A “deceptive trade practice” occurs when a company or individual engages in an activity that has the potential to mislead the public. Deceptive trade practices are forbidden because of the harm they cause to consumers and the wider public.
Deceptive trade activities are illegal under federal and state law. The Uniform Deceptive Trade Practices Act (UDTPA) is one example of federal legislation governing deceptive trade practices. The Act has been incorporated into state statutes in some manner in every state. The Federal Trade Commission Act also governs deceptive trade practices.
Deceptive trade practice laws apply to many different aspects of business, including trade and commerce, consumer transactions, and goods and services.
Unfair trade practices occur when a company or individual engages in dishonest, misleading, or unethical business tactics. These practices may be directed at customers or competitors.
What Are Some Examples of Deceptive Trade Practices?
Deceptive trade practices can take many different shapes. The primary principle behind deceptive trade conduct is that the action results in the recipient of products or services being misled or misinformed. False advertising and tampering with odometers or other measurement devices are two of the most common types of deceptive trade practices.
Other acts that could be considered misleading business tactics include:
- Impersonating another’s goods or services
- Increasing the possibility of misunderstanding or uncertainty about the source, certification, or approval of goods or services.
- Using misleading geographical origin designations or representations of goods/services
- Falsifying the ingredients, attributes, uses, qualities, or benefits of the goods or services.
- Claiming that items are new or original despite the fact that they have been used, resold, altered, or degraded
- Representing that particular goods or services are of a given quality, grade, standard, model, or style when they are of a different quality, grade, standard, model, or style.
- Using inaccurate facts to misrepresent another entity’s goods, services, or business.
- Advertising products with the intention of selling them at a lower price or quantity than stated (for example, price reductions)
As a result, the vast majority of deceptive commercial practices are related to providing goods and services.
Deceptive advertising, often known as false advertising, refers to any sort of advertisement that is deceptive, misleading, or has the effect of fooling people. Here are some examples of deceitful advertisements:
- Lying about the price, quantity, and/or quality or standard of the item;
- Lying about times, dates, and locations where the goods are available;
- Misleading warranty information;
- False facts about bargains or sales; and
- Confusion about interest rates or other aspects
Advertising may be considered deceptive under both state and federal laws, even if the ad’s designer did not intend it to be so. This means that a false advertising claim can be made even if the ad includes a genuine error.
The Federal Trade Commission (FTC) will notify the company and attempt to have it correct its mistakes on its own. If the company ignores this request, the FTC has the authority to issue a cease-and-desist order as well as file a lawsuit on behalf of the injured customers.
During the course of the case, the FTC may ask the court to issue an injunction against the company in order to discourage them from engaging in false advertising practices in the future.
The FTC may also levy fines and order the company or its third-party advertiser to run new ads with accurate facts and information. They may also compel the company to admit that previous advertisements contained false statements. The Federal Trade Commission Act (“FTCA”), specifically Section 5 of the Act, authorizes this.
Keep an eye out for the following, as they could lead to deceptive service estimates (particularly with car repairs):
- Before proceeding with the repairs, a shop waits until the vehicle is up on the lift and partially disassembled. By that point, you are effectively forced to: (a) allow pricey repairs or risk having your automobile returned to you in a dismantled and unusable state; or (b) pay a significant and unexpected fee to have your vehicle reassembled, only to discover it no longer runs at all.
- The shop begins working on your car without first obtaining your authority to do so, and then charges you for services that you did not authorize.
- The store provides you with a verbal estimate of the cost of repairs before charging you a higher amount;
- In order to stimulate the sale, the business advertises that repair services will be completed by a specific day, then fails to perform the repair services by that day.
- Before beginning repair work, the shop fails to reveal reassembly or inspection fees.
- The shop claims “free towing,” however you must pay for your towing charges.
- The shop claims to provide a free rental automobile for repairs, but then charges you for the rental.
- The establishment claims to perform warranty repair services but then charges you for work not covered by the guarantee.
- In cases where you borrow money to pay for repairs, the shop begins repair work before receiving written consent from the finance provider. If the loan business does not approve the loan and the work has already been completed, you may still be liable for the payment if the deceit cannot be proven.
- A shop fails to tell you and obtain your written approval for any additional work to be performed that was not specified in the original written agreement.
Do Deceptive Trade Practices Laws Cover Other Issues Besides Goods and Services?
Yes, the Federal Trade Commission monitors and regulates deceptive trade practices in addition to the requirements included in federal and state statutes.
These are more concerned with business activities than with goods and services and include:
- Contracts with unfair or unreasonable (one-sided) provisions
- Using high-pressure or forceful sales and collection techniques
- Engaging in criminal behavior
- Taking use of real-world conditions, such as an emergency or the susceptibility of a specific marketing demography
What Are the Consequences of Deceptive Trade Practices?
Deceptive business practices have exacerbated a structural change in the nation’s economic base, resulting in middle-class wage stagnation, rising income inequality, access disparities between rich and poor, and declining civic participation.
What Are the Remedies for Deceptive Trade Practices?
Consumers and people who have been victimized by deceptive business practices may be entitled to seek a number of legal remedies. Among these therapies are:
- Monetary Compensation: A plaintiff who has demonstrated actual damages may be entitled to statutory damages to compensate for their losses. In severe circumstances, some states impose treble damages, requiring the offender to pay three times the value of the losses. In some jurisdictions, punitive damages and criminal prosecution may be available.
- Equitable Relief: A court may also issue an injunction requiring the offender to take particular steps or refrain from engaging in certain activities. Cease and desist orders are frequently issued for misleading business activities.
Some state statutes allow for “private enforcement,” which means that individual citizens can sue businesses directly for misleading commercial practices. Some states, however, prohibit private enforcement or individual lawsuits. Instead, the state or federal government will file a lawsuit against the corporation.
Do I Need a Lawyer for Issues Involving Deceptive Trade Practices?
If you have been the victim of deceptive trade practices, you may be entitled to a number of remedies. You should consult with a business lawyer about how to file a claim for damages. Experienced attorneys can also assist businesses accused of deceptive trade practices in defending themselves.
