AB 1366: Disgorgement Requirement

Assembly Bill 1366 by Assemblyman Brian Maienschein (D-San Diego) would allow the Attorney General to obtain disgorgement in certain false advertising and unfair competition lawsuits. AB 1366 would add Government Code Section 12527.6.

Disgorgement is the legally mandated repayment of ill-gotten gains imposed on wrongdoers by the courts. Funds that were received through illegal or unethical business transactions are disgorged, or paid back, often with interest and/or penalties to those affected by the action.

AB 1366 would authorize the Attorney General, in an action brought under unfair competition laws or false advertising laws found in California’s Business and Professions Code, to obtain the remedy of disgorgement. This would be in addition to the remedies provided for in those laws. The funds recovered by the Attorney General would be deposited into the Victims of Consumer Fraud Restitution Fund.

In addition, the Victims of Consumer Fraud Restitution Fund is established in the State Treasury and those funds, upon legislative appropriation, be used by the Attorney General to provide restitution to victims of acts or practices for which consumer restitution has been ordered but not paid in an action brought by the Attorney General.  The Attorney General may adopt regulations to implement this section.