directory"), except as noted below.

(1) The attorney general shall not include or retain in the directory the name or brand families of any nonparticipating manufacturer that fails to provide the required certification or whose certification the attorney general determines is not in compliance with any term of this article, unless the attorney general has determined that the violation has been cured to the satisfaction of the attorney general.

(2) Neither a tobacco product manufacturer nor brand family shall be included or retained in the directory if the attorney general concludes, in the case of a nonparticipating manufacturer, that (i) any escrow payment required pursuant to section 44-7101, section 3(b) for any period for any brand family, whether or not listed by the nonparticipating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the attorney general, or (ii) any outstanding final judgment, including interest thereon, for a violation of section 44-7101 has not been fully satisfied for the brand family or the manufacturer.

(3) The attorney general shall update the directory as necessary in order to correct mistakes and to add or remove a tobacco product manufacturer or brand family to keep the directory in conformity with the requirements of this article.

(4) A distributor that has lawfully affixed stamps to cigarettes and subsequently is unable to sell those cigarettes lawfully because the cigarettes have been removed from the directory pursuant to section 3(b)(2) of this article, may apply to the department for a refund of the cost of such stamps.

(5) Every distributor shall provide and update as necessary an electronic mail address to the director and attorney general for the purpose of receiving any notifications as may be required by this article.

(6) A tobacco product manufacturer included in the directory may request that a new brand family be added to the directory by executing and delivering a supplemental certification with the necessary information to the attorney general and the director. Not later than forty-five business days after receiving such a request, and at such earlier time as is reasonable to do so, the attorney general shall either (i) certify the new brand family or (ii) deny the request. However, in cases where the attorney general reasonably determines that it needs additional information to ascertain whether the requestor is the tobacco product manufacturer of the new brand family, the attorney general may take whatever additional time is reasonably needed to process the request, to locate and assemble information or documents needed to process the request, and to notify persons or agencies affected by the request.

(c) Prohibition against stamping or sale of cigarettes not in the directory. It shall be unlawful for any person (1) to affix a stamp to a package or other container of cigarettes of a tobacco product manufacturer or brand family not included in the directory or (2) to sell, offer or possess for sale, in this state, including for sale within or outside of this state, cigarettes of a tobacco product manufacturer or brand family not included in the directory.

(d) Every nonparticipating manufacturer shall post a bond for the exclusive benefit of this state.

(e) The bond shall be posted at least ten days in advance of each calendar quarter as a condition to the nonparticipating manufacturer and its brand families being included in the state directory for that quarter. The amount of the bond shall be the greater of (i) the greatest required escrow amount due from the nonparticipating manufacturer or its predecessor for any of the twelve preceding calendar quarters or (ii) fifty thousand dollars. The bond certifications and materials must be submitted as part of the initial, annual and supplemental certifications required by this article.

(f) If a nonparticipating manufacturer that posted a bond has failed to make or have made on its behalf deposits equal to the full amount owed for a quarter within fifteen days following the due date of the quarter under section 5, subparagraph (g), the state may execute on the bond in the amount equal to any remaining amount of the escrow due. Amounts that the state collects on a bond shall be deposited into the state treasury and shall reduce the amount of escrow due from that nonparticipating manufacturer in the dollar amount collected. Escrow obligations above the amount collected on the bond remain due from that nonparticipating manufacturer and, as provided in any joint and several provision in this section, from the importers that sold its cigarettes during that calendar quarter.

(g) The office of the attorney general shall adopt rules necessary to implement subparagraphs (d), (e) and (f) of this section.

(h) Nonparticipating manufacturers located outside the United States must provide a declaration in a form prescribed by the attorney general from each of its importers into the United States of any of its brand families, that the importer accepts joint and several liability with the nonparticipating manufacturer for all escrow deposits due pursuant to section 44-7101 as well as all penalties and other relief available to the state pursuant to section 44-7101 and this section. The declaration shall appoint a resident agent for service of process in this state pursuant to section 4. The declarations shall be submitted as part of the certifications required pursuant to this section and updated at least thirty days before any other importer begins the importation of the manufacturer's cigarettes. Failure to comply with this subparagraph is grounds for removal from the directory. For the purposes of this subparagraph, "importer" has the same meaning as in 27 Code of Federal Regulations section 41.11 (2012). The importer declaration must be submitted as part of the initial, annual and supplemental certifications required by this article.

(i) The attorney general shall have the authority to not retain or refuse to include in the directory any nonparticipating manufacturer or the manufacturer's brand families, that (i) does not certify that it is subject to the enforcement of section 44-7101, this section and section 36-798.06 without any immunity, (ii) provides incorrect, false or misleading statements in any certification submitted to this state pursuant to section 44-7101 or this section with regard to any year or (iii) was previously or is currently not in compliance with any other federal or state laws, including another state's qualifying statute as defined in the master settlement agreement or if the attorney general has reason to believe that the tobacco product manufacturer will not comply with the laws.

