Arizona Consumer Fraud Act
Arizona State Legislature
Full nameArizona Consumer Fraud Act
Introduced26 January 1967
Signed into law13 March 1967
Sponsor(s)Arizona House Republican majority leader D. Delos Ellswort
GovernorJack Williams
ResolutionHB 114
Status: Current legislation

The Arizona Consumer Fraud Act (ACFA) is a package of Arizona state laws that give protections to consumers in almost any kind of transaction related to the sale or advertisement of merchandise. Both the state and a private citizen may bring action under the act, however a private citizen's lawsuit must be brought within one year from the date of the claim.[1][2]

Powers and protections given by the ACFA

The ACFA gives consumers in Arizona recourse in the event of fraudulent marketing and sales. A brochure released by the State of Arizona Financing Fraud Division states:

For example, if a car dealer sold a used car which he knew could not be safely driven, it would not only be a violation of the Act for him to state that the car was in good shape, but it would also be a violation if he failed to disclose the fact that the car could not be safely driven.[3]

Merchants who willfully violate the ACFA may be required to pay up to $10,000 per violation.[4]

It also gives broad powers to the Attorney General to investigate fraud already committed or about to be. For instance, Consumer Protection Law Developments states that the Attorney General has the power to "issue subpoenas, administer oaths or affirmations, and conduct hearings in order to carry out his duties under the ACFA."[4]

History

The AFCA was first introduced as House Bill 114 by Arizona House Republican majority leader D. Delos Ellsworth. The minutes from the House Commerce and Industry Committee said this:

House Bill 114 was introduced by Chairman Ellsworth who then introduced Attorney General Darrell Smith to explain the purpose of this Bill and their reasons for endorsing it. He stated that this Bill is to stop the fraud that now exists in the selling of many goods to the consumer, and the need for legislation to protect them from such. Mr. Smith introduced Mr. Philip Marquardt, an assistant on the staff of the Attorney General. Mr. Marquardt gave additional information in explaining that this Bill will also protect the merchant as well as the consumer from such frauds. It will also help to retain money for the state that is now being taken out of the state by those who are defrauding and leaving the state immediately thereafter and moving on to other places.

House Bill 114 was passed as an emergency measure and signed into law by Jack Williams on March 13, 1967.[5]

Judicial precedent

Application against pharmaceutical companies

In 2015 Arizona applied consumer fraud law for the first time against pharmaceutical companies, joining Illinois and Minnesota. The Arizona Court of Appeals allowed action under the ACFA against Medicis Pharmaceutical for marketing acne medication containing minocycline,[6][7] known to cause a lupus-like autoimmune response.[8]

2012 Ruling that ACFA funds must be returned to consumers

In the 2012 case of State of Arizona vs Autozone, Autozone was charged under the ACFA for multiple instances of mispricing merchandise from 2001 - 2006. The state of Arizona sought disgorgement instead of returning funds to consumers. After review, the Arizona Supreme Court ruled disgorgement was not authorized under the ACFA.[9][10]

Cases brought by State of Arizona

Arizona Attorney General Mark Brnovich announced April 19, 2016 legal action against Volkswagen for violating the ACFA after the company admitted to using defeat devices to skew vehicle emissions in 2015. Around 4,000 Arizona residents were affected, placing the potential penalty at $40 million.[11][12]

Diamond Resorts settled for $800,000 on December 23, 2016, after the company was sued by Arizona under the ACFA for misleading consumers about timeshares. Some of the allegations included increasing maintenance fees, membership resale and buy-back programs, timeshare resale market, ability to rent timeshares, and discounts on travel needs.[13][14]

Arizona brought an ACFA case against Theranos, reaching a $4.65 million settlement in 2017. Arizona consumers who were affected received refunds in the mail. The average refund was $60.92. The largest refund was $3,411. Under the terms of the settlement Theranos was banned for two years from blood-testing.[15][16]

Attorney General Brnovich announced a $6.28 million settlement with General Motors LLC in March 2018 as part of a faulty ignition switch-related settlement. Under the settlement, approximately 33,000 Arizona consumers who purchased GM vehicles between July 2009 and July 2014 are eligible for payments.[17] Consumers will receive a minimum of $200 each. Arizona was the only state to obtain restitution directly for consumers.[18]

References

  1. ↑ "Consumer Protection". Arizona Attorney General. Archived from the original on 13 July 2018. Retrieved 13 July 2018. The Arizona Attorney General has the authority to bring actions alleging violations of the Consumer Fraud Act and other state and federal consumer protection laws. A private citizen can also bring an action for a violation of the Consumer Fraud Act within one year from the date the claim arises.
  2. ↑ Mitchell, Robert D. "The Arizona Consumer Fraud Act and Private Causes of Action". www.mitchell-attorneys.com. Retrieved 13 July 2018. The plaintiff must bring a consumer fraud claim within one year after the cause of action accrues.
  3. ↑ "The Arizona consumer fraud act". Arizona State Government Publications. Retrieved 4 April 2018.
  4. 1 2 Horvath, August; Villafranco, John; Calkins, Stephen (2009). ABA Section of Antitrust Law, Consumer Protection Law Developments. ABA Publishing. pp. 393–394. ISBN 978-1604423907.
  5. ↑ Schaumberg, Dianne. "Legislative Intent of ACFA" (PDF). Legislative Intent Services, Inc. Retrieved 3 April 2018.
  6. ↑ Smith, Eleanor. "Arizona Court Revives Product Liability Case, Abolishes Learned Intermediary Doctrine". The National Trial Lawyers. Retrieved 3 April 2018.
  7. ↑ Novak, Edward. "Arizona Applies Consumer Fraud Act to Pharmaceutical Manufacturers". Polsinelli. Retrieved 3 April 2018.
  8. ↑ "Amanda Watts, Plaintiff/Appellant, v. Medicis Pharmaceutical Corporation, Defendant/Appellee". FindLaw. Retrieved 3 April 2018.
  9. ↑ "State of Arizona ex rel. Thomas C. Horne, Attorney General, Plaintiff/Appellant/Cross–Appellee, v. Autozone, Inc., a Nevada corporation, Defendant/Appellee/Cross- Appellant". FindLaw. Retrieved 3 April 2018.
  10. ↑ Harper, Kevin. "Arizona's Consumer Fraud Act Allows Consumers To Recover, But Not The State". Harper Law. Retrieved 3 April 2018.
  11. ↑ Fischer, Howard (19 April 2016). "Brnovich sues Volkswagen, alleging Arizonans were duped". Arizona Capitol Times. Retrieved 4 April 2018.
  12. ↑ Holmes, Courtney (19 April 2016). "State demands money back for VW customers". ABC 15. Retrieved 4 April 2018.
  13. ↑ Anderson, Ryan. "Attorney General Brnovich Announces $800,000 Settlement with Diamond Resorts". Arizona Attorney General. Retrieved 4 April 2018.
  14. ↑ Holmes, Courtney; Ducey, Joe (12 May 2017). "Settlement allows some owners to ditch timeshares". ABC 15. Retrieved 4 April 2018.
  15. ↑ Alltucker, Ken (14 December 2017). "Arizonans get $4.6 million in refund checks from blood test company Theranos". AZ Central. Retrieved 3 April 2018.
  16. ↑ Alltucker, Ken (18 April 2017). "Theranos reaches $4.65 million fraud settlement with Arizona". AZ Central. Retrieved 3 April 2018.
  17. ↑ "AG Brnovich Obtains $6.28 Million for Arizonans Who Purchased Recalled GM Vehicles".
  18. ↑ "How to get $200 or more from GM recall settlement".
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