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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.

Questions & Answers: Unfair and Deceptive Practices

I purchased a used car in Nevada, being advertised as "Dependable" and a V-6. I also asked the party to put in an email statement if it had any issues and again, they said it ran w...
I have been providing a specialized delivery service to a large company for over 12 years. We had drivers pickup in 27 location all over the U.S. Our contract expired with this co...
I purchased a used Nissan Rogue from the Reno Dodge dealer on 7/20/13. They charged me for a car alarm because "we put them in all of our cars". I was told someone would contact me...
Is this grounds for a lawsuit. A wireless company makes Dealers open up more locations to appear as if they have a lot of locations inorder to impress a larger company trying to ...
How do I make a complaint about a retailer selling below cost...
Can a dealership sell you a car that has either no airbag or a faulty airbag even if the vehicle has a prior salvage title? The vehicle is a 2007 and was in an accident in 2008. It...
Comments (5)add comment
stan: ...
. This dealer conned me to test drove a 2011 RAV4 and signed paperwork on the 2011 RAV4. I brought a copy of an quote I received from the dealer of Toyota of Winter Haven via E-mail for a 2012 RAV4 model priced at $22,189 to negotiate. The dealer final offer me on my E-mail quote is $21950 for 2012 RAV4 model. I accepted the price, but after I am signing and discovered that was not 2012 RAV4 model, also I asked where my copy of E-mail quote, the dealer all staffs stated that I don't know and could not find it. That dealer wanted me keep this 2011 instead of a 2012. the dealer offer some money off to keep the 2011 RAV4 model. Their sales manager, Matthew Daly, offered my wife and me $500 to keep the car, but knowing that would not fully compensate, I requested $700. Despite agreeing with my request, he only gave us $300 and some other form of compensation additional, but since it was Sunday, no high level management working and the deal would have to wait. He will talk to the highest management on Monday to compensate us. If few of other dealer's quote via E-mail for a 2012 RAV4 model price: 1) Toyota of Tampa's quote priced it at $21398, 2) Toyota of Orlando's quote priced it at $21276 and 3) Smart Auto Offers' quote offered it for $21800.63. Also the quote via E-mail for the 2011 RAV4 model from Toyota of Tampa priced it at $19990. According to all of these quotes, it is clearly proven that Toyota of Winter Haven did not give me a fair price and for my car. WARNING: Toyota of Winter Haven was rip off and there management responded with a bad attitude, and offered me no help, telling me I was bonded to the deal.  
1

April 29, 2012
Donna Mitchell: ...
I purchased a used car on 2/28/13 they were going to fix bears and spark plugs, so I did not take possion of the vehicle till 3/1/13 @ 5 pm. I then went to gas because it was empty and the car would not start, they came and jumped it to down the street had a new cable put on I then went through a full tank of gas over the week end just to it back to get worked on they then told my my warrinty only covered part of what they told me it would the day I bought it.
2

March 04, 2013
Dan S: ...
I have been providing a specialized delivery service to a large company for over 12 years. We had drivers pickup in 27 location all over the U.S. Our contract expired with this company so they gave me a 90 day extension. About 45 days into the extension they sent me another extension to sign for another 90 days. Only this time they eliminated 8 of our locations with the explanation that they were going a different route. Since then they keep telling me that our new contract is being developed and I should have it next week. The week went by and no contract and another week is about complete as well. I think they have unfairly and are being deceptive and may not issue a new contract at all. I believe they are leading my company on since there is no way they can replace us without doing it a piece at a time. They terminated the other sites without reason and did not give me an opportunity to bid. They are my largest customer and if they terminate all the locations It will put my company out of business. Do I have any grounds to stand on?
3

June 27, 2013
Jennifer Hughes: ...
I purchased a used Nissan Rogue from the Reno Dodge dealer on 7/20/13. They charged me for a car alarm because "we put them in all of our cars". I was told someone would contact me to set up a time to install, no calls. I went to the dealership to tell them that I want my money back for the non existent alarm, that I don't want or need. Manager told me they would have to wait until close of month to refund money. I still haven't heard anything. Do I have any legal rights in this?
4

August 12, 2013
Martin: ...
Is this grounds for a lawsuit. A wireless company makes Dealers open up more locations to appear as if they have a lot of locations inorder to impress a larger company trying to take them over. The following year after opening these doors the wireless company begins to shut down leaving dealer with leases they can't pay for. The takeover is done and various reasons are given to shut down all this locations.
5

September 25, 2013

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