(j) The attorney general has the authority to require any nonparticipating manufacturer to submit all information, certifications, affidavits and other materials that the attorney general deems appropriate to determine compliance with this section and other related laws, including the grounds for not retaining or not including in the directory any nonparticipating manufacturer or the manufacturer's brand families.

Section 4. Agent for Service of Process.

(a) Requirement for agent for service of process. Any nonresident or foreign nonparticipating manufacturer that has not registered to do business in the state as a foreign corporation or business entity shall, as a condition precedent to having its brand families included or retained in the directory, appoint and continually engage without interruption the services of an agent in this state to act as agent for the service of process on whom all process, and any action or proceeding against it concerning or arising out of the enforcement of this article and section 44-7101, may be served in any manner authorized by law. Such service on the agent constitutes legal and valid service of process on the nonparticipating manufacturer. The nonparticipating manufacturer shall provide the name, address, phone number and proof of the appointment and availability of the agent to and to the satisfaction of the attorney general.

(b) The nonparticipating manufacturer shall provide notice to the attorney general thirty calendar days prior to termination of the authority of an agent and shall further provide proof to the satisfaction of the attorney general of the appointment of a new agent not less than five calendar days prior to the termination of an existing agent appointment. In the event an agent terminates an agency appointment, the nonparticipating manufacturer shall notify the attorney general of the termination within five calendar days and shall include proof to the satisfaction of the attorney general of the appointment of a new agent.

(c) Any nonparticipating manufacturer whose cigarettes are sold in this state and who has not appointed and engaged an agent as herein required shall be deemed to have appointed the secretary of state as the agent and may be proceeded against in courts of this state by service of process upon the secretary of state; provided, however, that the appointment of the secretary of state as the agent shall not satisfy the condition precedent to having the brand families of the nonparticipating manufacturer included or retained in the directory.

Section 5. Reporting of Information; Escrow Installments.

(a) Reporting by distributors. Not later than twenty calendar days after the end of each calendar month, and more frequently if so directed by the director, each distributor shall submit to the department on a form prescribed by the department such information as the director requires to facilitate compliance with this article, including, but not limited to, a list by brand family of the total number of cigarettes or, in the case of roll your own, the equivalent stick count, for which the distributor affixed stamps during the previous calendar quarter or otherwise paid the tax due for the cigarettes. The department shall review all information reported by the distributor for accuracy and completeness. The distributor shall maintain, and make available to the director and the attorney general, all invoices and documentation of sales of all nonparticipating manufacturer cigarettes and any other information relied upon in reporting to the director for a period of five years.

(b) Disclosure of information. The department is authorized to disclose to the attorney general any information received under this article and requested by the attorney general for purposes of determining compliance with and enforcing the provisions of this article. The department and attorney general shall share with each other the information received under this article, and may share the information with other federal, state or local agencies only for purposes of enforcement of this article, section 44-7101 or corresponding laws of other states.

(c) If a tobacco product manufacturer required to establish a qualified escrow fund under section 44-7101, section 3(b) disputes the attorney general's determination of the amount that the manufacturer is required to deposit into escrow and the attorney general determines that the dispute can likely be resolved by information contained in reports submitted by distributors to the department indicating sales or purchases of the manufacturer's cigarettes, then the attorney general shall produce the relevant portions of the reports to the manufacturer. However, before disclosing the foregoing information, the attorney general may require the manufacturer to provide all records related to its sales of the cigarettes in dispute. The disclosure provided by the attorney general to a tobacco product manufacturer pursuant to this subsection shall be limited to information concerning the cigarettes alleged by the state to be subject to the requirements of section 44-7101, section 3(b), may be used by the manufacturer only for the limited purpose of determining the appropriate escrow deposit, and may not be disclosed by the manufacturer to any third parties.

(d) Verification of qualified escrow fund. The attorney general may require at any time from the nonparticipating manufacturer, proof from the financial institution in which the manufacturer has established a qualified escrow fund for the purpose of compliance with section 44-7101, section 3(b) of the amount of money in the fund, exclusive of interest, the amount and the date of each deposit to the fund, and the amount and date of each withdrawal from the fund.

(e) Requests for additional information. In addition to the information required to be submitted pursuant to this article, the director and attorney general may require a distributor or tobacco product manufacturer to submit any additional information including, but not limited to, samples of the packaging or labeling of each brand family, as is necessary to enable the attorney general to determine whether a tobacco product manufacturer is in compliance with this article.

(f) Quarterly escrow installments. To promote compliance with the provisions of this article, the attorney general may promulgate regulations requiring tobacco product manufacturers subject to the requirements of section 3(a)(2) to make the escrow deposits required in quarterly installments during the year in which the sales covered by the deposits are made:

(1) In circumstances where the attorney general reasonably concludes that a manufacturer may not fully and timely comply with section 44-7101, section 3(b).

(2) Where manufacturers have not made escrow deposits pursuant to section 44-7101, section 3(b) during the preceding calendar year.

The attorney general may require production of information sufficient to enable the attorney general to determine the adequacy of the amount of the installment deposit.

