All states have enacted consumer protection statutes, which are modeled after the Federal Trade Commission Act, which prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.” Minnesota is no different. The state enacted the Uniform Deceptive Trade Practices Act (UDTPA) in 1973. The unfair and deceptive trade practices are just that: when a seller acts unfairly to a buyer or deceives a buyer. The statute is designed to address the unequal bargaining power of the consumer.
There are thirteen practices considered deceptive trade practices under UNDTPA:
When, in the course of business, a person:
- Passes off goods or services as those of another
- Causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services
- Causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another
- Uses deceptive representations or designations of geographic origin in connection with goods or services
- Represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have
- Represents that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or secondhand
- Represents 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
- Disparages the goods, services, or business of another by false or misleading representation of fact
- Advertises goods or services with intent not to sell them as advertised
- Advertises goods or services with intent not to supply a reasonable amount for public demand, unless the advertisement discloses a limitation of quantity;
- Makes false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions
- In attempting to collect delinquent accounts, implies or suggests that health care services will be withheld in an emergency situation
- Engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding.
In addition to injunctive relief, the court may award attorney’s fees to the prevailing party under two circumstances: 1) if the plaintiff has brought the claim knowing it to be groundless, or 2) the defendant has willfully engaged in the trade practice knowing it to be deceptive.
If a person engages in deceptive trade practices as part of personal activities, not in the course of business or trade, the statute does not apply. A claim will also fail if the plaintiff fails to establish a causal connection. Further if the allegedly deceptive statement is in fact true, no claim exists. The burden is on the plaintiff to prove the falsity of statements allegedly disparaging the goods, services, or business of another by false or misleading representations of fact. Generally, there is a six year statute of limitations for claims.
The analysis for claims under the Minnesota Deceptive Trade Practices Act is the same as that applied under the Lanham Act.
To establish a Lanham Act false advertising claim, a plaintiff must prove
- A false statement of fact by the defendant in a commercial advertisement about its own or another’s product
- The statement actually deceived or has the tendency to deceive a substantial segment of its audience
- The deception is material, in that it is likely to influence the purchasing decision
- The defendant caused its false statement to enter interstate commerce
- The plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a loss of goodwill associated with its products
However, when a competitor’s advertisement, particularly a comparative ad, is proved to be literally false, the court may presume that consumers were misled and force the defendant to terminate circulation of the offending advertisement, without requiring consumer surveys or other evidence of the ad’s impact on the buying public. Do note that when this principle applies in a Lanham Act dispute between competitors, the plaintiff “must show that it will suffer irreparable harm absent the injunction.”
Examples of violations we might more commonly see are a refurbished computer sold as new, or a car with the odometer rolled back. In the news, we have seen:
- Fake Coach and Fendi purses sold at Target and Walmart respectively.
- Extra-virgin olive oil containing only seed oil, chlorophyll and beta-carotene to make it look and smell like the real thing.
- Market Pantry Brand Parmesan Cheese sold at Target containing no parmesan cheese.