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Unfair and Deceptive Acts and Practices: 10.3.6 Liability of Franchisors

Consumers may find franchisees to be insolvent, with the franchisor being the deep pocket. Liability has been asserted where the franchisor failed to terminate a financially troubled franchisee which later went out of business without honoring consumer contracts, particularly where franchisor advertising implied financial solvency of its franchisees.112

Unfair and Deceptive Acts and Practices: 10.4.2.2.1 Conduct sufficient to create liability

To aid and abet a fraud, the assisting party must act knowingly or recklessly in substantially assisting a fraud.141 This assistance can be to further the fraud or to assist in the concealment of the fraud.142 The Kansas Supreme Court identifies the following as the elements of a claim that one party aided and abetted another’s fraud: (1) the party whom the defendant aids must perform a wrongful act causing injury; (2) at the time the defendant provides assistance, they must be generally aware o

Unfair and Deceptive Acts and Practices: 10.4.2.5.2 Affirmative recoveries under the doctrine

While most of the close-connectedness decisions merely allow the consumer to raise defenses, a few decisions have applied the doctrine to hold the creditor liable on the consumer’s affirmative claims arising from the seller’s actions. The rationale of these decisions might enable a consumer to recover damages in excess of the FTC Holder Rule’s cap. For example, in Freeman v.

Unfair and Deceptive Acts and Practices: 10.4.3.1 Introduction

There can be potential UDAP liability not only for parties that aid the seller in advertising, planning, or conducting a deceptive sale, but also for parties that assist the seller in processing the consumer’s payment for the sale. Except in the case of a direct person-to-person cash payment, there will always be intermediaries involved in getting a payment processed from the consumer to the seller.

Unfair and Deceptive Acts and Practices: 5.1 Introduction

The previous two chapters discussed general principles for determining whether a practice is deceptive, unfair, or unconscionable in violation of a UDAP statute. Chapter 3 examined sources of UDAP precedent and developed an analytical framework for showing that a practice is a UDAP violation.

Unfair and Deceptive Acts and Practices: 8.8.5 Environmental Claims for Household Products

The FTC has issued Guides for the Use of Environmental Marketing Claims.758 The guides set out general principles, and have more specific standards about the use of terms such as biodegradable, recyclable, refillable, and ozone friendly.759 In 2012, the FTC expanded the guides to include sections on carbon offsets, certifications and seals of approval, and claims that products are free of certain substances, non-toxic, made with renewable energy, or made with renewable materials.

Unfair and Deceptive Acts and Practices: 8.8.7 Firearms

Massachusetts has adopted a UDAP regulation that prohibits violation of state gun control laws and the sale of handguns manufactured from inferior materials. It also requires tamper-resistant serial numbers, childproofing or safety devices, and safety warnings.797

Unfair and Deceptive Acts and Practices: 8.8.9 Miscellaneous Household Products

The sale of overpriced pots and pans, represented to help prevent heart disease and promote infant health, is a UDAP violation.816 The FTC has settled cases dealing with allegations that a photoprocessing package offered consumers was virtually worthless and an unacceptably bad bargain,817 and that a company misrepresented the performance of athletic shoes.818 Other FTC consent orders deal with misrepresentations dealing with ultrasonic flea collar

Unfair and Deceptive Acts and Practices: 12.3.1 Introduction

Although courts often distinguish between types of damages, there is not always a clear dividing line. Direct or general 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. For example, if a used car dealer sells the consumer a defective automobile, the decreased value of the automobile is direct damages.

Fair Debt Collection: Ark. Code Ann. §§ 17-24-101 to 17-24-512 (Fair Debt Collection Practices Act)

Coverage: The statute’s licensing requirements and restrictions on collection fees in § 17-24-309 apply to collection agencies, defined as a person or one of various business entities that (1) engages in the collection of delinquent accounts, bills or other forms of indebtedness owed or due or asserted to be owed or due to another; (2) uses any name other than its own in collecting its own accounts receivable; (3) solicits claims for collection; or (4) “purchases and attempts to collect delinquent accounts or bills.” § 17-24-101.