(g) A tobacco product manufacturer that is subject to the requirements of section 3(a)(2) shall make the required escrow deposits in quarterly installments following each sales quarter. The attorney general may require the production of information that is sufficient to enable the attorney general to determine the adequacy of the amount of the installment deposit. Quarterly escrow installment deposits must be made pursuant to the following schedule:

(1) For the first quarter, January through March, on or before May 31 of the calendar year.

(2) For the second quarter, April through June, on or before August 31 of the calendar year.

(3) For the third quarter, July through September, on or before November 30 of the calendar year.

(4) For the fourth quarter, October through December, on or before February 28 of the following calendar year.

Section 6. Penalties and Other Remedies.

(a) License revocation and civil penalty. In addition to or in lieu of any other civil or criminal remedy provided by law, upon a determination that a distributor has violated section 3(c) or any regulation adopted pursuant to this article, the director may revoke or suspend the license of the distributor in the manner provided by title 41, chapter 6, article 10 for contested cases. Each stamp affixed and each sale or offer to sell cigarettes in violation of section 3(c) shall constitute a separate violation. The director may also impose a civil penalty in an amount not to exceed the greater of five hundred percent of the retail value of the cigarettes or five thousand dollars upon a determination of violation of section 3(c) or any regulations promulgated pursuant thereto. The penalty shall be imposed in the manner provided by title 41, chapter 6, article 10 for contested cases.

(b) Contraband and seizure. Any cigarettes that have been sold, offered for sale or possessed for sale in this state in violation of section 3(c) shall be deemed contraband and the cigarettes shall be subject to seizure by the department and forfeiture, and all the cigarettes so seized and forfeited shall be destroyed and not resold.

(c) Injunction. The attorney general, on behalf of the director, may seek an injunction to restrain a threatened or actual violation of section 3(c), 5(a) or 5(d) by a distributor and to compel the distributor to comply with those sections. In any action brought pursuant to this section, the state shall be entitled to recover the costs of investigation, costs of the action and reasonable attorney fees.

(d) Unlawful sale and distribution. It shall be unlawful for a person to (i) sell or distribute cigarettes, or (ii) acquire, hold, own, possess, transport, import or cause to be imported cigarettes, that the person knows or should know are intended for distribution or sale in the state in violation of section 3(c). A violation of this section is a class 1 misdemeanor.

(e) Deceptive trade practice. A person who violates section 3(c) engages in an unlawful practice in violation of section 44-1522. Standing to bring an action to enforce title 44, chapter 10, article 7 for violation of section 3(c) shall lie solely with the attorney general.

Section 7. Miscellaneous Provisions.

(a) Notice and review of determination. A determination of the attorney general to not include or to remove from the directory a brand family or tobacco product manufacturer shall be subject to review as an appealable agency action in the manner prescribed by title 41, chapter 6, article 10.

(b) Dates. For the year 2003, the first report of distributors required by section 5(a) shall be due thirty calendar days after the effective date of this article. The certifications by a tobacco product manufacturer described in section 3(a) shall be due forty-five calendar days after the effective date and the directory described in section 3(b) shall be published or made available within ninety calendar days after the effective date.

(c) Promulgation of regulations. The department and the attorney general may promulgate regulations necessary to effect the purposes of this article.

(d) Recovery of costs and fees by attorney general. In any action brought by the state to enforce this article, the state shall be entitled to recover the costs of investigation, expert witness fees, costs of the action and reasonable attorney fees.

(e) Disgorgement of profits for violations of article. If a court determines that a person has violated this article, the court shall order any profits, gain, gross receipts or other benefit from the violation to be disgorged and paid to the state general fund. Unless otherwise expressly provided, the remedies or penalties provided by this article are cumulative to each other and to the remedies or penalties available under all other laws of this state.

(f) Construction and severability. If a court of competent jurisdiction finds that the provisions of this article and section 44-7101 conflict and cannot be harmonized, then the provisions of section 44-7101 shall control. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this article causes section 44-7101 to no longer constitute a qualifying or model statute, as those terms are defined in the master settlement agreement, then that portion of this article shall not be valid. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this article is for any reason held to be invalid, unlawful or unconstitutional, the decision shall not affect the validity of the remaining portions of this article or any part thereof.

(g) Tobacco sales data confidentiality. All tobacco sales data provided to the attorney general or the department of revenue pursuant to the master settlement or agreements regarding disputes under the master settlement agreement shall be confidential and shall not be made public. This subdivision does not apply to any data from tax reports or returns, or any other tax report, return or form filed with the department pursuant to title 42, chapter 3.

Chapter 28 Dating Services

Article 1 General Provisions

§ 44-7151 Definitions

In this chapter, unless the context otherwise requires:

1. "Banned member" means a member whose account or profile is the subject of a fraud ban.

2. "Dating referral services" means services that are primarily intended to introduce or match adults for social or romantic activities, including activities that are commonly referred to as computer dating or video dating services. Dating referral services does not include arrangements in which one party is compensated for engaging in the social activity.

3. "Dating services enterprise" or "enterprise" means any person or business entity that offers dating referral services to the public for compensation.

