Search
Unfair and Deceptive Acts and Practices: 8.8.1.3 Use of the Term “Organic”
The term “organic” may be used on a product’s label only if the product has been produced and handled in accord with federal regulations adopted under the Organic Foods Production Act (OFPA).712 These regulations, which are collectively termed the National Organic Program (NOP), set forth four different categories of organic products, namely those that are “100 percent organic,” “organic,” “made with organic (specified ingredients or food group(s)),” and “products with less than 70 percent organically produced ingredients.”
Unfair and Deceptive Acts and Practices: 8.8.2 Freezer Meats
Freezer meat plans involve purchase of discount meat through quantity purchases.
Unfair and Deceptive Acts and Practices: 8.8.4 Energy Savings Claims for Insulation and Household Products
The FTC has enacted a Trade Regulation Rule on Labeling and Advertising of Home Insulation.740 It requires the testing and disclosure of R-values, a standard measure of insulating effectiveness, and disclosure of related information concerning home insulation products.
Truth in Lending: 11.2.4.2.4 Failure to provide a disclosure
The complete failure to provide a disclosure (in contrast to providing an inaccurate disclosure) can cause monetary harm when the content of the disclosure would have affected the consumer’s behavior, as discussed in the preceding subsections. But there is still a good argument that a concrete injury exists regardless of whether the consumer would have acted differently upon receiving the disclosure.
Truth in Lending: 11.2.4.2.8 Informational injury
Because disclosure is such an important part of TILA, another potential harm caused by disclosure-related violations is that the consumer does not receive information that Congress deemed valuable. This section discusses the loss of knowledge as an injury, rather than monetary losses and other adverse effects of failing to provide the information. This type of harm is called informational injury.
Unfair and Deceptive Acts and Practices: 10.2.1 Introduction
The normal UDAP case seeks to hold the principal—that is, the corporation, employer, or other deep pocket—liable for the acts of those directly dealing with the consumer, such as sales personnel, commissioned salespersons, and other employees. The principal is usually a stable entity easily served with court papers and usually possesses sufficient assets to satisfy a judgment. Requests for injunctions or other nonmonetary relief may only be practical if the principal is joined as a party, and naming the principal may also enhance discovery.
Unfair and Deceptive Acts and Practices: 10.2.3.1 The General Rule That Principals Are Liable
Common law doctrine in most jurisdictions holds principals liable for misrepresentations made by agents who are acting within their actual or apparent authority.30 For torts involving bodily injury, the doctrine of respondeat superior holds masters liable only for the acts of “servants,” that is, for agents whose activity the principal controls.31 But principals are liable for the misrepresentations of all their agents, not just their servants.32
Unfair and Deceptive Acts and Practices: 10.2.3.2 Liability Even Where Agent Acts Without Authority
Courts do not immunize a principal even if the agent lacks actual authority.40 Apparent authority is shown when a reasonable person would suppose the agent has the authority they purport to exercise, and that belief is traceable to the principal’s manifestations.41 Even if there is no apparent authority, some state insurance laws or regulations hold an insurer liable for the acts of insurance agents selling policies for that insurer.42
Unfair and Deceptive Acts and Practices: 10.2.3.3 Are Dealers Agents for the Manufacturer?
An issue of practical import is whether a dealer selling a vehicle or other product is an agent for the product’s manufacturer, making the manufacturer liable for the dealer’s conduct. A consumer who seeks to hold a manufacturer liable for the acts of its dealers should do more than just categorically state that a dealer is an agent of the manufacturer. Specific facts that can establish such an agency should be alleged.45
Unfair and Deceptive Acts and Practices: 10.3.1 Introduction
Principal officers, directors, owners, and/or related companies with assets may be the preferred defendants when the company doing business with the consumer is little more than an empty shell. Even if the company doing business with the consumer is solvent at the initiation of the lawsuit, it may be prudent to join principal officers, owners, or related companies in case the company is later dissolved.
