Texas Deceptive Trade Practices-Consumer Protection Act
What Is The "Deceptive Trade Practices Act" The DTPA provides for both public enforcement and private remedies. Public enforcement is done by the Texas Attorney General, who can seek a court order prohibiting further deceptive practices. A private citizen may seek redress for damages caused by certain specific acts and practices listed in the DTPA. Because the DTPA is very broad and is constantly being interpreted by the courts, it is impossible to explain its complete meaning and impact in this short handbook. If you believe that you are the victim of a deceptive trade practice, please consult an attorney. Which Transactions Does the DTPA Apply To? The DTPA prohibits certain acts or practices "in the conduct of any trade or commerce." This is a very broad provision. "Trade and commerce" means "the advertising, offering for sale, lease, or distribution of any good or service, or any property, tangible or intangible, real, personal, or mixed, any other article, commodity, or thing of value wherever situated, and shall include any trade or commerce directly or indirectly affecting the people of this state." The term "goods" includes tangible things or real property purchased or leased for use. The word "service" includes work, labor, or services purchased or leased for use, including services furnished in connection with the sale or repair of goods. The DTPA does not apply to the rendering of a professional service, the essence of which is the providing of advice, judgment, opinion or similar professional skill. "For example, an accountant can probably not be held liable for violating the DTPA if they give the wrong opinion. However, professionals can violate the DTPA by making misrepresentations of fact or breaches of warranty. For example, if an accountant lies about his qualifications to attract business, a customer probably has a DTPA claim." The term "unconscionable" appears frequently in the DTPA, and in this handbook. The DTPA defines an "unconscionable action" as one that "takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree." So what does this all mean? The DTPA has a very broad application. The DTPA can be used by someone that is charged for an unnecessary $50 car repair; it can be used by someone buying a used car; it can be used by a homeowner buying a home; it can be used by a small business purchasing materials; it can be used by a business buying a $400,000 franchise; and it can be used in all transactions in between. Simply put, the DTPA was enacted to protect consumers in small transactions and businesses in rather large transactions. Who Is Entitled To Protection Under the DTPA? The Element of Knowledge or Intent Nevertheless, the DTPA provides that if a defendant acts "intentionally," the judge or jury may award the consumer "additional damages" in an amount not exceeding three times the actual damages suffered by the consumer. What Is Included Within the "Laundry List" of Acts and Practices Made Illegal by the DTPA? (1) Passing off goods or services as those of another. (2) Causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services. This section also prohibits acts that cause confusion regarding the sponsorship, approval, or certification of goods or services. It prohibits people from representing a product has the approval of an organization that has not really approved it. Certification is a formal process that often has significant meaning to consumers. Examples of certification includes various seals of approval, such as the Good Housekeeping Seal and the U.L. or Underwriters Laboratories certification for electrical products. (3) Causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another. (4) Using deceptive representatives or designations of geographic origin in connection with goods or services. (5) Representing goods or services that claim to have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities but do not or a person claiming to have a sponsorship, approval, status, affiliation or connection but does not. It is illegal to represent that goods and services have sponsorship or approval when they do not. This is similar to section (2) above. It is also illegal to represent that goods and services have characteristics, ingredients, uses, benefits, or quantities that they do not. For example, it is illegal to represent that a product is made out of steel when it is really made out of aluminum. Moreover, this provision forbids a salesman from telling you that goods have features that they do not have or that the goods can do things that they cannot do. Misrepresentations about quantities include misstating the number of acres being sold in a real estate transaction and misstating the number of items contained in a box of candy. Misrepresentations about benefits of goods or services include misrepresentations about the ailments that a medicine can cure and the effect upon one's self after only three visits to a health spa. Misrepresentations about ingredients include stating that a product contains vegetable fat when it really contains animal fat. This section also prohibits misrepresentations regarding the sponsorship, approval, status, or affiliation of an individual. It prohibits misleading and false statements about the nature and authority of a person. For example, an accountant may not claim to be a Certified Public Accountant if that person has not taken and passed the CPA exam. Also, physicians may not represent themselves as qualified specialists when they are not. (6) Representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or second-hand. (7) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another. (8) Disparaging the goods, services, or business of another by false or misleading representations of facts. (9) Advertising goods or services with intent not to sell them as advertised. (10) Advertising goods or services with intent not to supply a reasonable expectable public demand, unless the advertisement disclosed a limitation of quantity. This section is also violated when a store with several outlets in the same metropolitan area fails to disclose that the sale item can be found only in one of its stores. (11) Making false or misleading statements of fact concerning the reasons for, existence of, or amount of price reductions. The second also prohibits misleading statements about the existence of price reductions. A seller cannot advertise that prices are being reduced by 50 percent unless the item has previously been offered by the same seller at the stated regular price. Likewise, sellers cannot advertise that prices are marked 50 percent off suggested retail price unless the representation