4. "Fraud ban" means the barring of a member from an online dating service because, in the judgment of the online dating service, the member poses a significant risk of attempting to obtain monies from other members through fraudulent means, using a false identity or attempting to defraud other members.

5. "Member" means a person who submits to an online dating service the information required by the online dating service to access the online dating service for the purpose of engaging in dating or participating in a compatibility evaluation with other persons.

6. "Members in this state" means members who provide a billing address or zip code in this state when registering with an online dating service.

7. "Online dating service" means a product or service that offers or provides to its members access to dating, romantic relationships or matrimonial services between persons through the internet to arrange or facilitate the social introduction of two or more persons.

§ 44-7152 Dating referral services contracts

A. Every contract for dating referral services shall be in writing and is subject to this article. A dating services enterprise shall include any requirement or prohibition prescribed in this article in the written contract before the customer signs the contract. The enterprise shall give the customer a copy of the written contract at the time the customer signs the contract. The enterprise shall keep original copies of all contracts for services for three years after the expiration of those contracts.

B. Any contract for dating referral services that does not comply with this article is void and unenforceable.

§ 44-7153 Rescission; refunds; definition

A customer may rescind a contract for dating referral services within three business days after the customer signs the contract if within the three day period the customer either sends a signed written notice by certified mail to the dating services enterprise at the address specified in the contract or the customer personally delivers a signed written notice to the dating services enterprise at the address specified in the contract or at the dating services enterprise facility. Within thirty days after receipt of the notice of rescission, the enterprise shall refund to the customer any monies the customer paid under the contract. For the purposes of this section, "business day" means any day on which the dating services enterprise facility is open for business, excluding Sundays and other legal holidays.

§ 44-7154 Prohibited contract provisions; prohibited acts

A. A contract for dating referral services shall not:

1. Require payments or financing over a period of more than three years after the effective date of the contract and shall not extend for the life of the customer.

2. Extend the initial term of services to be rendered under the contract to more than one year after the effective date of the contract. At the end of the contract period, the dating services enterprise may give the customer the option to renew the contract for one year.

3. Require the customer to give up any right the customer may have against the enterprise. An assignment of the contract by the enterprise does not affect any right of action or defense arising out of the contract that the customer has against the enterprise.

B. A dating services enterprise shall not sell, induce or allow any customer to become directly or indirectly obligated under more than one contract for services for the purposes of avoiding the requirements and penalties prescribed in this article.

C. Any waiver by a customer of any requirement prescribed in this article is void and unenforceable.

D. A dating services enterprise shall not:

1. Use coercive sales tactics.

2. Misrepresent the quality, benefits or nature of services.

3. Misrepresent the qualifications or number of other customers participating in the services provided by the enterprise.

4. Misrepresent the success the enterprise has had in making matches or referrals that are favorable to the enterprise's customers.

E. Any contract entered into in reliance on any false, fraudulent or misleading information, representation, notice or advertisement made by the enterprise or any of the enterprise's employees or agents is void and unenforceable.

§ 44-7155 Damages; attorney fees

A court of competent jurisdiction may award a prevailing party actual damages and reasonable attorney fees and costs.

§ 44-7156 Enforcement by attorney general

Any violations of this article is an unlawful act or practice pursuant to section 44-1522. The attorney general may investigate the act or practice and take appropriate action pursuant to chapter 10, article 7 of this title.

§ 44-7157 Fraud ban disclosures

A. An online dating service shall provide notice to all of its members in this state who the online dating service knows have previously received and responded to an on-site message from another member who is subject to a fraud ban. The notice shall include all of the following:

1. The username, identification number or other profile identifier of the banned member.

2. A statement that the banned member may have been using a false identity or may attempt to defraud other members.

3. A statement that members should not send monies or personal financial information to another member.

4. A hyperlink that provides information regarding ways to avoid online fraud or being defrauded by a member of an online dating service.

B. The notification required by subsection A of this section shall be all of the following:

1. Clear and conspicuous.

2. Sent via email, text message or other appropriate means of communication consented to by the member.

3. Sent within twenty-four hours after the fraud ban is initiated against the banned member, except that notification may be sent within three days after the fraud ban is initiated if, in the judgment of the online dating service, circumstances require additional time.

C. An online dating service whose agents and employees are acting in good faith is not liable to any person, other than this state or any agency, department or political subdivision of this state:

1. For the means of communication used to notify a member.

2. When notification is sent pursuant to this section.

3. For disclosing any of the following:

(a) That a member has been banned.

(b) The username, identification number or other profile identifier of the banned member.

(c) The reason that the online dating service initiated the fraud ban of a member.

D. This section does not create a private right of action or diminish or adversely affect the protections afforded in 47 United States Code section 230.

Chapter 29 Event Online Ticket Sales

Article 1 General Provisions

§ 44-7201 Definitions

In this chapter, unless the context otherwise requires:

1. "Bot":

(a) Means any automated software program that performs automatic and repetitive tasks and that is designed to impersonate or replicate human activity online.

(b) Does not include autofill or password management features built into an internet browser or provided through separate software.

