Consumer Protection, Diversity, and Digital Assets
The 2023 legislative cycle brought some additional consumer protections–victims of consumer fraud can now be compensated and hidden consumer fees are now banned. New reporting requirements were implemented to promote diversity among venture capital firms, and California’s Uniform Commerical Code has been amended to include Digital Assets.
Digital Asset Amendments Added to California’s Uniform Commercial Code
SB 95 will update California’s version of the Uniform Commercial Code to address digital assets, including virtual currencies and non-fungible tokens (NFTs). It also addresses the transfer of such digital assets and their ownership rights. Notably, it creates a new Division 12 (commencing with section 12101) of California’s Commercial Code concerning “controllable electronic records” (CERs).
Hidden Consumer Fees Now Banned
SB 478 aims to regulate hidden “junk fees” for vendors or companies who use a low headline price to attract customers only to hit them later with additional required fees in fine print, or reveal additional unavoidable charges later in the buying process. Under California’s Consumer Legal Remedies Act, it will be unlawful to advertise “a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction, as specified.”
AB 1366 Establishes Victims of Consumer Fraud Restitution Fund
The new restitution fund is designed to ensure a source of restitution funding for victims in actions brought by the Attorney General who otherwise might go uncompensated due to the defendant’s inability to pay restitution. AB 1366 also authorizes courts to award disgorgement in actions brought by Bonta under the state’s Unfair Competition Law and False Advertising Law. Disgorgement requires companies that have broken the law to give up any funds they’ve acquired through conducting illegal business.
SB 54 Passed to Promote Diversity Reporting Among Venture Capital Firms
SB 54, also known as the “Fair Investment Practices by Investment Advisers” bill, would require venture capital firms operating in California to collect and disclose data concerning the demographic composition of the founding teams of the companies they elect to invest in. SB 54 is part of a concerted effort to advance transparency and diversification within the sphere of venture capital investments. The bill intends to focus on the need for diversity and funding of startups owned by under-represented groups such as women and minorities. The bill is groundbreaking in the industry and for California, as no prior laws have required venture capital firms to collect and disseminate demographic data for review by governmental agencies.