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Unfair and Deceptive Acts and Practices: 8.5.3.2 Slamming (Changing Service Providers Without the Consumer’s Authorization)

“Slamming” is the practice of changing a customer’s service provider without the customer’s consent. In the past this abuse was commonly seen in the provision of long-distance service, but it can occur with the provision of any competitive utility service, including electricity and natural gas in some states. The federal and state laws that address slamming are discussed in detail in NCLC’s Access to Utility Service.499

Unfair and Deceptive Acts and Practices: 8.5.3.3 Prepaid Phone Cards

Prepaid calling cards can be used to add minutes or data to prepaid wireless service plans and can also provide minutes for international calling. Some are offered by telecommunications providers, but most are offered by other companies that buy minutes from telecommunications providers in bulk and then resell them.

Unfair and Deceptive Acts and Practices: 8.5.3.5.1 Arbitration and preemption issues

A consumer wishing to bring a UDAP claim concerning wireless or cell phone charges, early termination penalties, or other practices faces a number of obstacles. The first is that virtually all wireless service contracts require arbitration of disputes and ban the consumer from proceeding in arbitration on a class-wide basis.524 Whether the arbitration requirement and the class arbitration ban are enforceable are discussed in another NCLC treatise.525

Unfair and Deceptive Acts and Practices: 8.5.3.7 Internet Service Providers

The question of federal regulation of internet access has been highly controversial. In 2018 the FCC issued a declaratory ruling reclassifying broadband internet access service as an information service under title I of the Telecommunications Act of 1934 557 rather than under title II.558 The result is to drastically reduce federal oversight of internet service, most notably precluding imposition of a “net neutrality” requirement. In an appeal under the Administrative Procedure Act, the D.C.

Unfair and Deceptive Acts and Practices: 8.5.4.2 Regulated Water Utilities

Rates of regulated utilities (“just and reasonable rates”) fall squarely within a state utility commission’s rate-setting authority. Claims involving rates are thus more likely than other claims to be found exempt from state UDAP laws.572 On the other hand, the UDAP statute is more likely to apply to a regulated utility if the practice involves something other than rates.573

Unfair and Deceptive Acts and Practices: 8.6.2 Alarm and Emergency Response Systems, Other Emergency Devices

A burglar alarm installer engages in a deceptive practice by falsely claiming that a burglar who cut the system wires would still trigger an alarm, that the police would arrive in only a few minutes, and that a panic button would work even with the wires cut.608 Advertising that a heat detector will give “an immediate early warning” is deceptive where dangerous amounts of smoke and carbon monoxide can accumulate before the alarm goes off.609 The FTC has successfully challenged misrepresentations

Unfair and Deceptive Acts and Practices: 8.6.3 Pest Control Services

A termite control service engages in a deceptive practice when it fails to live up to its promise to prevent termite infestation.616 It is deceptive to misrepresent that there is termite infestation, or to use scare tactics to sell a termite prevention service.617 Conversely, a termite service engages in a deceptive practice when it fails to disclose in a report the full extent of a termite problem it knows to exist.618

Unfair and Deceptive Acts and Practices: 8.7.1 Importance of UDAP Approach

The rent-to-own (RTO) industry is a major way in which low-income consumers obtain appliances and other household goods. RTO stores typically offer short-term, renewable leases with an option to purchase at the end of a specified series of renewals. For example, a RTO contract might require a consumer to pay $16 a week to rent a television set, and provide that the consumer will own the set upon renewing the rental agreement for seventy-eight weeks.

Unfair and Deceptive Acts and Practices: 8.7.4 Disclosure of RTO Transaction’s Effective Annual Percentage Rate

A fundamental problem with RTO transactions is that the effective interest rate or annual percentage rate in the transaction is often 100%, 200%, or more, but this number is never disclosed to consumers. The majority of state UDAP statutes give the state attorney general authority to enact regulations defining unfair and deceptive practices.658 Failure to disclose important information in an RTO transaction can certainly be an unfair or deceptive practice.

Unfair and Deceptive Acts and Practices: 8.7.5.1 General

An often overlooked way to challenge an RTO transaction is to argue that the RTO retailer should have complied with either the FTC rule concerning a “Cooling-Off Period for Door-to-Door Sales”663 or an analogous state statute. Such coverage should be investigated because some major RTO companies solicit customers door to door. Even when not solicited at the residence, door-to-door laws may still apply if the transaction was conducted by phone or otherwise consummated in the residence.664

Unfair and Deceptive Acts and Practices: 8.7.7 UCC Article 2A Unconscionability As Alternative to UDAP Claim

Another viable legal theory for many of the same RTO practices that a UDAP statute can reach is an unconscionability claim under UCC Article 2A on Leases. U.C.C. § 2A-108, allows courts to refuse to enforce unconscionable provisions in the RTO agreement, and also to grant appropriate relief where an RTO transaction is induced by unconscionable conduct or where unconscionable conduct has occurred in the RTO collection activities.686 The court must award prevailing consumers their attorney fees.

Unfair and Deceptive Acts and Practices: 8.8.1.1 General

False or unsubstantiated claims about the health benefits of foods are deceptive.688 Mislabeling of food, in violation of a state regulation, is also a UDAP violation.689 Unsubstantiated or misleading claims that foods contain certain ingredients,690 are fat free,691 low fat, low sodium, low calorie, low alcohol, sweetened with certain artificial sweeteners, low in sugar