State Consumer and Protection Laws Enforcement and Litigation Trends in Texas. September 20, 2011

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1 State Consumer and Protection Laws Enforcement and Litigation Trends in Texas September 20, 2011

2 Panel Members Moderator Nicole Williams Thompson & Knight LLP Panelists David Bragg Law Offices of David F. Bragg & former Assistant Attorney General / Division Chief, Consumer Protection Division Esther Chavez - Assistant Attorney General / Deputy Chief, Consumer Protection Division Mark Kincaid - Kincaid & Horton, L.L.P.

3 DTPA - Overview Texas Deceptive Trade Practices-Consumer Protection Act (DTPA)--Tex. Bus. & Com. Code et seq.--was enacted in The DTPA was designed to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure that protection.

4 DTPA Standing Plaintiff can be any "consumer" under DTPA, which is any: (a) an individual, partnership, corporation, State of Texas, or Texas agency. (b) that either (i) sought to purchase or lease goods or services from defendant; or (ii) actually purchased or leased goods or services from defendant. The term "consumer" does not include a "business consumer" that has assets of $25 million or more, or that is owned or controlled by a corporation or entity with assets of $25 million or more. Tex. Bus. & Com. Code 17.45(4)

5 DTPA Violations A consumer may maintain an action under the DTPA if the consumer has suffered economic damages or damages for mental anguish produced by any one of the following four types of actions: The use or employment of a false, misleading, or deceptive act or practice that is specifically enumerated in Business and Commerce Code Section 17.46(b) and relied on by the consumer to the consumer's detriment. The breach of an express or implied warranty. An unconscionable action or course of action. The use or employment of an act or practice in violation of Insurance Code Chapter 541.

6 DTPA Violations Prohibited practices are listed in Section 17.46(b), sometimes referred to as "laundry list" violations, and include: Passing off goods or services as those of another Causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services Causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another Using deceptive representations or designations of geographic origin in connection with goods or services Representing 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 the person does not have Representing that deteriorated, reconditioned, reclaimed, used, or secondhand goods are original or new Falsely representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model And more...

7 DTPA Tie-In Statutes Tie-in statutes are other statutes that provide that their violation, or a violation of some of their provisions, constitutes a deceptive trade practice. A person injured by a violation of the act or statute in question may bring suit either directly under that statute, under the DTPA, or under both. Examples of tie-in statutes include: Provisions regulating telephone solicitation, Tex. Bus. & Com. Code , et seq. Cancellation of Consumer Transactions Act, Tex. Bus. & Com. Code , et seq. Debt Collection Act, Tex. Fin. Code , et seq. Provisions governing sellers of real property, see Tex. Prop. Code 5.069(d),(e), 5.070(b),(c), 5.072(e),(f), 5.078(d),(e)

8 DTPA Damages Damages in a DTPA action include: Economic and mental anguish damages Injunction Court costs and attorney's fees Interest Treble damages for knowing violations Tex. Bus. & Com. Code 17.50(b)

9 Texas Insurance Code Ch. 541 and 542 Chapter 541 addresses unfair competition and unfair or deceptive acts or practices in the insurance industry. Chapter 541 provides a cause of action for a person who has sustained actual damages caused by another's engaging in an act or practice that is either: (1) declared to be an unfair or deceptive practice under Tex. Ins. Code ; or (2) specifically enumerated in the DTPA "laundry list" of violations as an unlawful deceptive trade practice. Persons who are victims of unfair or deceptive insurance practices may have a cause of action under the DTPA, under chapter 541 of the Insurance Code, or under both laws.

10 Consumer Privacy Laws Consumer Protection Against Computer Spyware Act Tex. Bus. & Com. Code et seq. Anti-Phishing Act Tex. Bus. & Com. Code et seq. Disposal of Business Records Containing Personal Identifying Information Tex. Bus. & Com. Code

11 Consumer Privacy Laws Identity Theft Enforcement and Protection Act Tex. Bus. & Com. Code et seq. Identity theft is a deceptive trade practice under the DTPA. Court Order to Declare Individual a Victim of Identity Theft Tex. Bus. & Com. Code et seq. Identity Theft Insurance Tex. Ins. Code et seq.

12 AG Civil Investigative Demand Whenever the consumer protection division believes that any person may be in possession, custody, or control of the original copy of any documentary material relevant to the subject matter of an investigation of a possible violation of this subchapter, an authorized agent of the division may execute in writing and serve on the person a civil investigative demand requiring the person to produce the documentary material and permit inspection and copying. Tex. Bus. & Com. Code 17.61

13 Helpful Texas Links Texas Attorney General s Office Consumer Protection Unit Texas Department of Insurance Texas Statutes