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Unfair and Deceptive Acts and Practices: 12.3.2.4.1 General

In some cases, restitution or out-of-pocket damages may be preferable to the consumer over other forms of damage calculations. Courts are normally generous in allowing restitution.139 Equitable defenses such as laches should not be applied to wholly defeat a restitution claim, although the court may weigh these issues along with the other equities when fashioning a remedy.140

Unfair and Deceptive Acts and Practices: 12.3.2.4.3 Restitution under California Law

The scope of restitution is particularly well-developed under the California Unfair Competition Law, one of California’s two UDAP statutes, which allows restitution but not damages. (California’s other UDAP statute—the Consumers Legal Remedies Act—allows both restitution and damages.179) The California Supreme Court defines restitution as “compelling a . . .

Unfair and Deceptive Acts and Practices: 12.3.3.1 General

Direct damages are those directly and immediately resulting from the unfair or deceptive act or practice and pertain directly to the goods or services involved in the transaction. Except possibly in Florida,208 UDAP litigants may obtain not just these direct damages, but also proximate or consequential damages—all damages foreseeably flowing from the unfair or deceptive act or practice.209 Such consequential damages are often far greater than the direct damages from the UDAP violation.

Unfair and Deceptive Acts and Practices: 12.3.3.3 Financing Costs As Consequential Damages

Financing costs that the consumer was forced to pay by reason of a deceptive sale are an important example of consequential damages that may be recovered in a UDAP suit.223 For example, where the purchase price of a defective car is found to be actual damages, interest payments attributed to the car loan are also recoverable.224 The penalty that a consumer had to pay for withdrawing retirement funds in order to pay for another contractor to complete the defendant’s botched home improvement work

Unfair and Deceptive Acts and Practices: 12.3.3.5 Lost Use of a Product or Service

An important issue concerning consequential damages is how to measure the consumer’s damages for lost use of a defective car or when a car was delivered late, or repairs were slow. Actual car rental costs can certainly be considered within the contemplation of the parties and thus are appropriate as consequential damages.234 Courts will also award the reasonable rental value of a substitute vehicle, even when there is no evidence that the consumer had in fact rented a substitute vehicle.235

Unfair and Deceptive Acts and Practices: 12.3.3.7 Attorney Fees As Consequential Damages

Often one of the greatest consequential costs to a consumer of a UDAP violation is the expense of hiring an attorney to untangle the problems caused by the deceptive practice. Most UDAP statutes authorize a prevailing consumer to recover attorney fees required to obtain the UDAP judgment, so that it will be unnecessary to recover these same costs as consequential damages. But some UDAP statutes do not do so, or make such an award discretionary with the court.

Unfair and Deceptive Acts and Practices: 12.3.3.9.1 General

An important form of consequential damages is pain and suffering or mental anguish. Authority to award “actual damages” is sufficiently broad to encompass emotional distress damages.252 In general, these damages should be available in a UDAP case at least to the same extent that they are recoverable at common law.253

Unfair and Deceptive Acts and Practices: 12.3.3.9.2 States where UDAP pain and suffering damages are never recoverable

The one exception where pain and suffering will not be available for a UDAP claim, even though such damages are recoverable at common law, is where the UDAP statute explicitly limits itself to economic damages. Only a few UDAP statutes explicitly limit the type of damages that are recoverable.254 More common is for a UDAP statute to limit recovery only to those situations where there is damage to money or property.

Unfair and Deceptive Acts and Practices: 12.3.3.9.5 Pain and suffering damages may be even more broadly available in UDAP cases

In a number of states, courts award pain and suffering damages in UDAP cases even where there is no physical injury or intent to deceive.266 Louisiana allows damages for mental anguish and humiliation in UDAP cases, simply as a component of actual damages.267 Thus, actual damages are recoverable for humiliation and mental anguish for the intentional filing of a suit in the wrong venue.268 Some Illinois decisions hold that emotional distress qualifi

Unfair and Deceptive Acts and Practices: 2.2.1.5.1 FTC Act

A final problem with UDAP coverage of credit practices is possible preemption by other credit statutes or regulatory schemes.369 The prohibition against unfair or deceptive acts or practices in the FTC Act does not exempt banks, but the FTC is not empowered to enforce this prohibition against banks, savings and loan institutions, and federal credit unions.370 Instead, the Consumer Financial Protection Bureau and federal banking regulators such as the Comptroller of the Currency enforce the FTC A

Unfair and Deceptive Acts and Practices: 2.2.1.6 Derivative Liability Under FTC Holder Rule Regardless of UDAP Statute’s Coverage

Even if a UDAP statute exempts creditors, this should only insulate creditors from UDAP liability for their own misconduct. The FTC’s Holder Rule subjects assignees and related creditors to claims and defenses, including UDAP claims, that arise from the seller’s misconduct.395 The fact that the creditor is exempt from the UDAP statute has no bearing on its derivative liability for UDAP claims against the seller.396

Unfair and Deceptive Acts and Practices: 2.2.2.1.1 Statutes that apply to trade or commerce

The term “trade or commerce” includes post-sale activities, and not just practices designed to induce a sale.573 Thus, when a UDAP statute applies to conduct “in trade or commerce,” there is usually little question that it can be used to challenge debt collection activities.574 At one point, the North Carolina Supreme Court ruled that the term “in the conduct of any trade or commerce” did not include debt collection, but instead only applied to activities surrounding the formation of the sales c

Unfair and Deceptive Acts and Practices: 2.2.2.1.2 Statutes that apply to goods, services, or merchandise; “in connection with”

Other UDAP statutes apply to transactions involving goods or services. In these states, courts typically ask both whether the underlying transaction involved goods or services, and whether the debt collection was closely enough connected to the underlying transaction to fall within the statute’s scope. Statutes that apply to transactions involving “merchandise” raise similar issues.