Statutory Fraud Claims: Uniform Deceptive Trade Practices Act

Minnesota has a number of statutory fraud claims and the Uniform Deceptive Trade Practices Act (“UDTPA”), found in Minn. Stat. §§ 325D.43,et seq., is one of those claims.

There are thirteen ways in which a person can engage in deceptive trade practices. Minn. Stat. § 325D.44 states,

A person engages in a deceptive trade practice when, in the course of business, vocation, or occupation, the person:

(1) passes off goods or services as those of another;

(2) causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services;

(3) causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another;

(4) uses deceptive representations or designations of geographic origin in connection with goods or services;

(5) 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;

(6) represents that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or secondhand;

(7) 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;

(8) disparages the goods, services, or business of another by false or misleading representation of fact;

(9) advertises goods or services with intent not to sell them as advertised;

(10) advertises goods or services with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity;

(11) makes false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions;

(12) in attempting to collect delinquent accounts, implies or suggests that health care services will be withheld in an emergency situation; or

(13) engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding.

Consumers are allowed to bring a claim directly against businesses for violations of the UDTPA. Consumers are not allowed, however, to recovery monetary damages. The UDTPA provides for injunction relief—which Minnesota courts have held to be the sole remedy for any violation. Consumers are allowed to collect his or her attorney’s fees and costs under the UDTPA if they are the prevailing party.

The case of Alternative Pioneering Systems, Inc. v. Direct Innovative Products, Inc., 822 F. Supp. 1437 (D. Minn. 1993) dealt with paragraph 5—the prohibition of representing goods or services that have characteristics or benefits they do not have. APS sells a countertop under a trademark “Jet Stream Oven” and uses a 30 minute infomercial to help sell its product. During the infomercial, APS’s president cooks a variety of foods in the oven.

Direct Innovative Products (“DIP”) sells a similar oven and has a very similar infomercial format used by APS and even cooks some of the same foods.

APS brought a claim alleging, among other things, violation of the UDTPA, because of some of the false statements used by DIP—mainly that DIP’s oven will drastically cut down on cooking time. APS contended that it had proved DIP’s assertions to be false.

While this case dealt with whether to grant a preliminary injunction, the court stated,

Consumers have a right not to be subjected to deceptive or confusing advertisements so that they can accurately assess the quality of a product and choose a product that is in accordance with their preferences. False or misleading advertising deprives the public of that information and may lead them to make purchases they might not otherwise make if they were supplied with the truthful information.

Even in light of this statement from the court, it ultimately found that APS had not made a sufficient showing to warrant a preliminary injunction. It should be noted, however, that as a general rule, consumer protection statutes are remedial in nature and are to be liberally construed in favor of protecting consumers. State by Humphrey v. Alpine Air Products, Inc. 490 N.W.2d 888 (Minn. Ct. App. 1992).

This is some case law that highlights a restriction of transaction types under the UDTPA. Most of the provisions reference “goods or services” (subdivisions 1, 2, 4, 7, 9 and 10). Paragraph 5 refers in part to “goods or services,” paragraph 6 only references “goods” and paragraph 8 states “goods, services, or business.” Paragraphs 3, 11, 12, and 13 do not contain any references to goods or services.

 

This article was written by attorney Maureen A. Carlson.