a 50-state report - nclc - national consumer law center

A 50-State Report on Unfair and Deceptive Acts

and Practices Statutes

Carolyn L. Carter

NATIONALCONSUM ER LAW

CENTER INC®

www.consumerlaw.org—————————————————

▲

February 2009

CONSUMER PROTECTION

IN THE STATES

ABOUT THE AUTHOR

Carolyn L. Carter is the Deputy Director for Advocacy at the NationalConsumer Law Center. She is one of the principal authors of NCLC’sUnfair and Deceptive Acts and Practices (7th ed. 2008) and a number ofother NCLC treatises dealing with consumer fraud. She is the editor ofPennsylvania Consumer Law and was the editor of the first edition ofOhio Consumer Law. She is a graduate of Brown University and YaleLaw School and has been practicing consumer law since 1974.

ABOUT THE NATIONAL CONSUMER LAW CENTER

The National Consumer Law Center®, a nonprofit corporation foundedin 1969, assists consumers, advocates, and public policy makers na-tionwide on consumer law issues. NCLC works toward the goal of con-sumer justice and fair treatment, particularly for those whose povertyrenders them powerless to demand accountability from the economicmarketplace. NCLC has provided model language and testimony onnumerous consumer law issues before federal and state policy makers.NCLC publishes an 18-volume series of treatises on consumer law, anda number of publications for consumers.

ACKNOWLEDGMENTS

Thanks to Jon Sheldon, Will Ogburn, and Rick Jurgens for reviewingdrafts of this report, and to the many attorneys in legal services offices,private practice, and Attorney General offices, who reviewed the analy-ses of the states’ laws. Particular thanks to Nate Player for research andanalysis and to Julie Gallagher for graphic design.

© 2009 National Consumer Law Center® All rights reserved.7 Winthrop Square, Boston, MA 02110617-542-8010 www.consumerlaw.org

SUMMARY

Unfair and Deceptive Acts and Practices (UDAP)statutes in each of the fifty states and the Districtof Columbia constitute the main lines of defenseprotecting consumers from predatory, deceptive,and unscrupulous business practices.

This report documents how widely and fre-quently those lines have been breached, and findsthat in almost all states significant gaps or weak-nesses undermine the promise of UDAP protec-tions for consumers.

UDAP laws prohibit deceptive practices inconsumer transactions and, in many states, alsoprohibit unfair or unconscionable practices. Yetdespite their critical role in ensuring marketplacejustice and fairness, the effectiveness of UDAPlaws varies widely from state to state.

The holes are glaring. Legislation or court de-cisions in dozens of states have narrowed the scopeof UDAP laws or granted sweeping exemptions toentire industries. Other states have placed substan-tial legal obstacles in the path of officials chargedwith UDAP enforcement, or imposed ceilings aslow as $1,000 on civil penalties. And several stateshave stacked the financial deck against consumerswho go to court to enforce the law themselves.

Specific findings include:

� UDAP protections in Michigan and RhodeIsland have been gutted by court decisionsthat interpret the statute as being applicableto almost no consumer transactions.

� Iowa does not allow consumers who have beencheated to go to court to enforce UDAPprovisions.

� In addition to Michigan and Rhode Island,three states—Louisiana, New Hampshire, and

Virginia—exempt most lenders and creditorsfrom UDAP statutes, while another 15 leavesignificant gaps or am big uities in theircoverage of creditors.

� Utility companies in 16 states enjoy im mu nityfrom UDAP laws, as do insurance companiesin 24 states.

� Five states—Colorado, Indiana, Nevada, NorthDakota, andWyoming—impede the AttorneyGeneral’s ability to stop ongoing unfair ordeceptive practices by conditioning an in-junction or any other relief upon proof thatthose practices were done knowingly orintentionally.

� While all states except Iowa allow con sumersto go to court to enforce UDAP laws, fivestates—Arizona, Delaware, Miss issippi, SouthDakota, and Wyoming—impose a financialburden on those consumers by denying themthe ability to recover their attorney’s fees.

� Worse, in Florida and Oregon, courts haverequired unsuccessful consumers to pay tensof thousands of dollars to the business for itsattorney fees, even though the consumers filed suit in good faith. Alaska’s UDAP statute requires unsuccessful consumers topay partial attorney fees to the business, andin three other states the UDAP statute has notyet been authoritatively interpreted to ruleout this result.

� A number of states impose special pro ceduralobstacles on consumers that can hinder oreven prevent them from enforcing the UDAPstatute.

CONSUMER PROTECTION IN THE STATES

A 50-State Report on UDAP Statutes

5

Every state has a consumer protection law thatprohibits deceptive practices, and many prohibitunfair or unconscionable practices as well. Thesestatutes, commonly known as Unfair and Decep-tive Acts and Practices or UDAP statutes, providebedrock protections for consumers.

In billions of transactions annually, UDAPstatutes provide the main protection to con-sumers against predators and unscrupulousbusinesses. Yet, despite their importance, UDAPstatutes vary greatly in their strength from stateto state.

In many states, the UDAP statute is surpris-ingly weak. Common weaknesses include:

� Prohibiting only a few narrow types ofunfairness and deception;

� Prohibiting only deceptive acts, not unfair acts;

� Failing to give a state agency the authority toadopt substantive regulations prohibitingemerging scams;

� A constricted scope, so that the statuteappears to prohibit unfairness and deceptionbut actually applies to few businesses;

� Weaknesses in the remedies that the AttorneyGeneral can invoke;

� Weaknesses in the remedies consumers caninvoke, such as failing to allow consumers torecover their attorney fees;

� Imposing special preconditions when consu -mers who have been cheated seek to go to court.

These weaknesses undermine—and in somestates almost completely negate—the promise of

UDAP statutes to protect consumers. This reportevaluates the strength of these fundamental con-sumer protection statutes in the fifty states andthe District of Columbia.

Why UDAP Statutes Are Important

UDAP statutes provide the basic protections forthe thousands of everyday transactions that eachconsumer in the United States enters into eachyear. Although UDAP statutes vary widely fromstate to state, their basic premise is that unfairand deceptive tactics in the marketplace are inap-propriate. UDAP statutes are the basic legal under-pinning for fair treatment of consumers in themarketplace.

Before the adoption of state UDAP statutes inthe 1970’s and 1980’s, neither consumers norstate agencies had effective tools against fraudand abuse in the consumer marketplace. Thiswas so even though the Federal Trade Commis-sion Act had prohibited unfair or deceptive actsor practices since 1938. In most states, there wasno state agency with a mandate to root out con-sumer fraud and abuse, much less tools to pur-sue fraud artists.

Consumers had even fewer tools at their dis-posal. A consumer who was defrauded often foundthat fine print in the contract immunized theseller or creditor. Consumers could fall back onlyon claims such as common law fraud, which re-quires rigorous and often insurmountable proofof numerous elements, including the seller’s stateof mind. Even if a consumer could mount a claim,

6 CONSUMER PROTECTION IN THE STATES

and even if the consumer won, few states had anyprovisions for reimbursing the consumer forattorney fees. As a result, even a consumer whowon a case against a fraudulent seller or creditorwas rarely made whole. Without the possibility ofreimbursement from the seller, consumers couldnot even find an attorney in many cases.

UDAP statutes were passed in recognition ofthese deficiencies. States worked from several dif-ferent model laws, all of which adopted at leastsome features of the Federal Trade CommissionAct by prohibiting at least some categories of un-fair or deceptive practices. But all go beyond theFTC Act by giving a state agency the authority toenforce these prohibtions, and all but one alsoprovide remedies that consumers who have beencheated can invoke.

Laws other than UDAP statutes rarely fill thisneed. For example, much consumer fraud is not acriminal offense. Even where an activity might vi-olate a criminal law, police and prosecuting au-thorities usually have few resources to devote tonon-violent crime. In addition, the burden ofproof is extremely high in a criminal case, andthe result of the case may only be punishment ofthe offender—not the refund that the consumerwants. State UDAP statutes provide a way forconsumers to get their money back when theyhave been cheated.

Another example is predatory lending andmortgage fraud. There are a few federal laws thataddress lending in general and mortgage lendingin particular. However, while these laws requiredisclosures to be given to consumers, and somerestrict certain loan terms, none includes a prohi-bition against deception or unfairness that con-sumers can enforce. A consumer who has beencheated or deceived by a lender will not have anyclaim under federal banking laws as long as thelender complied with relatively narrow require-ments regarding disclosures and contract terms.The massive level of fraud and unfairness thathas led to the subprime mortgage crisis demon-strates this weakness of the federal lending laws.

UDAP statutes bring consumer justice to thestate, local, and individual level. They enable state

agencies to protect their citizens by respondingquickly to emerging frauds. They give effectiveremedies that consumers themselves can invoke.UDAP statutes help the marketplace as well. Byproviding disincentives for unfair and deceptivepractices, they help honest merchants compete.

UDAP statutes are primarily civil statutes. Someallow criminal penalties for extreme violations, butalmost all enforcement is through the civil courts.

The typical UDAP statute allows a state en-forcement agency, usually the Attorney General,to obtain an order prohibiting a seller or credi-tor from engaging in a particular unfair or de-ceptive practice. The Attorney General can alsoask the court to impose civil penalties of a cer-tain dollar amount for violations, and to orderthe seller or creditor to return consumers’ pay-ments. The typical statute also allows consumersto seek similar remedies—return of payments orcompensation for other consumer loss (oftenwith some sort of enhancement to account forintangible or hard-to-document losses), some-times an injunction against repetition of thefraudulent practices, and, in most states, reim-bursement for attorney fees.

About This Report

This report analyzes the strengths and weak-nesses of state UDAP statutes in four broad cate-gories: their substantive prohibitions, their scope,the remedies they provide for the state enforce-ment agency, and the remedies they provide forconsumers. Appendix A provides a capsule sum-mary of the strength and weaknesses of each law,and Appendix B, available at www.nclc.org, pro-vides a detailed analysis of each state’s law.

