Unfair and Deceptive Acts and Practices: 5.6.7.3.1 General
Various misrepresentations concerning the status of guarantees have been prohibited by state or FTC precedent. It is a UDAP violation:
Various misrepresentations concerning the status of guarantees have been prohibited by state or FTC precedent. It is a UDAP violation:
Regulation F (effective November 30, 2021) provides detailed regulations about the amount and itemization of debts that must be provided to consumers as part of the validation information.127 When considering a FDCPA § 1692e(2) claim based on misrepresentations of fees, plaintiffs should consider whether the collector complied with these regulations in the validation notice or mirrored these required disclosures or model language128 in other communications.
Unscrupulous businesses can increase their income by concealing unauthorized charges amid legitimate charges in their bills. Many consumers will trust the company to bill properly, and pay the bill without questioning its amount. Billing for charges is an implicit representation that the creditor is lawfully entitled to the charges.587
In Illinois Brick Co. v. Illinois,623 the U.S. Supreme Court held that indirect purchasers of a product (such as consumers buying from retailers) cannot use the federal antitrust statutes to sue indirect sellers (such as the manufacturers who sold to the retailers) for anti-competitive conduct. Only the retailers have standing to sue the manufacturers.
With the explosion of internet-based marketing, there is a growing use of UDAP law to challenge companies’ use of personal information about their customers without disclosure. Misrepresentation of the purpose for which a company collects personal identifying information from its internet users, and misuse of that information, is unfair and deceptive.665
“Puffing” is an exaggeration that is incredible and not taken seriously by the listener or reader. Puffing is a common defense to FTC actions, although usually not a successful one.135
Courts interpreting many state UDAP statutes still follow the federal court decisions and the old FTC standard in holding that the test is whether a practice has a tendency to mislead even a minority of consumers; UDAP statutes safeguard the vast multitude which includes the ignorant, the unthinking and the credulous.166 “If unfair trade practitioners could escape liability upon showing that their victims were careless, gullible, or otherwise inattentive to their own interests, the Act would soon be a dead letter.”
Proof of reliance is required in a small minority of jurisdictions.
There is a particularly strong argument that reliance need not be proven where the seller’s deceptive act involves failure to disclose rather than an affirmative misrepresentation.229 For example, in one case an insurer sold life insurance to consumers without disclosing that illustrated dividends not only “may” but “probably will” decrease.
In addition to injury requirements imposed by the UDAP statute, which are discussed in the subsections that follow, suits filed in federal court must meet Article III standing requirements. The Supreme Court has interpreted Article III’s “case or controversy” requirement to give federal courts jurisdiction over a case only if the plaintiff has:
The continuing violation theory seeks to bring within the limitations period conduct over one year old where the conduct is closely linked to later conduct falling within the limitations period. The Supreme Court addressed the continuing violation theory in National Railroad Passenger Corp. v.
The Supreme Court has ruled that the FDCPA one-year limitations period begins to run from the violation’s occurrence, not from when the consumer discovers the violation.216 Nevertheless, this subsection explains how equitable principles can extend the FDCPA statute of limitations beyond one year, either because fraud prevented the consumer’s discovery of the violation (the fraud-based discovery rule) or by tolling the limitations period after it starts to run (equitable tolling).217
The consumer’s amended FDCPA complaint relates back to the date of filing of the consumer’s original complaint if a closely related defendant is added or if added violations relate to the same events as the initial complaint, even if the violations are of different FDCPA provisions.254 Where violations in a new complaint are materially different or rely on new facts and evidence, they will not relate back.255
The FDCPA specifies a defense of good faith conformity with a formal Consumer Financial Protection Bureau (CFPB) advisory opinion, even if the opinion is later ruled invalid:
Regulation F (effective November 30, 2021) provides a safe harbor for debt collectors providing validation information. Use of the model validation notice is optional.326
Some debt collection activities are permitted during the thirty-day period in which the consumer may dispute the debt and request original-creditor information.521 In 2006 Congress amended the FDCPA to codify this construction of the FDCPA.522 However, the debt collection activities must be carefully conducted so that they do not overshadow or conflict with the consumer’s right to dispute the debt or request original creditor information.
Regulation F (effective November 30, 2021) provides provisions that it either specifically identifies as safe harbors for debt collectors or that function as safe harbors. For simplicity, we refer to all of them as safe harbors in this section.
Collectors use, but with declining frequency, the Rooker-Feldman doctrine as a defense in cases where the FDCPA violations relate to the collector’s state court collection lawsuit.356 The doctrine is based on two Supreme Court decisions, Rooker357 and Feldman,358 discussing limited federal jurisdiction to review prior state litigation. The doctrine gives effect to 12 U.S.C.
The FDCPA provision states that attorney fees can be awarded to a debt collector only if the court finds that the action was brought by a consumer both in bad faith and for the purpose of harassment.481 Proof of only one or the other is insufficient to recover fees. This comports not only with the statutory language (“bad faith and for the purpose of harassment”), but is consistent with the legislative history.
28 U.S.C. § 1927 provides:
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
Sanctions under 28 U.S.C. § 1927 have been awarded against the consumer’s attorney where that attorney:
As noted above, the FDCPA’s bona fide error defense is patterned after that found in the Truth in Lending Act (TILA). Thus, of relevance is the TILA provision’s examples of bona fide errors: “Examples of a bona fide error include, but are not limited to, clerical, calculation, computer malfunction and programing, and printing errors, except that an error of legal judgment with respect to a person’s obligations under this subchapter is not a bona fide error.”47
The FDCPA limitations period is “one year from the date on which the violation occurs.”151 The Supreme Court, in 2019, ruled that the period begins to run from when the violation occurs, and not from when the consumer discovers the violation.152 The Court left open extending the statute of limitations based on equitable tolling or on the equitable fraud-specific discovery rule, as discussed at