TITLE 52 TRADE REGULATIONS AND PRACTICES
CHAPTER 598 DECEPTIVE TRADE PRACTICES
CREDIT SERVICE ORGANIZATIONS, ORGANIZATIONS FOR BUYING GOODS OR SERVICES AT
DISCOUNT, DANCE STUDIOS AND HEALTH CLUBS
GENERAL PROVISIONS
NRS 598.701 Definitions.
As used in NRS 598.701 to 598.736, inclusive, unless the context otherwise requires, the words and terms defined in NRS 598.706, 598.711 and 598.716 have the meanings ascribed to them in those sections.
NRS 598.706 "Commissioner" defined.
"Commissioner" means the Commissioner of the Consumer Affairs Division of the
Department of Business and Industry.
NRS 598.711 "Division" defined.
"Division" means the Consumer Affairs Division of the Department of Business and Industry.
NRS 598.716 "Registrant" defined.
"Registrant" means a credit service organization, an organization for buying
goods or services at a discount, a dance studio or a health club which is
required to register and post security with the Division pursuant to the
provisions of this chapter.
NRS 598.721 Registration: Application; fee; deposit of security; certificate
of registration; renewal of certificate.
1. Each credit service organization, organization for buying goods or
services at a discount, dance studio and health club regulated by the provisions
of this chapter shall apply for registration on the form prescribed by the
Division.
2. At the time of application for registration, the applicant must pay to the
Division an administrative fee of $25 and deposit the required security with the
Division.
3. Upon receipt of the security in the proper form and the payment of the
administrative fee required by this section, the Division shall issue a
certificate of registration to the applicant. A certificate of registration:
(a) Is not transferable or assignable; and
(b) Expires 1 year after it is issued.
4. A registrant must renew a certificate of registration issued pursuant to this
section before the certificate expires by submitting to the Division an
application for the renewal of the certificate on a form prescribed by the
Division.
NRS 598.726 Security required for registration: Form; term; records;
rejection for nonconformance; change in form; inadequate amount.
1. Each registrant shall deposit with the Division:
(a) A bond executed by a corporate surety approved by the Commissioner and
licensed to do business in this state;
(b) An irrevocable letter of credit for which the registrant is the obligor,
issued by a bank whose deposits are federally insured; or
(c) A certificate of deposit in a financial institution which is doing business
in this state and which is federally insured or insured by a private insurer
approved pursuant to NRS 678.755. The certificate of deposit may be withdrawn
only on the order of the Commissioner, except that the interest may accrue to
the registrant.
2. The term of the bond, letter of credit or certificate of deposit, or any
renewal thereof, must be not less than 1 year.
3. If the registrant deposits a bond, the registrant shall keep accurate records
of the bond and the payments made on the premium. The records must be open to
inspection by the Division during business hours. The registrant shall notify
the Division not later than 30 days before the date of expiration of the bond
and provide written proof of the renewal of the bond to the Division.
4. The Commissioner may reject any bond, letter of credit or certificate of
deposit which fails to conform to the requirements of this chapter.
5. A registrant may change the form of security which he has deposited with the
Division. If the registrant changes the form of the security, the Commissioner
may retain for not more than 1 year any portion of the security previously
deposited by the registrant as security for claims arising during the time the
previous security was in effect.
6. If the amount of the deposited security falls below the amount required by
this chapter for that security, the registrant shall be deemed not to be
registered as required by NRS 598.721 for the purposes of this chapter.
NRS 598.731 Rights and remedies of injured consumers; resolution by Division
of claims against security; regulations.
1. The security required to be deposited by a registrant pursuant to NRS
598.726 must be held in trust for consumers injured by the bankruptcy of the
registrant or the registrant's breach of any agreement entered into in his
capacity as a registrant.
2. A consumer so injured may bring and maintain an action in any court of
competent jurisdiction to recover against the security.
3. The Division may bring an action for interpleader against all claimants upon
the security. If the Division brings such an action, the Division shall publish
notice of the action at least once each week for 2 weeks in a newspaper of
general circulation in the county in which the organization has its principal
place of business. The Division may deduct its costs of the action, including
the costs of the publication of the notice, from the amount of the security. All
claims against the security have equal priority. If the security is insufficient
to pay all the claims in full, the claims must be paid pro rata. If the
registrant has posted a bond with the Division, the surety is then relieved of
all liability under the bond.
