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The Pennsylvania Unfair Trade Practices and Consumer Protection Law

Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) is a blunt yet versatile weapon, widely used by plaintiffs’ attorneys to attack a variety of actual and perceived harms to consumers. Although the UTPCPL has been the law of Pennsylvania since 1968, it is all but unknown in the business communities against which the Act is typically directed. It is therefore worth taking a moment to review the trade practices targeted by the Act, and the remedies available to those who succeed in their claims under the Act.

The Consumer Protection Bureau of the Pennsylvania Attorney General’s Office is charged with enforcement of the UTPCPL. To this end, the Consumer Protection Bureau investigates myriad consumer complaints and prosecutes the more meritorious of those complaints. The Act also permits individuals to pursue private remedies through lawsuits, and for every enforcement action initiated by the Consumer Protection Bureau, many more are actually pursued privately by the consumers themselves. So despite the Attorney General’s significant resources and enforcement powers, it is private litigants who pose the more likely threat to business.

Unfair or Deceptive Acts or Practices

The centerpiece of the UTPCPL, located at 73 P.S. § 201-1, et seq., is an extensive definition of conduct deemed to be “unfair methods of competition” and “unfair or deceptive acts or practices.” The definition consists of a laundry list of twenty-one separately enumerated unfair or deceptive acts or practices. Included among the definitions are five separate provisions targeted at preventing advertising and representations that confuse or mislead consumers as to the actual manufacturer or provider of goods or services, or as to the sources, sponsorship, affiliation or geographic origins of goods, or services. Other definitional provisions are aimed at representations that goods or services have characteristics, ingredients or uses they do not have, and representing that goods are original or new if they are deteriorated or used, or that goods or services are of a particular standard when they are not. The UTPCPL also makes it an unfair or deceptive act or practice to engage in a “bait and switch” – advertising goods or services with intent not to sell them as advertised, or advertising them with intent not to supply the reasonably expectable public demand, unless the advertisement discloses a quantity limitation.

Still other provisions target representations that repairs or replacements are needed when they are not, such as misleading rust proofing representations by car dealers, and failure to comply with written warranties.

The UTPCPL also takes aim at some common business practices which though dubious, would not normally be though of as unlawful. Specifically, the UTPCPL makes it an unfair trade practice for a seller to promise a buyer compensation for procuring another buyer or “referral” where that compensation is contingent upon some later event. The UTPCPL also singles out the “chain letter” as an unfair trade practice. More surprisingly to many, the Act also makes it an unfair trade practice to promote or even engage in a “pyramid club,” referring to the many commonplace sales schemes by which an individual buys goods or services upon the promise that he will receive compensation for selling similar goods and services to others, and for having those others sell goods and services, and so on.

A 1996 amendment to the Act focuses on telemarketing, making it an unfair trade practice to solicit telephone sales without first conspicuously stating the identity of the Seller, the purpose of the call (i.e., to make a sale), the nature of the goods or services in question and, in prize promotions, that no purchase or payment is necessary to win. You may well ask how often this legal requirement is met in your own experience with telemarketers.

The “Catchall” Provision

Although the Act is awash in detailed definitions of unfair practices, it is the UTPCPL’s most vague definition that is most often relied upon by plaintiffs’ attorneys. The Act’s twenty-first unfair trade practice definition, its “catchall,” is “any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” Before the 1996 amendments, the catchall provision addressed only “fraudulent conduct,” requiring a plaintiff to prove the elements of common law fraud, including proof that a misrepresentation was made intentionally or with reckless disregard of its truth. Rodriguez v. Mellon Bank, N.A., 218 B.R. 764 (Bankr. E.D. Pa. 1998). However the 1996 amendments expanded the catchall provision to include a wider variety of unsavory conduct within the reach of the UTPCPL. Curiously, the Pennsylvania Superior Court has since ruled that a plaintiff suing under the catchall provision still must prove all elements of common law fraud, despite the 1996 amendments. See Booze v. Allstate Ins. Co., 750 A.2d 877 (Pa. Super. 2000).

The scope of the catchall provision and whether it permits claims for “deceptive” conduct falling short of actual fraud remains unsettled. The United States Bankruptcy Court for the Eastern District of Pennsylvania recently rejected the Booze decision, reasoning that the Pennsylvania legislature must have intended to expand plaintiffs’ rights of recovery beyond fraudulent conduct when it amended the statute to address “deceptive” conduct. Patterson v. Chrysler Financial Company, 263 B.R. 82 (Bankr. E.D. Pa. 2001). It will now require a ruling by the Pennsylvania Supreme Court to settle the question and until that happens there will be some significant uncertainty as to what the UTPCPL does and does not prohibit.

In actual practice, even when the challenged business conduct does not fit any of the specific definitions of unfair trade practices, a plaintiff’s lawyer preparing a complaint for breach of contract or transactional misrepresentations will often include a claim of unfair trade practices under the catchall provision. The reasons are at least two-fold. First, the UTPCPL is not subject to the relatively short two-year statute of limitations applicable to common law fraud claims, thereby allowing a plaintiff to pursue what is in essence a claim for fraud so long as he files within the six-year limitations period applicable to UTPCPL claims. The second and more significant reason for including a UTPCPL claim is, in a word, money.

Treble Damages and Other Remedies

The UTPCPL offers a wide range of remedies-i.e., money damages-to those who succeed in proving an unfair trade practices claim. At Section 201-9.2, the Act provides that a person who has purchased or leased goods or services “primarily for personal, family or household purposes,” and who thereby suffers any loss of money or property as a result of an unfair trade practice may bring a private action to recover actual damages or $100.00, whichever is greater. Far more importantly, Section 201-9.2 also provides that “the court may in its discretion, award up to three times the actual damages sustained,” plus reasonable attorney fees.

In practice, an award of treble damages is quite rare. It is rather the threat of treble damages and counsel fees that makes the UTPCPL a powerful weapon. Many a case that might otherwise go to trial is settled quickly for a reasonable price upon the defendant’s fear of potentially having to pay not just the plaintiff’s attorney fees, but also three times whatever the actual damages might be.

By its terms, the UTPCPL only provides private remedies to consumers of “goods or services.” However in 1987 the Pennsylvania Superior Court ruled that sales of residential real estate are also within the purview of the UPTCPL. See Gabriel v. O’Hara, 368 Pa. Super. 383, 534 A.2d 488 (1987). As a result of the Gabriel ruling, unfair trade practices claims are now routinely included within fraud complaints against realtors and sellers of real estate.

With the Gabriel decision extending the reach of the UTPCPL, the Act provides consumers with significant leverage-excessive leverage, in the view of many business interests-to redress grievances in a wide variety of consumer transactions ranging from goods and services to telemarketing, motor vehicle sales and services, and now real estate. Further, with the 1996 amendments potentially gathering all manner of deceptive conduct within the “catchall” definition, there are surprisingly few hard limitations on what is and isn’t an unfair trade practice. The benefit for plaintiffs, and the risk for business, is that, in an Act providing for remedies as strong as treble damages, the definition of “unfair trade practices” remains to some degree in the eye of the beholder.

The attorneys at Wolf, Baldwin & Associates, P.C. have been practicing law primarily in Montgomery County, Berks County, and Chester County since 1973. Being general practitioners, we have the breadth of knowledge to help you learn and protect your rights in a wide range of civil litigation cases. If you need a lawyer for an unfair trade practices claim, you can consult with one of our attorneys. Please contact us now to schedule an appointment. We look forward to hearing from you.

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