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Federal Deception Law: 9.2.2 Strategic Advantages of State RICO Laws As Compared to UDAP Statutes

State RICO laws offer an approach to fill in some of the gaps in state unfair and deceptive acts and practices (UDAP) statutes:

Private right of action. Although there is a private right of action under every state’s UDAP statute, there are gaps and exclusions in many states. Iowa, for example, precludes private UDAP claims against banks, insurance companies, and a number of other potential defendants. Many state UDAP statutes do not afford a private cause of action for non-consumer transactions. The state RICO statute may provide a cause of action in these situations.

Federal Deception Law: 9.4.1 Predicate Offenses

The typical state RICO statute lists a variety of state offenses that constitute predicate offenses, and some add certain federal crimes as predicate offenses. Many state RICO statutes include the same offenses as federal RICO, providing a parallel cause of action to a federal RICO claim. Some state RICO statutes also allow a claim to be based upon collection of an unlawful debt.32

Federal Deception Law: 9.4.2 Pattern Requirements

Some state RICO statutes are explicit about matters as to which federal RICO is silent or vague, such as the meaning of a “pattern of racketeering activity.”50 Hawaii’s RICO statute requires only one predicate offense.51 Others require at least three predicate offenses.52 A pattern under the Florida53 and Idaho54 RICO statutes is at least two p

Federal Deception Law: 9.4.3 Enterprise Requirements

Some courts, in interpreting state RICO statutes, simply follow U.S. Supreme Court definitions of “enterprise.”78 However, many state RICO statutes have simplified requirements about the relationship between the defendant’s racketeering acts and an enterprise.

Federal Deception Law: 9.5 Statute of Limitations

Most state RICO statutes set forth a statute of limitations period as well as a requirement for the timing between predicate offenses. Statutes of limitations vary from one year to ten years and are typically about five years.111 Most are tolled while related cases are pending. Some state RICO statutes also extend the time allowed between predicate offenses when the offender has been incarcerated.

Federal Deception Law: 9.6.1 Jurisdictional and Procedural Issues

State RICO actions will generally be tried in state court, but in the alternative a state RICO claim can usually supplement a related federal RICO claim in federal court.120 The Eleventh Circuit has held that federal courts have original jurisdiction over a state RICO claim that alleges only federal crimes as predicate offenses and raises very substantial federal questions, and that such a case is removable to federal court.121

Federal Deception Law: 9.7 Application of State RICO Statutes to Consumer Fraud

Like federal RICO statutes, state RICO statutes constitute a proper weapon for use against “garden variety” fraud.164 Indeed, many state RICO statutes explicitly list fraud, usury, and violations of certain consumer protection statutes as predicate offenses.165 These statutes demonstrate the legislative intent to treat consumer fraud as organized crime and to afford victimized consumers the powerful remedies of the RICO laws.

Federal Deception Law: 9.8 State Civil Theft Statutes

A number of states have civil theft laws that offer a private cause of action for conduct that violates state criminal laws. Because there is no requirement that there be an enumerated nexus to an enterprise, and there is no pattern requirement, these statutes are often more appropriate than state or federal RICO statutes for consumer claims. For transactions within their scope, these statutes may provide significant advantages over the state UDAP statute.

Federal Deception Law: 12.1.1 Federal Antitrust Laws

Federal antitrust law is comprised of a series of federal statutes prohibiting various types of anti-competitive commercial activity. The most important of these are the Sherman Act, the Clayton Act, and the Robinson-Patman Act.

Federal Deception Law: 12.1.2 State Antitrust Laws

Following the Supreme Court’s Illinois Brick decision, discussed in § 12.1.1, supra, many states enacted so-called “Illinois Brick Repealer Statutes,” expressly authorizing recovery of damages under state antitrust law to “indirect purchasers” of a price-fixed product.9 In California v.

Federal Deception Law: 12.3 Plain English Statutes

A number of states have enacted plain language laws39 that apply broadly to many types of transactions.40 Other states have plain language requirements that apply to certain types of transactions, such as rent-to-own (RTO), insurance, consumer credit, and hearing aids transactions.41

Federal Deception Law: 12.4.1 Introduction

Recent immigrants are often new to the English language as well. Many scam artists prey on this vulnerability, coercing non-English-speaking consumers to sign contracts or other documents that they do not understand. There are a number of ways to challenge contract transactions based on language barriers, including federal requirements, state statutes mandating the use of a non-English language, state UDAP laws, contract claims and defenses, and affirmative fraud claims.

Federal Deception Law: 12.4.3.2 Impact of English-Only and English Official Language Laws

Many states have laws that declare English to be the “official language,” but these laws do not conflict with state statutes that require documents to be translated into a second language.81 However, several states have passed “English-only” laws,82 which raise more substantial issues regarding their relationship to state laws that require use of another language.83 Nonetheless, because the statutes requiring translation of certain documents

Federal Deception Law: 12.4.4 UDAP and Unconscionability Claims

Uniform Commercial Code and other unconscionability concepts also provide a basis to claim that disclosures should be made in the same language as the transaction. It would be unconscionable for a seller to use the buyer’s inability to understand contract provisions as a way to include oppressive terms in the agreement.87

Federal Deception Law: 4.1.1 Importance of the FTC Holder Rule

The FTC’s Preservation of Consumers’ Claims and Defenses Rule1 is commonly called the “FTC Holder Rule,” although a more accurate (and possibly more appealing) name for it is the Preservation of Claims Rule. In keeping with common usage, this chapter uses the phrase “FTC Holder Rule” to describe the rule and “FTC Holder Notice” to describe the notice that the rule requires.

Federal Deception Law: 4.1.2.2 Seller-Related Claims in Seller-Arranged Loans

In a second way of extending credit, the sale of goods is financed by a loan that a third-party lender makes directly to the consumer, without the seller being the originating creditor. The seller may arrange the direct loan, and the loan proceeds may even go directly from the lender to the seller, but the seller is not listed on the loan obligation as the original creditor. When financing is set up in this manner, the consumer’s debt is owed to the lender from the outset.

Federal Deception Law: 4.1.2.6 Stopping Check, Debit Card, or Other Payments As a Response to the Seller’s Misconduct

The consumer’s ability to stop payment in response to seller misconduct is significantly different when the consumer uses a check, debit card, or other payment device instead of obtaining credit to make the purchase. The FTC Holder Rule does not apply because there is no credit. As a practical matter, it is almost impossible to stop payment on many of today’s payment devices.

Federal Deception Law: 4.2.1 Operational Scope of the Holder Notice

The FTC Holder Rule is unique in that the scope of the rule is somewhat different from the scope of the rule’s operational effect. The rule operates by a notice placed in consumer credit agreements whereby, as a matter of the contract itself,38 the parties agree that the consumer can raise seller-related claims and defenses against the holder of the note or contract. As such, the effect of the rule is directly felt by any agreement that includes the FTC Holder Notice.