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Unfair and Deceptive Acts and Practices: 4.3.9 Illegal Conduct

One of the most important applications of UDAP unfairness standards is to hold violations of federal or state law meant to protect the public and other forms of illegal conduct to be unfair.995 In effect, UDAP remedies will be incorporated into these other laws because a violation of these laws will also violate a UDAP statute’s “unfairness” prohibition.

Unfair and Deceptive Acts and Practices: 4.4.4 Taking Advantage of Vulnerable Consumers

The unconscionability standard should be applied with particular force when a professional seller is seeking the trade of those most subject to exploitation—the uneducated, the inexperienced, and people of low incomes.1085 Knowingly taking advantage of the consumer’s confusion or frightened state of mind is unconscionable.1086 It is likewise unconscionable to take advantage of the number and complexity of the documents1087 or the consumer’s u

Unfair and Deceptive Acts and Practices: 4.4.7 Unconscionable Collection and Enforcement Practices

It is unconscionable and a UDAP violation to threaten, before judgment, to inform a debtor’s employer that the creditor intends to garnish the consumer’s wages and to exaggerate the remedies or power of the creditor or collector over the consumer.1123 Filing debt collection suits in distant forums is unconscionable.1124 But retaining a truck after installation of a new part until an earlier disputed bill was paid was not so outrageous and shocking to the conscience to dictate a finding of un

Unfair and Deceptive Acts and Practices: 4.4.9.2 Specific UCC, UCCC, and Common Law Unconscionability Findings

An unconscionability case of special note to consumer debtors is Besta v. Beneficial Loan Company.1173 The Eighth Circuit held that the facts required a finding of unconscionability under the Iowa Consumer Credit Code. The core unconscionability was that the lender did not disclose to the consumer that the consumer could have received the same loan proceeds with a three-year loan at a lower monthly payment and half the total of payments instead of the six-year loan the lender provided.

Unfair and Deceptive Acts and Practices: 5.2.1 General

It is unfair and deceptive to make unsubstantiated claims, even if the claims later turn out to be true.1 This is an important principle since it is often difficult to prove a claim to be false, but it may be easier to show that the seller did not have an adequate basis for making a claim at the time it was made.

Unfair and Deceptive Acts and Practices: 5.2.3 State UDAP Precedent

Connecticut was the first state to explicitly include a substantiation requirement in its UDAP regulations—in this case requiring car dealers to have sufficient information upon which a reasonable belief in the truth of their claims can be based.16 Idaho, Massachusetts, Missouri and Ohio have also enacted UDAP regulations requiring sellers to have substantiation for their claims.17 Pennsylvania regulations prohibit unsubstantiated automobile advertising.18

Unfair and Deceptive Acts and Practices: 5.3.3.2 Deceptive Pricing in Comparison to a Reference Price

Deceptive pricing and bargain sales involve a variety of pricing gimmicks that lure consumers into retail premises believing they are getting a bargain when they are not. The basic concept is that it is deceptive for advertisers to compare their own “sale” price with some other reference price unless the article on sale and the nature of the reference price are explicitly identified and the seller can substantiate the reference price.

Unfair and Deceptive Acts and Practices: 5.3.3.3 Deceptive Rebate Offers

Advertising rebates but then delaying them or rejecting them on spurious grounds is deceptive.90 Fulfillment houses that process rebates may even be paid a percentage of the “slippage”—i.e., the rebate checks that are never cashed, so they have an incentive to impede payment of rebates. A Connecticut regulation requires sellers who advertise net prices that already reflect a reduction for a manufacturer’s rebate to pay consumers the amount of the rebate at the time of purchase.91

Unfair and Deceptive Acts and Practices: 5.3.5 Other Deceptive Pricing Techniques

It is deceptive to misrepresent that a contract will save consumers time and money.115 “Below cost” prices must be below the seller’s cost to purchase and prepare the item.116 But a court held that an advertisement of “ten for $1” was not deceptive in failing to disclose that a buyer who bought fewer than ten items would receive the same $1-per-unit price.117

Unfair and Deceptive Acts and Practices: 5.3.6 Use of the Word “Free”

A special type of deceptive pricing involves the use of the word “free,” two-for-one bargains, and similar offers implying that the consumer will get something for nothing. Typically, the “free” offer requires that the consumer buy some other item, sit through a sales presentation, or comply with some other condition.

Unfair and Deceptive Acts and Practices: 5.3.7 Low Balling; Charging Higher Prices Than Agreed Upon

Another deceptive pricing inducement is sometimes referred to as “low balling.” The seller advertises low prices but eventually sells the item for a higher price. Low balling may be used to frustrate a consumer’s comparison shopping efforts, particularly where there is no standard price for a product such as car repairs, moving household contents, and home improvements. Low balling is deceptive under state UDAP statutes.130

Unfair and Deceptive Acts and Practices: 5.4.2 Product Uniqueness

It is deceptive to make false claims as to a product’s uniqueness, exclusiveness, or originality, such as that a product is the “only genuine” one, is “unique” or “exclusive,” or that the seller possesses exclusive legal rights to, is the sole distributor of, or is the originator of a product.177 For example, it was a UDAP violation to misrepresent that an art collection included all of the originals that were known to exist.178

Unfair and Deceptive Acts and Practices: 5.4.4 Product Safety

It is a UDAP violation to fail to disclose a safety risk in the use of a product which is not apparent to a casual user.187 Disclosure is required even where the safety hazard only occurs when the consumer does not follow safety instructions.188 Misrepresenting a product or service as safe, while knowing of its hazards, is deceptive.189 Advertising a product to homeowners carries an implicit representation that it i