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Unfair and Deceptive Acts and Practices: 8.6.3 Pest Control Services

A termite control service engages in a deceptive practice when it fails to live up to its promise to prevent termite infestation.616 It is deceptive to misrepresent that there is termite infestation, or to use scare tactics to sell a termite prevention service.617 Conversely, a termite service engages in a deceptive practice when it fails to disclose in a report the full extent of a termite problem it knows to exist.618

Unfair and Deceptive Acts and Practices: 8.7.1 Importance of UDAP Approach

The rent-to-own (RTO) industry is a major way in which low-income consumers obtain appliances and other household goods. RTO stores typically offer short-term, renewable leases with an option to purchase at the end of a specified series of renewals. For example, a RTO contract might require a consumer to pay $16 a week to rent a television set, and provide that the consumer will own the set upon renewing the rental agreement for seventy-eight weeks.

Unfair and Deceptive Acts and Practices: 8.7.4 Disclosure of RTO Transaction’s Effective Annual Percentage Rate

A fundamental problem with RTO transactions is that the effective interest rate or annual percentage rate in the transaction is often 100%, 200%, or more, but this number is never disclosed to consumers. The majority of state UDAP statutes give the state attorney general authority to enact regulations defining unfair and deceptive practices.658 Failure to disclose important information in an RTO transaction can certainly be an unfair or deceptive practice.

Unfair and Deceptive Acts and Practices: 8.7.5.1 General

An often overlooked way to challenge an RTO transaction is to argue that the RTO retailer should have complied with either the FTC rule concerning a “Cooling-Off Period for Door-to-Door Sales”663 or an analogous state statute. Such coverage should be investigated because some major RTO companies solicit customers door to door. Even when not solicited at the residence, door-to-door laws may still apply if the transaction was conducted by phone or otherwise consummated in the residence.664

Unfair and Deceptive Acts and Practices: 8.7.7 UCC Article 2A Unconscionability As Alternative to UDAP Claim

Another viable legal theory for many of the same RTO practices that a UDAP statute can reach is an unconscionability claim under UCC Article 2A on Leases. U.C.C. § 2A-108, allows courts to refuse to enforce unconscionable provisions in the RTO agreement, and also to grant appropriate relief where an RTO transaction is induced by unconscionable conduct or where unconscionable conduct has occurred in the RTO collection activities.686 The court must award prevailing consumers their attorney fees.

Unfair and Deceptive Acts and Practices: 8.8.1.1 General

False or unsubstantiated claims about the health benefits of foods are deceptive.688 Mislabeling of food, in violation of a state regulation, is also a UDAP violation.689 Unsubstantiated or misleading claims that foods contain certain ingredients,690 are fat free,691 low fat, low sodium, low calorie, low alcohol, sweetened with certain artificial sweeteners, low in sugar

Unfair and Deceptive Acts and Practices: 8.8.1.3 Use of the Term “Organic”

The term “organic” may be used on a product’s label only if the product has been produced and handled in accord with federal regulations adopted under the Organic Foods Production Act (OFPA).712 These regulations, which are collectively termed the National Organic Program (NOP), set forth four different categories of organic products, namely those that are “100 percent organic,” “organic,” “made with organic (specified ingredients or food group(s)),” and “products with less than 70 percent organically produced ingredients.”

Fair Debt Collection: 73 Pa. Stat. and Cons. Stat. § 2270.1 to 2270.6 (Fair Credit Extension Uniformity Act)

Coverage: Statute applies to both debt collectors and creditors. “Debt collector” is defined as a person not a creditor, acting on behalf of a creditor, engaging or aiding, directly or indirectly, in collecting a debt owed or alleged to be owed to a creditor or an assignee of a creditor, but excludes most of the entities excluded from the FDCPA. “Creditor” is defined as a person (including agents, servants or employees conducting business under the creditor’s name) to whom a debt is owed or alleged to be owed. “Debt” includes taxes owed to political subdivisions of the state.

Fair Debt Collection: 19 R.I. Gen. Laws §§ 19-14.9-1 to 19-14.9-14 (Rhode Island Fair Debt Collection Practices Act)

Coverage: Debt collectors, defined similarly to FDCPA as persons who use instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of debts, or who regularly collect or attempt to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Includes persons whose principal business is enforcement of security interests.

Fair Debt Collection: S.D. Codified Laws § 54-4-77

Coverage: Applies to entities holding a license to engage in the business of lending money, defined as originating, selling, servicing, acquiring, or purchasing loans, or servicing, acquiring, or purchasing retail installment contracts. § 54-4-36(2). Banks and certain other financial institutions are exempt from the chapter by virtue of § 54-4-37, but § 54-4-77.1 provides that they are still subject to the prohibitions of debt collection tactics found in § 54-4-77.

Fair Debt Collection: Tex. Fin. Code Ann. §§ 392.001 to 392.404 (West)

Coverage: Debt collector: person who directly or indirectly collects or solicits for collection consumer debts due or alleged to be due to a creditor, and includes sellers of debt collection forms. § 392.001. Third party debt collector: FDCPA definitions, except makes exception for attorney collecting as an attorney on behalf of and in the name of a client, provided attorney does not have non-attorney employees who solicit debts for collection or contact debtors.

Fair Debt Collection: Tex. Fin. Code Ann. §§ 396.001 to 396.353 (West) (Private Child Support Enforcement Agencies)

Coverage: Applies to private child support enforcement agency, defined as an individual or nongovernmental entity who engages in the enforcement of child support ordered by a court or other tribunal for a fee or other consideration. Definition excludes state child support enforcement agencies and their contractors; and attorneys that do not have any non-attorney employees who regularly solicit for child support enforcement or contact child support obligors or obligees for the purpose of child support enforcement. § 396.001.

Fair Debt Collection: Utah Code Ann. §§ 12-1-1 to 12-1-11 (West) (Collection Agencies)

Coverage: Registration and bonding requirements apply to any person who “conduct[s] a collection agency, collection bureau or collection office in this state,” or engages in the business of soliciting the right to collect or receive payment for another, or advertises or solicits in print for the right to collect or receive payment for another. § 12-1-1. Attorneys, title insurance agencies, title insurance producers, banks, and trust companies excepted. § 12-1-7.

Fair Debt Collection: Utah Code Ann. §§ 70C-7-105 and 70C-7-106 (West) (UCCC)

Coverage: Creditors.

Prohibited Practices: Unconscionable extension of credit, i.e., one in which debtor and creditor understand that delay or failure to repay may result in the use of violent or criminal means to damage the person, property, or reputation of any person.

Private Remedies: If extension of credit is extortionate, repayment may not be enforced through judicial proceedings and debtor may recover a penalty, as determined by the court, of not less than $100 or more than $5000, plus costs and attorney fees. Class actions prohibited.