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Unfair and Deceptive Acts and Practices: 11.4.2.1a.5 Traceability
Another one of Article III’s standing requirements is that the injury must be fairly traceable to the alleged deceptive practice.200 Traceability can be based on the defendant’s indirect control over the unfair or deceptive practice.201 Traceability is a relatively modest standard that does not require a showing of proximate causation, even if that would be required for proof of the claim on its merits.
Unfair and Deceptive Acts and Practices: 11.4.2.1a.6 Filing suit in state court; removal to federal court
If there are concerns about whether a federal court will find that it has Article III standing over a particular UDAP case, the best strategy may be to file the case initially in state court.
Unfair and Deceptive Acts and Practices: 11.4.2.1a.2 Spokeo, Inc. v. Robins
In its 2016 decision in Spokeo, Inc. v. Robins,159 the Supreme Court addressed for the first time the issue of constitutional standing in a case under a chapter of the federal Consumer Credit Protection Act.
Unfair and Deceptive Acts and Practices: 11.4.2.1a.3 TransUnion L.L.C. v. Ramirez
In 2021, the Supreme Court issued a second major decision, TransUnion L.L.C. v. Ramirez.173 Ramirez centers on the application of Article III to claims under federal consumer protection laws.
Consumer Warranty Law: 7.3.8.3 Article III Constitutional Standing
Cases filed in federal court in which a defect has not yet caused a malfunction may also raise the question whether the plaintiff has suffered a concrete injury, as required for standing under Article III of the United States Constitution.288 Both tangible and intangible injuries can be concrete,289 but the injury must be “ ‘real and immediate,’ not ‘conjectural’ or ‘hypothetical.’ ”
Unfair and Deceptive Acts and Practices: 11.4.2.2 Types of Damage Preconditions
UDAP statutes fall into several main patterns with respect to damage preconditions.
Unfair and Deceptive Acts and Practices: 11.4.2.3 Injury Requirements Under California’s UDAP Statutes
Until 2004, one of California’s two UDAP statutes, the Unfair Competition Law, allowed suit for injunction, restitution, and other equitable remedies by “any person acting for the interests of itself, its members, or the general public.”218 A private plaintiff need not have been directly harmed by the defendant’s practices in order to bring suit.219 The court could order restitution to all injured individuals without the formality of class certification.220
Unfair and Deceptive Acts and Practices: 11.4.2.4 UDAP Statutes That Explicitly Dispense with Damage Precondition
The District of Columbia’s UDAP law authorizes suits without any explicit damage precondition. In its current form, it spells out four categories of persons who can bring suit seeking relief from a trade practice in violation of any D.C. law:
Unfair and Deceptive Acts and Practices: 11.4.2.5 Exceptions to Damage Preconditions
Even if a UDAP statute has a damage precondition, the scope of the requirement should be analyzed carefully.
Unfair and Deceptive Acts and Practices: 6.1 Introduction
The previous chapters discussed the coverage of UDAP statutes, the general approach to determining whether a practice is a UDAP violation, the meaning of the terms “deceptive,” “unfair,” and “unconscionable,” and the application of UDAP statutes to general practices such as bait-and-switch and deceptive billing. This chapter analyzes the application of UDAP statutes to the extension of credit, the collection of consumer debt, bank accounts, other payment methods, security interests, repossession, and foreclosure.
