In the recent case of Arizona v. Autozone, Inc., one of the central issues addressed by the Arizona Supreme Court was the interpretation of Arizona's Consumer Fraud Act and whether that law authorizes disgorgement of profits earned in violation of the law to the State. The Court ultimately determined that the statute expressly allows for the restoration of losses to affected consumers, but it does not allow the State to seek disgorgement of monies received by a vendor in violation of the Consumer Fraud Act.
The Arizona Consumer Fraud Act
A.R.S. § 44-1522(A), provides as follows:
The act, use or employment by any person of any deception, deceptive act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, supression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice.
The statute further authorizes the attorney general to enforce the Consumer Fraud Act by use of various legal mechanisms, including the filing of a lawsuit in Superior Court.
Remedies For Violations Of Arizona's Consumer Fraud Act
When an action is filed in Superior Court the law allows the attorney general to seek injunctive relief to prevent further violations of the Consumer Fraud Act, and to obtain from the Superior Court orders and judgments "as may be necessary to:
1. Prevent the use or employment by a person of any unlawful practices.
2. Restore to any person in interest any monies or property, real or personal, which may have been acquired by means of any practice in this article declared to be unlawful, including the appointment of a receiver.
A.R.S. § 44-1528(A). This statute clearly authorizes the recovery of ill-gotten funds to be paid back to affected consumers, but in State v. Autozone, Inc., the State abandoned its request that consumers be repaid in favor of a request that the gains be disgorged to the Attorney General for use in the consumer protection revolding fund.
Disgorgement Is Not Authorized By The Statute
The Arizona Supreme Court disagreed with the Attorney General that the requested disgorgement to the Attorney General's common fund was authorized by the statute. Stating that because the legislature could have easily made such provision if it wanted to, but did not, the Court found that the requested remedy was not permitted.
Unfortunately, its not clear from the Court's decision why the Attorney General sought disgorgement instead of seeking to return the ill-gotten profits to consumers. What is clear, however, is that the statute does allow the recovery of those losses on behalf of consumers. If you have suffered a loss that you believe is the result of a violation of Arizona's Consumer Fraud Act, you should report the violation to the Attorney General and discuss the matter with an experienced Arizona lawyer as soon as possible.