The USA Consumer Law - Essay Example

A. True or False Questions: 1. If a father buys a toy for his son, the son may be a consumer under the Texas Deceptive Trade Practices Act. True. The court has made it known that although a consumer must acquire goods or services by purchase, one other than the consumer may make the purchase. A child is a consumer with respect to goods and services paid for the parents (Alderman, [n.d., pp. 75-76] citing Birchfield v. Texarkana Memorial Hospital, 747 S.W. 2d 361 [Tex. 1987]). 2. The best way to prevent identity theft is to review a copy of your credit report. True. Reviewing a copy of one’s credit report – which the consumer has right over annually – is among the best ways to prevent identity theft. The other ways to protect oneself from identity theft are destroying private records and statements, securing one’s mail, safeguarding one’s Social Security number, not leaving a paper trail, never letting one’s credit card out of sight, knowing who one deals with, taking one’s name off marketer’s hit lists, being more defensive with personal information, and reviewing one’s credit card statements carefully (see Wuorio, 2010). 3. In an American jury trial, they jury decides issues of fact and law. False. The jurors decide the issue of facts. It is the judge who decides the issues of law. 4. It is easier to recover damages under a producing cause standard than a proximate cause standard. True. The use of proximate cause as a limitation on liability has been problematic or confusing for the courts. Sometimes the courts use the term proximate cause in concluding that the defendant’s conduct was a cause-in-effect of the plaintiff’s injury, and sometimes to describe a conclusion that the injury while caused by such conduct is beyond the scope of the risk created by the defendant’s conduct (see Steenson, 2009). 5. If you buy something online, it is best to use a credit card. False. The use of credit card in online procurement opens one to the possibility of identity theft. 6. Excessive costs may invalidate an arbitration clause. False. Generally, what invalidates an arbitration clause is when it is induced by fraud or when it is not enforceable as a contract under applicable state laws (see Zwisler & Wallman, 2009). 7. Strict Products Liability, 402A, applies to only the consumer or the user. True. Strict Products Liability 402A is silent as to whether it applies to harm to persons other than users or consumers. Its basic premise provides that “one who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property… (and) although the seller has exercised all possible care in the preparation and sale of his product” (see Madden, 1993). 8. A consumer has the right to a free copy of her credit report once a month. False. A consumer has the right to a free copy of his/her credit report once a year (see Wuorio, 2010). 9. Any business may be a consumer under the Texas Deceptive Trade Practices Act. False. The DPTA excludes certain businesses from its definition of a consumer. Accordingly, a business consumer with assets of $25 million or more, or one that is owned or controlled by a corporation or entity with assets of $25 million or more, is not a consumer for purposes of the DPTA (Alderman, 2009, pp. 10). 10. UDAP means “You Don’t Attack Professors”. UDAP stands for Unfair and Deceptive Practices Acts. UDAP is legal measure that is meant to assist consumers in battling fraud in the market place and provide several protections to consumers that are meant to encourage consumers to bring suit and attract competent lawyers to litigate the cases. UDAP statutes vary significantly by State, with some providing protection than others (see Rudnick, 2009). B. What legal claims might Casey have under the Deceptive Trade Practices Act? Fully discuss the claims and the likelihood she will prevail. What damages could she recover? As an individual who sought (and) acquired by purchase the residential unit – considered a goods under Texas Deceptive Trade Practices Act (DTPA) Section 17.45(1) – where she currently lives in, Casey – a consumer by definition of Section 17.45(4) – can legally push for claims under the DTPA (Alderman, [n.d.], pp. 78). While the amount of her transaction to acquire her residential unit was in the amount of $300,000, it cannot be numbered among the exemptions that the Act affords a number of certain large transactions (see Section 17.49[f]). For, the Act is also categorical that such does not apply to transactions involving the consumer’s residence (see Texas Business & Commerce Code § 17.49[f][3]). Coming to know about the murder of the seller’s mother inside the house where she now lives, Casey suffers actual damages. She’s upset, cannot sleep in the house, and starts to have nightmares. As she gets distracted, she was fired from her job. She plans to sell the house to at least recoup the money she paid for it. But, no one is willing to pay her even more than just half of the amount. Under these circumstances, Casey may sue the seller under the DTPA primarily for violations contained in the laundry list of the Act (Section 17.46[b]). Of the twenty-seven acts or practices that are deemed to be false, deceptive or misleading in the laundry list, the pertinent is subsection (24): “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.” This actionable deed or practice, however, requires proof of intent (Alderman, [n.d.], pp. 79). To establish a claim under Section 17.46(b)(23), Casey needs to establish four elements. The first element is that defendant knew (the undisclosed) information regarding the – in Casey’s case – residential unit. This is an obvious requirement (see Alderman, [n.d.], pp. 80), since a party cannot be held responsible for failing to disclose that which he or she does not know (Riverside National Bank vs. Lewis 603 S.W.2d 169 [Tex. 1980]). The second and third elements are that the information was not disclosed and that there was an intention on the part of the seller to induce the consumer to enter into the transaction. These elements are usually considered together. A presumption of intent arises whenever