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Unfair and Deceptive Acts and Practices: 2.5.9.1.1 Express preemption
The Food, Drug, and Cosmetic Act (FDCA)2678 contains an express preemption provision that prohibits “any requirement for the labeling of food . . .
Unfair and Deceptive Acts and Practices: 2.5.9.1.3 UDAP claims based on violation of FDA requirements; the FDA’s exclusive enforcement authority and POM Wonderful
Courts have generally agreed that there is no express or implied preemption of a claim that violation of an FDA labeling requirement is a violation of a state UDAP statute or other law.2713 Such a claim does not seek to impose a requirement that is not identical to the federal requirements, and it would be hard to argue that enforcement of the FDA requirements through a state law claim creates a conflict with the federal requirements.
Unfair and Deceptive Acts and Practices: 2.5.13 Other Federal Statutes
Courts have found that UDAP actions are generally not preempted by:
Unfair and Deceptive Acts and Practices: 2.1.4.2 Practices Found Not to Be in Trade or Commerce
The following practices have been held not within the scope of trade or commerce: the activities of citizens and a neighborhood in opposing a developer’s plan to build a shopping center;74 registering multiple copyrights and filing frivolous copyright enforcement suits;75 responding to a U.S. Customs question about whether products shipped by another business to the U.S.
Unfair and Deceptive Acts and Practices: 2.1.8.6 Transactions Not Found to Be for Consumer Purposes
Courts have found the following transactions not to be for personal, family, or household use:
Home Foreclosures: 8.2.3.1 Precondition to Commencing an Action: Contractual Right to Notice of Violation and Opportunity to Cure
Mortgage loan documents should be reviewed in all foreclosure cases for preconditions that may be necessary before commencing an action against the lender and for indications of abusive lending or other claims in the origination of the loan that may provide significant remedies.
Unfair and Deceptive Acts and Practices: 2.5.3.2.3 The extent to which state UDAP statutes are preempted
The OCC regulations do not address state UDAP statutes, neither listing them among the laws that are preempted nor among the laws of general application that are not.2434 The savings clause does, however, include contract and tort law, and courts often treat UDAP claims as contract or tort claims.2435 In addition, state UDAP laws closely parallel the FTC Act, the Consumer Financial Protection Act, and OCC regulations2436 that prohibit banks f
Unfair and Deceptive Acts and Practices: 6.3.2 UDAP and Other Laws Prohibiting Credit That Consumer Cannot Repay
In a little more than a third of the statute, a UDAP statute prohibits unconscionability.54 A number of these statutes specify that, in determining whether a practice is unconscionable, the court should consider whether the creditor had reason to know, when the consumer entered into the transaction, that there was no reasonable probability of payment of the obligation in full by the consumer.55
Truth in Lending: 1.2.11a Constitutional Challenges to the CFPB’s Authority to Implement TILA
Ideological hostility to the CFPB existed since the agency’s inception, and recent years have witnessed a spike in judicial challenges to the Bureau’s authority. Certain broad attacks have questioned the constitutionality of virtually every function of the Bureau. If accepted, these arguments could potentially undermine the Bureau’s rulemaking authority and bring into question the validity of the CFPB’s amendments to Regulation Z.
Truth in Lending: 1.7 Getting Started: Quick Reference Checklist (Closed-End)
Evaluating a consumer credit transaction for TILA disclosure rule compliance consists at a minimum of three tasks: evaluating the accuracy of the numerical disclosures on their face; determining whether those numerical disclosures were made in accordance with TILA rules (including assessing the legitimacy of charges imposed); and evaluating the adequacy of the non-numerical disclosures under TILA rules.
