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discussion ch.25 In the beginning, a consumer harmed by some commercial practice had the ability to sue the business based on a claim of fraud
discussion ch.25 In the beginning, a consumer harmed by some commercial practice had the ability to sue the business based on a claim of fraud at common law. To be successful on a common-law fraud claim, in addition to proving up the facts and circumstances constituting the alleged fraud the consumer also had to prove that the perpetrator intended to deceive. In an economy composed mainly of individuals and small local businesses engaging in in-person transactions, this made sense. As the economy grew and changed, it became more and more difficult, as a practical matter, for a consumer to prove the requisite intent to deceive. Consumers bought most products from store shelves based on advertising, often with little interaction with a human salesperson, and later found it almost impossible to identify any person or persons who could be shown to have engineered - "intended" - a fraud, Now, we buy many, even most, products online or by telephone based on mass-market advertising without entering a store and with no human interaction. We even can buy a car over the Internet and have it delivered through a vending machine (check out Carvana for this). When we believe we've been defrauded, we find it's really hard to prove up the intent of a faceless and monolithic business organization - If such an organization is even capable of having intent in the first place. Most jurisdictions have sought to remedy this situation by enacting statutes that afford special protection to consumers, who are usually (but not always) defined as individuals buying consumer-type goods for personal or household use or consumption. A common provision of consumer protection statutes is elimination or other significant reduction of the requirement to prove intent to deceive, the goal being to in effect, put the burden on the business to prove proper motives and conduct in a circumstance where the product or service in question does not conform to representations made through advertising or otherwise Texas has a consumer protection statute called the Deceptive Trade Practices Consumer Protection Act, commonly known as "DTPA" One key feature of the DTPA is that proof of intent is not required and a consumer simply must prove that the product or service in question did not conform to representations made through advertising or otherwise. If a consumer Is also able to prove "knowing conduct by the business (not quite intent to deceive, but close), damages recoverable can be increased by application of a multiple to the actual damages incurred. Another key feature of the DTPA is that some small businesses (defined in terms of net worth) are protected along with the individual consumer. The state senator who got the DTPA passed back in the 1970s considered it one of his most important achievements during a long and productive legislative career ('Senator El Grande was one of the most effective state senators ever to serve. He also was a practicing lawyer I hired him once to help my company with a regulatory problem and have vivid memories of working with him). Is intent to deceive a relevant concept in modern consumer transactions, and if not should it be and to what extent? Who should quality as a consumer who does not have to prove intent? What do you think of the DTPA as described? Have we gone too far in tipping the balance toward the consumer? As a businessperson, what would you do to protect against being held liable under the DTPA in circumstances where your business did not act intentionally but may have made a mistake that harmed a consumer? In the beginning, a consumer harmed by some commercial practice had the ability to sue the business based on a claim of fraud at common law. To be successful on a common-law fraud claim, in addition to proving up the facts and circumstances constituting the alleged fraud the consumer also had to prove that the perpetrator intended to deceive. In an economy composed mainly of individuals and small local businesses engaging in in-person transactions, this made sense. As the economy grew and changed, it became more and more difficult, as a practical matter, for a consumer to prove the requisite intent to deceive. Consumers bought most products from store shelves based on advertising, often with little interaction with a human salesperson, and later found it almost impossible to identify any person or persons who could be shown to have engineered - "intended" - a fraud, Now, we buy many, even most, products online or by telephone based on mass-market advertising without entering a store and with no human interaction. We even can buy a car over the Internet and have it delivered through a vending machine (check out Carvana for this). When we believe we've been defrauded, we find it's really hard to prove up the intent of a faceless and monolithic business organization - If such an organization is even capable of having intent in the first place. Most jurisdictions have sought to remedy this situation by enacting statutes that afford special protection to consumers, who are usually (but not always) defined as individuals buying consumer-type goods for personal or household use or consumption. A common provision of consumer protection statutes is elimination or other significant reduction of the requirement to prove intent to deceive, the goal being to in effect, put the burden on the business to prove proper motives and conduct in a circumstance where the product or service in question does not conform to representations made through advertising or otherwise Texas has a consumer protection statute called the Deceptive Trade Practices Consumer Protection Act, commonly known as "DTPA" One key feature of the DTPA is that proof of intent is not required and a consumer simply must prove that the product or service in question did not conform to representations made through advertising or otherwise. If a consumer Is also able to prove "knowing conduct by the business (not quite intent to deceive, but close), damages recoverable can be increased by application of a multiple to the actual damages incurred. Another key feature of the DTPA is that some small businesses (defined in terms of net worth) are protected along with the individual consumer. The state senator who got the DTPA passed back in the 1970s considered it one of his most important achievements during a long and productive legislative career ('Senator El Grande was one of the most effective state senators ever to serve. He also was a practicing lawyer I hired him once to help my company with a regulatory problem and have vivid memories of working with him). Is intent to deceive a relevant concept in modern consumer transactions, and if not should it be and to what extent? Who should quality as a consumer who does not have to prove intent? What do you think of the DTPA as described? Have we gone too far in tipping the balance toward the consumer? As a businessperson, what would you do to protect against being held liable under the DTPA in circumstances where your business did not act intentionally but may have made a mistake that harmed a consumer
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