Federal Deception Law: 8.9.2 Treble and Punitive Damages
A successful RICO claimant will be awarded treble damages. The jury will not normally be told about either the triple damages provision or the attorney fee provision.540
A successful RICO claimant will be awarded treble damages. The jury will not normally be told about either the triple damages provision or the attorney fee provision.540
The RICO statute provides that an injured person “shall” recover costs, including a reasonable attorney fee.545 The attorney fees awarded need not be in proportion to the amount of damages.546 Singling out RICO defendants for the imposition of attorney fee liability does not deny them equal protection of the laws.547 A prevailing defendant, however, is not entitled to fees.548
The district courts have jurisdiction to prevent and restrain RICO violations by means including, but not limited to, compelling divestiture of interests in an enterprise, placing reasonable restrictions on a person’s future activities or investments, and even ordering the dissolution or reorganization of an enterprise.556 The U.S. Attorney General is expressly authorized to seek such relief,557 but whether private civil litigants may obtain it is a question that has divided the courts.
A number of RICO claims have successfully challenged mortgage lending practices:
A number of RICO claims have successfully challenged non-mortgage lending practices and rent-to-own transactions:
A number of RICO claims have successfully challenged auto financing, leasing, and repossession practices:
A number of RICO claims have successfully challenged land sale, retirement community, and nursing home practices:
Successful RICO claims against trade school abuses include the following:
A number of RICO claims have successfully challenged practices relating to insurance and annuities:
A number of RICO claims have successfully challenged other consumer law abuses:
Consumer cases in which the plaintiffs were, for one reason or another, unsuccessful include the following:
Some creditors seek to circumvent the FTC Credit Practices Rule. It is unfair and deceptive to try to evade the rule by taking a prohibited security interest in household goods but then disclaiming the security interest in another part of the contract.229
The FTC’s trade regulation rule on the sale of used motor vehicles (“the Used Car Rule”)231 applies to “motor vehicles,” defined as any motorized vehicle other than a motorcycle, with a gross vehicle weight rating under 8500 pounds, a curb weight less than 6000 pounds, and a frontal area less than forty-six square feet.232 The Used Car Rule applies to any “used vehicle,” defined as a vehicle driven more than the limited use necessary in moving or road testing a new vehicle prior to delivery to a
The Used Car Rule has three main requirements:
FTC enforcement of the Used Car Rule has found widespread violations.261 Consumer attorneys should therefore be alert to potential violations of the FTC Used Car Rule and should ensure that dealers:
Violations of the Used Car Rule violate the FTC Act, and the FTC has brought enforcement actions for such violations.265 As with any FTC rule, there is no private right of action under the FTC Act for rule violations.266 Nevertheless, a rule violation should be actionable under a state UDAP statute, since an FTC rule should guide courts in interpreting state UDAP statutes.267
The Used Car Rule states clearly that the dealer may not make any statements, oral or written, that contradict the disclosures in the Buyers Guide. The dealer can negotiate the warranty coverage so that the final sale has different terms than those first disclosed on the Buyers Guide. However, in such a case, the final warranty terms have to be identified in the contract of sale and summarized on the copy of the Buyers Guide that is provided to the consumer.271
Seller compliance with the FTC Used Car Rule does not insulate the seller from UDAP liability. For example, although the FTC considered and rejected a rule requirement that dealers disclose known defects, compliance with the rule does not prevent a state UDAP action alleging the dealer failed to disclose known defects.273
The Federal Trade Commission (FTC) has broad authority under the FTC Act to prohibit unfair or deceptive acts and practices in trade or commerce and to enact trade regulation rules that define and prevent such practices.1 The FTC has issued sixteen such trade regulation rules, and many of them establish important standards and requirements for sellers, creditors, and others.
This chapter focuses on eight FTC trade regulation rules of special relevance to consumer law:
The FTC has issued over fifty rules, and this chapter only considers eight trade regulation rules. This subsection lists the FTC rules not covered in this chapter but indicates where additional information on these other rules can be found.
Trade regulation rules (TRRs) “define with specificity acts and practices which are unfair or deceptive acts or practices. . . . Rules under this subparagraph may include requirements prescribed for the purpose of preventing such acts or practices.”22 Trade regulation rules not only enumerate practices that are unfair or deceptive but add requirements to prevent such practices—for example, three-day cooling-off periods, required disclosures, and notices placed in contracts that alter substantive rights.
The FTC can enact trade regulation rules (TRRs) with respect to unfair and deceptive practices “in or affecting commerce.”29 This is a broad standard applying to almost any commercial activity. Nevertheless, there are a number of statutory exemptions to the FTC’s authority and thus to the scope of its TRRs.
The FTC Act gives the FTC authority to adopt rules defining unfair or deceptive acts or practices in or affecting interstate commerce.36 In order to declare an act unfair, the FTC must find that it causes or is likely to cause substantial injury to consumers that is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.37 This standard is discussed in detail in NCLC’s Unfair and Deceptive Acts and Practices.
There is no private right of action under the FTC Act to challenge unfair or deceptive practices or trade regulation rules (TRR) violations.47 Private litigants have attempted to bring individual enforcement actions under the FTC Act, but judicial precedent, with only a few exceptions, indicates that there is no implied private right of action under the FTC Act.48