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Unfair and Deceptive Acts and Practices: 9.5.9.3 Marketing Deception, Illusory Coverage

It is a factual issue whether advertising free credit life insurance is deceptive where eligibility depends on the debtor meeting certain physical preconditions.599 A creditor commits a UDAP violation by switching a credit disability policy mid-term to a different company with less generous benefits, particularly where any financial benefit from the switch goes to the creditor and not the consumer.600 However, an auto dealer was held not liable for failing to inform a consumer that a credit disa

Unfair and Deceptive Acts and Practices: 9.5.9.4 Coercion in Selling Credit Insurance

Violation of a state credit law that prohibits creditors from requiring a consumer to purchase credit insurance is evidence of a UDAP violation.606 It is also a UDAP violation to misrepresent that credit insurance is required when the creditor has portrayed it as voluntary in order to disclose the premium as part of the amount financed in compliance with the Truth in Lending Act.607 Even if the consumer initials a provision stating that the consumer is purchasing the insurance voluntarily, it ca

Unfair and Deceptive Acts and Practices: 9.5.9.5 Sale of Credit Insurance That Is Excessive or Violates State Lending Laws

Some states’ lending statutes restrict the types or amounts of credit insurance that can be sold or the circumstances in which it can be sold.616 These restrictions are most common with respect to credit property insurance. In addition, UNIP statutes may prohibit the sale of credit property insurance in amounts greater than necessary to cover the loan or the collateral.617

Unfair and Deceptive Acts and Practices: 9.5.9.6 Failure to Pay Credit Insurance Claims

A common credit insurance abuse that may be subject to a UDAP challenge is the refusal to pay an insurance claim because of a preexisting illness excluded by the current policy. A creditor may be liable under a UDAP statute if it does not tell a borrower that refinancing a loan will result in loss of coverage of a condition that arose during the time the original loan was in effect.620 It may be unfair to deny coverage when insurance was in continuous effect before the illness was manifest.

Unfair and Deceptive Acts and Practices: 9.5.10 Force-Placed Automobile Insurance

Automobile creditors typically require consumers to purchase collision and theft coverage to protect the creditor’s interest in the automobile. The credit contract will authorize the creditor to purchase such insurance on behalf of the consumer if the consumer does not present evidence of continuous coverage or if the coverage ever lapses during the term of the loan. This coverage purchased by the creditor is often called “force-placed,” “creditor-placed,” or “collateral protection” insurance.

Unfair and Deceptive Acts and Practices: 9.5.11 “Packing” Non-Credit Insurance in Conjunction with Credit Sale

Insurance “packing” involves folding in various insurance products with the extension of a loan. For example, it was alleged that Aetna Finance Company, usually without customers’ knowledge, “packed” or loaded onto consumer loans various types of expensive optional insurance.630 Loan officers faced with heavy insurance sales quotas used various techniques to persuade hesitant customers to sign up for insurance.631 Typically the debtor would request a loan in a specified amount.

Unfair and Deceptive Acts and Practices: 9.6.2 Investments

Whether a UDAP statute applies to investments and securities transactions is discussed at § 2.2.8.3, supra. The many FTC decisions that address deception in the promotion of investments are good precedent on the nature of unfair and deceptive practices in this area.

Unfair and Deceptive Acts and Practices: 9.6.4 Pyramid Sales

A pyramid sale is one in which, in the guise of selling a product or business opportunity, the scammer is really selling the right to sell new memberships in the pyramid. Investors make their return not through the sale of the product, but through encouraging others to invest. Pyramid schemes take many guises and are often marketed over the internet.