2. "Event" means a concert, theatrical performance, sporting event, exhibition, show or similar scheduled activity that meets all of the following:

(a) Is open to the public.

(b) Is held in a public or private venue.

(c) Requires payment of an admission fee to attend the event.

3. "Ticket" means a physical or electronic certificate, voucher, document, token or other evidence of a right for admission to enter a place of entertainment for one or more events at one or more specified dates and times.

§ 44-7202 Prohibitions

A person may not use or create a bot to do any of the following:

1. Purchase tickets in excess of the posted limit for an online ticket sale.

2. Use multiple internet protocol addresses, multiple purchaser accounts or multiple email addresses to purchase tickets in excess of the posted limit for an online ticket sale.

3. Circumvent or disable an electronic queue, waiting period, presale code or other sales volume limitation system associated with an online ticket sale.

4. Circumvent or disable a security measure, access control system or other control or measure that is used to validate that the ticket is not fraudulent.

§ 44-7203 Enforcement; injunctive relief; restitution; civil penalty

A. A violation of this chapter constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action pursuant to title 44, chapter 10, article 7.

B. Each ticket acquired in violation of section 44-7202 is a separate violation for the purpose of assessing a civil penalty pursuant to section 44-1531.

Chapter 31 Gift Cards

Article 1 General Provisions

§ 44-7401 Definitions

In this chapter, unless the context otherwise requires:

1. "Fee" means any amount or value automatically deducted from the amount of the gift card due to a period of nonuse or inactivity.

2. "Gift card" means any gift certificate, gift card or electronic gift card or any other medium issued or sold after October 31, 2005 for which the issuer has received payment for the full face value or full banked dollar value of the card for the future purchase or delivery of goods or services.

§ 44-7402 Gift card fees prohibited; underlying monies expiration date prohibited; civil penalty

A. A gift card may not be subject to a fee.

B. The underlying monies on a gift card may not be subject to an expiration date.

C. A gift card or a code or device associated with a gift card may contain an expiration date with respect to the gift card or the code or device, but not with respect to the underlying monies, if the gift card contains a clear and conspicuous disclosure that the underlying monies do not expire and that the consumer may contact the issuer for a replacement gift card or a replacement code or device associated with the gift card. If the gift card is an electronic gift card, the disclosure shall be in the message to the consumer that contains the card number or code.

D. This section does not apply to any of the following:

1. A gift card that is distributed to a consumer pursuant to an awards, loyalty or promotional program when no money or other property with value has been given by the consumer in exchange for the gift card.

2. A gift card that is sold below face value to a nonprofit or charitable organization or that is donated to a nonprofit or charitable organization for fund raising purposes.

3. A card for prepaid telecommunication services, an electronic funds transfer card or a bank-issued debit or general purpose reloadable prepaid card not marketed or labeled as a gift card or gift certificate.

E. Notwithstanding chapter 10, article 7 of this title, the sole penalty for a violation of this section is a civil penalty of not more than five hundred dollars per card violation.

Chapter 33 Record Discard and Disposal

Article 1 Discard and Disposal of Personal Identifying Information Records

§ 44-7601 Discarding and disposing of records containing personal identifying information; civil penalty; enforcement; definition

A. An entity shall not knowingly discard or dispose of records or documents without redacting the information or destroying the records or documents if the records or documents contain an individual's first and last name or first initial and last name in combination with a corresponding complete:

1. Social security number.

2. Credit card, charge card or debit card number.

3. Retirement account number.

4. Savings, checking or securities entitlement account number.

5. Driver license number or nonoperating identification license number.

B. This section may be enforced by either of the following:

1. A county attorney in the county in which the records or documents were wrongfully discarded or disposed. If a violation occurs by the same entity in multiple counties, a county attorney in a county in which records or documents were improperly discarded or disposed of, after filing a notice of intent to enforce this section, may send a copy of the notice to the county attorney in each county in which records or documents were not properly discarded or disposed of and may request that the actions be consolidated.

2. The attorney general.

C. A civil penalty shall be imposed for each violation of subsection A of this section arising out of one incident. The civil penalty shall not exceed:

1. Five hundred dollars for a first violation.

2. One thousand dollars for a second violation.

3. Five thousand dollars for a third or subsequent violation.

D. An entity that maintains and complies with the entity's own procedures for the discarding or disposing of records or documents containing the information listed in subsection A of this section that is consistent with the requirements of this section shall be deemed to be in compliance with this section.

E. This section does not apply to any of the following:

1. An entity subject to title V of the Gramm-Leach-Bliley act (P.L. 106-102; 113 Stat. 1338; 15 United States Code sections 6801 through 6809).

2. Covered entities and business associates as defined under regulations implementing the health insurance portability and accountability act, 45 Code of Federal Regulations section 160.103 (2003).

