Federal Deception Law: 8.10.1.1 Mortgage Lending
A number of RICO claims have successfully challenged mortgage lending practices:
A number of RICO claims have successfully challenged mortgage lending practices:
A number of RICO claims have successfully challenged non-mortgage lending practices and rent-to-own transactions:
A number of RICO claims have successfully challenged auto financing, leasing, and repossession practices:
A number of RICO claims have successfully challenged land sale, retirement community, and nursing home practices:
Successful RICO claims against trade school abuses include the following:
A number of RICO claims have successfully challenged practices relating to insurance and annuities:
A number of RICO claims have successfully challenged other consumer law abuses:
Consumer cases in which the plaintiffs were, for one reason or another, unsuccessful include the following:
15 U.S.C.
§ 8401 Findings; declaration of policy
§ 8402 Prohibitions against certain unfair and deceptive internet sales practices
§ 8403 Negative option marketing on the Internet
§ 8404 Enforcement by Federal Trade Commission
§ 8405 Enforcement by State attorneys general
The Congress finds the following:
(1) The Internet has become an important channel of commerce in the United States, accounting for billions of dollars in retail sales every year. Over half of all American adults have now either made an online purchase or an online travel reservation.
(a) Requirements for certain internet-based sales
It shall be unlawful for any post-transaction third party seller to charge or attempt to charge any consumer’s credit card, debit card, bank account, or other financial account for any good or service sold in a transaction effected on the Internet, unless—
It shall be unlawful for any person to charge or attempt to charge any consumer for any goods or services sold in a transaction effected on the Internet through a negative option feature (as defined in the Federal Trade Commission’s Telemarketing Sales Rule in part 310 of title 16, Code of Federal Regulations), unless the person—
(1) provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information;
Some creditors seek to circumvent the FTC Credit Practices Rule. It is unfair and deceptive to try to evade the rule by taking a prohibited security interest in household goods but then disclaiming the security interest in another part of the contract.229
The FTC’s trade regulation rule on the sale of used motor vehicles (“the Used Car Rule”)231 applies to “motor vehicles,” defined as any motorized vehicle other than a motorcycle, with a gross vehicle weight rating under 8500 pounds, a curb weight less than 6000 pounds, and a frontal area less than forty-six square feet.232 The Used Car Rule applies to any “used vehicle,” defined as a vehicle driven more than the limited use necessary in moving or road testing a new vehicle prior to delivery to a
The Used Car Rule has three main requirements:
FTC enforcement of the Used Car Rule has found widespread violations.261 Consumer attorneys should therefore be alert to potential violations of the FTC Used Car Rule and should ensure that dealers:
Violations of the Used Car Rule violate the FTC Act, and the FTC has brought enforcement actions for such violations.265 As with any FTC rule, there is no private right of action under the FTC Act for rule violations.266 Nevertheless, a rule violation should be actionable under a state UDAP statute, since an FTC rule should guide courts in interpreting state UDAP statutes.267
The Used Car Rule states clearly that the dealer may not make any statements, oral or written, that contradict the disclosures in the Buyers Guide. The dealer can negotiate the warranty coverage so that the final sale has different terms than those first disclosed on the Buyers Guide. However, in such a case, the final warranty terms have to be identified in the contract of sale and summarized on the copy of the Buyers Guide that is provided to the consumer.271
Seller compliance with the FTC Used Car Rule does not insulate the seller from UDAP liability. For example, although the FTC considered and rejected a rule requirement that dealers disclose known defects, compliance with the rule does not prevent a state UDAP action alleging the dealer failed to disclose known defects.273
(a) Right of action
The Federal Trade Commission (FTC) has broad authority under the FTC Act to prohibit unfair or deceptive acts and practices in trade or commerce and to enact trade regulation rules that define and prevent such practices.1 The FTC has issued sixteen such trade regulation rules, and many of them establish important standards and requirements for sellers, creditors, and others.
This chapter focuses on eight FTC trade regulation rules of special relevance to consumer law:
The FTC has issued over fifty rules, and this chapter only considers eight trade regulation rules. This subsection lists the FTC rules not covered in this chapter but indicates where additional information on these other rules can be found.
Trade regulation rules (TRRs) “define with specificity acts and practices which are unfair or deceptive acts or practices. . . . Rules under this subparagraph may include requirements prescribed for the purpose of preventing such acts or practices.”22 Trade regulation rules not only enumerate practices that are unfair or deceptive but add requirements to prevent such practices—for example, three-day cooling-off periods, required disclosures, and notices placed in contracts that alter substantive rights.
The FTC can enact trade regulation rules (TRRs) with respect to unfair and deceptive practices “in or affecting commerce.”29 This is a broad standard applying to almost any commercial activity. Nevertheless, there are a number of statutory exemptions to the FTC’s authority and thus to the scope of its TRRs.