A handful of states have more than one UDAP-type statute. In many of those states, only one ofthe UDAP statutes is commonly used by con-sumers and state enforcement agencies, so thisreport analyzes only that statute.

The factors analyzed in this report are summa-rized on the charts on the following pages.

State UDAP Statutes at a GlanceStrengths and Weaknesses

AL AK AZ AR CA CO CT DE DC FL GA HI ID IL

Prohibition of unfairness, deception

Broad deception prohibition � � � � � � � � � � � � � �

Broad unfairness prohibition � � � � � � � � � � � � � �

Rulemaking authority � � � � � � � � � � � � � �

Scope

Covers credit � � � � � � � � � � � � � �

Covers insurance � � � � � � � � � � � � � �

Covers utilities � � � � � � � � � � � � � �

Covers post-sale acts � � � � � � � � � � � � � �

Covers real estate � � � � � � � � � � � � � �

State enforcement

Civil penalty amount � � � � � � � � � � � � � �

Deception sufficient without � � � � � � � � � � � � � �

proof of intent or knowledge

Remedies for consumers

Compensatory damages � � � � � � � � � � � � � �

for consumers

Multiple or punitive damages � � � � � � � � � � � � � �

Attorney fees for consumers � � � � � � � � � � � � � �

Class actions � � � � � � � � � � � � � �

Allows consumer suit without � � � � � � � � � � � � � �

proof of reliance


proof of public impact


pre-suit notice

Key: � = strong � = mixed or undecided � = weak

CONSUMER PROTECTION IN THE STATES 7


State UDAP Statutes at a Glance (continued)Strengths and Weaknesses

IN IA KS KY LA ME MD MA MI MN MS MO MT NE





Scope

Covers credit � � � � � � � � � � � � � �





State enforcement






for consumers



Class actions � � � � � � � � � � � � � �


proof of reliance




pre-suit notice




NV NH NJ NM NY NC ND OH OK OR PA RI SC SD





Scope

Covers credit � � � � � � � � � � � � � �





State enforcement






for consumers



Class actions � � � � � � � � � � � � � �


proof of reliance




pre-suit notice




TN TX UT VT VA WA WV WI WY


Broad deception prohibition � � � � � � � � �

Broad unfairness prohibition � � � � � � � � �

Rulemaking authority � � � � � � � � �

Scope

Covers credit � � � � � � � � �

Covers insurance � � � � � � � � �

Covers utilities � � � � � � � � �

Covers post-sale acts � � � � � � � � �

Covers real estate � � � � � � � � �

State enforcement

Civil penalty amount � � � � � � � � �

Deception sufficient without proof of � � � � � � � � �

intent or knowledge


Compensatory damages for consumers � � � � � � � � �

Multiple or punitive damages � � � � � � � � �

Attorney fees for consumers � � � � � � � � �

Class actions � � � � � � � � �

Allows consumer suit without proof of reliance � � � � � � � � �

Allows consumer suit without proof of public impact � � � � � � � � �

Allows consumer suit without pre-suit notice � � � � � � � � �


I. Practices Prohibited

Broad prohibition of deception and unfairness.A state UDAP statute’s substantive protections—the extent to which it prohibits unfair and decep-tive acts and practices—is one of its mostimportant features. The strongest statutes in-clude broad, general prohibitions against bothdeceptive conduct and unfair conduct. This isalso the approach of the FTC Act, on whichmany UDAP statutes are based.

By broadly prohibiting deception, rather thanconfining the prohibition to a closed list of decep-tive tactics, states are able to attack new methods ofdeception as they emerge. A broad prohibitionagainst unfairness (or unconscionability, a similarconcept that some state UDAP statutes use) is alsoimportant. Practices such as harassment, high-pressure sales tactics, and one-sided contract termsare unfair to consumers and can distort the market-place even though they may not involve deception.

A number of states, however, provide weakerprotections for consumers. The weakest states in-clude no general prohibitions, but prohibit onlya closed list of specific practices. While prohibi-tions of specific practices are sometimes helpfulto consumers, they inevitably leave the door openfor inventive fraud artists who devise new methodsof deception and unfairness.

Rulemaking authority. The strongest UDAPstatutes also allow a state agency to issue detailedregulations prohibiting specific unfair and de-ceptive practices. The authority to issue regula-tions means that the state can target emerging orpersistent unfair and deceptive acts and practicesand develop state-based solutions. It means thatstates can add bright-line rules to their generalprohibitions, so that there is no question that acertain practice is unfair or deceptive. Specificrules also act as helpful guidelines for businessesthat want to use fair practices.

While rulemaking authority is important, itsexistence does not mean that the state agencywill use it. For example, Mississippi and the Dis-

trict of Columbia have rulemaking authority buthave never adopted any rules. Florida repealedmost of its UDAP rules in 1996. North Dakotahas adopted just one rule, relating to retail priceadvertising, and Rhode Island has adopted onlytwo very narrow rules.

How Do the States Rate on theStrength of Their SubstantiveProtections?

Broad prohibition against deception. The UDAPstatutes in forty-three states and the District ofColumbia include a broad prohibition againstdeception that is enforceable by both consumersand a state agency. On the other hand, the UDAPstatutes in Colorado, Indiana, and Oregon donot include a general prohibition against decep-tion. Instead, those states prohibit only a closedlist of specific deceptive acts, leaving the fieldopen for creative fraud artists. South Dakota’sstatute includes a prohibition of deception thatmight appear at first blush to be broad, but con-sumers who seek to take advantage of this prohi-bition must bear the heavy burden of showingthat the deceptive act was both knowing and in-tentional. In addition, Iowa, Mississippi, andTexas, while including broad prohibitions of de-ception in their statutes, do not allow consumersto enforce this prohibition. Colorado and SouthDakota are particularly notable because theirUDAP statutes also lack broad prohibitions ofunfair or unconscionable acts, making their sub-stantive prohibitions the weakest in the country.

STATES WITHOUT A BROAD PROHIBITION OF

DECEPTIVE ACTS, ENFORCEABLEBY CONSUMERS

Colorado MississippiIndiana Oregon

Iowa South DakotaTexas


Broad prohibition against unfair or uncon-scionable acts. In thirty-nine states and the Dis-trict of Columbia, the UDAP statute includes atleast a fairly broad prohibition against unfair orunconscionable acts that is enforceable by con-sumers and a state agency. Eight state UDAPstatutes—those in Arizona, Colorado, Delaware,Minnesota, Nevada, North Dakota, SouthDakota, and Virginia—do not include a generalprohibition of unfair or unconscionable prac-tices. In addition, Iowa, Mississippi, and NewYork include general prohibitions of unfair orunconscionable practices, but do not allow con-sumers to enforce them.

Rulemaking authority. Twenty-seven states andthe District of Columbia give rulemaking au-thority to a state agency, but the remaining juris-dictions do not.

What States Can Do To Improve TheirUDAP Statutes’ Substantive StrengthStates that want to improve the substantivestrength of their UDAP statutes should considerthese steps:

� Add broad prohibitions of deceptive andunfair acts

� Remove any provisions that prevent con-sumers from enforcing broad prohibitions

� Give a state agency the authority to adoptrules that specify particular practices as unfairor deceptive

STATES WITHOUT A BROADPROHIBITION OF UNFAIR OR

UNCONSCIONABLE ACTS,ENFORCEABLE BY CONSUMERS

ArizonaColoradoDelaware

IowaMinnesotaMississippi

NevadaNew York

North DakotaSouth Dakota

Virginia

STATES THAT DO NOT GIVE ASTATE AGENCY THE AUTHORITYTO ADOPT SUBSTANTIVE RULES

Alabama NebraskaArizona New Hampshire

Arkansas New YorkCalifornia North CarolinaColorado OklahomaDelaware South CarolinaIndiana South DakotaKansas Tennessee

Kentucky TexasMichigan1 VirginiaMinnesota Washington

Wyoming


II. Scope of the State UDAP Statute

The scope of the state’s UDAP statute is just asimportant as its substantive prohibitions. If aUDAP statute has strong substantive protections,but applies them to few industries, it is of littlehelp to consumers.

For example, an exemption for banks andother creditors leaves consumers unable to usetheir state UDAP statute to obtain redress forpredatory lending practices. A home purchase isthe biggest consumer transaction most consu -mers enter into, yet an exemption for real estatetransactions insulates speculators involved inproperty flipping and other real estate fraud. Un-fair or deceptive practices in the insurance industryinclude false statements about insurance cover-age or costs and stalling and evasion in payingclaims. Nonetheless, some states exempt insurersfrom the state UDAP statute.

Abusive debt collection consistently ranks firstamong complaints to the FTC about specific in-dustries.2 Yet some courts have interpreted theirstate UDAP statutes not to cover post-sale acts.Some states also exempt utility companies, eventhough consumers depend on utility service forsurvival and are therefore extremely vulnerable tounfair and deceptive practices.

In a few states, courts have interpreted a statu-tory exemption for “regulated industries” sobroadly that the UDAP statute covers almostnothing. For example, Michigan had a relativelystrong UDAP statute until it was gutted by acourt decision3 that construed an exception for“a transaction or conduct specifically authorizedunder” laws administered by a state or regulatoryboard to exclude entire industries whenever theyare subject to any regulation or licensing.4 ARhode Island Supreme Court decision5 gives anequally broad interpretation to similar languagein its UDAP statute. As a result, while these twostates have UDAP statutes that appear strong onpaper, they provide almost no actual protectionto consumers. In fact, the UDAP statutes in these

states are worse than ineffective, as they give theappearance of providing protection for con-sumers while actually providing nothing.

Of course, a business should not be penalizedfor actions that are required or specifically per-mitted by another law. For example, if a law re-quires a business to use certain contract terms ormake certain disclosures, the business should beinsulated from consumer claims that those con-tract terms are unfair or that those disclosuresare deceptive. But the mere fact that a business isregulated does not mean that it will not engagein unfair and deceptive practices. New and usedcar dealers, mortgage brokers, debt collectors,payday lenders, and other predatory lenders arejust a few of the types of businesses that are com-monly licensed or regulated in some fashion, yethave often been found to have engaged in unfair,deceptive, and abusive tactics.

