Legal Remedies in Unfair or Deceptive Trade Practices

Unfair or deceptive trade practices are prohibited by both federal and state laws principally to protect consumers against unfair competition and to prevent business practices that are meant to confuse consumers on the source of a product. It is also used for tort action in trademark infringement cases.

A deceptive trade practice refers to any activity by an individual or business which results in misleading or luring the public into purchasing a product or service. One of the most common examples of this is false advertising and odometer tampering.

In some states, these practices result in criminal prosecution while in other states, a consumer can file a lawsuit against a business for violating the law and may recover punitive damages and/or statutory fines. The state attorney general may also bring a lawsuit against an offending business.

Federal Law on Unfair and Deceptive Trade Practices

Because deceptive business practices can affect other persons or businesses in other states, several states have adopted the standardized Uniform Deceptive Trade Practices Act (UDPTA). This law is inclusive and covers all the issues and prohibitions similarly addressed in the state law.

The Federal Trade Commission Act (FTCA), originally passed in 1914, which was the original statute prohibiting unfair and deceptive trade acts and practices in the country. It was originally enacted as a law against unfair competition and later developed and amended to include issues related to antitrust and patent/ trademark infringement. It was later superseded by the UDPTA.

Application of Statutes

State laws on deceptive trade practices are limited in scope and do not govern all situations where one party has deceived another. Most states try to limit the scope of the law mostly to commercial transactions by a consumer such as in purchasing or leasing goods for personal or household use.

These are some of the common applicability of the statutes:

• In trade and commerce – It involves profit-oriented transactions but excludes trade between non-merchants and similar transactions
• Consumer transactions
• Goods and services – the law applies on goods or items movable at the time of purchase, which also include livestock. In some states, they also refer to merchandise which incorporates goods, services, real property, commodities, and other intangibles.

Legal Remedies

Most state statutes on deceptive trade practices have broad restrictions and include not only unfair practices but also fraudulent and unconscionable acts. In California alone, nearly 23 deceptive trade practices are prohibited by law.

When interpreting the law, the Federal Trade Commission (FTC) does not require that a person has the intent to deceive nor does it require an actual deception to occur. The agency merely requires that a party has the capacity to deceive or commit unfair trade practice; in which case, the FTC may order the company to cease and desist the practice. State statutes have similar requirements.

The statutes offer the following remedies against businesses engaging in unlawful trade practices:

• Injunction or restraining order forbidding the continued deceptive trade practice
• Punishment through fines, damages and imprisonment

Unfair and deceptive trade practices may be difficult to curb but the aggrieved party may always seek the protection of the law against it.