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Unfair and Deceptive Acts and Practices: 2.4.1.3 Donees

A Florida court has found that an intended beneficiary of a gift is a “consumer,” as nothing in the statutory definition of “consumer” limits the term to an immediate purchaser.2166 An Illinois decision agrees that a donee has standing to bring a UDAP claim.2167 But where the UDAP statute is limited to persons who acquire property by purchase or lease, some courts have held it inapplicable to donees.2168 A don

Unfair and Deceptive Acts and Practices: 2.4.1.4 Third-Party Beneficiaries

UDAP statutes are intended to go beyond contract law, so a consumer who has been harmed by a company’s failure to abide by a contract with someone else may not need to show third-party beneficiary status in order to assert a UDAP claim.2170 Nonetheless, it is useful for consumers to establish third-party beneficiary status, because then there should be no doubt that they have standing to assert a UDAP claim based on the contract.2171 For example, a consumer who paid rent could assert a UDAP

Unfair and Deceptive Acts and Practices: 2.4.1.5 Assignees of Consumers’ Claims; Third-Party Payors

The North Carolina Supreme Court holds that UDAP claims are not assignable.2183 The court reasoned that North Carolina law does not allow the assignment of personal torts, and a UDAP claim is akin to a personal tort.2184 The court was also strongly influenced by a desire to limit mandatory treble damage recoveries to consumers with limited resources and not to make them available to insurance companies and similarly well-financed parties.

Unfair and Deceptive Acts and Practices: 2.4.2 Where Consumer Is Now Deceased

A Texas appellate court has ruled that a claim for treble damages and attorney fees under the UDAP statute action survives the consumer’s death, even though in Texas punitive damages claims are considered personal and do not survive the plaintiff.2216 The court reasoned that the UDAP statute was enacted to expand on the consumer’s rights under contract and tort theories. It would be contrary to the legislative intent to make a UDAP claim more difficult to bring than contract or tort claims, both of which survive the consumer’s death.

Unfair and Deceptive Acts and Practices: 2.4.3 Loan Guarantors

Statutes that only limit their scope to transactions in “trade or commerce” may not preclude cosigners and other loan guarantors from bringing actions.2232 However, several courts have held that a UDAP statute that applies only to purchases and leases does not protect a guarantor.2233 Hawaii’s UDAP statute covers individuals who make personal investments, but this language does not extend to business owners’ guaranty of a lease for their business.2234

Unfair and Deceptive Acts and Practices: 2.4.4.2.1 Analytical framework

UDAP claims by businesses can add significantly to the impact of a business suit.2237 Whether a business can bring a UDAP action will depend on several issues. First, is the UDAP statute limited to “consumer transactions” or sales for “personal, family, or household use”? While the meaning of these terms is subject to various interpretations,2238 most business purchases will be excluded if the statute is so limited.

Unfair and Deceptive Acts and Practices: 2.4.4.2.2 State-specific decisions

A number of states have well-developed case law about the extent to which businesses can bring UDAP claims.2265 A business that sustains damage as a consumer can bring suit under Georgia’s Fair Business Practices Act, which allows any “person” to sue, and defines “person” to include corporations.2266 Businesses can also sue under Georgia’s second UDAP statute, modeled after the Uniform Deceptive Trade Practices Act.2267

Unfair and Deceptive Acts and Practices: 2.4.5 Investigators

It may be advisable to investigate allegedly fraudulent sellers by making test purchases or sending pre-examined goods to be repaired. Normally those actions would serve as evidence that another purchase involved deception. However, a consumer may wish to bring an action based solely on such test purchases. The issue then arises whether a sale has taken place to trigger use of the UDAP statute.

Unfair and Deceptive Acts and Practices: 2.5.2 The FTC Act

As a general rule, FTC decisions do not preempt state cases, but serve as guidelines.2401 Even FTC rules and guides covering a subject area do not preempt state UDAP regulations that deal with the same subject area,2402 or prevent states from finding UDAP violations in practices not prohibited by those rules and guides.2403

Unfair and Deceptive Acts and Practices: 2.5.3.1 Types of Federal Banking Laws That Affect State Laws; Effect of Dodd-Frank Act

When analyzing a defendant’s claim that federal banking laws preempt a state UDAP claim, it is important to determine exactly what federal statutes apply to the particular defendant. The scope of preemption varies significantly among the federal banking laws. Some federal banking laws only relate to the institution’s ability to export rates or charges allowed by its home state.2408 Preemption then often turns on whether the defendant succeeds in characterizing the consumer’s claim as a challenge to rates and charges.

Unfair and Deceptive Acts and Practices: 2.5.3.2.1 Rate exportation and complete preemption of usury claims against national banks

The National Bank Act allows national banks, when originating credit, to charge either the highest rate allowed by the law of the bank’s home state or an alternative federal rate.2414 Consequently, national banks are not subject to the usury laws of the states to which they export interest rates, or to claims under that state’s UDAP statute that seek to impose limits on those rates.2415 The Supreme Court has interpreted the term “interest” to encompass and to preempt state laws regarding a w

Unfair and Deceptive Acts and Practices: 2.5.3.3.6 UDAP claims that impose substantive standards

Courts often held that the former OTS regulation preempted UDAP claims based on unconscionability, unfairness, unreasonableness, or unlawfulness that were framed as substantive attacks on loan terms or lender practices.2489 For example, the Seventh Circuit held that claims that were not based on breach of contract or misrepresentation—including claims for failing to provide mortgagors with adequate monthly statements of their account balances, assessing “excessive” late fees, and force placing insurance on properties that already have insur

Unfair and Deceptive Acts and Practices: 2.5.3.4 Preemption Issues for State-Chartered FDIC-Insured Banks and Other State Lenders

National Bank Act (NBA) and Home Owners Loan Act (HOLA) preemption applies just to depositories regulated under those statutes—national banks and federal savings associations, respectively. This preemption does not directly apply to state-chartered banks, savings associations, or credit unions.2498 Nevertheless, NBA or HOLA preemption does have an indirect impact on state-chartered depositories.

Unfair and Deceptive Acts and Practices: 2.5.4 Federal Vehicle, Boat, and Manufactured Home Standards

The National Traffic and Motor Vehicle Safety Act (NTMVSA) has an express preemption provision that prohibits states from adopting standards for aspects of motor vehicle performance that are governed by federal standards, unless the state standard is identical to the federal standard.2541 The statute expressly preserves state common law claims.2542 However, the Supreme Court has held that the statute implicitly preempts common law tort claims that stand as an obstacle to the accomplishment o

Unfair and Deceptive Acts and Practices: 2.5.5.1 Carmack Amendment

The federal Carmack Amendment, which limits the liability of carriers of interstate freight shipments, provides the exclusive remedy against shippers for loss or damage to goods and preempts tort, contract, and UDAP claims.2558 Courts have held that the Carmack Amendment even preempts a UDAP action based on misrepresentations before the contract was signed, if the damages are based on loss of or damage to the goods.2559 The First Circuit has, however, held that claims for emotional distress