How Do the States Rate on the Scopeof Their UDAP Statutes?The Terrible Two: states whose UDAP statutescover virtually nothing. As noted above, judicialdecisions have gutted Michigan’s and Rhode Is-land’s UDAP statutes, leaving them empty shellsthat cover few if any businesses that deal withconsumers.

Coverage of predatory and abusive lending.The importance of prohibiting unfair and decep-tive practices in consumer lending could not be clearer. The abusive lending, bait-and-switch

THE TERRIBLE TWO

Courts in these states have interpreted an excep-tion for “authorized” or “permitted” transactionsso broadly that the statute now covers few if anyconsumer transactions.

MichiganRhode Island


tactics, and outright deception that led to thesubprime mortgage crisis has not only harmedmillions of consumers, but also led to global eco-nomic insecurity. UDAP statutes can act as a bul-wark against predatory lending, and give injuredconsumers their most effective remedies—butonly if the statute does not exempt lenders.

Despite the overwhelming problem of preda-tory and abusive lending, five states— Louisiana,Michigan, New Hampshire, Rhode Island, andVirginia—immunize all or almost all lenders andcreditors from the UDAP statute, regardless ofthe unfair or deceptive nature of their practices.

In addition, a number of states, while not af-fording lenders and creditors a blanket exemp-tion, have significant gaps in coverage. Alabama,Alaska, Florida, Illinois, Nebraska, Ohio, Texas,and Utah are examples of states where the statuteitself or decisions interpreting it have createdsubstantial loopholes or exemptions for preda-tory and abusive lenders.

For example, Alabama and Florida exempt allbanks, regardless of the unfair or deceptive na-ture of their acts. Ohio’s UDAP statute excludesmost lenders other than payday lenders, mort-gage brokers, and non-bank mortgage lenders.Illinois courts have significantly reduced the oth-erwise broad applicability of the UDAP statute tocredit by adopting an unusually expansive viewof the effect of the federal Truth in Lending Act,with some decisions holding that it immunizeslenders from UDAP liability for a wide range ofdeception and non-disclosure.

Other states, while not affording such clear im -munity to lenders, have ambiguities in their UDAPstatutes that could lead to questions about cover-age of predatory and abusive lending. For example,a number of states, such as Arkansas and Ten-nessee, have exemptions for practices “permitted”by a regulatory agency.6 States that want to en-sure that their UDAP statutes apply to unfairand deceptive lending practices should examinethis type of statutory language to make sure thatit is not susceptible to an overly broad interpreta-

tion like those which have eviscerated the Michi-gan and Rhode Island statutes. Other statutes arelimited to “goods and services,” and courts have notyet ruled whether lending amounts to a “service.”

STATES THAT IMMUNIZE ALL OR MOST LENDERS

AND CREDITORS

In these states, the UDAP statute provides no orvery little protection against predatory lending,mortgage fraud, and other abuses and deceptionin the extension of credit.

Louisiana New HampshireMichigan Rhode Island

Virginia

STATES WITH SIGNIFICANT GAPSOR AMBIGUITIES IN COVERAGEOF LENDERS AND CREDITORS

In these states, the UDAP statute covers somelenders and creditors, but has significant gaps orambiguities.

Alabama7 Oklahoma14

Alaska8 Oregon15

Arkansas9 Tennessee16

Florida10 Texas17

Illinois11 Utah18

Nebraska12 Washington19

Ohio13 West Virginia20

Wisconsin21


Coverage of insurance and utility transactions.Twenty-four states immunize insurers, and six-teen states specifically immunize utility companies.

Coverage of post-sale activities and real estatetransactions. Most state UDAP statutes appearto cover post-sale acts, such as abusive debt col-lection, although in many states the courts havenot directly addressed this question. The statusof coverage of post-sale acts is summarized in thechart at the beginning of this report, and de-scribed in more detail in Appendix B, available atwww.nclc.org.

Most states cover real estate transactions, al-though there are ambiguities in a number ofstates that make categorization difficult. In addi-tion, Florida, Maryland, and Virginia specificallyexempt holders of real estate licenses even whenthey engage in intentional deception. Nebraskahas interpreted a general exemption for entitiessubject to state regulation to exclude holders ofreal estate licenses, and the same result wouldprobably apply in Michigan and Rhode Islandbecause of the courts’ sweeping interpretationsof similar exemptions. In addition, several statesrestrict their UDAP statutes to “goods” and “ser-vices,” and courts have differed as to whether realestate sales amount to a “service.” The status ofcoverage of real estate transactions is summa-rized in the chart at the beginning of this report,and described in more detail in Appendix B.

What States Can Do To Improve theScope of Their UDAP StatutesStates that want to improve the scope of theirUDAP statutes should consider:

� Narrowing any exclusion for regulated in-dustries, so that is clear that the mere fact ofregulation is not a license to engage in unfairand deceptive practices. A 2007 amendment tothe Maine UDAP statute, narrowing such anexemption,22 can serve as a model.

� Eliminating exemptions for lenders and othercreditors. This may require eliminating anexplicit exemption that names certain cate -gories of creditors such as banks; expandingthe statute’s scope to cover more than “goodsand services”; clarifying that “services” includeslending; or eliminating an exemption for atransaction’s credit terms.

� Eliminating exemptions for insurers andutility companies.

� Clarifying that the statute applies to realestate and post-transaction matters such asabusive debt collection.

STATES THAT IMMUNIZE ALL OR MOST INSURERS

Alabama MontanaAlaska New Hampshire

Delaware OhioFlorida OklahomaGeorgia OregonIdaho Rhode Island

Indiana South CarolinaKansas Utah

Louisiana VermontMaryland VirginiaMichigan Wisconsin

Mississippi Wyoming

STATES THAT IMMUNIZE ALL ORMOST UTILITY COMPANIES

Alabama New HampshireDelaware New JerseyFlorida Ohio

Louisiana OklahomaMaryland Rhode IslandMichigan UtahMontana VirginiaNebraska Washington



III. State Enforcement

Every state designates a state agency—usually theAttorney General’s office—to enforce its UDAPstatute. Almost all states give the state enforce-ment agency the authority to seek three key formsof relief:

� Equitable relief—an injunction or other orderrequiring a business to stop engaging in anunfair or deceptive practice.

� Restitution for consumers—an order requiringthe business to return money that was wrong-fully taken from consumers.

� A civil penalty—a monetary penalty imposedfor having engaged in the unfair or deceptivepractice.

Equitable relief. Equitable relief is of great im-portance because it makes it possible for stateagencies to shut down unfair or deceptive opera-tions quickly, before more consumers are harmed.Every state UDAP statute allows the state agencyto seek this type of order to stop unfair or decep-tive practices.

A few states, however, undercut the effective-ness of this basic and critical remedy by requiringthe state agency, before it can protect the public,to show not only that the business engaged inthe unlawful practices, but also that it did so in-tentionally or knowingly. While few businesses useunfair and deceptive practices by mistake, provingintent or knowledge can be extremely difficult. Ifthe state agency must prove the business’s intentor knowledge before getting an order stoppingan unfair or deceptive practice, it is much harderfor the state to protect its citizens. Many moreconsumers are likely to be harmed. Even if a busi-ness acted without knowledge or intent, thatshould not be an excuse to continue an unfair ordeceptive practice.

Restitution. The ability to seek restitution isalso critical. Stopping a business’s practices does

nothing to help consumers who fell victim to thepractice before the state agency acted. In addi-tion, without the prospect of being forced tomake restitution, it would be in a business’s in-terest to make as much money as possible fromunfair and deceptive tactics, and then simply stopwhen caught, keeping the money it took fromconsumers. Allowing fraud to be profitable inthis way gives new companies an incentive to adoptthe same tactics, leading to a steady stream of newfraud artists to replace any stopped by the state.

Civil penalties. A substantial civil penalty forinitial violations is important because of its de-terrent effect. A business that faces no potentialpenalty beyond returning its ill-gotten gains maybe tempted to engage in unfair and deceptivepractices. If it is caught, it simply ends up backwhere it started, but if it is not caught it keeps itsgains. The potential of a civil penalty in additionto restitution helps balance this equation.

The existence of strong remedies does not, ofcourse, mean that the state enforcement agencywill use them. If the state enforcement agency iscomplacent about consumer fraud, its effortswill be ineffective regardless of the strength ofthe statute. By the same token, an aggressive,committed Attorney General can do a great dealfor consumers even with a relatively weak UDAPstatute. Still, enacting a statute that has strongstate enforcement potential makes it much morelikely that the state agency will be able to take ef-fective measures against consumer fraud.

How Do the States Rate on the State Enforcement Potential of Their UDAP Statutes?All states allow the state agency to seek restitu-tion for consumers, and all states except RhodeIsland allow the state agency to seek civil penaltiesfor initial violations. The key differences amongthe states in the strength of state enforcementremedies are whether a showing of knowledge orintent is required and the size of the civil penalty.

Conditioning state remedies upon proof of in-tent or knowledge. Most states do not requirethe state agency to prove the business’s intent orknowledge, but there are five states that requirethis proof in all or most cases. Colorado, Indiana,Nevada, North Dakota, and Wyoming conditionstate remedies upon proof of the business’s knowl-edge or in tent in all or a significant number of cir-cumstances.

Size of civil penalties. Rhode Island is the onlystate that does not authorize the state agency toseek civil penalties when a business violates theUDAP statute. Among the other 49 states andthe District of Columbia, there is a wide range inthe amount of the civil penalty that a fraudulentor unfair business can be required to pay. Somestates have the ability to assess substantial civilpenalties, but in other states the amounts are solow that a seller or creditor may simply considercivil penalties part of the cost of doing business.For example, the District of Columbia, Missouri,Pennsylvania, and Tennessee allow civil penaltiesof just $1000 per violation. By contrast, for exam-ple, Alaska allows a civil penalty of $25,000 perviolation, without requiring proof of any specialfactors such as willfulness. (A number of statesallow larger civil penalties if the unfair or decep-tive act was committed against an elderly or dis-abled person).

