As a business, one of the most important things to consider when offering goods or services to consumers is to abide by honest and transparent practices in regard to the function or quality of those goods or services. In Texas, the Deceptive Trade Practices Act (“DTPA”) specifically covers this topic, providing consumers with a certain level of protection that applies broadly to a range of activities that businesses can cause them harm with. It’s important not only to be familiar with the Act and what it is, but also to ensure that your actions and representations are always in compliance with the Act.
The three major areas of conduct the DTPA bans includes:
- False, Misleading, and Deceptive Business Practices
- Unconscionable Acts
- Breaches of Warranty
False, Misleading, and Deceptive Business Practices
False, misleading, and deceptive business practices under the DTPA cover a broad range of activities and claims that have to do with misrepresentations and deceit specifically related to different aspects or characteristics of a good or service. Some examples of these kinds of practices, as listed out in the Act, include:
- Representing that goods are new when they are not (Example: Restarting the odometer on a car and advertising it as new, when it is actually used)
- Causing confusion or misunderstanding as to the source of a good or service (Example: Using a logo that is confusingly similar to that of a large company, leading the consumer to believe the good comes from that company)
- Disparaging the goods, services, or business of another by false or misleading representation of facts (Example: Making unbased statements that a competitor is lying about where their goods are made)
- Using deceptive representations or designations of geographic origin in connection with goods or services (Example: Claiming that clothing was made in Italy when it was really made in China)
For example, a real estate company that engages in a real estate transaction with a customer and tells them that the property did not flood during the last hurricane when it actually did is an example of a false, misleading, and deceptive business practice. The company’s intention is to mislead the consumer into believing something that is not true about the property to push them to purchase it, when they may not be as willing to purchase it if they had all the accurate information the company should have provided them with.
An unconscionable act under the DTPA is defined as “an act or practice which, to a consumer’s detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree.” This characterizes a transaction that is one-sided in that the business holds more knowledge than the consumer does, specifically using that to the business’s advantage and to the consumer’s harm.
For example, a consumer with little to no knowledge of vehicle maintenance and repair takes their vehicle to a dealership for a yearly revision. A dealership employee who takes advantage of that consumer’s lack of knowledge on the topic and convinces them that they need repairs or replacements on their vehicle that they do not actually need is an example of an unconscionable act, causing detriment to the consumer and directly benefitting the dealership.
Breaches of Warranty
Breaches of warranty range from false and misleading representations of the goods or services being sold to the consumer, to written notices or promises about the goods or services. Breaches of warranty can be:
- Implied: Implied warranties are unwritten, but are assumed as general guarantees that a good or service should work as expected and advertised.
An example of an implied warranty protected under the DTPA is the implied warranty of merchantability, found in Chapter 2 of the Uniform Commercial Code, which establishes that there is an implied warranty for the merchantability of goods “if the seller is a merchant with respect to goods of that kind.” In other words, if a car dealership specifically sells cars to consumers, there is an implied warranty that the cars they sell will be merchantable, or fit for their ordinary purpose.
Another example of an implied warranty protected under the DTPA is the implied warranty of good and workmanlike services, established instead through a famous Texas Supreme Court case, Melody Home Mfg. Co. v. Barnes. This case set forth that there is an implied warranty “to repair or modify existing tangible goods or property in a good and workmanlike manner,” bringing into question instead the quality with which a consumer’s goods were repaired or modified by a business. That same dealership is held to a certain standard of repairing or modifying consumers’ cars when they come into their shops or locations, providing them with quality repairs and modifications that match the level of expertise those dealerships are expected and advertised as having.
- Express: Express warranties can either be written or spoken, making a specific promise to the consumer about the good or service.
For example, a mechanic that makes repairs to a consumer’s vehicle and includes a written warranty stating that they will fix any faulty aspects of the repair over the course of one year is obligated to live up to that promise for the course of that year, as that particular promise constitutes an express warranty. A failure or refusal to honor that warranty would lead the mechanic to be in breach of warranty, thus violating the DTPA.
The major takeaway about the DTPA in Texas is that you should always act in accordance with what is permitted under the Act and make sure your actions or representations for your goods and services are never in violation. In situations where it is unclear how to best proceed with a specific issue or consumer, the best choice is to always consult an attorney about how to make sure that your actions are in direct compliance with the Act.