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Unfair and Deceptive Acts and Practices: 4.2.15.3.1 General standards

Cases under state UDAP statutes do not utilize such a complex analysis, but have little difficulty finding the failure to disclose to be deceptive.334 Literal truths and half-truths that avoid material facts are deceptive.335 For example, a credit card statement disclosure that past-due accounts would incur a service charge, when no such charge was being imposed for past-due balances of less than $25, violated the Illinois UDAP statute.336 Likewise

Unfair and Deceptive Acts and Practices: 4.2.16.1 Subsequent Disclosures Cannot Correct Earlier Deceptive Claims

A practice is deceptive even if subsequently clarified.501 Point of sale disclosure is not sufficient to clarify deceptive media advertising.502 Many courts recognize that the deception need only be a substantial factor, not the sole cause of the consumer’s loss.503 It is deceptive to place statements in a product’s instruction manual at variance with advertising claims.504 Small print cannot save a m

Unfair and Deceptive Acts and Practices: 4.2.21.3 Unclean Hands

That the consumer has unclean hands is not a defense to a UDAP action.680 A policyholder’s false answers in an insurance application do not create a defense to a UDAP claim based on the agent’s own misrepresentations, even if they would create a defense to a contract claim.681

Unfair and Deceptive Acts and Practices: 4.2.21.4 Other Tort Defenses

It is irrelevant to a UDAP claim that a party to an at-will contract does not incur tort liability by terminating the contract.684 Some courts hold that Pennsylvania’s “gist of the action” doctrine, which bars tort claims that arise from a contract, is inapplicable to UDAP claims.685 Others hold that the doctrine bars UDAP claims, but only if they arise out of the parties’ contract.686

Unfair and Deceptive Acts and Practices: 4.3.2.3.8 Consumers cannot reasonably avoid harm that they have no reason to anticipate

Whether consumers had reason to anticipate harm is a key touchstone in courts’ determination of whether consumers actually had a free and informed choice, and thus whether consumer injury is reasonably avoidable.780 In National Ass’n of Mortgage Brokers v. Board of Governors,781 a federal court upheld an FRB rule that it was it unfair for creditors to fund mortgage originators’ compensation through the consumer’s interest rate.

Unfair and Deceptive Acts and Practices: 4.3.2.3.11 Steps that mitigate harm that has already occurred do not make the injury reasonably avoidable

Often, defendants argue that consumer injuries were avoidable after the fact, and that even if consumers were substantially injured, they could later have taken reasonable steps to avoid the loss. This argument ignores transaction costs—both the transaction costs the consumer has already incurred to enter into the unfair transaction, and the transaction costs the consumer will have to incur to get out of the first transaction and then find and enter into a new one.

Unfair and Deceptive Acts and Practices: 4.3.3.4 State UDAP Use of “S&H” Unfairness Definition in Lieu of the Current FTC Definition

At the time of the early development of state UDAP case law in the 1960s and 1970s, the FTC utilized the “S&H” definition of unfairness: whether the practice is within the penumbra of common law, statutory, or other established concepts of fairness; whether it is immoral, unethical, oppressive, or unscrupulous; and whether it causes substantial injury.914 In 1980, the FTC amended this definition to adopt the standard that is essentially codified now in the FTC Act.915 Nevertheless,

Unfair and Deceptive Acts and Practices: 5.2.3 State UDAP Precedent

Connecticut was the first state to explicitly include a substantiation requirement in its UDAP regulations—in this case requiring car dealers to have sufficient information upon which a reasonable belief in the truth of their claims can be based.16 Idaho, Massachusetts, Missouri and Ohio have also enacted UDAP regulations requiring sellers to have substantiation for their claims.17 Pennsylvania regulations prohibit unsubstantiated automobile advertising.18

Unfair and Deceptive Acts and Practices: 5.4.4 Product Safety

It is a UDAP violation to fail to disclose a safety risk in the use of a product which is not apparent to a casual user.187 Disclosure is required even where the safety hazard only occurs when the consumer does not follow safety instructions.188 Misrepresenting a product or service as safe, while knowing of its hazards, is deceptive.189 Advertising a product to homeowners carries an implicit representation that it i

Unfair and Deceptive Acts and Practices: 5.4.5 Product Quantity and Size; Packaging

It is deceptive to misrepresent—through advertising, labels, other claims, use of oversized containers, slack fill, or use of substandard containers—a product’s volume, weight, size, or the number of units sold.198 The Seventh Circuit held, however, that a seller did not violate the Illinois or Missouri UDAP statute by selling eye drops in larger doses than a patient needed, resulting in some waste of the product, despite the patients’ allegations that the result was an unnecessarily high price.199

Unfair and Deceptive Acts and Practices: 5.4.6 Product’s Method of Manufacture

It is deceptive to misrepresent the method or process by which a product is produced, including false claims that a product is “custom-made,” “tailor-made,” “hand-made” or “union-made,”207 or that it was made by disabled persons.208 “Indian-made” goods must be hand-made by Indians who reside within the United States.209 A food producer’s overstated representations regarding its animal care practices may be deceptive.