3. An entity subject to the federal fair credit reporting act (15 United States Code section 1681x).

F. This section only applies to paper records and paper documents.

G. For the purposes of this section, "entity" includes a corporation, foreign corporation, not for profit corporation, profit and not for profit unincorporated association, nonprofit corporation, sole proprietorship, close corporation, corporation sole or limited liability company, a professional corporation, association or limited liability company, a business trust, estate, partnership, registered limited liability partnership, trust or joint venture, a government, governmental subdivision or agency or any other legal or commercial entity.

Chapter 34 Retailer Use of Identification Information

Article 1 General Provisions

§ 44-7701 Retention of customer information; transmission to third parties prohibited; enforcement; civil penalties

A. A retailer may retain and use information from a customer's driver license or other state issued identification only for the purpose of verifying the customer's age, for the purpose of establishing a customer's identity, for the purpose of confirming that the customer is properly licensed to operate a motor vehicle, recreational vehicle, truck or motorcycle on public roads or for the purpose of disclosing the information to any of the following:

1. The department of transportation.

2. A person licensed pursuant to title 20.

3. A notary public pursuant to section 41-319.

4. A business for the purpose of any of the following:

(a) Verifying a check at the point of sale for the purchase of a good or service by check.

(b) Evaluating creditworthiness.

(c) Detecting or reducing the risk of fraud, abuse, identity theft or other crimes.

(d) Conducting account collection activities.

(e) Confirming that the customer has met the motor vehicle financial responsibility requirements pursuant to section 28-4135.

5. Financial institutions, if permitted by federal law.

B. Except as provided in this section, the retailer shall not transmit the information to a third party for any purpose, except that a retailer may disclose the information to a law enforcement agency for the purposes of a law enforcement investigation.

C. This section does not prohibit the use of the information in a court proceeding or administrative proceeding.

D. This section may be enforced by either of the following:

1. A county attorney in the county in which the violation occurs. If a violation occurs by the same retailer in multiple counties, a county attorney in a county in which a violation of this section occurred, after filing a notice of intent to enforce this section, may send a copy of the notice to the county attorney in each county in which a violation occurred and may request that the actions be consolidated. A county attorney may obtain injunctive relief and recover costs, attorney fees and the penalties prescribed in subsection E of this section.

2. The attorney general. An act or practice in violation of this section constitutes an unlawful practice pursuant to section 44-1522. The civil penalty prescribed by subsection E of this section is in lieu of the penalty prescribed by section 44-1531.

E. A civil penalty shall be imposed for each violation of subsection A of this section. The civil penalty shall not exceed:

1. Five hundred dollars for a first violation.

2. One thousand dollars for a second violation.

3. Five thousand dollars for a third or subsequent violation.

Chapter 35 Credit Card Agreements

Article 1 General Provisions

§ 44-7801 Definitions

In this article, unless the context otherwise requires:

1. "Authorized user" means any person other than a cardholder who has actual, implied or apparent authority to use a cardholder's credit card or credit card account.

2. "Cardholder" means the named person who applies for or accepts the credit card account.

3. "Charges" means purchases, cash advances, annual membership fees, delinquent payment fees, insufficient fund fees, over limit fees or other amounts incurred through use of the credit card.

4. "Credit card" means any card, plate or other single credit device that may be used from time to time to obtain credit and shall include a charge card, courtesy card, identification card or account number that may be used to access a line of credit to purchase goods or services.

5. "Credit card account" means a line of credit offered by an issuer to a cardholder that is accessible by the use of a credit card.

6. "Credit card agreement" means the terms and conditions governing the use of the credit card account.

7. "Creditor" means the person, business, financial institution or commercial enterprise that owns the credit card account.

8. "Financial institution" means any of the following:

(a) A banking institution that is authorized to issue credit cards pursuant to federal or state law.

(b) A banking subsidiary owned by a bank holding company as defined in 12 United States Code section 1841, or by a savings and loan holding company as defined in 12 United States Code section 1467a(a)(1)(d).

(c) Any other federally regulated banking institution.

9. "Issuer" means a financial institution or an authorized agent of a financial institution that issues a credit card.

§ 44-7802 Acceptance of credit card agreement

A cardholder's acceptance of the terms and conditions of a credit card account may be established as binding and enforceable in accordance with the terms and conditions of the credit card agreement or by either of the following other methods:

1. The cardholder's written or electronic signature or by any other electronic record acceptance as provided by title 44, chapter 26, article 1.

2. Any cardholder or authorized user uses the credit card account.

§ 44-7803 Consumer credit cardholder liability

A cardholder is personally liable for all charges and interest incurred on the cardholder's credit card account by the cardholder or an authorized user. In no case is a cardholder liable for any charges or interest that result from the unauthorized use of a credit card.

§ 44-7804 Establishment of amount owed on a credit card account

In an uncontested court action in this state a creditor may establish the amount of the debt that is owed on a credit card account through a copy of the issuer's final billing statement or by the electronic record pursuant to section 44-7007 that is maintained by the issuer and that represents the amount owed. In contested actions the court shall weigh the evidence of the parties as required by law.