Unfair and Deceptive Acts and Practices: 9.6.5 Contests and Game Promotions

It is deceptive, in connection with a game or contest promotion, to misrepresent the chances of winning.703 It is deceptive to use a sham contest to gain sales leads by failing to offer bona fide prizes and awards704 or by offering fictitious discounts as a prize to specially selected winners.705 Informing all entrants that they are “finalists,” thereby falsely implying that they are members of a smaller group with a greater chance of winning, is d

Unfair and Deceptive Acts and Practices: 9.6.6.1 State and Federal Restrictions

Many states, either as part of their UDAP statutes or as separate laws, require a charitable organization to register with the state, disclosing various types of information, such as its name and address, the amount of funds to be raised, estimated expenses, previous court actions, and the organization’s tax status.729 In addition, the FTC telemarketing sales rule applies to charitable solicitations conducted over the telephone by for-profit entities on behalf of non-profit organizations.730 The

Unfair and Deceptive Acts and Practices: 9.6.8 Diploma Mills

“Diploma mills” are defined as entities that: (1) for a fee, offer degrees, diplomas, or certificates which may be used to represent to the general public that the individual possessing such a degree, diploma, or certificate has completed a program of post-secondary education or training; (2) require such individual to complete little or no education or coursework to obtain such degree, diploma, or certificate; and (3) lack accreditation by a recognized accrediting agency or association.752 The Department of Education is required to maintain

Unfair and Deceptive Acts and Practices: 11.1 Introduction

Previous chapters have analyzed major issues facing UDAP litigants: whether the seller’s unfair or deceptive actions fall within the scope of the statute, whether the challenged practice violates the UDAP statute, and who can be held liable for the UDAP violation. But a number of other issues are important when litigating UDAP cases. Timing issues such as the statute of limitations and the effective date of the statute and its amendments are raised in many UDAP cases.

Unfair and Deceptive Acts and Practices: 11.2.1.2 Selecting a Statute of Limitations When the UDAP Statute Is Silent

In jurisdictions where no limitation period is found in the UDAP statute and the state has several general statutes of limitations applying to differing categories of actions, the court must determine which one applies to a UDAP action. Thus, there may be different limitations periods for an action arising from a nonpenal statutory right, a tort, a contract, or a penal statute. When a UDAP statute does not have a specific limitations period, consumer litigants must familiarize themselves with all of the state’s general statutes of limitations and determine which applies.

Unfair and Deceptive Acts and Practices: 11.5.1 Introduction

UDAP actions must comply with the state courts’ normal jurisdictional requirements. Jurisdictional and choice-of-law issues often arise in cases with out-of-state features. Even when a case has no multi-state aspects, there may be questions about which state court has jurisdiction. In other cases, the consumer may wish to litigate the case in federal court or bankruptcy court, or the defendant may seek to force the case into arbitration. This section discusses these questions.

HUD Housing Programs: Tenants’ Rights (The Green Book): 5.8.2 Establishing LIHTC Utility Allowances

The LIHTC regulations provide several options for owners to determine how utility allowances should be established. Regardless of the methodology used, telephone, cable television, and internet are not included in the utility allowance.251 Importantly, if any units in the project are subsidized by Rural Development (RD) or HUD or are occupied by voucher tenants, the RD or HUD rules, rather than the LIHTC rules, apply.252

HUD Housing Programs: Tenants’ Rights (The Green Book): 5.8.3 Adjusting LIHTC Utility Allowances

Owners must review the basis on which utility allowances have been established at least once during each calendar year.265 The review must take into account changes in utility rates and any changes to the building that affect energy consumption, such as conservation measures.266 Unlike the other housing programs discussed above, there is no 10% rate-change threshold for determining when owners must recalculate allowances, so even smaller changes could justify advocating for an adjustment.

HUD Housing Programs: Tenants’ Rights (The Green Book): 5.9.1 Energy Efficiency Programs and Initiatives

Because many properties used for subsidized housing are old and/or poorly maintained, tenants, PHAs, HUD and owners frequently pay a kind of energy inefficiency premium. In an effort to rein in costs, reduce environmental impacts, and improve the comfort and well-being of tenants living in subsidized properties, many federal and state agencies are now attempting to increase energy efficiency in these properties.