[co-author: Stephanie Kozol]*
On April 7, California Attorney General Rob Bonta and Assembly member Brian Maienschein announced new legislative bill AB 1366, which creates a state Treasury Victims of Consumer Fraud Restitution Fund (VCFRF) to benefit victims of consumer fraud. Currently, victims may receive restitution after a judgment. However, if a business collapses and cannot pay restitution, victims can go without any compensation. The VCFRF seeks to remedy this issue.
Rather than financing the fund through taxes, AB 1366 would allow the AG to seek disgorgement. Under this remedy, companies that violate California’s unfair competition law and false advertising law must relinquish illegally-made profits to fund victim restitution.
Why It Matters
New York and Arizona already have consumer protection laws that allow their AGs to seek disgorgement. The California bill signals a trend that more states may create disgorgement funds to help compensate consumer fraud.
*Senior Government Relations Manager