Of course, even a civil penalty in a small amountcan be an effective deterrent if courts impose thecivil penalty per consumer, or per day of an un-lawful practice. Likewise, even a large civil penaltywill have less impact if it can be imposed just onceno matter how many violations the company has

committed. Nonetheless, the size of the civilpenalty is an important measure of the strengthof the law. A substantial civil penalty sends astrong message to businesses that unfair and de-ceptive practices will not be tolerated in the state.

States With Weak Civil Penalty Provisions

No civil penalty for initial violationsRhode Island

$1000District of Columbia

MissouriPennsylvania

Tennessee

$2000–$2500Alabama

California ColoradoKentucky

Maryland24

NebraskaSouth Dakota

UtahVirginia

Washington

States With Average Civil Penalty Provisions

(all are $5000)

Connecticut NevadaGeorgia New Mexico Idaho New York

Indiana North CarolinaLouisiana North Dakota

Massachusetts South CarolinaWest Virginia

States That Make Relief UnavailableUnless the State Proves the

Business’ Knowledge or Intent23

Colorado NevadaIndiana North Dakota

Wyoming


What Can States Do To StrengthenState Enforcement of Their UDAPStatutes?States that want to strengthen state enforcementof their UDAP statutes can:

� Delete any requirement that knowledge orintent be proven as an element of a UDAPviolation.

� Increase the size of the civil penalty, and makesure that it is applicable per violation.

States whose UDAP statutes are already strongin these respects can still improve their UDAPstatutes by making sure that the agency has a fullrange of pre-suit investigatory power. States withthe strongest laws allow the state agency to de-mand and obtain information both from the tar-get and from others prior to suit.

Another way to strengthen state enforcementis to allow the court to order the business to paythe state’s attorney fees and costs when the stateprevails in a UDAP case. Finally, to state the obvi-ous, even with a strong statute, adequate fundingfor the consumer protection activities of the stateagency is essential for strong enforcement.

IV. Consumer Access to Justice

Giving consumers the ability to enforce their stateUDAP statute is crucial for consumer justice.Limited state consumer protection enforcementbudgets are not able to police the marketplacefully. Most state agencies lack the resources to ob-tain redress for consumers unless there are manyvictims of the same practice. And even if a fraud-ulent business has cheated many consumers, thestate agency may only be able to target the com-mon elements in the company’s practices, not theindividual variations. State enforcement agenciesrarely bring cases that require detailed proof ofspecific facts to show how an individual con-sumer was cheated.

In addition, many state agencies focus moreon stopping future deception and unfairnessthan on compensating consumers who have al-ready fallen victim. Further, the state agency’spriorities—even the priority it gives to prosecut-ing consumer fraud—may change when office-holders change.

Fundamentally, there are so many businesses,transactions, and practices, and the day-to-dayeconomic activity of the country is so immense,that public enforcement cannot do the job nomatter how well-funded. The market can never bepoliced adequately from above. Consumers must beable to protect themselves—and that ability is cru-cial for a well-functioning consumer marketplace.

A strong, effective UDAP statute gives con-sumers the ability to take a fraudulent businessto court to get back not just the money they lost,but also enhanced or punitive damages in appro-priate cases plus attorney fees, and to seek reliefin a class action if many consumers have beenharmed in the same way. In addition, a strong, ef-fective UDAP statute does not impose specialbarriers that consumers must meet, such as send-ing a special advance notice, proving that thebusiness cheated many others in the same way, orproving reliance. These features are discussed inmore detail below.

States With Strong Civil Penalty Provisions

($10,000-$40,000)

Alaska MinnesotaArizona Mississippi

Arkansas MontanaDelaware New HampshireFlorida New JerseyHawaii OhioIllinois Oklahoma

Iowa OregonKansas TexasMaine Vermont

Michigan WisconsinWyoming



Compensatory relief. Allowing consumers torecover their losses from fraudulent businesses isan essential component of preventing and re-dressing consumer fraud. All state UDAP stat -utes except Iowa’s allow consumers to seek atleast the dollar amount of their losses.

Attorney fees. Consumers need to be able to re-cover their attorney fees when they win a con-sumer protection case. Otherwise, the consumeris not made whole, because having to pay an at-torney eats into the refund the consumer recov-ers from the business. Attorney fees are likely tobe several thousand dollars even for a small case,and can completely consume--or even exceed therefund the consumer is seeking.

Awarding attorney fees to consumers makesconsumer justice affordable. It also provides anincentive for private attorneys to bring consumersuits and thus to vindicate the important publicpolicies underlying these laws. In addition, with-out such a provision, the business can wear downthe consumer by prolonging and over-litigatingthe case, exhausting the consumer’s resources.The consumer may not even be able to find an at-torney willing to take the case if there is no provi-sion in the statute for the business to pay theconsumer’s attorney fees.

At the same time, consumers should not bethreatened with having to pay the business’s at-torney fees unless the case is frivolous or broughtin bad faith. Allowing consumers to be threat-ened with having to pay the business’s attorneyfees acts as a powerful deterrent against everseeking to enforce the UDAP statute.

Class actions. Class actions are an efficient wayfor consumers to obtain redress when an unfairor deceptive practice affects many people. Theyare particularly important when the dollaramount per person is small. As Congress has rec-ognized, class action lawsuits “permit the fairand efficient resolution of legitimate claims ofnumerous parties by allowing the claims to beaggregated into a single action against a defen-dant that has allegedly caused harm.”25

Aggregation of claims into a single case recog-nizes the economic reality that each individualloss is likely to be too small to merit the cost ofpursuing it. Moreover, it is patently unfair toconsign consumers to the sole option of individual-ized suits, when suppliers have followed standardpractices and cheated consumers in the same way.

It is through class action status and class-widediscovery that the defendant’s allegedly harmfulpractice and its application to large numbers ofsimilarly-situated consumers may be determinedcarefully and accurately. Class action discoveryserves two important functions: (1) it identifiesthe extent of the underlying wrongful activity,and (2) it aligns the scope and size of the poten-tial recovery for affected consumers with thescope of the unlawful practice.

Despite the importance of class actions inachieving consumer justice, some states prohibitUDAP class actions. Singling out consumerfraud for kid-gloves treatment is certainly ques-tionable as a policy matter. Worse, it leaves con-sumers without a practical remedy in manycircumstances, particularly for small-scale fraudpracticed on a wide number of people.

Requirement that the consumer show a publicimpact. Placing preconditions on consumerprotection suits that go beyond those for othercivil claims significantly weakens consumer ac-cess to justice. For example, some UDAP statutesundercut their effectiveness by requiring con-sumers to prove not just that they were cheated,but also that the business’s practice impacts thepublic at large. Whether a practice affects the pub-lic interest often depends on the eye of the be-holder, leading to inconsistent, ad hoc decisionsallowing or refusing to allow UDAP claims to proceed.

Another problem with this precondition isthat it requires consumers to prove facts that theymay not be in a position to show. Having to gatherand present evidence about how the practice af-fected others greatly increases the complexity andexpense of a consumer suit. It does not make senseto impose this burden on a consumer who has


been cheated and simply wants to be made whole.In states that require such a showing, many con-sumers with meritorious claims have been leftwithout a remedy under the state UDAP statute.

In some states this requirement is interpretedso expansively as to make the consumer protec-tion law virtually a dead letter for consumers. Forexample, in Minnesota some courts have heldthat it is not enough if the practice affects manymembers of the public: the consumer’s suit itselfmust also benefit the public at large.26 This inter-pretation precludes consumers from obtainingindividual redress under the UDAP statute.

Reliance. Some states require the consumer toshow not only that the business engaged in unfairness or deception that was material andcaused the consumer’s loss, but also that the con-sumer specifically relied on the practice. This re-quirement frustrates the forward-looking natureof state unfair and deceptive acts and practiceslaws, as it impairs consumers’ ability to stoppractices before they cause widespread consumerharm. It also leads businesses to try to evade con-sequences for their deceptive practices by insert-ing clauses in the fine print of their contractsstating that the consumer did not rely on whatthe salesperson said.

A reliance requirement means that consumersmust prove their state of mind—always a difficultundertaking. It allows businesses to argue thatthe consumer acted unreasonably in falling forthe deceptive sales pitch or failing to pay suffi-cient attention to it. This precondition also com-plicates aggregation of consumers into classactions where their collective voice could equalthe bargaining power of a seller because any needto show reliance for each class member may de-feat class treatment.

Under the FTC Act, a seller can be required tomake redress to consumers if its misrepresenta-tion was material—that is, of a type that usuallymakes a difference in the purchasing decision.For example, the FTC can obtain redress for con-sumers if a seller falsely claimed that an appli-ance carried a warranty, or that a table was solid

oak, without having to prove that each consumerspecifically relied on the misrepresentation. Bythe same token, state UDAP statutes are strongerif they allow consumers to recover when theyshow that the seller’s deception was material.

Special advance notice procedures: Some statessingle out consumer protection cases for a spe-cial requirement that the consumer send thebusiness a notice before filing suit. Placing thisspecial burden on consumer protection casesmakes it harder for consumers to get their casesheard in court, especially if they are trying to pro-ceed without an attorney. This is a particularproblem if the courts require rigid compliancewith requirements for the timing and content ofthe notice, giving fraudulent businesses the abilityto defeat meritorious suits on technical grounds.

