Applicability of Deceptive Trade Practices Statutes
Deceptive trade practices statutes do not govern all situations where one party has deceived another party. Most states limit the scope of these statutes to commercial transactions involving a consumer purchasing or leasing goods or services for personal, household, or family purposes. The terms used in each statute to set forth the scope of the statute are often the subject of LITIGATION. The majority of states requires a liberal interpretation of the terms of the deceptive trade practices statutes, including those describing the applicability of the statutes.
Trade or Commerce
Several states limit the applicability of deceptive trade practices to transactions in trade or commerce. This requirement usually incorporates a broad range of profit-oriented transactions. But it generally excludes trade between non-merchants and similar transactions.
Consumer Transactions
The appropriate plaintiff under most deceptive trade practices acts is a consumer, commonly defined as a person who will use a good or service for personal, family, or household purposes. The determination of whether a plaintiff is a consumer often requires use of one of two types of analysis, a subjective test and an objective test. The subjective analysis typically considers the intended use of the good or service at the time of the transaction. Thus, if a buyer of a good intends at the time of a purchase to use to good for a personal, family, or household purpose, the buyer will likely be considered a consumer under the relevant statute. The objective analysis considers whether the type of good or service involved in the transaction is ordinarily used for a personal, family, or household purpose.
Goods or Services
Goods are defined under the UNIFORM COMMERCIAL CODE as those items movable at the time of a purchase. Many deceptive trade practices statutes apply this definition to the requirement that goods are involved in a transaction for a deceptive trade practices statute to apply. Livestock are also usually included in the definition of a good. Statutes and courts usually define services broadly, including in the definition most activities conducted on behalf of another. Some states require that consumers seek to purchase merchandise, which incorporates goods, services, real property, commodities, and some intangibles.
Prohibited Acts and Practices
Most state deceptive trade practices statutes include broad restrictions on "deceptive" or "unfair" trade practices. These states often include prohibitions against FRAUDULENT practices and unconscionable practices. The Federal Trade Commission, when interpreting the FTCA, does not require that the person committing an act of deception have the intent to deceive. Moreover, the FTC does not require that actual deception occur. The FTC merely requires that a party have the capacity to deceive or commit an unfair trade practice. If a business or individual has this capacity or tendency to deceive, the FTC under the FTCA may order the company to cease and desist the deceptive or unfair practice. State statutes similarly do not require that a company specifically intends to deceive, nor must a company always have knowledge that a statement is false to be liable for misrepresentations made to a consumer.
A consumer who has been victimized by a potential deceptive or unfair trade practice should consult the deceptive trade practice statute in that state, plus consult CASE LAW applying this statute, to determine whether he or she has a cause of action. In addition to the broad prohibition against deception, most state statutes also include a list of practices that are defined as deceptive. Under the Uniform Deceptive Trade Practices Act, if a business or person engages in the following, the action constitutes a deceptive trade practice:
* Passes off goods or services as those of another
* Causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services
* Causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another
* Uses deceptive representations or designations of geographic origin in connection with goods or services
* Represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or qualities that they do not have or that a person has a sponsor-ship, approval, status, affiliation, or connection that he does not have
* Represents that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or second-hand
* Represents that goods or services are of particular standard, quality, or grade, or that goods are of particular style or model, if they are of another
* Disparages the goods, services, or business of another by false or misleading misrepresentation of fact
* Advertises goods or services with intent not to sell them as advertised
* Advertises goods or services with intent not to supply reasonably expected public demand, unless advertisement discloses a limitation of quantity
* Makes false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions
* Engages in any other conduct which similarly creates the likelihood of confusion or of misunderstanding
Most states include similar items in their lists of deceptive trade practices violations, even if those states have not adopted the uniform act. In addition, the FTC and many states prohibit other unfair practices, including the following:
* Unfair provisions in contracts of adhesion
* Coercive or high-pressure tactics in sales and collection efforts
* Illegal conduct
* Taking advantage of bargaining power of vulnerable groups
* Taking advantage of emergency situations
* Unconscionable activities, including outrageous and offensive conduct by a business in the sale of goods or services
Remedies for Violations of Deceptive Trade Practices Statutes
A consumer who has been the victim of a deceptive trade practice has a variety of remedies. State deceptive trade practices statutes have been particularly successful due to the damages provisions included in the statutes. About half of the states provide minimum STATUTORY damages to a litigant who has proven a deceptive trade practice, even if the litigant has not proven actual damages. Many states also permit courts to award treble damages, which means the actual damages to a party injured by a deceptive trade practice are tripled. Several states also permit courts to impose PUNITIVE DAMAGES and/or attorney's fees for these practices.
In addition to monetary damages, several other options may exist for a person injured by a deceptive trade practice. When the FTC has JURISDICTION over a case, it may enjoin a deceptive trade practice of a company under the FTCA. Statutes in each of the states also permit government enforcement officials to seek cease and desist orders to prevent businesses from engaging in deceptive trade practices. These remedies may be available in addition to civil remedies sought by private litigants.
State and Local Provisions Prohibiting Deceptive Trade Practices
CALIFORNIA: The state statute prohibits 23 specific practices, plus any other unfair methods of competition and unfair or deceptive practices. Parties must intend for the transaction to result in the sale or lease of goods or services to a consumer for the statute to apply.