is accurate. The third prohibits misrepresentations about the amount of price reductions. When a seller advertises "X percent lower prices," those representations must be true. (12) Representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law. (13) Knowingly making false or misleading statements of fact concerning the need for parts, replacement, or repair service. (14) Misrepresenting the authority of a salesperson, representative, or agent to negotiate the final terms of a consumer transaction. (15) Basing a charge for the repair of any item in whole or in part on the quantity or warranty instead of on the value of the actual repairs made or work to be performed on the item without stating separately the charges for the work and the charges for the warranty or guaranty, if any. (16) Disconnecting, turning back, or resetting the odometer of any motor vehicle so as to reduce the number of miles indicated on the odometer gauge. (17) Advertising of any sale by fraudulently representing that a person is going out of business. (18) Using or employing a chain referral sales plan in connection with the sale, or offer to sell, of goods, merchandise, or anything of value, which uses the sales technique, plan, arrangement, or agreement in which the buyer or prospective buyer is offered the opportunity to purchase merchandise or goods and, in connection with the purchase, receives the seller's promise or representation that the buyer shall have the right to receive compensation or consideration in any form for furnishing to the seller the names of other prospective buyers if receipt of the compensation or consideration is contingent upon the occurrence of an event subsequent to the time the buyer purchases the merchandise or goods. (19) Representing that a guaranty or warranty confers or involves rights or remedies which it does not have or involve; provided however, that nothing in this subchapter shall be construed to expand the implied warranty or merchantability as defined in Section 2.314 and 2.318 of the Business and Commerce Code to involve obligations in excess of those which are appropriate to the goods. (20) Selling or offering to sell, either directly or associated with the sale of goods or services, a right of participation in a multi-level distributorship. As used herein, "multi level distributorship" means a sales plan for the distribution of goods or services in which promises of rebate or payment are made to individuals conditioned upon those individuals recommending or securing additional individuals to assume positions in the sales operation, and where the rebate or payment is not exclusively conditioned on or in relation to proceeds from the retail sales of goods. (21) Representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts replaced. (22) Filing suit founded upon a written contractual obligation of and signed by the defendant to pay money arising out of or based on a consumer transaction for goods, services, loans, or extensions of credit intended primarily for personal, family, household, or agricultural use in any county other than in the county in which the defendant resides at the time of the commencement of the action or in the county in which the defendant in fact signed the contract; provided however, that a violation of this section shall not occur where it is shown by the person filing such suit he/she neither knew nor had reason to know that the county in which suit was filed was either the county in which the defendant resides at the commencement of the suit nor the county in which the defendant in fact signed the contract. (23) The failure to disclose information concerning goods or services known at the time of the transaction and was used to induce the consumer into a transaction whom otherwise would not have entered had the information been disclosed. (24) Using the term "corporation," "incorporated," or an abbreviation of either of those terms in the name of a business entity that is not incorporated under the laws of this state or another jurisdiction. (25) Taking advantage of a disaster declared by the Governor under Chapter 418, Government Code, by: (A) selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excessive price; or (B) demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine, or another necessity. Conclusion: Laundry List What Remedies Are Available Under the DTPA? The remedies of the DTPA are not exclusive. Instead, they are in addition to remedies provided in other laws. In fact, violations of certain other laws may also constitute violation of the DTPA. You may not, however, recover under the DTPA and under some other law for the same alleged wrong. In other words, you cannot recover twice for one violation. Remedies under the DTPA may not usually be waived, and an attempt to make a consumer waive DTPA remedies is expressly made void and unenforceable unless specific requirements are met. This provision is particularly important when consumers buy goods "As Is." Often, consumers may still be able to recover under the DTPA even if the consumer buys the goods "As Is." If you have such a situation, you should seek the advice of an attorney. Public Remedies The DTPA authorizes local district and county attorneys to provide assistance to the Consumer Protection division in the commencement and prosecution of such actions. All of those authorities, however, must notify the alleged violator at least seven days prior to instituting an action and inform the alleged violator in general terms of the alleged unlawful conduct. The DTPA provides an exemption for certain advertisers such as newspapers, magazines, radio stations, etc., except when the advertiser has actual knowledge of the false statements or has a substantial financial interest in the transaction. Anyone wishing to report an activity believed to be in violation of the DTPA and subject to the above described public remedies, should contact the Consumer Protection Division of the Attorney General's Office in Austin, Texas, or in larger cities, contact the local Attorney General's Office. Private Remedies
