Ignore Ohio Consumer Law at Your Own Peril
This article is the first part of a series on Ohio’s consumer laws, designed to raise awareness of a part of business owner’s potential pitfalls of these laws and how they can be avoided. You do not want to find yourself on the wrong side of a CSPA lawsuit.
Why you need to understand the CSPA
The CSPA, or Consumer Sales Practices Act, is a collection of statutes passed by the Ohio legislature, Rules enacted by the Ohio Attorney General and case decisions by Ohio juries and Judges that collectively set out the requirements suppliers must follow in most commercial transactions.
The CSPA, along with other consumer laws, most notably the Home Solicitation Sales Act (HSSA), mandates suppliers to follow certain procedures include specific language in contracts, prohibited specific conduct and even specify the font size of certain advertisements.
If you or your company sells goods, provide services, or any combination of goods and services for personal, family or household use, you need to know about Ohio consumer laws. Failure to take these laws into consideration can put you and/or your business at risk. Penalties for violating some of the statutes can be up to three times the damages claimed by your customers, plus $5,000. In some cases, you or your employees may be held personally liable for the violation. Furthermore, in many instances, if you lose the lawsuit, you may be responsible to pay the other side’s attorney fees. Worse yet, under many general liability insurance policies, the treble damages and attorney fees may be considered “punitive damages” and not be covered, meaning you may have to pay these costs out of your company’s bank account.
In Ohio, there more than 25 separate state consumer protection laws. However, the CSPA is the state’s main consumer protection law. Other consumer protection laws are more focused on particular segments, such as credit cards, auto sales or door-to-door sales. The CSPA is an umbrella consumer protection law. Violations of most other consumer protection statutes are also viewed has “per se” violations of the CSPA, meaning no additional proof is required to prove a violation. This means, if you violate another consumer protection law, you most likely also violate the CSPA.
Who Must Worry About The CSPA?
As mentioned, the CSPA, or Consumer Sales Practices Act, applies to most transactions of sales of goods or services for personal, family or household use. The consequences for failing to abide by these laws can be severe. Most sales of goods or services to a consumer, called a consumer transaction, are regulated by the CSPA.
The Ohio Attorney General defines a consumer transaction as “the purchase, solicitation for purchase, or award by chance, of a product or service that is intended for home, family, or personal use.” The Attorney General’s office gives several examples of consumer transactions:
- A motor vehicle dealer selling a used or new vehicle to a consumer.
- A wallpaper company selling its goods online to consumers.
- A department store advertising a sale.
- A home improvement contractor soliciting consumers at their homes.
- Third party debt collectors calling consumers to collect debts.
- Salespeople making telemarketing calls to consumers.
- Credit repair companies contracting with consumers to improve their credit.
However, not all consumer transactions fall under the CSPA. A partial list of transactions that are exempt from the CSPA include:
- All sales between businesses
- Services for accounting
- Doctors and dentists
- Public utilities such as telephone, gas, electric, and pipeline companies
- Financial institutions including banks, credit unions and the like. (However, non-bank financed residential mortgages fall under the CSPA, too.)
- Insurance companies
- Veterinarians (for medical services to pets, but not ancillary services such as boarding)
- New Home construction (These are covered under a separate Consumer Statute)
Most other sales of goods or services in Ohio fall under the statute and/or its sister provisions. These others statutes will be discussed at a later time. The most common lawsuits involving the CSPA include: roofers, home repair services, plumbers, masons, electricians, contractors, car dealers (new and used), auto repair facilities, alarm service suppliers and installers, retail shops and restaurants. This is by no means exhaustive list. Almost any business other than those exempt, can find themselves on the wrong side of a CSPA suit.