4. The Division may, in lieu of bringing an action for interpleader pursuant to
subsection 3, conduct a hearing to determine the distribution of the security to
claimants. The Division shall adopt regulations to provide for adequate notice
and the conduct of the hearing. If the registrant has posted a bond with the
Division, distribution pursuant to this subsection relieves the surety of all
liability under the bond.
5. If the security is sufficient to pay all claims against the security in full,
the Division may deduct from the amount of the security, the cost of any
investigation or hearing it conducted to determine the distribution of the
security.
NRS 598.736 Release of security if registrant ceases to operate or
registration expires.
1. If no claims have been filed against the security deposited with the
Division pursuant to NRS 598.726 within 6 months after the registrant ceases to
operate or his registration expires, whichever occurs later, the Commissioner
shall release the security to the registrant and shall not audit any claims
filed against the security thereafter by consumers.
2. If one or more claims have been filed against the security within 6 months
after the registrant ceases to operate or his registration expires, whichever
occurs later, the proceeds must not be released to the registrant or distributed
to any consumer earlier than 1 year after the registrant ceases to operate or
his registration expires, whichever occurs later.
3. For the purposes of this section, the Commissioner shall determine the date
on which a registrant ceases to operate.
CREDIT SERVICE ORGANIZATIONS
NRS 598.741 Definitions.
As used in NRS 598.741 to 598.787, inclusive, unless the context otherwise
requires:
1. "Buyer" means a natural person who is solicited to purchase or who purchases
the services of an organization which provides credit services.
2. "Commissioner" means the Commissioner of Consumer Affairs.
3. "Division" means the Consumer Affairs Division of the Department of Business
and Industry.
4. "Extension of credit" means the right to defer payment of debt or to incur
debt and defer its payment, offered or granted primarily for personal, family or
household purposes.
5. "Organization":
(a) Means a person who, with respect to the extension of credit by others,
sells, provides or performs, or represents that he can or will sell, provide or
perform, any of the following services, in return for the payment of money or
other valuable consideration:
(1) Improving a buyer's credit record, history or rating.
(2) Obtaining an extension of credit for a buyer.
(3) Providing counseling or assistance to a person in establishing or effecting
a plan for the payment of his indebtedness, unless that counseling or assistance
is provided by and is within the scope of the authorized practice of a debt
adjuster licensed pursuant to chapter 676 of NRS.
(4) Providing advice or assistance to a buyer with regard to subparagraph (1) or
(2).
(b) Does not include:
(1) A person 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 who is subject to regulation and supervision by an
officer or agency of this state or the United States.
(2) A bank, credit union or savings and loan institution whose deposits or
accounts are eligible for insurance by the Federal Deposit Insurance
Corporation, the National Credit Union Share Insurance Fund or a private insurer
approved pursuant to NRS 678.755.
(3) A person licensed as a real estate broker by this state where the person is
acting within the course and scope of that license, unless the person is
rendering those services in the course and scope of employment by or other
affiliation with an organization.
(4) A person licensed to practice law in this state where the person renders
services within the course and scope of his practice as an attorney at law,
unless the person is rendering those services in the course and scope of
employment by or other affiliation with an organization.
(5) A broker-dealer registered with the Securities and Exchange Commission or
the Commodity Futures Trading Commission where the broker-dealer is acting
within the course and scope of such regulation.
(6) A person licensed as a debt adjuster pursuant to chapter 676 of NRS.
(7) A reporting agency.
6. "Reporting agency" means a person who, for fees, dues or on a cooperative
nonprofit basis, regularly engages in whole or in part in the business of
assembling or evaluating information regarding the credit of or other
information regarding consumers to furnish consumer reports to third parties,
regardless of the means or facility of commerce used to prepare or furnish the
consumer reports. The term does not include:
(a) A person solely for the reason that he conveys a decision regarding whether
to guarantee a check in response to a request by a third party;
(b) A person who obtains or creates a consumer report and provides the report or
information contained in it to a subsidiary or affiliate; or
(c) A person licensed pursuant to chapter 463 of NRS.
NRS 598.746 Prohibited acts: Receiving money before complete performance;
receiving money for referral to provider of credit; misleading statements; other
fraudulent or deceptive acts.
An organization and its agents, employees and representatives who sell or
attempt to sell the services of the organization, shall not:
1. Charge or receive any money or other valuable consideration before full and
complete performance of the services the organization has agreed to perform for
or on behalf of the buyer.
