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Unfair and Deceptive Acts and Practices: 9.2.3 Travel Agents

Travel agents hold themselves out as experts on whom consumers can rely.191 Their role is analogous to that of a fiduciary in whom clients place their trust.192 Travel agents have the duty to investigate destinations, suppliers, and tour operators, and to verify that travel packages with the represented features are actually available.

Unfair and Deceptive Acts and Practices: 9.2.4 Marketing of International Driver’s Permits

The FTC has prosecuted cases against a number of companies that marketed bogus international driver’s permits.196 These companies claimed that the permit could take the place of government-issued identification, would enable otherwise unlicensed drivers to drive legally in the United States, and would prevent issuance of traffic tickets. In fact, international driver’s permits only enable people with valid driver’s licenses to drive in foreign jurisdictions.

Unfair and Deceptive Acts and Practices: 9.3.2 Medical Care and Medications

Decisions in UDAP cases involving medical care or medications often turn on the question whether the UDAP statute applies to the defendant. A number of states exempt medical practitioners altogether, or hold that the UDAP statute applies only to entrepreneurial aspects of their practices such as advertising and billing. Because of the role of FDA regulation, federal law preempts many claims regarding medications and medical devices.

Unfair and Deceptive Acts and Practices: 9.3.4 Nursing Facilities

Standards for proper nursing home conduct can be found in the federal Nursing Home Reform Law (NHRL).230 Although there is some support to the contrary in the legislative history, courts have held that the federal NHRL does not create a private right of action.231 However, the federal law is still relevant for setting the standard of care in negligence and intentional tort actions against nursing facilities.

Unfair and Deceptive Acts and Practices: 9.3.5 Assisted Living Facilities

A growing industry of assisted living facilities (ALFs) has developed to meet the needs of elders who are unable to live alone but do not need a nursing facility.247 Most assisted living residents have some sort of limiting physical or mental condition that prevents them from living in their own homes, often involving significant cognitive impairment.248

Unfair and Deceptive Acts and Practices: 9.3.6 Funerals

The FTC has enacted an extensive trade regulation rule concerning funeral industry practices.259 In brief, the rule requires funeral homes to offer itemized price information and to reveal prices over the telephone.260 The rule also prohibits various misrepresentations and specifies various disclosures and prohibits conditioning a funeral sale on the purchase of a casket or other items.261 The rule and related state UDAP case law are examined in so

Unfair and Deceptive Acts and Practices: 9.3.7 Hospital Treatment and Payment Issues

Courts in some states have applied UDAP statutes to misrepresentations by hospitals and other health care providers about the quality or success rate of the care they will provide.263 However, other UDAP statutes exempt transactions between consumers and physicians or, more broadly, members of any learned profession.264 In these states, courts are likely to find the statute inapplicable to unfair or deceptive practices by the exempt entities, regardless of the topic of the misrepresentation or t

Unfair and Deceptive Acts and Practices: 9.3.8 Tobacco

The Massachusetts Supreme Judicial Court held that a UDAP violation would be established by proof that the manufacturer labeled its cigarettes “Lights” with “lowered tar and nicotine” while knowing that most smokers would not experience the advertised reduction.295 However, the Illinois Supreme Court held that consent orders obtained by the FTC, which set standards for cigarette manufacturers’ use of words like “low tar,” amounted to specific authorization by a regulatory body to use those terms.

Unfair and Deceptive Acts and Practices: 9.4.1 Attorneys

Attorney misconduct can be challenged by a UDAP claim in many states.303 An attorney’s use of an illegal fee arrangement may be a per se UDAP violation.304 Massachusetts’ highest court has found it unfair for an attorney, after reaching a settlement that provides for attorney fees, to collect a contingency fee from the amount the client received.305 Double billing or other abusive billing practices are also UDAP violations.

Unfair and Deceptive Acts and Practices: 9.4.2.2 State Immigration Consultant Laws

Some states regulate immigration consultant services through laws governing the notary public profession,325 or through other statutes that regulate non-attorneys who assist consumers on immigration matters.326 These statutes exempt accredited representatives (non-attorneys working for an organization accredited by the Board of Immigration Appeals327) and non-attorneys who work for non-profit agencies or law school legal clinics.

