Understanding the Deceptive Trade Practices Act to avoid litigation and how to pursue damages caused by deceptive trade practices.
Texas takes its business ethics very seriously and has created the Deceptive Trade Practices Act (DTPA) to protect people and businesses from unfair business practices. Enacted in 1973, the Act can be found starting at Section 17.41 of the Texas Business and Commerce Code. The DTPA provides a legal mechanism for people to bring an action against businesses that engage in activities that were deceptive or misleading. The DTPA enumerates many different practices that fall within its classification of false or misleading practices.
The DTPA was intended to prevent the following types of practices:
- The use of misleading or false advertising;
- Asserting that a product or service is far more impressive than it actually is through the use of exaggeration or misrepresentations;
- Using false or fraudulent statements about the origin of a particular good or service;
- Claiming that a used product is new;
- Disparaging a competitor through the use of negative or false statements;
- Misrepresenting the nature of a situation, including trying to force unneeded repairs; or
- Increasing prices in the event of a natural disaster or other catastrophe.
These are only some of the many different types of practices that qualify as violations of the DTPA. The basis for the DTPA is that these claims are compelling enough to entice a person to make a purchase or hire a service provider and will lead to a consumer not getting what he expected due to the misleading or false statements. The DTPA imposes significant fines against the businesses that are found guilty of violations of the Act. Many times, litigation involving the DTPA arises out of:
- Real estate transactions;
- The purchase of goods and services;
- The purchase of insurance;
- Financial investments; and
- Other business opportunities.
There are many serious legal claims that a business that has engaged in deceptive practices may face. When a business is charged under the DTPA, the accusations may include:
- Engaging in false business practices;
- Engaging in deceptive business practices;
- Breach of express or implied warranties;
- Committing unconscionable acts – this term is used widely throughout the DTPA; or
- Violating Chapter 541 of the Texas Insurance Code.
Many times, the legal cases that arise out of these accusations are protracted. However, these actions ultimately achieve the goal of holding businesses accountable or the bad practices in which they engaged to the detriment of the consumer in many cases. This Act does provide a private cause of action, so a consumer may bring litigation against a business directly under the terms of this Act. A consumer who is eligible to bring an action under the DTPA includes an individual, corporation, partnership, or government entity. Businesses that have $25 million or more in assets or those businesses that are owned or controlled by another entity with this amount of assets do not qualify as consumers under the DTPA.
The burden of proof that a consumer must satisfy is relatively low. A consumer does not have to prove that a business intentionally or knowingly violated the Act. Therefore, it is much easier to prove a violation. If a consumer does succeed in proving that the defendant business intended to violate the DTPA, a judge may award treble damages as a punitive measure against the business. These damages are an indication of how seriously the State of Texas takes the issue of deceptive business practices.
The Texas Deceptive Trade Practices Act was enacted to provide important protections for consumers. If you believe that you have done business with a company that engaged in deceptive practices, it is important to speak with one of our experienced Texas business litigation attorneys at to develop an effective legal strategy to hold the business accountable for its wrongdoing. To schedule an appointment, call us today at