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Federal Deception Law: 2.5.6.4 Other Consumer Protections

The FTC Cooling-Off Rule includes several other protections for the buyer aside from the right to cancel. It prohibits confession of judgment clauses or waivers of rights in door-to-door sales contracts439 and prohibits sale or assignment of the note or contract to a third party prior to midnight of the fifth business day following the sale.440 Many state laws impose these or additional requirements, such as particular disclosures.441

Federal Deception Law: 2.6.1 The FTC Mail, Internet, or Telephone Order Merchandise Rule

The FTC’s Mail, Internet, or Telephone Order Merchandise Rule453 requires that sellers of merchandise by mail, internet, or telephone have a reasonable basis to expect to be able to deliver the merchandise within the time specified in their advertising or within thirty days if no time is specified.454 The rule allows the thirty-day period to be extended to fifty days when the order is accompanied by a request for an extension of credit from the merchant to pay for the merchandise.

Federal Deception Law: 2.6.2 State Mail and Telephone Order Laws and Regulations; Other Claims

The FTC’s Mail, Internet, or Telephone Order Merchandise Rule does not preempt state laws that provide greater protections to consumers.470 Two states have incorporated the Mail, Internet, or Telephone Order Merchandise Rule into their UDAP regulations.471 A California statute tracks the FTC rule but explicitly applies to services as well as goods.472 Other state UDAP regulations are similar but slightly weaker, for example by giving sellers six we

Federal Deception Law: 2.8.3.1 Introduction

The Business Opportunity Rule528 is an outgrowth of the FTC’s Franchise Rule. The FTC’s Franchise Rule originally covered certain non-franchise business opportunities. In 2007, the FTC decided to confine the Franchise Rule to sales of franchises that were associated with trademarks and met certain other criteria.

Federal Deception Law: 2.8.3.2 Scope

The revised Business Opportunity Rule applies to any commercial arrangement in which the seller solicits a prospective buyer to enter into a new business, the buyer makes a required payment (excluding voluntary purchases of reasonable amounts of inventory at bona fide wholesale prices for resale),530 and the seller promises assistance in the form of providing locations (for example, for display racks), outlets, accounts, or customers, or buying the goods or services the buyer makes.531 Sales to

Federal Deception Law: 2.8.4 Other FTC, State UDAP Precedent

Most UDAP statutes cover franchise and business opportunity schemes.556 In some states, provisions in the UDAP statute or regulations under it specify certain unfair practices in the sale of franchises or business opportunities.557 In other states, unfair practices will be determined under the more general standards of the state’s UDAP statute, taking the prohibitions of the FTC rule into account.

Federal Deception Law: 2.8.5 Other Claims

A number of states have their own business opportunity or franchise laws.581 A state’s regulation of business opportunities within its borders through a franchise law does not violate the Commerce Clause even though the franchise may make sales in other states.582

Federal Deception Law: 2.9.1 The FTC Funeral Rule

Funeral and burial services are often high-priced packages purchased by bereaved relatives of the deceased under time pressures allowing little reflection. Religious, racial, or ethnic preferences may create virtual local monopolies of services.

Federal Deception Law: 2.9.2 State Claims

UDAP statutes typically prohibit misrepresenting the standard, quality, or composition of goods and thus will apply when a funeral supplier substitutes inferior products.612 The Oklahoma UDAP statute specifically prohibits failure to perform cemetery services that are promised in the contract.613

Federal Deception Law: 2.10 FTC Guides

The FTC has issued a number of industry guides. Trade regulation rules are distinguished from guides in that the TRRs often create disclosure requirements or other bright line requirements to prevent unfair and deceptive practices. Guides generally just list practices that are likely to be found unfair and deceptive. In addition, while violation of a trade regulation rule leads to special statutory remedies, this is not the case with violation of a guide.618

The FTC has stated the following concerning its guides:

Consumer Arbitration Agreements: 8.3.2 Is There a “Delegation Clause”?

An important distinction when determining who decides challenges to the enforceability of an arbitration requirement is whether there is a provision in the contract delegating such issues of enforceability to the arbitrator (called a “delegation clause”). If there is no delegation clause, then issues of enforceability are for the court.28

Consumer Arbitration Agreements: 9.3.1 Forum Rules

Arbitration procedures do not follow federal or state rules of court procedure, but the rules of the applicable arbitration forum. As one arbitration commentator states, “[u]nless the parties may agree that some set of court rules will govern the arbitral procedure (e.g., Federal Rules of Civil Procedure or a specific state’s court rules), no such rules apply . . .

Consumer Arbitration Agreements: 9.5 Starting the Arbitration Process

Some arbitrators prefer that the demand for arbitration be a compelling, short narrative (for example, one page in length) rather than a formalistic legal complaint. The plaintiff can also attach a legal-style complaint to the demand, but the one-page narrative may be more helpful to busy arbitrators who just want to acclimate themselves to a case quickly. Most arbitration forums do not have a formal pleading requirement.

Consumer Arbitration Agreements: 9.6 Importance of the Preliminary Hearing

Experienced arbitration practitioners know the critical importance of the preliminary hearing. Unlike a jury or bench trial in which different judges handle different aspects of a case, a preliminary hearing in an arbitration proceeding takes place before the ultimate fact finder and decision maker. From the very first hearing and through every conference, email, and telephone call with the arbitrator, the consumer attorney should act as if they were speaking to a jury.

Consumer Arbitration Agreements: 9.8.1 Number of Hearing Days; Bifurcation of Liability and Remedies; Payment Schedule

An arbitrator’s award can be vacated if the plaintiff was not permitted a fair hearing. Thus, many arbitrators are receptive to a consumer’s time estimate of the number of days needed for the arbitration hearing. It is better to ask for more days at the beginning because it is easier to later cancel dates than to add more dates to everyone’s busy calendar (arbitrators are well aware of this). It is not unusual to have a merits hearing that is three days or longer, if the circumstances warrant.154