Unfair and Deceptive Acts and Practices: 10.3.3 Piercing the Corporate Veil and Related Theories
Consumer litigants may wish to join a corporation’s major shareholders or parent company in an action if the corporation that engaged in the UDAP violation is a mere shell, even if the shareholders or parent company were not directly involved in the deception.
Unfair and Deceptive Acts and Practices: 10.3.6 Liability of Franchisors
Consumers may find franchisees to be insolvent, with the franchisor being the deep pocket. Liability has been asserted where the franchisor failed to terminate a financially troubled franchisee which later went out of business without honoring consumer contracts, particularly where franchisor advertising implied financial solvency of its franchisees.112
Unfair and Deceptive Acts and Practices: 10.4.2.2.1 Conduct sufficient to create liability
To aid and abet a fraud, the assisting party must act knowingly or recklessly in substantially assisting a fraud.141 This assistance can be to further the fraud or to assist in the concealment of the fraud.142 The Kansas Supreme Court identifies the following as the elements of a claim that one party aided and abetted another’s fraud: (1) the party whom the defendant aids must perform a wrongful act causing injury; (2) at the time the defendant provides assistance, they must be generally aware o
Unfair and Deceptive Acts and Practices: 10.4.2.2.2 Where liability may not be found
Consumers should carefully develop the facts to show the culpability of third parties. One court has held that a landlord who knows its commercial tenant is engaging in a deceptive scheme against other parties is not liable where the landlord did not conspire in or aid the scheme.152
Unfair and Deceptive Acts and Practices: 10.4.2.4 Ratification, Acceptance of Benefits, and Concealment of Fraud
As discussed in more detail in another NCLC treatise,175 even defendants who were not involved in the original fraud or UDAP violation may be liable if they ratified others’ fraud or UDAP violation, accepted the benefits of the fraud or violation, or assisted in continuing to conceal the fraud or violation.
Unfair and Deceptive Acts and Practices: 10.4.2.5.2 Affirmative recoveries under the doctrine
While most of the close-connectedness decisions merely allow the consumer to raise defenses, a few decisions have applied the doctrine to hold the creditor liable on the consumer’s affirmative claims arising from the seller’s actions. The rationale of these decisions might enable a consumer to recover damages in excess of the FTC Holder Rule’s cap. For example, in Freeman v.
Unfair and Deceptive Acts and Practices: 10.4.3.1 Introduction
There can be potential UDAP liability not only for parties that aid the seller in advertising, planning, or conducting a deceptive sale, but also for parties that assist the seller in processing the consumer’s payment for the sale. Except in the case of a direct person-to-person cash payment, there will always be intermediaries involved in getting a payment processed from the consumer to the seller.
Unfair and Deceptive Acts and Practices: 10.4.3.5 Other Types of Payments
Fraudulent sellers seek out new ways to process consumer payments to avoid chargebacks and other consumer recourse on the payment.
Unfair and Deceptive Acts and Practices: 5.1 Introduction
The previous two chapters discussed general principles for determining whether a practice is deceptive, unfair, or unconscionable in violation of a UDAP statute. Chapter 3 examined sources of UDAP precedent and developed an analytical framework for showing that a practice is a UDAP violation.
Unfair and Deceptive Acts and Practices: 8.8.5 Environmental Claims for Household Products
The FTC has issued Guides for the Use of Environmental Marketing Claims.758 The guides set out general principles, and have more specific standards about the use of terms such as biodegradable, recyclable, refillable, and ozone friendly.759 In 2012, the FTC expanded the guides to include sections on carbon offsets, certifications and seals of approval, and claims that products are free of certain substances, non-toxic, made with renewable energy, or made with renewable materials.
Unfair and Deceptive Acts and Practices: 8.8.7 Firearms
Massachusetts has adopted a UDAP regulation that prohibits violation of state gun control laws and the sale of handguns manufactured from inferior materials. It also requires tamper-resistant serial numbers, childproofing or safety devices, and safety warnings.797