A pre-suit notice requirement also allows un-fair and deceptive businesses to avoid UDAP suitssimply by returning the money just on those oc-casions when they get caught. They can keeptheir activities out of the public eye, buy off trou-blesome consumers, and continue in their courseof conduct. Pre-suit notice laws can also makeclass action cases impossible if courts allow thebusiness to prevent the suit from going forwardby offering a refund just to the individual con-sumer after receiving notice. Even worse, somebusinesses have, upon receiving advance notice,tried to retaliate against the consumer by filing a“preemptive strike” suit against the consumer.

Enhanced damages. Many state UDAP statutesinclude an enhanced damages provision that allowsconsumers to seek two or three times their actualdamages. In the alternative, some UDAP statutesexplicitly authorize consumers to recover puni-tive damages. In many states the consumer mustprove that the business acted knowingly in orderto get enhanced damages.

Enchanced damages provisions give consu mersan incentive to enforce the law and businesses anincentive to comply with it, rather than draggingout litigation. In addition, since consumer claimsoften involve a relatively small amount of money,

a double or treble damages provision helps coverdamages that are difficult to prove in court. Italso covers the indirect costs, such as lost time,telephone calls, and travel expenses, that con-sumers incur when they enforce a statute againsta business. Especially when the consumer’s claimis small, providing for an enhanced award in thisway is important to make litigation practical. Anenhanced damages award also acts as a deterrentto businesses that might otherwise be temptedby the profitability of fraudulent behavior.

How Do the States Rate on Consumer Access to Justice under Their UDAP Statutes?Iowa and Mississippi: the states with the weak-est overall remedies for consumers. Iowa’sUDAP statute ranks at the very bottom, as con-sumers have no ability to enforce it. A consumerwho has been cheated by a business in Iowa can-not obtain any remedy under the UDAP statute.

Mississippi, although it does not deny con-sumers the right to enforce the state UDAPstatute, is almost as bad as Iowa because its con-sumer remedies are so weak. Mississippi’s UDAPstatute requires pre-suit notice, prohibits con-sumers from joining together in a class action,and does not offer multiple damages. It allowsthe court to order the consumer to pay the busi-ness’s attorney fees in some circumstances, butdoes not allow the court to order the business toreimburse the consumer for attorney fees whenthe consumer wins. The possibility of having topay the business’s attorney fees, without havingany right to recover fees from the business,makes the Mississippi UDAP statute such a poorand risky remedy for consumers that it is not sur-prising that few have ever used it.

Attorney fees. Forty-five states and the Districtof Columbia allow the court to order the busi-ness to reimburse the consumer for attorney feesif the consumer wins the case. The failure of theremaining five states—Arizona, Delaware, Missis-sippi, South Dakota, and Wyoming27—to author-ize reimbursement of the consumer’s attorney feesgreatly undermines the effectiveness of the statute.

In two states—Florida and Oregon—con-sumers who have lost UDAP cases have beenforced to pay tens of thousands of dollars to thebusiness for its attorney fees even though thecases were filed in good faith. In addition,Alaska’s UDAP statute requires unsuccessfulconsumers to pay partial attorney fees to thebusiness. The threat of this enormous financialburden is a highly effective deterrent against con-sumer enforcement of the UDAP statute.

The UDAP statutes in three other states—Indi-ana, Kentucky, and Missouri—do not set forthspecific standards that would prevent courtsfrom requiring an unsuccessful consumer to paythe business’s attorney fees. However, reporteddecisions in those states do not show courts re-quiring consumers to pay the business’s attorneyfees. Faced with a similar statute that lacked spe-cific standards, the Illinois Supreme Court heldthat trial courts should exercise their discretionand limit fee awards against consumers to caseswhere the consumer has proceeded in bad faith.1

STATES THAT DO NOT ALLOW CONSUMERS WHO

PREVAIL TO RECOVER THEIR ATTORNEY FEES

Arizona MississippiDelaware South Dakota

Iowa29 Wyoming30

TWO STATES WITH WEAKESTOVERALL CONSUMER REMEDIES

IowaMississippi


Class actions. Nine states—Alabama, Georgia,Iowa, Louisiana, Mississippi, Montana, SouthCarolina, Tennessee, and Virginia—deny con-sumers the right to join together in a class actionunder the state UDAP statute. In addition, someof the states that allow class actions have specialrules for UDAP cases that are more restrictivethan the rules for other cases. States seeking tostrengthen their UDAP statutes should examinewhether the statute has class action rules embed-ded in the statute that are more restrictive thanthe state’s general class action rules.

Special barriers to suit. Seven states—Colo -rado, Georgia, Minnesota, Nebraska, New York,South Carolina, and Washington—require con-sumers to prove not just that they were cheated,but that the business cheats consumers fre-quently or as a general rule. These states vary inhow they formulate this requirement. Some Min-nesota courts impose a barrier so high that noconsumer is ever likely to meet it. New York

courts have dismissed hundreds of UDAP cases,simply because the consumer proved only thatthe business cheated him or her, not that thepractice impacted consumers at large.

Most UDAP statutes do not explicitly requireconsumers to prove that they specifically reliedon the deception. Indiana, Texas, and Wyomingare notable exceptions. In addition, in a numberof states the courts have grafted this requirementonto the statute. In many states, the issue ofwhether and when consumers must prove spe-cific reliance is not completely clear, because thecourts have made pronouncements only in spe-cific cases, without purporting to set a universalrule. For these reasons, it is difficult to categorizestates precisely as to whether they require con-sumers to prove reliance. Where it is not alreadyclear that proof of reliance is not required, statescan strengthen their UDAP statutes by makingthis explicit.

Nine states—Alabama, California (one of itstwo UDAP statutes), Georgia, Indiana (with ex-ceptions), Maine, Massachusetts, Texas, West Vir-ginia, and Wyoming— impose a special advancenotice procedure on consumers who seek reliefunder the state UDAP statute. Mississippi createsan equivalent hurdle by imposing a pre-suit dis-pute resolution procedure. The remaining fortystates and the District of Columbia do not im-pose this special burden on consumers bringingUDAP claims.

STATES WHERE CONSUMERSCAN BE FORCED TO PAY THE

DEFENDANT’S ATTORNEY FEESEVEN IF SUIT WAS FILED

IN GOOD FAITH

Alaska31 FloridaOregon

STATES THAT PROHIBIT UDAP CLASS ACTIONS

Alabama Mississippi33

Georgia MontanaIowa32 South Carolina

Louisiana TennesseeVirginia34

STATES THAT REQUIRECONSUMERS TO PROVE AN

IMPACT ON THE PUBLIC AS APRECONDITION OF SUIT

Colorado NebraskaGeorgia New York

Minnesota South CarolinaWashington


Enhanced damages: Twenty-five states and theDistrict of Columbia authorize double or trebledamages for consumers (although New York’streble damage provision is relatively toothlesssince treble damages are capped at $1000 formost violations and at $10,000 for false advertis-ing). In addition, the UDAP statutes in California(one of its two UDAP statutes), Connecticut,Idaho, Kentucky, Missouri, Oregon, and RhodeIsland do not authorize multiple damages butexplicitly authorize punitive damages.

What States Can Do to Improve the UDAP Remedies Available toConsumersStates that want to improve the remedies avail-able to consumers under their UDAP statutes can:

� Make it clear that the court should order thebusiness to pay a successful consumer’sattorney fees, and that the consumer cannotbe held responsible for the business’s attorneyfees if the case was filed in good faith.

� Remove any restrictions on UDAP class actions,so that they are governed by the state’s usualclass action rules.

� Amend the statute if necessary to make it clearthat a consumer who has been cheated caninvoke the statute’s remedies without provingthat the business cheats consumers as ageneral rule.

� Amend the statute to make it clear that courtscan presume that consumers relied on materialmisrepresentations, without requiring indi-vidual proof.

� Delete any special advance notice provisions.

� Allow consumers to seek enhanced dam agesin appropriate cases.

States whose UDAP statutes are already strongin these respects can improve consumer remediesby 1) making it clear that consumers can obtainequitable relief, such as an injunction to stop apractice that harms similarly-situated consumers;2) making attorney fee awards to consumers man -datory so that if they prevail they are assured ofbeing made whole; 3) adding a provision for asmall statutory damages award, such as $100–$200, whenever a consumer proves a violation ofthe UDAP statute; 4) making it clear that con-sumers do not have to meet a heightened stan-dard of proof, but can prove a UDAP claim by thenormal preponderance of the evidence standard;and 5) making it clear that the heightened require-ments of common law fraud and rigid contractlaw rules are not applicable to UDAP claims.

STATES THAT REQUIRECONSUMERS TO SEND A SPECIAL

PRE-SUIT NOTICE

Alabama MassachusettsCalifornia35 Mississippi37

Georgia TexasIndiana36 West Virginia

Maine Wyoming

STATES THAT DO NOTAUTHORIZE ENHANCED

DAMAGES

Arizona MichiganArkansas MinnesotaDelaware MississippiFlorida NebraskaIllinois Nevada

Iowa OklahomaKansas South DakotaMaine Utah

Maryland West VirginiaWyoming


APPENDIX A

CAPSULE SUMMARIES OF STRENGTHS AND WEAKNESSES OF EACH STATE’S UDAP STATUTE

AlabamaAlabama’s UDAP statute includes strong prohibitionsof unfair or deceptive acts. It is weakened by blanketexemptions for banks and other lending institutions,so it does not help stop predatory lending and mort-gage fraud. Other weaknesses are blanket exemptionsfor insurers and utility companies, a special advancenotice requirement that is imposed on consumers,and a prohibition against class actions. The statutewould be stronger if the Attorney General had the au-thority to adopt regulations prohibiting emergingforms of unfairness and deception.

AlaskaAlaska’s UDAP statute includes strong prohib itionsof unfair or deceptive acts, and gives the AttorneyGeneral the authority to adopt regulations prohibit-ing emerging forms of unfairness and deception. Itsremedies for consumers are undermined by a provi-sion that allows courts to require consumers to pay aportion of the business’s attorney fees if the consumerloses the case. The statute is also marred by a compli-cated series of overlapping exemptions for types of in-dustries and practices, and would be improved byclarifying that these exemptions do not immunize un-fair or deceptive acts.

