How Businesses Are Held Liable Under The Unfair Trade Practices Act

Businesses can be held liable for violations of the Unfair Trade Practices Act. Since unfair or deceptive trade practices are unlawful, businesses must keep in mind that being misleading is bound to backfire in the long-run. Misleading statements are just one way a business can be suspected of violating the unfair trade practices act.

The Unfair Practices Act “imposes a duty to disclose material facts reasonably necessary to prevent any statements from being misleading.” Specifically, the Act provides that “unfair or deceptive trade practices and unconscionable trade or commerce are unlawful.” The Act defines unfair or deceptive trade practices as:

an act specifically declared unlawful pursuant to the Unfair Trade Practices Act [ 57-12-1 NMSA 1978], a false or misleading oral or written statement, visual description or other representation of any kind knowingly made in connection with the sale, lease, rental or loan of goods or services or in the extension of credit or in the collection of debts by a person in the regular course of his trade or commerce, which may, tends to or does deceive or mislead any person and includes:

(1) representing goods or services as those of another when the goods or services are not the goods or services of another;
(2) causing confusion or misunderstanding as to the source, sponsorship, approval or certification of goods or services;
(3) causing confusion or misunderstanding as to affiliation, connection or association with or certification by another;
(4) using deceptive representations or designations of geographic origin in connection with goods or services;
(5) 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 he does not have;
(6) representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used or secondhand;
(7) representing 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) disparaging the goods, services or business of another by false or misleading representations;
(9) offering goods or services with intent not to supply them in the quantity requested by the prospective buyer to the extent of the stock available, unless the purchaser is purchasing for resale;
(10) offering goods or services with intent not to supply reasonable expectable public demand;
(11) making false or misleading statements of fact concerning the price of goods or services, the prices of competitors or one’s own price at a past or future time or the reasons for, existence of or amounts of price reduction;
(12) making false or misleading statements of fact for the purpose of obtaining appointments for the demonstration, exhibition or other sales presentation of goods or services;
(13) packaging goods for sale in a container that bears a trademark or trade name identified with goods formerly packaged in the container, without authorization, unless the container is labeled or marked to disclaim a connection between the contents and the trademark or trade name;
(14) using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if doing so deceives or tends to deceive;
(15) stating that a transaction involves rights, remedies or obligations that it does not involve;
(16) stating that services, replacements or repairs are needed if they are not needed; or
(17) failure to deliver the quality or quantity of goods or services contracted for;

The Act further defines “unconscionable trade practices” as:

an act or practice in connection with the sale, lease, rental or loan, or in connection with the offering for sale, lease, rental or loan, of any goods or services, including services provided by licensed professionals, or in the extension of credit or in the collection of debts which to a person’s detriment:

(1) takes advantage of the lack of knowledge, ability, experience or capacity of a person to a grossly unfair degree; or
(2) results in a gross disparity between the value received by a person and the price paid.

It is important to consider that just because one of the following acts above is not pertaining to a business, any false or misleading statement whether written or oral, or a visual description or representation of any kind knowingly made in connection with the sale, lease, rental or loan of goods or services or in the extension of credit or in the collection of debts by a person in the regular course of his trade or commerce, which may, tends to or does deceive or mislead any person is a violation of the unfair trade practices act.

In other words, if a business or person knowingly makes a false or misleading statement (which includes a failure to disclose material facts) as part of the sale of goods or services and that is part of their regular business or a person or business engages in an unconscionable trade practice in connection with sale of goods or services then they can be liable under the Unfair Trade Practices Act.

The Unfair Trade Practices Act permits any person who “suffers any loss of money or property, real or personal” from the violation of the Act to bring a lawsuit to recover the money they lost or $100.00, whichever is greater. If the violation was willful, the court may award up to three times actual damages. One of the Act’s biggest hammers is the attorney’s fees provision which requires the court to award attorney’s fees and costs if the damaged party wins. But if the damaged party loses and the court finds that the damaged party’s action was groundless then the defendant will be awarded attorney’s fees and costs.