§ 44-7805 Establishment of interest rate

Subject to sections 44-1205 and 44-6002, if applicable, a creditor may establish the contracted interest rate for a credit card account through either of the following:

1. Terms and conditions that contain a stated or variable interest rate.

2. A billing statement generated by the issuer that contains a stated or variable interest rate.

§ 44-7806 Consumer protection rights

Nothing in this chapter diminishes the party's consumer protection rights that are prescribed in any federal law or other state law relating to consumers.

Chapter 36 Private Firearm Transactions

Article 1 General Provisions

§ 44-7851 Definitions

In this chapter, unless the context otherwise requires:

1. "Firearm" means any loaded or unloaded handgun, pistol, revolver, rifle, shotgun or other weapon that will expel or that is designed to or may readily be converted to expel a solid projectile by the action of expanding gases.

2. "Private party" means a person who is not a prohibited possessor under state or federal law and does not include a person who possesses a federal firearms license and who primarily engages in the business of selling, trading or purchasing firearms.

3. "Transfer" means when a person gives, loans, offers for sale, wills or in any manner offers another person a firearm for any lawful purpose and the person is not a prohibited possessor under state or federal law.

§ 44-7852 Private party firearms transfer; state or political subdivision encumbrance prohibited

This state or any political subdivision of this state may not enact or implement any additional fee, tax, assessment, lien or other encumbrance on the transfer of a firearm between two private parties who are not prohibited possessors under state or federal law.

Chapter 37 Mugshot Website Operators

Article 1 General Provisions

§ 44-7901 Definitions

In this article, unless the context otherwise requires:

1. "Booking photograph" means a photograph of a subject individual that is taken pursuant to an arrest or other involvement in the criminal justice system.

2. "Commercial purpose" has the same meaning prescribed in section 39-121.03.

3. "Criminal justice record" includes a booking photograph and the name, address and description of and the charges filed against a subject individual.

4. "Mugshot website operator" means a person that publishes a criminal justice record on a publicly available internet website for a commercial purpose.

5. "Person" means a natural person, partnership, association, joint venture, corporation, limited liability company, nonprofit organization or trust or any similar entity or organized group of persons.

6. "Subject individual" means an individual who has been arrested.

§ 44-7902 Mugshot website operators; prohibited acts; exceptions

A. A mugshot website operator that publishes a subject individual's criminal justice record for a commercial purpose on a publicly accessible website is deemed to be transacting business in this state.

B. A mugshot website operator may not use criminal justice records or the names, addresses, telephone numbers and other information contained in criminal justice records for the purpose of soliciting business for pecuniary gain, including requiring the payment of a fee or other valuable consideration in exchange for removing or revising criminal justice records that have been published on a website or other publication.

C. A subject individual whose criminal justice record is published in violation of subsection B of this section and who suffers a pecuniary loss or who is otherwise adversely affected as a result of a violation of subsection B of this section has a cause of action against the person responsible for the violation and may recover damages in addition to the damages prescribed in subsection D of this section in any court of competent jurisdiction.

D. A person that violates subsection B of this section is liable for damages for each separate violation in an amount of at least:

1. $100 per day during the first thirty days of the violation.

2. $200 per day during the subsequent thirty days of the violation.

3. $500 per day for each day thereafter.

E. This article does not apply to any act performed for the purpose of disseminating news to the public, including the gathering, publishing or broadcasting information to the public for a news-related purpose, or to any act performed by a publisher, owner, agent, employee or retailer of a newspaper, radio station, radio network, television station, television broadcast network, cable television network or other online news outlet associated with any news organization in connection with the dissemination of news to the public, including the gathering, publishing or broadcasting information to the public for a news-related purpose.

F. This article does not apply to activities by a licensed attorney, private investigator or registered process server that are associated with purposes relating to a current or anticipated criminal or civil proceeding. This section does not affect the conduct of trials or the discovery process in any proceeding as otherwise provided by law or court rule.

Chapter 38 Businesses Exempt from Mask Mandate

Article 1 General Provisions

§ 44-7951 Businesses exempt from mask mandate

Notwithstanding any other law, a business in this state is not required to enforce on its patrons a mask mandate that is established by this state, a city, town or county or any other jurisdiction of this state.

Chapter 39 Genetic Testing Companies

Article 1 General Provisions

§ 44-8001 Definitions

In this chapter, unless the context otherwise requires:

1. "Biological sample" means any material part of a human, discharge from a human or derivative of a human, including tissue, blood, urine or saliva, that is known to contain DNA.

2. "Consumer" means an individual who is a resident of this state.

3. "De-identified data" means data that has been de-identified in accordance with 45 Code of Federal Regulations section 164.514(b).

4. "Direct-to-consumer genetic testing company" or "company" means an entity that offers genetic testing products or services directly to consumers that involve collecting from a consumer of either genetic data or biological samples and from which the company derives genetic data for analysis.

5. "Express consent" means a consumer's affirmative response to a clear and prominent notice regarding collecting, using or disclosing genetic data for a specific purpose.

6. "Genetic data":

(a) Means any data, regardless of its format, that concerns a consumer's genetic characteristics.