ArizonaArizona has a weak UDAP statute. It only prohibitsdeceptive practices, not unfair practices. It providesonly minimal remedies for consumers. It does notallow the Attorney General to adopt rules addressingemerging forms of deception. On the positive side, itavoids blanket exemptions of entire industries.

ArkansasThe Arkansas UDAP statute includes broad prohibi-tions of both deceptive and unconscionable acts. Thestatute would be stronger if its coverage of deceptiveconsumer lending and insurance practices were clearer,and if it allowed consumers to recover multiple dam-ages in appropriate cases. It would also be enhancedby giving rulemaking authority to a state agency.

California California’s main UDAP statute, its Unfair Competi-tion Law, broadly prohibits unlawful, unfair, or fraud-ulent business practices and deceptive advertising,and it is not undercut by exemptions for particularbusinesses. A weakness is that consumers can onlyseek restitution, not damages, and multiple damagesare not allowed. California has a second UDAP statutethat also provides useful remedies, but it lacks a broadprohibition of deception and imposes a special ad-vance notice requirement on consumers. The UnfairCompetition Law would be enhanced by increasingthe civil penalty for violations, currently just $2500,by giving a state agency authority to adopt rules pro-hibiting emerging scams, and by clarifying that con-sumers need not prove specific reliance on the unfairor deceptive act.

ColoradoThe Colorado UDAP statute’s substantive prohibi-tions are among the weakest in the country, prohibitingonly certain specified acts without broad prohibitionsof either deception or unfairness. In addition, courtdecisions create a significant impediment for con-sumers by denying them any remedy, even if they werecheated, unless the unfair or deceptive practice inquestion also has a significant impact on the public.On the other hand, a significant strength of Col-orado’s law is that it does not create blanket exemp-tions for specific industries.

ConnecticutConnecticut’s UDAP statute broadly prohibits bothdeceptive and unfair acts and practices. It would be en-hanced by adding a minimum damages provision, mak-ing attorney fee awards to consumers mandatory so thatif they prevail they are assured of being made whole, andproviding that violation of another state or federalconsumer protection law is a per se UDAP violation.

DelawareDelaware’s UDAP statute has relatively weak prohibitionsand private remedies. It broadly prohibits deceptive

24

acts, but does not prohibit unfair acts or give the At-torney General the authority to adopt regulations ad-dressing new forms of deception. It does not allowconsumers to recover their attorney fees, so when theywin a case against a deceptive business they will still notbe made whole. Other weaknesses are the absence of amultiple damages provision, and blanket exemptionsfor insurance and utility companies. On the positive side,it appears to cover deceptive loan and credit practices.

District of ColumbiaThe District of Columbia’s UDAP statute broadly pro-hibits both deceptive and unconscionable practices, anddoes not include blanket exemptions for entire indus-tries. Public enforcement would be stronger if the civilpenalties for violations were increased from their currentlow amounts ($1000 per violation—among the lowest inthe country). Another weakness is that courts have in-terpreted the statute as requiring consumers to meet ahigher standard of proof—clear and convincing evi-dence—than is normally required in civil cases.

FloridaFlorida’s UDAP statute broadly prohibits deceptive,unfair, or unconscionable acts, but provides onlyweak remedies for consumers and suffers from a con-stricted scope. A consumer who asserts an unsuccess-ful UDAP claim can be required to pay the business’sattorney fees, even if the consumer asserted the claimin good faith. The statute exempts many practices bylenders, even if they act unfairly or deceptively, so is oflittle use against predatory lending and mortgagefraud. It also provides blanket exemptions for insur-ers, utility companies, and holders of real estate li-censes. It would be enhanced by allowing consumersto recover multiple damages in appropriate cases. Astrength of the statute is that it gives a state agencythe authority to adopt rules specifying prohibitedpractices, but the state agency repealed almost all ofits rules in 1996.

GeorgiaThe broad prohibitions of Georgia’s UDAP stat ute areundermined by procedural obstacles and a constrictedscope. Georgia courts require consumers to show notjust that they were cheated, but that the practice af-fects other consumers. The statute also imposes a spe-cial advance notice requirement on consumers andprohibits consumers from joining together in a classaction. Some courts have interpreted the statute notto apply to lending practices at all, which denies con-sumers a remedy for predatory lending and mortgagefraud, or have denied consumers the right to sue re-garding oral misrepresentations. Georgia courts have

also interpreted the statute as providing a blanket ex-emption for insurers.

HawaiiHawaii’s UDAP statute broadly prohibits both unfairand deceptive acts and gives the office of consumerprotection the authority to adopt rules to addressemerging scams. It does not carve out entire industriesas exempt.

IdahoIdaho’s UDAP statute is quite strong in some ways. Itbroadly prohibits both deceptive and unconscionableacts and gives the attorney general relatively strongenforcement powers, including the authority to adoptregulations prohibiting emerging scams. It does notimpose procedural hurdles on consumers seekingremedies, and allows consumers to recover their attor-ney fees. Significant weaknesses are a blanket exemp-tion for insurance companies, and some ambiguitiesas to coverage of lenders and utility companies. Thestatute would also be enhanced by adding a multipledamages provision.

IllinoisThe main Illinois UDAP statute includes both broadand specific prohibitions. Its main weaknesses are sig-nificant gaps created by court decisions in coverage of creditors and credit transactions, making it lessuseful than it could be to stop predatory lending andmortgage fraud, and its lack of a multiple damagesprovision.

IndianaIndiana has a relatively weak UDAP statute. It broadlyprohibits unconscionable acts but confines its prohi-bition of deception to a list of specific practices, mostof which are violations only if it is proven that thebusiness acted knowingly. While there are no reporteddecisions requiring consumers to pay the business’sattorney fees after losing a good-faith suit, the statutewould be stronger if it were amended to preclude thisresult. Consumer enforcement is impeded by a pre-suitnotice requirement. The statue also specifically deniesconsumers the right to bring suit for unfair and de-ceptive acts that occur in real estate transactions.

IowaIowa is the only state in the nation that does not giveconsumers the right to go to court under the stateUDAP statute. The statute’s scope and prohibitionsare broad, and it provides strong enforcement tools tothe state, but the failure to allow consumers to seekremedies for unfair and deceptive practices leaves it asone of the country’s weakest UDAP statutes.


KansasThe Kansas UDAP statute is quite strong in its prohi-bitions, its application to a broad range of businesses,and its public and private remedies. One weakness isthat many of the specific prohibitions require a show-ing that the business acted knowingly or willfully. Thestatute would be enhanced if consumers could recovermultiple dam ages in appropriate cases, if insurancetransactions were covered, and if a state agency hadauthority to adopt rules to address emerging scams.

KentuckyThe broad prohibitions of Kentucky’s UDAP statuteare undermined by weaknesses in its consumer reme-dies. While there are no reported decisions requiringconsumers to pay the business’s attorney fees afterlosing a good-faith suit, the statute would be strongerif it were amended to preclude this result. In addition,there is no provision for multiple damages. Thestatute would be stronger if coverage of credit transac-tions and real estate transactions were clarified.

LouisianaThe Louisiana UDAP statute’s broad prohibitionswould be far more valuable to consumers were itsscope not so limited. It is of little use against preda-tory lending and mortgage fraud, as it exempts mostpractices, no matter how unfair or deceptive, by a widerange of financial institutions, as well as by insurersand utility com panies. It also prohibits consumersfrom joining together in a class action.

MaineMaine’s UDAP statute has broad prohibitions andreasonably strong consumer remedies. The legislaturerecently narrowed the statute’s exemptions, so it ap-plies broadly to most businesses. Two weaknesses arethat consumers are required to send the business a no-tice before filing suit, and the statute does not providefor multiple damages.

MarylandMaryland’s UDAP statute broadly prohibits both de-ceptive and unfair acts. Private enforcement would beenhanced by a multiple damages provision. While thestatute covers credit transactions, a weakness is that it ex-cludes insurance companies, utility companies, and along list of specific occupations such as real estate bro-kers, land surveyors, and certified public accountants.

MassachusettsMassachusetts’ UDAP statute has broad prohibitionsand no significant exemptions. It gives the attorneygeneral the authority to adopt regulations definingunfair and deceptive acts, and the attorney general has

adopted a number of strong, specific regulations.Consumers can obtain injunctions, damages, multi-ple damages, and attorney fees against businesses forunfair or deceptive acts. A weakness is that Massachu-setts’ UDAP imposes a special advance notice require-ment on consumers.

MichiganMichigan’s UDAP statute has been gutted by rulingsnarrowing its scope. The courts have interpreted anexemption for “a transaction or con duct specificallyauthorized” under laws administered by a state or fed-eral regulatory board so broadly that the statute nowcovers almost no businesses. If not for these rulings, itwould provide relatively strong consumer protection,as it includes reasonably broad prohibitions, relativelystrong public and private enforcement remedies, andfew procedural hurdles for consumers to overcome. Asit stands, however, the statute is of little or no use tothe state enforcement agency or to consumers.

MinnesotaMinnesota’s main UDAP statute has relatively weaksubstantive prohibitions, as it prohibits only decep-tive, not unfair acts, and does not give the state agencythe authority to adopt regulations to address newscams. An even greater weakness is that courts holdthat a consumer who has been defrauded cannot ob-tain any remedy unless the suit benefits the public atlarge. These rulings have left many injured consumerswithout a remedy under the statute. The statute’spublic remedies are relatively strong. Although theywould be enhanced by a multiple damages provision,the statute’s private remedies would be adequate ifconsumers could use them.

MississippiMississippi’s UDAP statute has among the weakestconsumer enforcement provisions in the nation. Con-sumers can bring suit only for a narrow subset of viola-tions, and the statute allows consumers to claim onlylimited relief. In addition, a consumer who sues a busi-ness can be required to pay the business’s attorney fees,but there is no provision for requiring the business topay the consumer’s attorney fees, even if the consumerwins the case. Mississippi does not allow consumers tojoin together in a class action to pursue deceptive prac-tices claims. As a result of these weaknesses, Missis-sippi’s UDAP statute is of little use to consumers.