Unfair and Deceptive Acts and Practices: 9.4.3 Bankruptcy Petition Preparers

Various types of non-attorney operators purport to offer assistance to debtors in filing bankruptcy petitions. Many of these document preparers are either fraudulent or incompetent, making promises which they cannot keep and extracting fees that far exceed the value of the work performed. As a result of these schemes, many victims file for bankruptcy, only to lose their homes or other assets due to the preparer’s incompetence.

Unfair and Deceptive Acts and Practices: 9.4.4 Unauthorized Practice of Law

Scams targeted at immigrants, tenants, debtors, and other consumers often violate state unauthorized practice of law statutes. While these statutes generally provide for criminal penalties, they typically do not provide a private right of action.355 However, a violation of an unauthorized practice of law statute can be the basis of a UDAP claim in many states.356

Unfair and Deceptive Acts and Practices: 9.4.5 Living Trusts

A living trust is a legitimate estate planning device that is established when a consumer is alive. In appropriate situations and when properly implemented, it can enable the consumer to control and protect her assets. The living trust, more formally known as an inter vivos trust, is a written agreement between the individual creating the trust and the person or institution that manages the assets held in trust.

Unfair and Deceptive Acts and Practices: 9.4.6 Trustees, Escrow Agents, Other Fiduciaries

It is unfair for a bank to allow a trustee to use trust assets for personal purposes.383 A bank acting as an escrow agent violated the state UDAP statute by failing to answer inquiries, pay interest as required, or account for the money, in intentional disregard of its fiduciary status.384 Similarly, it is unconscionable for an escrow company to pay out money to the wrong party based on questionable documentation and to refuse to pay out the required amount to the correct party.

Unfair and Deceptive Acts and Practices: 9.4.7 Investigators and Other “Finders”

The FTC has sued many ingenious telemarketers who falsely promised, for a fee, to obtain relief for past victims of telemarketing fraud, particularly in obtaining free gifts that were never delivered.389 When such a service is sold by telephone, the FTC’s Telemarketing Sales Rule prohibits the seller from requesting or receiving any payment from the consumer until seven business days after recovering the money or property.390

Unfair and Deceptive Acts and Practices: 9.4.8 Accountants

An accountant may violate a UDAP statute by certifying financial statements that contain material misstatements and omissions.393 In general, the lack of privity between the consumer and the accountant does not prevent the UDAP claim.394 The public must be able to reasonably rely on financial statements certified by public accounting firms.395 It is a UDAP violation to hold oneself out as an accountant if not certified.

Unfair and Deceptive Acts and Practices: 9.5.1 Introduction

The complexity of UDAP application to insurance practices stems in a large degree from state unfair insurance practices legislation that exists side by side with the UDAP statute. Does the state insurance legislation displace the UDAP statute, does it provide an alternative private remedy, or does it offer a guide to using the UDAP statute to challenge insurance practices? Other issues include whether private remedies apply only to the insured or also to accident victims who want to collect under the policy.

Unfair and Deceptive Acts and Practices: 9.5.2.1 UNIP Legislation Described

Every state has adopted legislation defining and prohibiting unfair methods of competition and unfair or deceptive acts and practices in the business of insurance.397 This “unfair insurance practices” (UNIP) legislation applies broadly to all lines of insurance and is patterned after a model statute promulgated by the National Association of Insurance Commissioners (NAIC).398

Unfair and Deceptive Acts and Practices: 9.5.2.2.2 Advantages and disadvantages of a private UNIP claim

In the few states that offer an explicit private cause of action to enforce the UNIP statute, the remedies may include attorney fees and treble damages.444 In these states, a UNIP claim may have advantages over a UDAP claim. The remedies may be as strong or stronger, there will be no question of coverage of insurance transactions, and the consumer will not need to comply with any preconditions to suit set by the UDAP statute.