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Prohibited Acts and Practices

Most state deceptive trade practices statutes include broad restrictions on “deceptive” or “unfair” trade practices. These states often include prohibitions against fraudulent practices and unconscionable practices. The Federal Trade Commission, when interpreting the FTCA, does not require that the person committing an act of deception have the intent to deceive. Moreover, the FTC does not require that actual deception occur. The FTC merely requires that a party have the capacity to deceive or commit an unfair trade practice. If a business or individual has this capacity or tendency to deceive, the FTC under the FTCA may order the company to cease and desist the deceptive or unfair practice. State statutes similarly do not require that a company specifically intends to deceive, nor must a company always have knowledge that a statement is false to be liable for misrepresentations made to a consumer.

A consumer who has been victimized by a potential deceptive or unfair trade practice should consult the deceptive trade practice statute in that state, plus consult case law applying this statute, to determine whether he or she has a cause of action. In addition to the broad prohibition against deception, most state statutes also include a list of practices that are defined as deceptive. Under the Uniform Deceptive Trade Practices Act, if a business or person engages in the following, the action constitutes a deceptive trade practice:

  • Passes off goods or services as those of another
  • Causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services
  • Causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another
  • Uses deceptive representations or designations of geographic origin in connection with goods or services
  • Represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or qualities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that he does not have
  • Represents that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or second-hand
  • Represents that goods or services are of particular standard, quality, or grade, or that goods are of particular style or model, if they are of another
  • Disparages the goods, services, or business of another by false or misleading misrepresentation of fact
  • Advertises goods or services with intent not to sell them as advertised
  • Advertises goods or services with intent not to supply reasonably expected public demand, unless advertisement discloses a limitation of quantity
  • Makes false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions
  • Engages in any other conduct which similarly creates the likelihood of confusion or of misunderstanding

Most states include similar items in their lists of deceptive trade practices violations, even if those states have not adopted the uniform act. In addition, the FTC and many states prohibit other unfair practices, including the following:

  • Unfair provisions in contracts of adhesion
  • Coercive or high-pressure tactics in sales and collection efforts
  • Illegal conduct
  • Taking advantage of bargaining power of vulnerable groups
  • Taking advantage of emergency situations
  • Unconscionable activities, including outrageous and offensive conduct by a business in the sale of goods or services

Inside Prohibited Acts and Practices