MissouriMissouri’s UDAP statute broadly prohibits unfair anddeceptive acts, plus allows the Attorney General to adopt regulations addressing specific practices.


While there are no reported decisions requiring con-sumers to pay the business’s attorney fees after losing agood-faith suit, the statute would be stronger if it wereamended to preclude this result. Other weaknesses arethe statute’s lack of clarity regarding cov erage of in-surers and some ambiguities regarding coverage oflenders and other creditors. The civil penalty amountis just $1000, among the lowest in the country.

MontanaMontana’s UDAP statute broadly prohibits both de-ceptive and unfair acts, plus gives the state depart-ment of justice the authority to adopt regulationsaddressing specific practices. The state supreme courthas ruled that the statute applies to consumer lend-ing, and the statute does not impose significant proce-dural obstacles when consumers seek remedies forunfair or deceptive acts. However, the statute is weak-ened by blanket exemptions for insurance and utilitycompanies, and by a prohibition of class actions.

NebraskaThe broad prohibitions of unfair or deceptive acts inNebraska’s UDAP statute are undermined by thestatute’s limited scope. Exemptions for lending prac-tices and practices by utility companies and holders ofreal estate licenses exclude a wide range of acts even ifthey are unfair and deceptive. Another weakness isthat courts hold that a consumer who has been de-frauded cannot obtain any remedy unless the con-sumer also shows that the practice affects the public.The statute would also be enhanced by allowing con-sumers to recover multiple damages in appropriatecases and by giving a state agency the authority toadopt rules prohibiting emerging scams.

NevadaNevada’s substantive prohibitions are relatively nar-row, as they only address deception, not unfairness,and generally require a showing that the businessacted knowingly. The statute would be enhanced ifconsumers could recover multiple damages in appro-priate cases. A strength of the statute is that it does notgenerally provide blanket exemptions for industries.

New HampshireNew Hampshire’s broad prohibitions of unfair or de-ceptive acts and reasonably strong public and privateremedies are undermined by the statute’s limitedscope. The statute does not apply to transactions withbanks, no matter how unfair or deceptive, so it doeslittle to stop predatory lending and mortgage fraud. Italso provides blanket exemptions for insurance andutility companies. The statute would also be enhanced

by giving a state agency the authority to adopt regula-tions prohibiting specific unfair and deceptive practices.

New JerseyNew Jersey’s UDAP statute includes both broad andspecific prohibitions of unfair and deceptive acts, plusgives the Attorney General authority to adopt rulesprohibiting other specific practices. It exempts fewbusinesses, and does not impose procedural obstacleson consumers seeking redress. The statute would beimproved by overruling judicial decisions that havecarved out “learned professionals” such as insurancebrokers and attorneys from its scope, and by clarifyingthat it covers unfair and deceptive insurance claimssettlement practices.

New MexicoNew Mexico’s UDAP statute includes both broad andspecific prohibitions, plus gives the Attorney Generalauthority to adopt regulations prohibiting additionalunfair or deceptive practices. The remedies affordedto the Attorney General and consumers would bestronger if the statute did not require proof that thebusiness acted knowingly. Courts have given an ap-propriately narrow reading to the statute’s exemp-tions, declining to read them as blanket exemptionsfor particular industries, but the statute would bestrengthened by clarifying that it applies to real estatetransactions.

New YorkThe scope of New York’s UDAP statute is broad, butits prohibitions are relatively weak and courts haveimposed procedural hurdles on consumers seekingremedies for deceptive practices. The statute broadlyprohibits deceptive practices, but its prohibitionsagainst unconscionable and unlawful practices arefound in a separate statute that is enforceable only bypublic officials, not by consumers. Nor does New Yorkgive a state agency the authority to adopt rules ad-dressing emerging scams. A great weakness is thatcourts hold that a consumer cannot obtain any rem-edy for a deceptive practice without showing that thepractice has a broader impact on consumers at large.These rulings have left many injured consumers with-out a remedy under the statute. The statute’s trebledamages remedies are undermined by outdated capsof $1000 and $10,000.

North CarolinaNorth Carolina’s UDAP statute includes both broadand specific prohibitions of unfair and deceptive prac-tices, provides reasonably strong remedies for boththe Attorney General and consumers, and covers most


businesses. One weakness is a blanket exemption forlearned professions such as attorneys. The statute wouldalso be improved by giving a state agency the author-ity to adopt regulations addressing emerging scams.

North DakotaNorth Dakota’s UDAP statute prohibits only decep-tion, not unfairness. Unlike most states, in NorthDakota both the Attorney General and consumersmust not only show that a practice was deceptive, butalso that the business acted with the intent that oth-ers rely on the deception. A strength of the law is thatit allows the Attorney General to adopt regulationsspecifying practices that are deceptive. Although thereare few decisions construing the statute’s scope, itdoes not appear to create blanket exemptions for anytypes of businesses.

OhioThe strong prohibitions of Ohio’s UDAP statute areundermined by its limited scope. It excludes mostlenders, financial institutions, and real estate transac-tions, so is of little use to stop predatory lending andmortgage fraud. It also provides blanket exemptionsfor insurance and utility companies. In 2007 the statelegislature weakened the statute by capping the dam-ages consumers can recover.

OklahomaOklahoma’s main UDAP statute includes both broadand specific prohibitions of unfair and deceptive prac-tices. The scope of the statute has not yet been defini-tively resolved, and the statute would be improved if itwere clearer that it applies to all unfair and deceptivelending practices. The statute would also be improved byallowing consumers to recover multiple damages in ap-propriate cases, clarifying that it applies to unfair anddeceptive acts by insurance and utility companies, over-ruling a series of poorly-reasoned decisions that refuseto apply it to unfair, deceptive, and abusive debt col-lection tactics, and giving a state agency the authorityto adopt rules to address emerging forms of deception.

OregonOregon’s UDAP statute is fairly strong in some respectsbut also has significant weaknesses. A significant weak-ness is that a consumer who files an unsuccessfulclaim can be required to pay the business’s attorneyfees even if the case was filed in good faith. Thestatute’s substantive prohibitions would be stronger ifthey were broader, but this weakness is balanced to someextent by the Attorney General’s authority to adoptrules prohibiting additional unfair and deceptivepractices. The statute would be strengthened by allowingconsumers to recover multiple damages in appropri-

ate cases, by deleting an exemption for insurance com-panies, and by clarifying that it applies to consumerlending, as a 30-year old decision from an intermedi-ate appellate court creates uncertainty in this regard.

PennsylvaniaThe strength of Pennsylvania’s UDAP statute is itsscope, as courts have not created blanket exemptionsfor specific industries, and its remedies for consumers,which include multiple damages and attorney fees.On the other hand, some courts have weakened thestatute by imposing burdensome requirements takenfrom common law fraud cases (such as proof of intentto defraud) and contract cases (such as a prohibitingevidence of oral misrepresentations). The AttorneyGeneral’s enforcement remedies would be improvedby increasing the low civil penalty ($1000—among thelowest in the country) for violations.

Rhode IslandThe strong substantive prohibitions of the Rhode Is-land UDAP statute have been rendered virtuallymeaningless by court decisions creating blanket ex-emptions for a wide range of businesses. As it stands,the statute is of little or no use to consumers, becauseit applies to so few businesses. Rhode Island is also theonly state that does not authorize the Attorney Gen-eral to seek a civil penalty when a business violates theUDAP statute.

South CarolinaSouth Carolina’s UDAP statute includes both broadand specific prohibitions of unfair and deceptive prac-tices. One weakness is that courts have required con-sumers to show not only that they were cheated, butalso that the practice impacts the public interest. An-other weakness is an exemption for insurers, althoughcourts have not construed the statute to create blan-ket exemptions for other businesses. The statutewould be enhanced by giving a state agency rulemak-ing authority and by deleting the prohibition of con-sumer class actions.

South DakotaSouth Dakota’s UDAP statute has unusually narrowprohibitions, and its consumer remedies are amongthe weakest in the nation. Only deceptive acts, not un-fair acts, are prohibited, and consumers must provethat the deceptive act was both knowing and inten-tional. Consumers can recover only compensatorydamages, not multiple damages or even their attorneyfees. On the positive side, the statute does not appearto provide blanket exemptions for entire industries,although it would be improved by clarifying that it ap-plies to real estate transactions.


TennesseeTennessee’s UDAP statute includes both broad andspecific prohibitions. Its main weaknesses are the lowcivil penalty ($1000—among the lowest in the country)that the Attorney General can seek for violations, aprohibition on class actions, and significant gaps incoverage of unfair and deceptive lending practicesthat can leave consumers without a remedy under thestatute for predatory lending or mortgage fraud. Itwould be enhanced by giving a state agency the au-thority to adopt regulations prohibiting emergingforms of unfairness and deception.

TexasThe Texas UDAP statute has many weaknesses. Onlythe Attorney General, not consumers, can bring suitunder the statute’s broad prohibition of deceptiveacts. Other weaknesses are gaps in coverage of con-sumer credit transactions, and the statute’s elaboratepre-suit notice requirements. The statute would be en-hanced by giving a state agency the authority to adoptregulations prohibiting emerging forms of unfairnessnad deception.

UtahUtah’s UDAP statute includes broad prohibitions ofboth deceptive and unconscionable practices. One sig-nificant weakness is its scope, as it excludes all insur-ance and utility companies and has significant gaps incoverage of unfair or deceptive consumer lending prac-tices. The statute’s remedies for consumers would beenhanced by authorizing multiple damages in appro-priate cases.

VermontVermont’s UDAP statute includes broad prohibitionsof both unfair and deceptive acts, plus gives the Attor-ney General the authority to adopt rules prohibitingadditional forms of unfairness and deception. It wouldbe strengthened by clarification that it applies to un-fair or deceptive practices by insurance companies.

