Legislature supported some new consumer protections

Consumer-related bills passed in the 2007 session of the Nevada Legislature will change the way Nevadans buy health care, mortgages and gift cards.

This year's crop of consumer protection bills arose largely out of hot topics in the news: mortgage fraud, payday loans and price gouging. At least one came from a lawmaker's experience.

Freshman Assemblyman Ruben Kihuen said he decided to reform gift card regulation after trying to use a $100 gift card at a favorite restaurant. He was told the card had expired, but later learned that businesses are supposed to return the value of those cards to the state they are based in, Kihuen said.

Hoping to keep more of consumers' money in Nevada, the Las Vegas Democrat sponsored AB279, which requires 60 percent of the value of unused, expired gift cards sold in Nevada to revert to the treasury to help fund education programs.

Kihuen is hopeful the bill, signed by Gov. Jim Gibbons last month, could raise $5 million or more for education.

"There's a reason why businesses promote gift cards so much," said Kihuen, who said that 10 percent of the value of gift cards purchased last year wasn't spent. "They know that people tend to lose the card, or forget to use the card."

A bill that didn't make it across the legislative finish line was SB82, a measure that would have banned price-gouging during emergencies as a deceptive trade practice. That bill, sponsored by Senate Minority Leader Dina Titus, D-Las Vegas, died without a vote in a Senate committee.

An attempt to amend the provisions into another bill also was rejected by the Senate.

Retail and oil lobbyists argued that the bill's definition of gouging - a price increase of at least 25 percent over a product's average price before an emergency - was vague and would lead to frivolous complaints.

"Naturally they didn't want to see any limitations on the price they can charge, but I thought there were lots of protections for business," said Titus. "I think you need to protect citizens in time of an emergency. They're already victims, and to make them victims of greedy merchants is just unfair."

A bill sponsored by Titus that did become law was SB302, which made Nevada one of several states to ban "universal default clauses." The clauses in credit card contracts enable some companies to boost interest rates if a customer misses a payment on a separate account.

That proposal passed both houses unanimously, and was signed into law last month by Gov. Jim Gibbons.

Even with the bill's passage, many Nevada consumers can still be subject to universal default. The U.S. Supreme Court has ruled that states can't regulate banks that are based out-of-state, and most cards are issued by such banks.

Legislators also took action on mortgage fraud, passing AB440, which applies new rules for lenders who don't follow standard loan procedures. The bill, which is awaiting the governor's signature, also brings Nevada in line with new federal mortgage regulations, and makes mortgage lending fraud a felony crime.

Assemblyman Marcus Conklin, D-Las Vegas, the bill's prime sponsor, said Nevada is a "hot spot" in the nation for mortgage fraud and ranks No. 1 in the per capita rate of foreclosures. One of the most common schemes uses fraudulent appraisals to boost the price of a home.

Also awaiting Gibbons' signature is AB483, a bill that contains his own proposal to increase the state's homestead exemption from $350,000 to $550,000. The bill also includes sections supported by Assembly Speaker Barbara Buckley, D-Las Vegas, to exempt $1,000 of personal property from forfeiture in a bankruptcy, and a proposal to double a cap on damage awards paid by state or local governments to $100,000 by 2011. Those caps haven't increased since 1979.

Last month, Gibbons vetoed SB66, an earlier proposal to double the damage caps in October.