ARIZONA STATE SENATE
Phoenix, Arizona
contractors;
advertisements; violations; telecommunications service
now:
advertisements; contractors; consumer fraud
Purpose
Changes disclosure requirements for licensed and unlicensed contractors who advertise to the public.
Background
The Arizona Registrar of Contractors (ROC) oversees the licensing and regulatory system of contractors to promote quality construction. Current law exempts persons engaging in contracting work of a minor nature from the Registrar’s licensure requirements, if the price of their work is less than $750.
A contractor’s license number must be placed on all written bids, advertising, loan forms letterheads and other documents. An unlicensed contractor must include the words “unlicensed” in any advertising. According to a representative of ROC some have avoided using this label by including a license number other than a contractor’s license number in advertising.
According to representatives of Qwest, placement of a yellow pages advertisement in a particular category such as “Handy Person Service” or “Contractors” is determined by the entity placing the ad. Unlicensed contractors can advertise next to licensed contractors and Qwest is not responsible for informing a person placing an ad of statutory requirements, nor does Qwest need to inquire as to the validity of a license number being placed in an ad.
The residential contractor’s recovery fund was established in 1981 as a form of financial protection provided by licensed Arizona residential contractors to residential consumers. The recovery fund is governed by statute and available only to owner / occupants of class five residential property. A "person injured" as defined by statute, can recover losses incurred due to poor workmanship or non-performance by a licensed residential contractor. According to representatives of the Registrar’s office, over 2,000 complaints against unlicensed contractors, claiming unsatisfactory workmanship, are received each year. Many consumers are unaware that the contractor they have chosen is not licensed. The Registrar can fine an unlicensed contractor, but the consumer is unable to receive relief from the residential contractor’s recovery fund.
H.B. 2371 requires unlicensed contractors to disclose their lack of a license in any advertising by including the words “not a licensed contractor” in the ad and subjects non-exempt unlicensed contractors to possible action by the Attorney General (AG).
There is no anticipated fiscal impact to the state general fund associated with this measure.
1. Requires a person who is exempted from contractor licensure requirements to include the words “not a licensed contractor” in any advertisements to the public.
2. States that any unlicensed contractor who does not disclose his or her unlicensed status in an advertisement is subject for prosecution under the Consumer Fraud Act.
3. Allows the AG to investigate and take appropriate action, which may include an injunction prohibiting any further advertising, prohibiting the person from engaging in a trade, an order of restitution or a civil penalty of up to $10,000.
4. Specifies that the acronym “ROC” (Registrar of Contractors) must precede the contractor’s license number.
5. Provides for a general effective date.
CED 2/12/01 DPA/SE 8-0-1-1
3rd Read 3/19/01 38-18-4-0
Prepared by Senate Staff
March 23, 2001