Unfair and Deceptive Acts and Practices: 6.2.1 Overview of Regulation of Loan Brokers
Misdeeds by loan brokers are often at the root of unfair or deceptive lending. If a loan broker’s compensation is based on the volume, size, or terms of the loans generated, the broker will bear little or none of the risk that the borrower will default.11 As a result, knowing that they will not bear the consequences if the consumer is unable or refuses to pay, unscrupulous brokers use deceptive and unfair tactics to bind consumers to loans.12
Unfair and Deceptive Acts and Practices: 6.3.3 Applying General UDAP Prohibitions to Improvident Extension of Credit
Even without a specific statutory prohibition, improvident extension of credit violates general UDAP principles of unfairness and deception.70 For example, a Connecticut appellate court held that it was an unfair practice under the state UDAP statute to lend at an arbitrarily high annual percentage rate while knowing that the borrower could not repay the loan unless it was refinanced by a second loan, and refusing to allow the borrower an opportunity to discuss or evaluate the terms of the second loan.71
Unfair and Deceptive Acts and Practices: 6.3.4.3 Computing the Consumer’s Damages
The court may initially be inclined to view the creditor rather than the consumer as the victim, with the consumer suffering no damage. However, the consumer should be able to establish damage if the income falsification caused the consumer to be locked into an unaffordable transaction.112 The main consumer injury is that the consumer has obtained a loan where there is a higher probability than normal that the consumer will default.
Unfair and Deceptive Acts and Practices: 6.4.1 Truth in Lending Violations
The federal Truth in Lending Act and the Consumer Leasing Act require specific disclosures in consumer credit transactions. These laws afford a private cause of action for actual damages and attorney fees. Nonetheless, a UDAP statute’s double or treble damages provision may be a better remedy.
Unfair and Deceptive Acts and Practices: 6.5.2.2 Exorbitant Credit Charges as UDAP Violation
A number of courts have applied these concepts to credit charges and held that charging excessive interest rates or finance charges is an unfair or unconscionable practice that violates state UDAP statutes.189 Decisions that reach the same conclusion under the common law of unconscionability or a non-UDAP statutory prohibition190 are also strong UDAP precedent.
Unfair and Deceptive Acts and Practices: 6.6.1 Misrepresentation of Credit Terms
Misrepresentation that a creditor offers easy credit terms is deceptive if the seller does not extend credit to persons below prevailing standards of creditworthiness, the down payment or repayment periods are less favorable than ordinary, the credit cost is higher than average, the seller’s mark-up on the underlying goods is higher than usual, or the seller has a more vigorous debt collection policy than usual.217
Unfair and Deceptive Acts and Practices: 3.2.3 Practices Outside Specific UDAP Prohibitions Can Still Be UDAP Violations
The existence of a statutory laundry list does not foreclose challenges to practices not included in the list, nor does it prevent challenges to practices that fall just outside the definition of a specific statutory prohibition.
Unfair and Deceptive Acts and Practices: 3.2.7.3.4 Florida’s UDAP statutes explicitly sets forth a per se approach
Florida’s UDAP statute defines “a violation of this part”—the phrase used in the subsections creating a private cause of action and authorizing attorney general enforcement61—as “any violation of this act or the rules adopted under this act.”62 It goes on to provide that such a violation “may be based upon any of the following as of July 1, 2017: (a) Any rules promulgated pursuant to the Fed. Trade Commission Act, 15 U.S.C. ss.
Unfair and Deceptive Acts and Practices: 3.2.7.3.9a Minnesota's private cause of action may extend to violations of other laws
By statute, Minnesota extends a private cause of action to any consumer who is injured by a violation of ten enumerated statutes plus other Minnesota laws “respecting unfair, discriminatory, and other unlawful practices in business, commerce, or trade.”76 The reference to “other unlawful practices” is a clear indication that violations of a wide range of other statutes may be privately actionable under this provision.
Unfair and Deceptive Acts and Practices: 3.2.7.3.10 Texas UDAP statute explicitly rejects per se approach
The Texas legislature has specifically rejected finding a violation of another law as a per se UDAP violation unless the other law so declares.78
Unfair and Deceptive Acts and Practices: 3.2.7.4.2 Examples of statutory and rule violations found to be per se UDAP violations
Courts have found violations of FTC trade regulation rules to be per se UDAP violations, including:
Unfair and Deceptive Acts and Practices: 3.2.7.4.3 Case law restricting the per se approach
A number of courts have limited or rejected the concept that a violation of another statute is a per se violation.
Unfair and Deceptive Acts and Practices: 3.2.7.5.2 Violation of another statute as deceptive practice
In states whose UDAP statute only prohibits deceptive practices, consumers are in a different position in arguing for a per se standard.