Also known as deceptive acts, deceptive practices, and deceptive sales practices, deceptive trade practices are methods of doing business that are likely to mislead individual consumers or other businesses, usually through the use of deceitful, false, incomplete, or otherwise misleading statements. In other words, deceptive trade practices occur when someone in business acts in a misleading manner toward another party, often a buyer, in a commercial transaction. For example, sellers of a weightloss product were recently found to have violated a federal law prohibiting deceptive acts and practices by falsely representing that their product could cause substantial weight loss in a short period of time without the need for diet or exercise. Another example would be an outlet store selling reconditioned blenders or stereos, without any indication that they were actually used and reconditioned rather than new. Consumers and other businesses are protected from deceptive trade practices through laws prohibiting and punishing such practices. For example, today, many companies include explanatory statements in their ADVERTISING and product PACKAGING that are designed to prevent the misleading of consumers. Statements such as “some assembly required” in television advertisements for children’s toys, “quantities limited” in sale circulars, and “serving suggestion” on boxes of breakfast cereal are the result, in part, of laws against deceptive trade practices. Deceptive trade practices are prohibited by both federal and state laws. Enacted by Congress in 1914, the Federal Trade Commission Act (FTCA), which can be found at 15 United States Code § 45, prohibits “[u]nfair methods of COMPETITION in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.” As the quoted text suggests, commercial acts or practices may be found to be unfair, deceptive, or both, but an act or practice need not be both deceptive and unfair to violate the FTCA. The FEDERAL TRADE COMMISSION is the federal agency primarily responsible for enforcing the FTCA. While the FTCA governs unfair or deceptive trade practices occurring across state lines, all 50 states have also enacted laws prohibiting deceptive trade practices. Such laws may be known as consumer protection acts, unfair trade practices acts, or consumer fraud acts, among others. While the specific provisions of each state’s laws differ, they often have the following common features. First, both the state governmental authorities and private consumers or businesses can enforce the laws. The government can bring enforcement actions and individual consumers or businesses can bring lawsuits against those who engage in deceptive trade practices. For example, in Massachusetts both the Attorney General’s Office of Consumer Protection and injured consumers or businesses can enforce the state’s consumer protection act. Second, the government, consumers, or businesses may be able to get an INJUNCTION against deceptive trade practice through a court order requiring that the offending party stop engaging in the deceptive trade practice. Third, victims of deceptive trade practices may be entitled to sue for double or triple DAMAGES and attorney’s fees for knowing violations of their state’s deceptive trade practices laws. Under some states’ laws, the standards for what constitutes a deceptive trade practice may be different in the business-to-consumer context and the business-tobusiness context. Such standards are more protective of consumers than of other businesses. For example, courts in Massachusetts have decided that business conduct considered unfair or deceptive toward a consumer would not necessarily be unfair or deceptive toward another business. As one court put it, in the business-to-business context, “[t]he objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce.” (Levings v. Forbes & Wallace, 396 N.E.2d 149, 153, 1979) Many states have adopted the Revised Uniform Deceptive Trade Practices Act (UDTPA), which was originally drafted and approved by the National Conference of Commissioners on Uniform State Laws, approved by the American Bar Association in 1964, and approved in its revised form in 1966. The original purpose of the UDTPA was to reconcile and update the states’ conflicting laws in the area of deceptive trade practices. The UDTPA’s drafters subdivided the types of business conduct that constitute deceptive trade practices under the act into conduct involving either misleading trade identification or false or deceptive advertising. More specifically, the UDTPA enumerates 12 types of business conduct that constitute deceptive trade practices.
Under the UDTPA, a “person” (which includes individuals, CORPORATIONs, and many other entities) “engages in a deceptive trade practice when, in the course of his business, vocation, or occupation, he
1. passes off goods or SERVICES as those of another;
2. causes likelihood of confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services;
3. causes likelihood of confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another;
4. uses deceptive representations or designations of geographic origin in connection with goods or services;
5. represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that he does not have;
6. represents that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or second-hand;
7. represents 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. disparages the goods, services, or business of another by false or misleading representation of fact;
9. advertises goods or services with intent not to sell them as advertised;
10. advertises goods or services with intent not to supply reasonably expectable public DEMAND, unless the advertisement discloses a limitation of quantity;
11. makes false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions; or
12. engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding.”