Fair Debt Collection: Cal. Civ. Code §§ 1788 to 1788.33, 1812.700 to 1812.702 (West) (Fair Debt Collection)

Coverage: Applies to “debt collector,” defined as “any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection.” Debt must be a “consumer debt,” defined as one “due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction” and including mortgage debt. Definition of “debt collector” also includes providers of forms, letters, or other media for the use in debt collection. Note that there is a separate statute (see below) further regulating debt buying. § 1788.2.

Fair Debt Collection: Cal. Civ. Code §§ 1788.50 to 1788.64 (West) (Fair Debt Buying Practices)

Coverage: Debt buyers, defined as persons or entities that regularly engage in the purchase of charged-off consumer debt for collection purposes, whether it collects debts itself, hires a third-party collector or hires an attorney for collection litigation. Exception for charged off debt included in portfolio predominantly consisting of consumer debts that have not been charged off; acquisition by check services company of right to collect on returned checks or automatic clearing house items. § 1788.50.

Fair Debt Collection: Cal. Family Code §§ 5610 to 5616 (West) (Child Support Collectors)

Coverage: Any individual, corporation, attorney, nonprofit organization, or other nongovernmental entity who is engaged by an obligee to collect child support ordered by a court or other tribunal for a fee or other consideration. Does not include attorneys who address child support issues in course of paternity, divorce, separation, etc. proceedings or postjudgment modifications. But does include any private, non-governmental attorney whose business is substantially comprised (i.e., more than 50% of remuneration or time) of the collection or enforcement of child support.

Fair Debt Collection: Colo. Rev. Stat. § 5-5-109 (Consumer Credit Code)

Coverage: Applies to any person.

Prohibited Practices: Broad prohibition, applicable to “any person,” of unconscionable debt collection, including use of deceptive forms; fraudulent, deceptive or misleading representations; simulated legal process; representing itself as government-approved; unlawful threats; unreasonable communications. § 5-5-109.

Fair Debt Collection: Colo. Rev. Stat. §§ 5-16-101 through 5-16-135

This statute will sunset on July 1, 2028. § 12-14-137. Note that this summary reflects the amendments made by 2017 Colo. Legis. Serv. Ch. 285 (S.B. 17-216), which was approved on June 1, 2017. Section 2 of that bill, effective immediately upon enactment, extends the sunset date for the state debt collection statute to 2030. Sections 3, 4, and 7, effective Jan. 1, 2018, amend the debt collection statute’s definitions and substantive provisions. However, 2017 Colo. Legis. Serv. Ch. 260 (H.B.

Fair Debt Collection: Colo. Rev. Stat. §§ 5-17-101 through 5-17-113 (Colorado Child Support Collection Consumer Protection Act)

Coverage: Person or entity that collects or seeks to collect child support, required to be paid by court or administrative order, if the obligee lives in Colorado at the time of contracting, or the collector has a place of business in Colorado, or the collector contacts more than twenty-five obligors per year in Colorado. § 5-17-102(9)(a). Exemptions for attorneys, persons exempt under state debt collection law, non-profits that charge no more than a nominal fee, and independent contractors providing services for county government agency that county is required by law to provide.

Fair Debt Collection: Conn. Gen. Stat. §§ 36a-645 to 36a-648a (Creditors’ Collection Practices)

Coverage: Creditors, defined as persons to whom a consumer debt is owed by a consumer residing in the state, if the debt resulted from a transaction in the ordinary course of the person’s business, or any person to whom such a debt is assigned; excludes collection agencies (defined to include debt buyers: entities engaged directly or indirectly in the business of collecting debt that was delinquent or defaulted when acquired); and various government entities. § 36a-645.

Fair Debt Collection: Conn. Gen. Stat. §§ 36a-800 to 36a-814 (Collection Agencies)

Coverage: Statute applies to “consumer collection agencies,” defined as those “engaged as a third party in the business of collecting or receiving payment for others on any account, bill or other indebtedness from a consumer debtor,” or “engaged in the business of collecting on any account, bill or other indebtedness from a consumer debtor for such person’s own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired.” Definition also includes private collectors of municipal property taxes,