VirginiaVirginia’s UDAP statute is relatively weak. It prohibitsdeceptive practices, but not unfair practices, and it ex-empts all insurance companies and almost all con-sumer lenders. It also includes a broad exemption forany aspect of a transaction that is subject to certainfederal consumer laws, and exempts holders of real es-tate licenses from any liability. Its consumer remediesare undermined by Virginia’s failure to allow con-sumers to join together in a class action. The statutewould be enhanced by giving a state agency the au-thority to adopt regulations prohibiting emergingforms of deception.

WashingtonWashington’s UDAP statute broadly prohibits unfairand deceptive acts, and violations of many other con-sumer protection laws are considered to be UDAP vio-lations. Major weaknesses of the statute are its gaps incoverage of consumer lending, its blanket exemptionfor most utility companies, and a complicated publicinterest test that has resulted in denial of many meri-torious consumer claims.

West VirginiaWest Virginia’s UDAP statute broadly prohibits bothunfair and deceptive acts. It also includes a number ofspecific prohibitions, and gives the Attorney Generalthe authority to adopt regulations defining unfair anddeceptive acts more specifically. The statute would beenhanced by clarification that it applies to all forms ofconsumer lending and to real estate transactions, andby allowing consumers to recover multiple damages.

WisconsinWisconsin’s patchy UDAP statutes broadly prohibitunfair trade practices, but prohibit deception only in ad-vertisements and other misrepresentations to the gen-eral public. On the other hand, the state has a strongseries of UDAP regulations defining specific practicesas unfair. The statute gives consumers relativelystrong remedies, but only if the business violated oneof the regulations. The statutes would be enhanced byclarification that they cover unfair lending practices;by deletion of the false advertising statute’s exemp-tion for insurance companies; by adding a broad pro-hibition of deceptive practices that is not limited toadvertisements and is enforceable by both the stateagency and consumers; and by allowing consumers tobring suit for unfair practices that are not addressedby a specific regulation.

WyomingWyoming’s UDAP statute applies only if the con-sumer or the Attorney General can prove that a busi-ness committed an unfair or deceptive act knowingly.It does not allow consumers to recover their attorneyfees in individual suits, so when they win a caseagainst a deceptive business they will still not be madewhole. The statute would be enhanced by making itclear that it applies to insurance companies, deletingthe special advance notice requirement imposed onconsumers, giving rulemaking authority to a stateagency, and allowing consumers to recover multipledamages in appropriate cases.


APPENDIX B

STATE-BY-STATE ANALYSES OF STATE UDAP STATUTES

Appendix B provides a detailed analysis of each state’s law. Because of its length, it is found as an appendix to this report only atwww.nclc.org.

State-by-State Summaries of State UDAP Statutes

http://www.nclc.org/issues/udap/content/50-statesummariesFeb09.pdf

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Notes

1 Mich. Comp. Laws Ann. § 445.903(2) gives the AttorneyGeneral the authority to adopt rules, but it forbids rulesthat create additional unfair trade practices not already enu-merated.2 Federal Trade Commission, Annual Report 2007: FairDebt Collection Practices Act, available at www.ftc.gov/reports/fdcpa07/P0748032007FDCPAReport.pdf, at 2/-/3.3 Liss v. Lewiston-Richards, Inc., 732 N.W.2d 514 (Mich. 2007).4 Mich. Comp. Laws Ann. § 445.904(1)(a).5 Chavers v. Fleet Bank, 844 A.2d 666 (R.I. 2004).6 Tennessee’s UDAP statute also has an exemption for the“credit terms of a transaction,” and, while courts have heldthat this language does not create a blanket exemption forall lenders, it could be interpreted as a significant restrictionon the scope of the statute.7 Ala. Code § 8-19-7(3) exempts any bank or affiliate regu-lated by a state or federal agency.8 Alaska Stat. § 45.50.481(a)(1) says that the statute does notapply to “an act or transaction regulated under laws admin-istered by the state, by a regulatory board or commission ex-cept as provided by Alaska Stat. § 45.50.471(b)(27) and (30), orofficer acting under statutory authority of the state or of theUnited States, unless the law regulating the act or transactiondoes not prohibit the practices declared unlawful in AlaskaStat. § 45.50.571.” Alaska courts find that this exemptionapplies “only where the business is both regulated elsewhereand the unfair acts and practices are therein prohibited.”Smallwood v. Central Peninsula General Hosp., 151 P.3d319, 329 (Alaska 2006). As a result, this section does not cre-ate a blanket exemption for creditors or credit. However, it isstill relatively broad, as it denies consumers a UDAP remedywhenever another law prohibits a creditor’s practice.9 The exemption set forth in Ark. Code § 4-88-101(3) for “ac-tions or transactions permitted under laws administered bythe banking commissioner and other regulatory bodies” hasnot yet been construed by the courts.10 Fla. Stat. Ann. § 501.212(4) exempts “[a]ny person or ac-tivity regulated under laws administered by … (b) Banks andsavings and loan associations regulated by [the stateagency]; (c) Banks or savings and loan associations regu-lated by federal agencies.”11 Illinois courts have significantly reduced the applicabilityof the UDAP statute to credit by adopting an unusuallybroad view of the effect of the Truth in Lending Act, with somedecisions holding that it immunizes lenders from UDAP liability for a wide range of deception and non-disclosure.See, e.g., Najieb v. William Chrysler-Plymouth, 2002 WL31906466 (N.D. Ill. 2002). In addition, Zekman v. Direct

American Marketers, Inc., 659 N.E.2d 853 (Ill. 1998), holdsthat knowingly accepting the fruit of a seller’s fraud is in -sufficient to impose UDAP liability upon actors such ascreditors.12 Neb. Rev. Stat. § 59-1617(1) immunizes conduct if thelender is regulated and the conduct itself is also regulated.13 Ohio excludes financial institutions, dealers in intangi-bles, and lenders other than payday lenders, mortgage brokers,and nonbank mortgage lenders and their loan officers. OhioRev. Code § 1345.01(A), (K).14 The exemption set forth in Okla. Stat. Ann. tit. 15, §754(2) for “actions or transactions regulated under laws ad-ministered by” a regulatory authority has not yet been au-thoritatively interpreted.15 Or. Rev. Stat. § 646.605(8) defines “trade” and “commerce”as “advertising, offering or distributing, whether by sale,rental or otherwise, any real estate, goods or services. . . .”Haeger v. Johnson, 548 P.2d 532 (Or. App. 1976) interpretedthis language not to include consumer lending. While theOregon Supreme Court has not yet ruled on the question,the intermediate appellate decision stands as an impedi-ment to consumers.16 Tenn. Code § 47-18-111(a)(1) and (3) exclude “acts ortransactions required or specifically authorized under thelaws administered by, or rules and regulations promulgatedby, any regulatory bodies or officers acting under the au-thority of this state or of the United States” and “Creditterms of a transaction which may be otherwise subject tothe provisions of this part, except insofar as the TennesseeEqual Consumer Credit Act of 1974, compiled in part 8 ofthis chapter may be applicable.”17 Credit is covered but only if it was used to purchase goodsor services. Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169(Tex. 1980).18 Utah Code Ann. § 13-11-22(1)(d) exempts “Credit termsof a transaction otherwise subject to this act.”19 Wash. Rev. Code § 19.86.170 states that the UDAP statutedoes not “apply to actions or transactions permitted by anyother regulatory body or officer acting under statutory au-thority of this state or the United States.” The WashingtonSupreme Court has interpreted this exemption as applyingif the particular practice found to be unfair or deceptive isspecifically permitted, prohibited or regulated. The exemp-tion is significantly narrowed, however, by provisions inWashington lending laws that explicitly make violations ac-tionable under the state UDAP statute.20 The West Virginia UDAP statutes applies to transactionsinvolving goods or services, and there has not yet been an

31

authoritative ruling as to whether it encompasses exten-sions of credit.21 Wis. Stat. Ann. § 100.20 applies to “business and trade,”but a private cause of action is available only if the defen-dant violated one of the specific UDAP regulations, andnone of the UDAP regulations targets lending practices.22 Me. Rev. Stat. Ann. tit. 5, § 208.23In Arizona, the state agency must show that the defendantacted with intent that others rely; in Colorado, the most sig-nificant substantive prohibitions require showing of knowl-edge; in Indiana, a showing of intent or knowledge isrequired for most substantive violations; in Nevada, almostall prohibitions require that the act be knowing or inten-tional; North Dakota requires a showing of intent that othersrely on the misrepresentation; in Wyoming, the definition ofunlawful practices requires that the defendant act know-ingly. In New Mexico, knowledge is required as an elementof any deceptive practice, but courts have appropriately in-terpreted this language as requiring a showing only that thedefendant knew or should have known of the receptive na-ture of the statement, so it is not listed here.24 $5000 per violation for repeat offender.25 CAFA (Class Action Fairness Act of 2005), Sec. 2(a).

26 See, e.g., Yarian v. Rainbow Foods Group, 2003 WL24027721 (D. Minn. Mar. 18, 2003).27 Wyoming allows the court to order reimbursement of theconsumer’s attorney fees in class actions, but not in individ-ual suits.28 Krautsack v. Anderson, 861 N.E.2d 633 (Ill. 2006).29 Iowa does not allow consumers to bring suit at all.30 Wyoming authorizes the court to order reimbursement ofthe consumer’s attorney fees in class actions, but not indi-vidual suits.31 A consumer who loses a UDAP case in Alaska can be re-quired to pay a percentage of the defendant’s fees withoutregard to good faith.32 Iowa does not allow consumers to bring suit at all.33 Mississippi disallows class actions as a general rule for alltypes of cases.34 Virginia disallows class actions as a general rule for alltypes of cases.35 One of two UDAP statutes requires notice.36 Advance notice is required except for deceptive acts doneas part of a scheme, artifice, or device with intent to defraud.37 Requires a pre-suit dispute resolution procedure.


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