it is shown that the (undisclosed) information was material (Alderman, [n.d.], pp. 80). The fourth element is that the consumer would not have entered into the transaction on the same terms had the information been disclosed (Alderman, [n.d.], pp. 80). These elements are expected to be easily established by Casey. First, the seller definitely knew about the murder of his/her mother. In fact, if the information from Casey’s neighbor is taken as an indication, it is precisely his/her mother’s murder that the seller wanted to dispose the property. Second, the seller never disclosed the information. Casey came to know of it through her neighbor. Third, the non-disclosure of the information that a murder was made inside the house must have been made to entice Casey to enter into the negotiation and eventually buy the house. As if to cover the gruesome story, the house was newly repainted when Casey first visited it. Definitely, the information on the seller’s mother being murdered was very material to Casey’s decision to procure the house. And, finally, had she known it at the time prior to her signing the contract to buy the house, she definitely would have second thought on her decision. This is evidenced by the actual damages that she has been going through since she came to know of the (undisclosed) information. Casey may also maintain a claim under Section 17.50(a) for unconscionable act or practice. Unconscionable act or practice refers to 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 (see Parkway Corporation v. Woodruff 901 S.W.2d. 434 [Tex. 1995]). Whether an act or practice is unconscionable is determined at the time of the sale or contract. It would require a review of the facts of the case, in the light of education, experience and ability of the consumer. Casey’s native tongue is French; and the seller has a thick Texan accent that Casey can hardly understand him/her. For this reason, Casey did not talk too much with the seller. This must have presented an ideal opportunity for the seller not to disclose all pertinent surrounding circumstances on the house that was being sold – which obviously grossly affected Casey. To Casey’s advantage, she is not going to be required to show that the defendant acted with any form of culpable mental state – such as acting intentionally, knowingly, or with conscious indifference (Chastain v. Koonce, 700 S.W.2d 583 [Tex. 1985]). In the event that Casey’s DTPA lawsuit is successful, what may she expect to recover? Section 17.50(a) provides that a consumer may claim for economic damages or damages for mental anguish. If the court finds the wrongful conduct knowingly committed, it may award up to three times the amount of economic damages, in addition to damages for mental anguish. If the act or deed was intentionally committed, up to three times the mental anguish may be awarded (Section 17.50[b][1]). These questions of whether a violation was with elements of knowledge and intention are established by the court or the jury in consideration of all the facts and circumstances relative to the transaction. Too, the consumer who prevails is awarded court costs and necessary attorney fees (Section 17.50[e]). C. You work for a law firm that Casey contacted. The firm has asked you whether Casey has any claims under the Fair Debt Collection Practices Act (FDCPA) against either RGM or GBH and what damages she might be able to recover if she won a lawsuit. Discuss whether this law applies, what claims Casey may have, and what damages she could recover if she prevailed. As typified in this case, there are debt collectors who are infamous for some underhanded tactics that they use. However, there is the Fair Debt Collection Practices Act (FDCPA) – a federal law that governs the actions of parties acting as debt collectors for personal debts. This is the law that lays down the rules any third-party in the collection of debts should follow. Following the account by Casey, the following are the actions by the RGM and GBH debt collectors that are not sanctioned by the FDCPA. Firstly, while RGM may have been right in writing Casey a letter demanding payment in thirty days time when Casey has not yet notified the debt collectors in writing that her debt is disputed (Section 809[a][3]), RGM threatened her by telling her that a sheriff is coming to put her behind bars. This contradicts Section 807(4&5) which rule against false and/or misleading representations. Section 807(4) categorically mentions about the representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person. Section 807(5) is specific on making threat to take any action that cannot be legally taken or that is not intended to be taken (see also Brown v. Card Service Center, ___F.3d __, 2006 WL 2788476). The same FDCPA provisions are violated by GBH as it wrote Casey a letter telling her that she will lose her house if she does not pay promptly. Against the actions by the GBH, Section 807(4) provides that the debt collectors cannot represent or implicate that non-payment of debt results to seizure, garnishment, attachment or sale of any property (by Casey). RGM’s tactic of calling up Casey’s father and telling him that his daughter was a deadbeat and GBH’s action of telephoning Casey’s mother and telling her that she was a bad mother as her daughter did not pay her bills run counter the Sections 806(2) and 805(b). A collector may not harass, oppress or abuse any person in connection to the debt (Section 806). FDCPA prohibits the use of obscene or profane (or obscene and abusive) languages the natural consequence of which is to abuse the hearer (Section 806[2]). Casey has a case against the two debt collecting agencies for calling her deadbeat (or lazy, loafer or one who does not fulfill financial obligations) and her mother a bad mother for not teaching her daughter to pay her bills. FDCPA, too, prohibits debt collectors from illegally informing a third party about one’s alleged debt. Except when acquiring location information (which is not without several regulations (Section 804), debt collectors cannot without the prior consent of or expressly given permission