False or misleading commercial disaster communication., the official text

An act to add Section 790.20 to the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL'S DIGEST

Existing law generally regulates the rules governing insurance and insurance contracts. Existing law prohibits a person from engaging in any trade practices that are defined as unfair methods of competition or unfair or deceptive acts or practices in the business of insurance, including publicly making or dissimilating in a publication or advertising device, among others, a statement containing an untrue, deceptive, or misleading statement regarding the business of insurance, and makes a person who engages in those practices liable to the state for a civil penalty not to exceed $5,000 or $10,000, as specified.
This bill would authorize a court to increase a civil penalty by up to $2,500 for a commercial disaster communication, as defined, that otherwise constitutes a violation of the above-described provisions. The bill would authorize the increase for a commercial disaster communication made on or after the date of a proclamation of a state of emergency or catastrophic disaster, as defined, until 60 calendar days after the termination of the state of emergency or catastrophic disaster, but prohibits the increase for applying more than 180 calendar days for any one state of emergency or catastrophic disaster.
The bill would make related findings and declarations.

The people of the State of California do enact as follows:

SECTION 1.
The Legislature finds and declares all of the following:
(a) Disasters, including wildfires, extreme weather events, and earthquakes, have pronounced impacts on our state and are increasing in frequency. These disasters affect Californians living in every corner of our state.
(b) Californians affected by a disaster are faced with the daunting task of restarting their lives, often after losing their home and all of their possessions. In many cases, people affected by a disaster are living in temporary accommodations, may not be able to go to work, may be living off of their savings, and may be feeling tremendous pressure to begin the process of rebuilding their lives.
(c) Experiences have taught government and law enforcement officials that the wake of a disaster is often rife with scams and bad actors who are intent upon capitalizing on the misfortune of others.
(d) False and misleading advertising is a significant problem associated with the disaster recovery process. Bad actors attempt to trick consumers into using their services through advertising that appears to be an official government communication or by disguising for-profit offers as being advertisements of a not-for-profit organization.
(e) Survivors of a disaster must be free to make informed decisions, based upon fair and objective information. Therefore, it is necessary to strengthen restrictions upon deceptive advertising in the business of insurance to curtail this practice during periods of declared emergency.

SEC. 2.
Section 790.20 is added to the Insurance Code, immediately following Section 790.15, to read:
790.20.
(a) A court may increase, by up to two thousand five hundred dollars ($2,500), a civil penalty imposed under this article for a commercial disaster communication that otherwise constitutes a violation of subdivision (b) of Section 790.03.
(b) This section applies to a commercial disaster communication made on or after the date of a proclamation of a state of emergency or catastrophic disaster until 60 calendar days after the termination of the state of emergency or catastrophic disaster, but shall not apply for more than 180 calendar days for any one state of emergency or catastrophic disaster.
(c) For purposes of this section, the following definitions apply:
(1) “Commercial disaster communication” means a communication targeted at, or that may reasonably be expected to be observed by, a person residing within, or displaced from, an area subject to a declared state of emergency or catastrophic disaster and that meets either of the following:
(A) Advertises goods or services related to the losses caused by the declared disaster and that are to be provided by any person that operates in a for-profit manner.
(B) Uses the name of any specific geographic area that is named in a declared state of emergency or catastrophic disaster.
(2) “State of emergency” has the same meaning as in Section 8558 of the Government Code.
(3) “Catastrophic disaster” has the same meaning as in Section 15001.