(b) Includes:

(i) Raw sequence data that results from sequencing of a consumer's complete extracted DNA or a portion of the consumer's extracted DNA.

(ii) Genotypic and phenotypic information that results from analyzing the raw sequence data.

(iii) Self-reported health information that a consumer submits to a company regarding the consumer's health conditions and that is used for scientific research or product development and analyzed in connection with the consumer's raw sequence data.

(c) Does not include de-identified data.

7. "Genetic testing" means any laboratory test of a consumer's complete DNA, regions of DNA, chromosomes, genes or gene products to determine the presence of a consumer's genetic characteristics.

8. "Person" means an individual, partnership, corporation, association, business, business trust or legal representative of an organization.

§ 44-8002 Direct-to-consumer genetic testing company requirements; prohibition

A. A direct-to-consumer genetic testing company shall:

1. Provide clear and complete information regarding the company's policies and procedures for collecting, using or disclosing genetic data by making available to a consumer both of the following:

(a) A high-level privacy policy overview that includes basic, essential information about the company's collection, use or disclosure of genetic data.

(b) A prominent, publicly available privacy notice that includes information about the company's data collection, consent, use, access, disclosure, transfer, security and retention and deletion practices.

2. Obtain a consumer's consent for collecting, using or disclosing the consumer's genetic data, including:

(a) Initial express consent that clearly describes the uses of the genetic data collected through the genetic testing product or service and that specifies who has access to test results and how the genetic data may be shared.

(b) Separate express consent for any of the following:

(i) Transferring or disclosing the consumer's genetic data to any person other than the company's vendors and service providers.

(ii) Using genetic data beyond the primary purpose of the genetic testing product or service and inherent contextual uses.

(iii) Retaining any biological sample provided by the consumer following completion of the initial testing service requested by the consumer.

(c) Informed consent in compliance with the federal policy for the protection of human research subjects prescribed by 45 Code of Federal Regulations part 46 for transferring or disclosing the consumer's genetic data to third-party persons for research purposes or research conducted under the control of the company for the purpose of publication or generalizable knowledge.

(d) Express consent for marketing to a consumer based on the consumer's genetic data or for marketing by a third-party person to a consumer based on the consumer having ordered or purchased a genetic testing product or service. For the purposes of this subdivision, marketing does not include providing customized content or offers on websites or through applications or services provided by the direct-to-consumer genetic testing company with the first-party relationship to the consumer.

3. Require a valid legal process for disclosing genetic data to law enforcement or any other government agency without a consumer's express written consent.

4. Develop, implement and maintain a comprehensive security program to protect a consumer's genetic data against unauthorized access, use or disclosure.

5. Provide a process for a consumer to do all of the following:

(a) Access the consumer's genetic data.

(b) Delete the consumer's account and genetic data.

(c) Request and obtain the destruction of the consumer's biological sample.

6. Disclose genetic data only in accordance with section 12-2802.

B. Notwithstanding any other provision in this section, a direct-to-consumer genetic testing company may not disclose a consumer's genetic data to any entity offering health insurance, life insurance or long-term care insurance or to any employer of the consumer.

§ 44-8003 Exceptions

This chapter does not apply to any of the following:

1. Protected health information that is collected by a covered entity or business associate governed by the privacy, security and breach notification rules issued by the United States department of health and human services under 45 Code of Federal Regulations parts 160 and 164.

2. Biological samples that are obtained or genetic data that is generated for the purposes of an individual's medical screening, treatment or diagnosis.

3. Genetic data that is generated by analyses or tests described in section 12-2801, paragraph 1, subdivision (b).

4. A public or private institution of higher education or an entity that is owned or operated by a public or private institution of higher education.

§ 44-8004 Enforcement; violation; civil penalty; damages; costs; attorney fees

The attorney general may bring an action to enforce this chapter. A person who violates this chapter is subject to:

1. A civil penalty of up to $2,500 for each violation.

2. The payment of actual damages incurred by consumers as a result of the violation.

3. Costs and reasonable attorney fees incurred by the office of the attorney general.

Chapter 40 Animal Shelters

Article 1 General Provisions

§ 44-8021 Dog or cat possession; microchip scan; owner notification; definition

A. When taking possession of a dog or cat, an animal shelter shall thoroughly scan for the presence of a microchip in the dog or cat and shall make a reasonable effort to contact the owner.

B. For purposes of this section, "animal shelter" has the same meaning prescribed in section 11-1022.

Chapter 41 Ticket Resales

Article 1 General Provisions

§ 44-8031 Prohibitions

A reseller, a secondary ticket exchange or any affiliate of a reseller or secondary ticket exchange may not:

1. Resell more than one copy of the same ticket to an athletic contest or live entertainment event.

2. Resell a ticket without first informing the purchaser of the location in the entertainment facility of the seat or, if there is not an assigned seat, the general admission area to which the ticket corresponds, including the row and section number of the ticket, as applicable.

3. Resell a ticket or advertise a ticket for resale, unless either:

(a) The ticket is in the possession or constructive possession of the reseller.

(b) The reseller has a written contract with the rights holder to obtain the ticket.