Advocacy News – Oct. 10, 24
The Senate Finance, Insurance and Consumer Protection Committee heard testimony Wednesday on a series of bills aimed at increasing “consumer protections” – but that could ultimately spur costly litigation, including class action litigation, against a host of Michigan businesses.
Why it matters:
Litigation Nightmare for Industries Regulated by State and Federal Law. Senate Bills 1021-22 would repeal the regulatory compliance exemption under the Michigan Consumer Protection Act (MCPA). If the legislation is passed, nearly every industry and profession regulated under state and federal law will be subject to lawsuits under the MCPA – in addition to the remedies available to consumers under their regulatory statutes. The MCPA creates additional avenues to class action lawsuits and the awarding of treble damages.
- The MCPA currently does not apply to “[a] transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” In its Smith v. Glove Life Ins. Co. and Liss v. Lewiston-Richards, Inc. decisions, the Michigan Supreme Court (MSC) interpreted this to mean the following: if a person or company is licensed or approved to engage in a certain business or profession, and the transaction at issue falls within the scope of that license, that conduct falls outside the MPCA. While these rulings do not give a complete exemption to regulated industries from the MCPA (i.e., if the person or business is operating outside the scope of the occupation or profession, there could be an MCPA claim), they do provide protections.
Curiously, this legislation received testimony for the first time just one day prior to the start of oral arguments before the MSC on whether the Court should reverse their prior decision.
- Read the coalition letter the MI Chamber coordinated and submitted to the committee Wednesday, and see a full list of the 80+ regulated entities and professions that would be impacted.
Price Controls During States of Emergency. Adding to the flurry of anti-business bills before the committee, Senate Bills 954-956 create a cap for how much retailers, energy producers, and hotel and lodging entities can charge for certain products and services during a declared state of emergency. The bills cap a businesses’ price increase on goods at 10%, or $0.10 on the dollar – which is a common price fluctuation for day-to-day business operations. Read more of the legislation’s background here.
What we’re saying: Although the MI Chamber supports tackling bad actors who are blatantly taking advantage of consumers during a time of struggle, a threshold of $0.10 on the dollar isn’t price gouging. Examples of price gouging are those that ignore standard business operations and dramatically increase prices to exploit consumers – such as hand sanitizer being sold for over an 800% increase during the COVID-19 pandemic. The legislation does not capture the true intent and punishes good actors who want to be in compliance with the law.
- Read the coalition letter the MI Chamber submitted to the committee.
Sweeping New Data Breach Requirements. The MI Chamber also voiced concern to legislation (Senate Bill 888) to add sweeping new data breach and identity theft requirements to current state law.
What we’re saying: While we agree that Michigan’s breach notification law may need to be updated, we believe these updates should reflect best practices adopted by other states. For example, we believe breach notifications are most beneficial to consumers when they receive a single notice that clearly and comprehensively details what information was compromised and what they can do to protect themselves against possible identity theft and fraudulent activity. Efficient notice to consumers is driven by uniformity with other state laws – the less deviation there is between state laws, the easier it is to provide consumers notice quickly and accurately.
- Read the coalition letter the Chamber submitted to the Committee.
Questions? Email the Chamber’s Business Advocacy Team at info@michamber.com.