Home  > For Small Business  > Marketing  > Unfair and Deceptive Practices  > Unfair and Deceptive Business Practices 
Unfair and Deceptive Business Practices
Last Updated August 4, 2008
Federal and state law prohibits businesses from engaging in activities that are "unfair" or "deceptive." The key federal law on this subject for most businesses is the Federal Trade Commission Act, enforced, of course, by the Federal Trade Commission. Similar state laws are often called "mini-FTC Acts" or "UDAP" statutes and are enforced by the states' Attorneys General or other consumer protection offices.

Unfair and Deceptive Practices Definition

While there is no definition of "unfair" or "deceptive" in the FTC Act, the FTC has issued guidance on the subject which has since been codified into law. The FTC's test of "unfairness" requires that there be a consumer injury, and the injury be
  1. substantial,
  2. not outweighed by offsetting consumer or competitive benefits, and
  3. not be one that consumers could have reasonably avoided.

The FTC test for "deception" examines

  1. whether the representation, omission or practice is likely to mislead,
  2. the reasonableness of the practice from the perspective of a consumer or group of consumers, and
  3. the materiality of the act or practice, which involves analyzing whether the act or practice is likely to influence or otherwise "affect the consumer's conduct or decision with regard to a product or service," resulting in likely injury.

Specific Business Practices Prohibited

Many state laws, in addition to a broad prohibition of unfair or deceptive practices, list specific practices that are deemed unfair or deceptive, such as:

  • False statement about a product's effectiveness, quality or ingredients
  • Advertising sale items that are not actually available for sale
  • Deceptive guarantees or failing to fully disclose the material terms of a guarantee
  • "Bait and switch" advertising
  • Fictitious testimonials
  • Enrolling a consumer in a "negative option" program without fully disclosing the material terms, such as how to terminate

Remedies

FTC Enforcement

The FTC may fine a business $11,000 per violation, obtain other civil damages, force the business to refund customers, and obtain an injunction against the business. Civil fines and remedies can easily reach into the millions of dollars.

Consumer Remedies

Consumers have no private right of action under the FTC Act, however many of the parallel state statutes, such as Florida's, do provide private rights of action. Consumers may file a complaint with the FTC however, though the FTC obviously has limited resources with which to investigate complaints. Consumers may also file complaints to the Better Business Bureau, but this is only effective if the business is a BBB member.
 
Comment  Comment (0) Email  Email Print  Print   Digg  

Attorney Services

12400 Wilshire Blvd., Suite 810
Los Angeles, California 90025
Practice Areas: For Small Business, Business Litigation, Commercial Real Estate
www.attorneyservicesetc.com/
Blecher & Collins
Los Angeles Antitrust Litigators

515 South Figueroa Street, 17th Floor
Los Angeles, California 90071
Practice Areas: For Small Business
www.blechercollins.com/
Hankin Patent Law, A Professional Corporation

6404 Wilshire Boulevard, Suite 1020
Los Angeles, California 90048-5512
Practice Areas: For Small Business
www.hankinpatentlaw.com/
Compulsory Attendance -- Age Beyond Which Attendance Not Required
Click map for specifics

 
 Children must attend school to age 16
 
 Children must attend school to age 17
 
 Children must attend school to age 18
 
 No compulsory attendance law
 

Hot Topics