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,

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.

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Nebraska

NE ST � 45-801

Neb.Rev.St. � 45-801

NEBRASKA REVISED STATUTES OF 1943
CHAPTER 45. INTEREST, LOANS, AND DEBT
ARTICLE 8. CREDIT SERVICES ORGANIZATIONS

� 45-801. Act, how cited.

Sections 45-801 to 45-815 shall be known and may be cited as the Credit Services Organization Act.

� 45-802. Terms, defined.

For purposes of the Credit Services Organization Act:

(1) Buyer shall mean an individual who is solicited to purchase or who purchases the services of a credit services organization;

(2) Consumer reporting agency shall have the meaning assigned by the Fair Credit Reporting Act, 15 U.S.C. 1681a(f);

(3) Credit services organization shall mean a person who, with respect to the extension of credit by others and in return for the payment of money or other valuable consideration, provides or represents that the person can or will provide any of the following services:

(a) Improving a buyer’s credit record, history, or rating;

(b) Obtaining an extension of credit for a buyer; or

(c) Providing advice or assistance to a buyer with regard to subdivision (a) or (b) of this subdivision;

(4) Extension of credit shall mean 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; and

(5) Person shall include individual, corporation, company, association, partnership, limited liability company, and other business entity.

� 45-803. Exemptions.

(1) The following shall be exempt from the Credit Services Organization Act:

(a) A person authorized to make loans or extensions of credit under the laws of this state or the United States who is subject to regulation and supervision by this state or the United States or a lender approved by the United States Secretary of Housing and Urban Development for participation in a mortgage insurance program under the National Housing Act, 12 U.S.C. 1701 et seq.;

(b) A bank or savings and loan association whose deposit or accounts are eligible for insurance by the Federal Deposit Insurance Corporation or a subsidiary of such a bank or savings and loan association;

(c) A credit union doing business in this state;

(d) A nonprofit organization exempt from taxation under section 501(c)(3) of the Internal Revenue Code;

(e) A person licensed as a real estate broker or salesperson under the Nebraska Real Estate License Act acting within the course and scope of that license;

(f) A person licensed to practice law in this state acting within the course and scope of the person’s practice as an attorney;

(g) A broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission acting within the course and scope of that regulation;

(h) A consumer reporting agency;

(i) A person whose primary business is making loans secured by liens on real property;

(j) A person, firm, corporation, or association licensed as a collection agency in this state or a person holding a solicitor’s certificate in this state acting within the course and scope of that license or certificate; and

(k) A person licensed to engage in the business of debt management pursuant to sections 69-1201 to 69-1217.

(2) The burden of proving an exemption under this section shall be on the person claiming the exemption.

� 45-804. Prohibited acts.

A credit services organization, a salesperson, agent, or representative of a credit services organization, or an independent contractor who sells or attempts to sell the services of a credit services organization shall not:

(1) Charge a buyer or receive from a buyer money or other valuable consideration before completing performance of all services, other than those described in subdivision (2) of this section, which the credit services organization has agreed to perform for the buyer unless the credit services organization has obtained a surety bond or established and maintained a surety account as provided in section 45-805;

(2) Charge a buyer or receive from a buyer money or other valuable consideration for obtaining or attempting to obtain an extension of credit that the credit services organization has agreed to obtain for the buyer before the extension of credit is obtained;

(3) Charge a buyer or receive from a buyer 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 that is or will be extended to the buyer is substantially the same as that available to the general public;

(4) Make or use a false or misleading representation in the offer or sale of the services of a credit services organization, including (a) guaranteeing to erase bad credit or words to that effect unless the representation clearly discloses that this can be done only if the credit history is inaccurate or obsolete and (b) guaranteeing an extension of credit regardless of the person’s previous credit problem or credit history unless the representation clearly discloses the eligibility requirements for obtaining an extension of credit;

(5) Engage, directly or indirectly, in a fraudulent or deceptive act, practice, or course of business in connection with the offer or sale of the services of a credit services organization;

(6) Make or advise a buyer to make a statement with respect to a buyer’s credit worthiness, credit standing, or credit capacity that is false or misleading or that should be known by the exercise of reasonable care to be false or misleading to a consumer reporting agency or to a person who has extended credit to a buyer or to whom a buyer is applying for an extension of credit; or

(7) Advertise or cause to be advertised, in any manner whatsoever, the services of a credit services organization without filing a registration statement with the Secretary of State under section 45-806 unless otherwise provided by the Credit Services Organization Act.

� 45-805. Surety bond or surety account; requirements; action on surety; depository; Secretary of State; powers and duties.

(1) A credit services organization conducting business in this state shall obtain a surety bond or establish a surety account which complies with this section. The bond or account shall be in the amount of one hundred thousand dollars.

(2) If a surety bond is obtained, the bond shall be issued by a surety company authorized to do business in this state and a copy of the bond shall be filed with the Secretary of State. If a surety account is established, the account shall be established and maintained at a federally insured bank or savings and loan association located in this state and notification of the depository, the trustee, and the account number shall be filed with the Secretary of State.

(3) The bond or account shall be in favor of the state for the benefit of any person who is damaged by any violation of the Credit Services Organization Act. The bond or account shall also be in favor of any person damaged by such a violation.

(4) Any person claiming against the bond or account for a violation of the act may maintain an action at law against the credit services organization and against the surety or trustee. The surety or trustee shall be liable only for damages awarded under section 45-810. The aggregate liability of the surety or trustee to all persons damaged by a credit services organization’s violation of the act shall not exceed the amount of the bond or account.

(5) A depository holding money in a surety account under the act shall not convey money in the account to the credit services organization that established the account or a representative of the credit services organization unless the credit services organization or representative presents a statement issued by the Secretary of State indicating that subsection (6) of this section has been satisfied in relation to the account. The Secretary of State may conduct investigations and require submission of information as necessary to enforce this subsection.

(6) The bond or account shall be maintained until two years after the date that the credit services organization ceases operation in this state.

� 45-806. Registration statement; contents; requirements; fee.

(1) A credit services organization shall file a registration statement with the Secretary of State before conducting business in this state. The registration statement shall contain:

(a) The name and address of the credit services organization; and

(b) The name and address of any person who directly or indirectly owns or controls ten percent or more of the outstanding shares of stock in the credit services organization.

(2) The registration statement shall also contain either:

(a) A full and complete disclosure of any litigation or unresolved complaint filed with a governmental authority of this state relating to the operation of the credit services organization; or

(b) A notarized statement that there has been no litigation or unresolved complaint filed with a governmental authority of this state relating to the operation of the credit services organization.

(3) The credit services organization shall update the registration statement within ninety days after the date on which a change in the information required in the statement occurs.

(4) Each credit services organization registering under this section shall maintain a copy of the registration statement in the files of the credit services organization. The credit services organization shall allow a buyer to inspect the registration statement on request.

(5) The Secretary of State may charge each credit services organization that files a registration statement with the Secretary of State a reasonable fee not to exceed one hundred dollars to cover the cost of filing. The Secretary of State shall not require a credit services organization to provide information other than that provided in the registration statement.

� 45-807. Written statement to buyer; contents; credit services organization; duties.

(1) Before executing a contract or agreement with or receiving money or other valuable consideration from a buyer, a credit services organization shall provide the buyer with a written statement containing:

(a) A complete and detailed description of the services to be performed by the credit services organization for the buyer and the total cost of the services;