2. Charge or receive any money 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 upon
substantially the same terms as those available to the general public.
3. Make, counsel or advise any 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 creditworthiness,
credit standing or credit capacity.
4. Make or use any untrue or misleading representations in the offer or sale of
the services of an organization. For the purposes of this subsection, a
"misleading representation" includes a guarantee that:
(a) The organization is able to remove information that is adverse to the
buyer's ability to obtain credit from the buyer's credit record, history or
rating.
(b) The organization is able to obtain an extension of credit for the buyer
regardless of the buyer's existing credit record, history or rating.
5. Engage, directly or indirectly, in any act, practice or course of business
which operates or would operate as a fraud or deception upon any person in
connection with the offer or sale of the services of an organization.
6. Remove, or assist or advise the buyer to remove from the buyer's credit
record, history or rating, information that is adverse to the buyer's ability to
obtain credit if the information is accurate and not obsolete.
7. Create, or assist or advise the buyer to create a new credit record, history
or rating by using a different name, address, social security number, employee
identification number or other misleading information.
8. Attempt to transfer or assign the organization's certificate of registration.
9. Submit a buyer's dispute to a consumer credit reporting agency without the
buyer's knowledge.
10. Call, or authorize any other person who is not the buyer to call a consumer
credit reporting agency and portray himself as the buyer.
NRS 598.752 Organization to register and deposit security before advertising
services or conducting business in this State; separate security not required
from salesperson, agent or representative of organization; regulations.
1. Before advertising its services or conducting business in this State, an
organization must register pursuant to NRS 598.721 and deposit security in the
amount of $100,000 with the Division pursuant to NRS 598.726. The security must
be conditioned on compliance by the organization with the provisions of NRS
598.746 to 598.772, inclusive, and the terms of its contracts with buyers.
2. If an organization has deposited the required security, a salesperson, agent
or representative of the organization who sells its services is not required to
deposit his own separate security. For the purposes of this subsection, a person
is a salesman, agent or representative of an organization if:
(a) He does business under the same name as the organization; or
(b) The organization and the issuer of the security certify in writing that the
security covers the salesperson, agent or representative.
3. The Division shall adopt such regulations as it deems necessary to carry out
the provisions of this section.
NRS 598.757 Organization to provide buyer certain information in writing.
1. Before the execution of a contract between the buyer and an organization
or before the receipt by the organization of any money or other valuable
consideration, whichever occurs first, the organization must provide to the
buyer, in writing:
(a) A statement:
(1) That the buyer has a right pursuant to 15 U.S.C. §§ 1681g and 1681h to
receive disclosure of all information, except medical information, in any file
on him maintained by a consumer credit reporting agency;
(2) That 15 U.S.C. § 1681j requires that this disclosure be made free to the
buyer if he requests it within 30 days after receipt of notice of a denial of
credit;
(3) Of the approximate cost to the buyer of receiving this disclosure when there
has not been a denial of credit; and
(4) That the buyer has the right pursuant to 15 U.S.C. § 1681i to dispute the
completeness or accuracy of any item contained in any file on him maintained by
any consumer credit reporting agency.
(b) A detailed description of the services to be performed by the organization
for the buyer and the total amount the buyer will become obligated to pay for
the services.
(c) A statement that the buyer has a right to proceed against the security
deposited with the Division by the organization under the circumstances and in
the manner set forth in NRS 598.731 and 598.736. The statement provided pursuant
to this paragraph must include the name and address of the issuer of the
security.
(d) A statement that the buyer may cancel a contract for the services of an
organization within 5 days after its execution by written notice mailed or
delivered to the organization.
(e) A statement identifying the availability of any nonprofit association which
provides services similar to those offered by the organization. The statement
provided pursuant to this paragraph must include the association's telephone
number, including the association's national toll-free telephone number, if any.
2. The written information provided pursuant to subsection 1 must be printed in
at least 10-point bold type and must include the following statement or a
similar statement approved by the Division:
RIGHTS OF CONSUMERS REGARDING CREDIT FILES
PURSUANT TO STATE AND FEDERAL LAW
You have the right to obtain a copy of your credit file from a consumer credit
reporting agency. There is no fee if, within the past 30 days, you have been
turned down for credit, employment or insurance because of information in your
credit report. The consumer credit reporting agency is obligated to provide
someone to help you interpret the information in your credit file.