Let's use an example to illustrate. Assume you prove economic damages in the sum of $3,000. Let's further assume it was proved that the conduct of the violator was "knowingly" committed. The court or jury could then award a maximum amount of three times the economic damages. Therefore, in this example, a maximum damage recovery could be obtained in the sum of $9,000, plus mental anguish damages, court costs and attorney's fees. Before filing a DTPA lawsuit, a consumer must first give written notice to the alleged violator, advising the violator of the consumer's specific complaint and the amount of actual damages and expenses, including attorney fees, if any, reasonably incurred by the consumer in asserting the claim. The alleged violator has 60 days to respond; suit should not be filed during this 60-day period. But there are two exceptions: the first when it is necessary to immediately file suit in order to prevent the running of a statute of limitations, and the second when the consumer asserts the DTPA claim as counterclaim in an existing suit. The alleged violator may, within 60 days from receipt of such notice, offer the consumer a written offer of settlement including an offer to reimburse the consumer for the attorney's fees, if any, reasonably incurred in asserting the claim up until the date of the notice. If a prior notice is not required to be given because of one of the two exceptions described above, the alleged violation may tender such settlement offer within 60 days after the service of the suit or counterclaim. The consumer has the option of accepting or rejecting the settlement offer. In the event the consumer takes no action for 60 days after receipt of such settlement offer, the offer is deemed to have been rejected. A rejected settlement offer may be filed with the court together with an affidavit certifying its rejection. If the court finds that the amount tendered in the settlement offer is the same or substantially the same as the actual damages found, then the consumer may not recover an amount in excess of the tendered amount or the amount of actual damages found, whichever is less. The DTPA specifically provides that a tender of a settlement offer is not an admission of guilt and may be used only to determine the reasonableness of the offer. Mediation If mediation is not requested, the defendant has a second opportunity to make an offer of settlement. The defendant may make the offer up to 90 days after the answer to the consumer's suit is filed. Then, the consumer has the option to accept or reject the offer, as set forth above. Defenses As discussed above, a finding that a settlement offer is the same or substantially the same as the actual damages found, will constitute a defense to the additional damage provisions of the DTPA. Further, an offer made by the defendant within the 60-day period of the full amount claimed including expenses and attorney's fees constitutes a complete defense to a lawsuit by the consumer. How Long Can You Wait to File a Suit? Finally, there is a special provision stating that, if the consumer proves that failure to begin the lawsuit within these time limits was caused by the defendant knowingly engaging in conduct solely calculated to induce the consumer to refrain from or postpone the commencement of the suit, the right to file suit may be extended for an additional 180 days. In other words, if a violator of the DTPA strings you along by promising to make good, and does this intending to make you wait past the two-year time limit, and then "changes his or her mind" once the time limit has passed, he or she may not be able to get away with the trickery. Questions regarding the statute of limitations or time limit for filing suit are often difficult and confusing. Consulting an attorney is strongly advised. Remember that you should make your demands for correction of the problem or violation right after you discover it. If you do not get your complaint satisfied within a reasonable period of time, and after giving the alleged violator a good faith opportunity to make good, you should promptly contact a lawyer to protect your legal rights. In general, two years is the absolute maximum allowed for filing suit, but you should never wait to take action until the last minute, because you might be wrong, and thereby lose your legal rights. When Should You Consult a Lawyer to Protect Your Rights? However, you generally should first make reasonable effort to have the violator correct the problem. Send a letter demanding correction of the problem and making good on the damages you have suffered. Be as clear, specific, and factual as possible. Send the letter by certified mail, return receipt requested (or hand deliver it, and get a signed receipt), and be sure to keep a copy of the letter. Talk to the appropriate people in charge, without getting angry and shouting, calmly telling them why you feel you have been treated wrongly and explaining what should be done to remedy the problem. Give the person or business to whom you are complaining an amount of time, reasonable under the circumstances, to make good. If they flatly turn you down, or seem to be "stringing you along" without actually doing anything, then you may have no choice but to take legal action. Individuals (but not partnerships or corporations) may represent themselves without a lawyer. For very small amounts of damages you may be able to file suit and represent yourself in the small claims court. If you do this, you should obtain a copy of the Texas Young Lawyers Association's pamphlet, How To Sue In Small Claims Court, by writing to the address given on the back of this handbook. Although you have the right to represent yourself, the Texas Young Lawyers Association strongly recommends that you hire an attorney to represent you on claims filed under the DTPA because the language and procedures of the DTPA are sometimes complex and may be confusing. In order to provide an incentive for consumers to enforce their rights under the DTPA, the Act provides that a plaintiff who wins will recover the reasonable attorney fees incurred for bringing suit. This, plus the additional damages, is intended to encourage consumers with valid cases to seek legal correction. You should never file unfounded lawsuits. Litigation is expensive and you may have to pay, at the very least, court costs. Further, as explained above, if you bring a groundless suit in bad faith or for harassment, you may have to pay the defendant's attorney fees. If you do not know an attorney to handle your case, ask a friend or an associate for a recommendation. Also, you may locate one through your local Lawyer Referral Service listed in your telephone directory, or through the State Bar Lawyer Referral Service by calling (toll free) 1 800-252-9690. This information is not intended to be a substitute for the legal advice of a licensed attorney. If you have any questions regarding a particular issue or topic we suggest you seek legal counsel. The above information is adapted from the brochure "A Guide to the Texas Deceptive Trade Practices Consumer Protection Act," prepared by the Texas Young Lawyers Association and published by the State Bar of Texas. Contact Tammi Sweet at the State Bar of Texas at 1-800-204-2222 ext. 2610 for a copy of the publication. |
