How Does Someone Violate the CSPA?
This is the fifth installment of our 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. If you haven’t already, read Parts One through Four of this series in previous posts for more information about the CSPA.
The idea behind the Consumer Sales Practices Act (CSPA) is a noble one. Lawmakers realized that there are unscrupulous business owners and con artists willing to pray on the unsophisticated consumer. As a business owner, you should be happy these laws exist. They’re in part designed to discourage and prevent, or at the very least punish, those companies that put your profession in a bad light. The CSPA levels the playing field, requiring all businesses to play by the same rules. But what are the rules, you ask? How does the CSPA protect my businesses reputation and my profession’s reputation?
In general, a business violates the CSPA when it commits an unfair or deceptive act or practice or an unconscionable act or practice before, during or after a sale of goods or services, whose purpose is primarily for personal, family or household use. Yeah, that sounds like a lawyer wrote it – so let’s break down what that really means.
At its root, it means that the seller will not trick or deceive a customer in any sale. What kind of deception or tricks does the law consider unfair, unconscionable, or deceptive? It’s quite a long list. Furthermore, this is divided up into three parts. First there is the law itself, as passed by the Ohio state legislature and signed by the governor. This is in the Ohio Revised Code starting at §1345.01. Second, the law permits the Ohio Attorney General to make additional rules stating what is a violation of the CSPA. Finally, there are acts and practices not explicitly contemplated by the law or the Ohio Attorney General that add additional acts and practices that, going forward, are violations of the CSPA.
To give you a general idea of what the law covers, here’s a list of what the legislature and the attorney general consider unfair, unconscionable or deceptive:
- Stating that something is the particular standard, quality, grade, style or model, when it is not
- Stating that something is new or unused, when it is not
- Telling a consumer something is available for a reason that does not exist
- Telling a consumer that the supply is of a greater quality than he intends to sell
- Telling a consumer that something needs to be replaced or repaired when it does not
- Telling a consumer that a price advantage exists, when it does not
- Deceiving a consumer about a warranty, or lack of warranty
- Taking advantage of the consumer’s mental or physical illness, ignorance, illiteracy or inability to understand the language of the contract
- Knowing that a consumer could not fully pay for the product
- Requiring a consumer to enter into a contract with terms that are one-sided in favor of the supplier
- Refusing, without justification, to make a refund in cash or check for a returned item unless there was a pre-existing refund policy known by the consumer, or otherwise posted
These are just the tip of the iceberg when it comes to consumer laws. Many of the attorney general’s rules are specific to a particular business or trade. For instance, automobile dealers, both new and used, have a set of specific rules, as do automobile repair shops. Other specific industries that have rules include gas stations, residential mortgages, auto rust inhibitors, debt collection, and advertisements of all sorts.
The CSPA rules are there for everyone’s protection
The attorney general’s office in Ohio received over 30,000 consumer complaints a year. These complaints are in areas including home-improvement contracts, automobile sales, debt collection and many other consumer transactions. The CSPA was designed to protect consumers from the types of allegations made in these complaints. Its primary focus is to protect consumers from shoddy work, deceptive advertising and one-sided contracts. In order to accomplish these goals, the CSPA:
- Defines consumer transactions as well as sellers and suppliers
- Sets up requirements for sellers and suppliers
- Defines unfair, deceptive or unconscionable practices
- Permits the Ohio Attorney General to conduct investigations and bring penalties
- Permits the Ohio Attorney General to make rules describing unfair, deceptive or unconscionable practices
- Permits private litigation
Some of the initial practices that were targeted include bait and switch tactics, unavailability of goods, and proper disclosure of estimates. Since its inception, it has been amended and expanded numerous times as the economic climate has changed. More recently, several rules were added relating to home mortgage loans and other practices as a result of the 2008 real estate meltdown.
While the Ohio Attorney General has the power to investigate any complaints it receives, by far the most common enforcement tool for the CSPA is private litigation. Private litigation is when the consumer sues the supplier for the alleged unfair or unconscionable act or practice. If a consumer wins, they are entitled to 3 times their actual damages plus up to $5,000 in non-economic damage. Additionally, when a consumer brings a suit, and succeeds, they are genuinely entitled to have the supplier pay its attorney’s fees. This is sometimes the costliest portion of a suit.
Next time, we will cover what to do when someone files a CSPA lawsuit against your business. Watch this column or visit www.gertsburglaw.com/blog for the full series and for more legal tips for your business.