What Does Deceptive Act Mean Under the FTCA?
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The Federal Trade Commission Act (FTCA) business regulations, originally passed in 1914, prohibit unfair competition by outlawing “unfair or deceptive acts or practices in or affecting commerce.” FTCA business regulations apply to all individuals and businesses engaged in commerce, even banks.
A company can commit a deceptive act through practices such as false advertising and packaging, but there are a variety of other deceptive acts, which are unique to banks. The FTCA grants the Federal Trade Commission (FTC), and the Federal Deposit Insurance Corporation (FDIC), among other agencies, broad authority to define an unfair or deceptive act within a bank. The FTCA may even be used against a bank when the bank is acting within the bounds of other consumer laws, but is using acts or practices that appear to be unfair or deceptive. FTCA regulations have been especially important in the recent years of the predatory lending practices associated with the sub-prime mortgage crisis.
How the FTCA Define Deceptive Acts
The FTCA breaks down an “unfair or deceptive act or practice” into two different legal standards: one for unfair, and another for deceptive. A party is in violation of the act when they are found liable under either or both of these standards.
An unfair act or practice under the FTCA is one that cannot reasonably be avoided by the consumer; and causes, or is likely to cause, the consumer some sort of injury. The act or practice by the business will also be either no, or very little, benefit to the consumer.
An act or practice is considered deceptive when it involves a material representation or omission that is reasonably likely to mislead a consumer. A representation or omission is material when it is an important or main reason for the customer’s decision to purchase the good or service. There is no need to establish intent to deceive in order to find a company liable for a deceptive act or practice under the FTCA. Further, the deception does not even actually have to occur to be in violation of the FTCA. A court recently found that a weight-loss pill company was liable for a deceptive act when it claimed that the consumer who took the pills did not need to diet or exercise to lose weight. Courts may also take into consideration other public policy factors when determining if the act or practice is unfair or deceptive.
States Governed by FTCA Regulations
While the FTCA is federal law, every state also has its own laws on unfair or deceptive acts or practices. These laws can vary from federal FTCA business regulations, so it is important to find out what your own state's applicable laws entail. These state laws are often known as UDAP statutes, unfair trade protection acts or consumer protection acts. To obtain more detailed information about the laws governing unfair or deceptive acts in your state, contact a local business attorney.