Truth in Lending: 1.5.3.4.7 Other post-2010 rulemaking
The CFPB published an interim final rule on appraiser independence on October 28, 2010, effective in part on December 27, 2010, and in part on April 1, 2011.328
In 2012, in order to conform to an adverse court decision, the CFPB adopted an interim final rule that permits subprime fee harvester credit cards to charge pre-account opening fees that exceed the cap on fees that Congress enacted in 2009.329 It finalized the revision in 2013.330
Truth in Lending: 1.1.2 The Role of Truth in Lending Act in Consumer Advocacy
A working knowledge of the Truth in Lending Act (TILA) can help attorneys evaluating clients’ prospective credit transactions. A TILA analysis will reveal whether a transaction is a sound value, a Christmas tree loan, loaded with expensive and unnecessary charges,13 or a potential disaster for the borrower, such as a loan with an unaffordable balloon payment or an unmanageable variable rate feature.14
Mortgage Servicing and Loan Modifications: 8.1 Introduction
Congress created the Federal Housing Administration (FHA) in 1934 to help define federal housing policy during the Depression. FHA’s programs further Congress’s stated national housing goal of “a decent home and a suitable living environment for every American family.”1 The FHA’s primary public purpose is now to expand homeownership and rental housing opportunities for people not adequately served by the private mortgage markets.
Unfair and Deceptive Acts and Practices: 12.3.5.2 Damages and Causation in Bait-and-Switch and Phony Discount Cases
Damages and causation issues sometimes arise in private suits challenging bait-and-switch tactics. If the consumer backed out of the sale after learning the true price, the seller may argue that the consumer has not suffered any loss.
Unfair and Deceptive Acts and Practices: 12.4.1.3 Should Statutory Damages Be Trebled?
A number of UDAP statutes authorize both statutory damages and treble damages for certain types of violations, such as willful or knowing violations. The statutory language will often make it clear whether the minimum statutory damages can be trebled. A California statute allows the trier of fact to treble any civil penalty (or any other remedy if its purpose or effect is to punish or deter) when the person affected is an older or disabled person and certain other factors apply.363
Unfair and Deceptive Acts and Practices: 12.4.2.2 Are Multiple Damages Mandatory?
Despite the clear policy underpinnings for multiple damage awards, individual courts may be reluctant to order merchants to pay consumers more than actual damages. In this situation, it is useful if the consumer litigant can argue that the award of multiple damages is not in the court’s discretion, but is mandated if the statutory preconditions are met.
Unfair and Deceptive Acts and Practices: 12.4.2.3.4 Standards where multiple damages are discretionary
The Pennsylvania Supreme Court holds that, in light of the remedial purposes of the UDAP statute and the absence of any statutory language adopting common law punitive damages standards, treble damage awards “should not be closely constrained by the common-law requirements.”453 Courts should, however, review UDAP treble damage awards for rationality, focusing on the presence of intentional or reckless wrongful conduct, in which case treble damages are consistent with the statute’s remedial purposes.454
Unfair and Deceptive Acts and Practices: 12.4.2.7.6 Prejudgment and postjudgment interest; other financing costs
Courts are split as to whether prejudgment interest should be trebled.531 A court has attempted to resolve this split with the following reasoning. Prejudgment interest should not be allowed on treble damages. But where prejudgment interest is authorized in calculating actual damages, that amount should be included in the actual damage award. This total award should then be trebled where appropriate.532
Unfair and Deceptive Acts and Practices: 12.4.3.5.1 Are punitive damages authorized in arbitration?
The interrelationship of arbitration and punitive damages is similar to that between arbitration and multiple damages examined at § 12.4.2.5, supra.
Unfair and Deceptive Acts and Practices: 12.5.2.1 Special State Requirements and Restrictions for UDAP Class Actions
Class action procedures are normally determined by a state’s class action statute or rule. However, a number of state UDAP statutes contain class action provisions that supplement or supersede the general class action rules.660
Unfair and Deceptive Acts and Practices: 12.5.2.2.2 Applying Shady Grove to UDAP statutes that preclude class actions
Two lines of thought have emerged among the courts that have applied Shady Grove to statutory restrictions on UDAP class actions.