You have a right to dispute inaccurate information by contacting the consumer
credit reporting agency directly. However, neither you nor any credit service
organization has the right to have accurate, current and verifiable information
removed from your credit report. Generally, under the Fair Credit Reporting Act,
the consumer credit reporting agency is obligated to remove accurate, negative
information from your report only if it is more than 7 years old and bankruptcy
information can be reported for 10 years. If you have notified a credit
reporting agency that you dispute the accuracy of information in your credit
file, the consumer credit reporting agency is obligated to make an investigation
and modify or remove inaccurate information. The consumer credit reporting
agency may not charge a fee for this service. Any relevant information and
copies of all documents you have concerning the disputed information should be
given to the consumer credit reporting agency. If the investigation does not
resolve the dispute to your satisfaction, you may send a brief statement to the
consumer credit reporting agency to keep in your credit file, explaining why you
think the information in the credit file is inaccurate. The consumer credit
reporting agency is obligated to include your statement or a summary of your
statement about disputed information in any report it issues about you.
RIGHTS OF CONSUMERS REGARDING
CANCELLATION OF A CONTRACT
You have a right to give written notice of your intent to cancel a contract with
a credit service organization for any reason within 5 working days from the date
you signed it. If for any reason you do cancel a contract during this time, you
do not owe any money. You have a right to sue a credit service organization if
it misleads you.
3. The organization shall retain a copy of the written information it provides
pursuant to the requirements of subsections 1 and 2 for not less than 2 years.
NRS 598.762 Requirements of contract for purchase of services; copy of
contract must be retained by organization.
1. A contract between a buyer and an organization for the purchase of the
services of the organization:
(a) Must be in writing;
(b) Must be signed by the buyer;
(c) Must be dated; and
(d) Must clearly indicate above the signature line that the buyer may cancel the
contract within 5 days after its execution by giving written notice to the
organization of his intent to cancel the contract. If the notice is mailed, it
must be postmarked not later than 5 days after the execution of the contract.
2. A copy of each contract executed by a buyer and an organization must be
retained by the organization for not less than 2 years.
NRS 598.767 Organization to maintain resident agent for service of legal
process.
An organization shall file with the Division a designation and acceptance of and continuously maintain a resident agent for service of legal process.
NRS 598.772 Waiver of statutory rights prohibited; burden of proof upon
person claiming exemption or exception from definition.
1. Any waiver by a buyer of the provisions of NRS 598.746 to 598.777,
inclusive, is contrary to public policy and is void and unenforceable. Any
attempt by an organization to have a buyer waive rights given by NRS 598.746 to
598.777, inclusive, is unlawful.
2. In any proceeding involving NRS 598.741 to 598.787, inclusive, the burden of
proving an exemption or an exception from a definition is upon the person
claiming it.
NRS 598.777 Buyer's action for recovery of damages or injunctive relief;
attorney's fees; punitive damages.
A buyer injured by a violation of NRS 598.746 to 598.772, inclusive, or by a
breach by an organization of a contract subject to those sections, may bring an
action for recovery of damages, for injunctive relief or for both recovery of
damages and injunctive relief. Judgment for damages must be entered for actual
damages, but in no case less than the amount paid by the buyer to the
organization, plus reasonable attorney's fees and costs. If the court deems it
proper, the court may award punitive damages.
NRS 598.782 Criminal penalty.
1. Except as otherwise provided in subsection 2, a person who violates any
provision of NRS 598.746 to 598.772, inclusive, is guilty of a misdemeanor.
2. A person who breaches a contract subject to NRS 598.746 to 598.772,
inclusive, is not guilty of a misdemeanor solely because of the breach.
NRS 598.787 Provisions and remedies not exclusive; violation constitutes
deceptive trade practice.
1. The provisions of NRS 598.746 to 598.777, inclusive, are not exclusive and
do not relieve the parties or the contracts subject thereto from compliance with
any other applicable provision of law.
2. The remedies provided in NRS 598.772 and 598.777 for violation of any
provision of NRS 598.746 to 598.772, inclusive, are in addition to any other
procedures or remedies for any violation or conduct provided for in any other
law.
3. Any violation of NRS 598.746 to 598.772, inclusive, constitutes a deceptive
trade practice for the purposes of NRS 598.0903 to 598.0999, inclusive.
Case Law
I identified no significant cases construing this statute.