The DTPA in Texas
Texas law prohibits businesses from engaging in deceptive trade practices. The Deceptive Trade Practices-Consumer Protection Act (“DTPA”), enacted in 1973 and codified in the Texas Business and Commerce Code, outlines those business practices that are deceptive and provides consumers with a remedial scheme to protect their interests. The DTPA’s overarching purposes are: (1) to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty, and (2) to provide efficient and economical procedures to secure such protection.[1]
Elements of a DTPA Claim
Generally, to prevail on a DTPA claim, plaintiffs must establish three elements:
- The plaintiff is a consumer;
- The defendant engaged in false, misleading, or deceptive acts; and
- The acts were a producing cause of the consumer’s damages.[2]
According to the DTPA, a “consumer” is defined as an individual, partnership, corporation, the state of Texas, or a subdivision or agency of the state of Texas who seeks or acquires by purchase or lease, any goods or services.[3] However, the term “consumer” specifically excludes a business consumer that has assets of $25 million or more or that is owned or controlled by a corporation or entity with assets of $25 million or more.[4]
False, Misleading, or Deceptive Acts
A consumer may maintain an action where any of the following constitute a producing cause of economic damages or damages for mental anguish:
- The use or employment by any person of a false, misleading, or deceptive act or practice that is:
- specifically described in Subsection (b) of Tex. Bus. & Com. Code § 17.46; and
- relied on by a consumer to the consumer’s detriment;
- Breach of an express or implied warranty;
- Any unconscionable action or course of action by any person; or
- The use or employment by any person of an act or practice in violation of Chapter 541 of the Insurance Code.[5]
Often, plaintiffs will pursue DTPA claims based one or more acts described in Tex. Bus. & Com. Code § 17.46(b). Those acts include:
- passing off goods or services as those of another;
- causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another;
- representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which the person does not;
- representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand;
- representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;
- advertising goods or services with intent not to sell them as advertised;
- representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law;
- failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed;
- using the term “corporation,” “incorporated,” or an abbreviation of either of those terms in the name of a business entity that is not incorporated under the laws of this state or another jurisdiction.[6]
Remedies and Relief for Consumers
Consumers may be entitled to various forms of relief by bringing a DTPA lawsuit. First, a consumer may be entitled to economic damages determined by the court.[7] Second, if the court determines that the defendant “knowingly” committed the false, misleading, or deceptive acts, the plaintiff may be entitled to up to three times its economic damages in addition to damages for mental anguish. If the court determines the defendant acted “intentionally,” the plaintiff may also be entitled to up to three times its damages for mental anguish.[8] Third, a consumer who prevails on a DTPA claim is entitled to court costs and reasonable and necessary attorneys’ fees.[9] Additionally, while a consumer has other available forms of relief (e.g., injunctive relief), Subsection (h) provides another avenue of recovery. Specifically, if a consumer is granted the right to bring a cause of action under the DTPA by another law, the consumer may recover actual damages, without regard to whether the defendant’s conduct was committed intentionally.[10]
Defenses
Defendants also have a number of defenses to DTPA claims, including:
- The plaintiff is not a consumer under the DTPA;
- The consumer failed to give sufficient written notice to the defendant at least 60 days before filing suit for damages under Section 17.50(b)(1);[11]
- Before the consummation of the transaction, the defendant gave reasonable and timely written notice to the plaintiff of the defendant’s reliance on:
- written information relating to the particular goods or service in question obtained from official government records if the written information was false or inaccurate and the defendant did not know and could not reasonably have known of the falsity or inaccuracy of the information;
- written information relating to the particular goods or service in question obtained from another source if the information was false or inaccurate and the defendant did not know and could not reasonably have known of the falsity or inaccuracy of the information; or
- written information concerning a test required or prescribed by a government agency if the information from the test was false or inaccurate and the defendant did not know and could not reasonably have known of the falsity or inaccuracy of the information;[12]
- The defendant proves that it received written notice from the consumer and within 30 days after receiving notice tendered to the consumer the claimed economic damages, mental anguish damages, expenses, and reasonable attorneys’ fees;[13] and
- The court finds that the consumer’s DTPA claim was groundless in fact or law or brought in bad faith or brought for the purpose of harassment.[14] This finding entitles the defendant to court costs and reasonable and necessary attorneys’ fees.
That last defense should give plaintiffs/consumers pause before bringing a DTPA lawsuit against a business. In my practice (when representing the business), the consumers’ DTPA claims have failed primarily because: (1) the DTPA claims were groundless, or (2) the consumer was not able to show how the defendant’s alleged deceptive acts were a producing cause of the consumer’s damages.
Need assistance in managing the business tax audit process? Freeman Law’s representations include disputes involving a variety of claims, such as breaches of fiduciary duty, business torts and other commercial disputes, partnership disputes, misrepresentation, deceptive trade practices act (“DTPA”) violations, tortious interference, extortion, Texas Theft Statute violations, civil conspiracy, and cyber and computer violations. We offer value-driven services and provide practical solutions to complex tax issues. Schedule a consultation or call (214) 984-3000 to discuss our business litigation services.
[1] Tex. Bus. & Com. Code § 17.44(a).
[2] See Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995).
[3] See Tex. Bus. & Com. Code § 17.45(4).
[4] Id.
[5] See Tex. Bus. & Com. Code § 17.50(a).
[6] Tex. Bus. & Com. Code § 17.46(b)(1), (3), (5)-(7), (9), (12), (24)-(25).
[7] See Tex. Bus. & Com. Code § 17.50(b)(1).
[8] Id.
[9] See Tex. Bus. & Com. Code § 17.50(d).
[10] See Tex. Bus. & Com. Code § 17.50(h).
[11] See Tex. Bus. & Com. Code § 17.505(a), (c), (d).
[12] See Tex. Bus. & Com. Code § 17.506(a).
[13] See Tex. Bus. & Com. Code § 17.506(d).
[14] See Tex. Bus. & Com. Code § 17.50(c).