by the consumer give information on any third party about one’s debt, except to the debtor’s attorney, the creditor, the creditor’s attorney, a credit reporting agency. If Casey is married, then her husband may need to know about her debts. But, as clearly indicated in her case, Casey is no longer a minor. Hence, her parents need not be informed their daughter’s financial debt (see Section 805[b]). As a result of these developments, Casey is very upset. It has made her close her restaurant for several days. She cannot sleep, too, and loss her appetite to eat. On this account, Casey may sue the debt collectors in state or federal court within one year from the date of their violations (of FDCPA) (Section 813). In general, a lawsuit is a good idea for individuals who have proof that they are – as in Casey’s situation – being unduly harassed by debt collectors (Gillingwater, 2010). In case she wins her case, Casey stands to recover damages in the amount of any losses she has suffered as a consequence of the violation (Section 813[a][1]). The actual damages occur in situations where a debt collector’s behavior has caused the debtor financial loss (Gillingwater, 2010). In the case of Casey, she closed her restaurant because she was upset by the debt collectors’ tactics. In addition, she may be awarded an additional amount of up to $1,000.00 (Section 813[a][2][A])and recover court costs and attorney fees (Section 813[a][3]; see also Larson, 2003). By suing the collection agencies for violating the law, Casey does not only defend herself. She also reminds RGM and GBH to take the law seriously and spare the other consumers and debtors the same harassment (Gillingwater, 2010). D. Fully discuss what claims Bob and Mary may have, what they will have to prove to win a lawsuit, and what damages they each may recover if they prevail. Do not discuss the DTPA. The legal options available to consumers that have been injured – either physically such as Mary in our case, or economically such as Bob – by Toyota’s malfunctioning gas pedal are actually numerous (Ledger, 2010). Among the basic issues that Toyota buyers have wanted to ascertain is whether they have a claim against the car marker; and, if they do, what type of claim it is. Indeed, Bob and May have two basic types of lawsuits. Mary may file a personal injury case. This is an individual lawsuit that may be filed by the one who is personally injured, (or – in the case of a wrongful death – by the family members of someone who was killed as a result of a car accident involving a Toyota manufactured vehicle) (Ledger, 2010). Mary’s personal injury lawsuit stems from allegations of sudden acceleration problem in the Toyota vehicle that she bought. It may include claims of fraud, breach of warranty, misrepresentation, unjust enrichment, deceptive trade practices and serious injury (Paula, 2010). This kind of lawsuit may potentially recover for actual damages including lost time from work, medical bills and damage to a vehicle and other personal properties – for instance, Mary’s personal laptop – as well as pain and suffering (Ledger, 2010). Bob, for his part, may either spearhead or join a class action lawsuit against Toyota – such as the Heidenreich v. Toyota Motor North America Inc., N.D., Fla., No. 4:10-CV-0035-RH-WCS, filed 02/01/10. This kind of lawsuit is based on economic losses. An economic loss may be made to base on a number of claims. However, specifically on a loss of value claim, it is being asserted that the Toyota car that Bob has purchased has diminished – if not lost – its value through the fault of the manufacturer. Bob’s Toyota car commands $2,000 less than when it did not have any problem. This has been the result of the defective manufacturing of the car and the subsequent publicity that has surrounded the car making company since they have brought out to the market their defective models (Ledger, 2010). This suit may focus on the difference in market value due to the defect, and considerable amount in damages – both compensatory and punitive– for violations of state consumer protection laws, breach of express and implied warranty, and unjust enrichment (Paula, 2010). Particularly in the realm of motor vehicles, there are warranty laws in different states in America that deal with lemonitis – that is, serious, stress-induced disorder, sometimes debilitating, often evidenced by sour taste, and accompanied by financial, emotional and at times life-compromising symptoms by automobiles with significant impairments to use, or market value or safety (see Swann, 2002). In United States, the Virginia Lemon Law is among the best. It provides for a full cash refund of a qualifying vehicle’s purchase price. Otherwise, it may mandate for replacement or swap of vehicles. It may afford a complainant with reimbursement of collateral charges, including interest expenses, and reasonable attorney fee. However, under the Act, a window of merely eighteen months from the vehicle’s delivery date to the consumer is maintained during which problems must be reported to the manufacturer (Swann, 2002). Nevertheless, the Virginia lemon law provides a rather simple formulation for computation of damages of purchased vehicles. Specifically, the consumer can always expect the manufacturer to reimbursement – among others: the purchase price, along with fees for taxes, title and tags, as published on the front of the buyers order (contract) or loan application (less any rebate); one hundred per cent of interest charges paid for a bank or credit union loan; loss of use for shop days without a loaner vehicle, which is usually $30-50 per day; a portion of personal property taxes and insurance, which is occasionally 25%-50% of amounts; repair costs, tow charges, storage fees, and lost wages; litigation expenses, following the computation by Magnuson-Moss, 15 USC §2310 inclusive of filing and service, consultant/expert charges, and other expenses such as postage, copying, etc.; and attorney fees, which are usually $1,000 to $1,500 (see Swann, 2002). For its part, Magnuson-Moss stipulates on express and/or implied warranties on all goods such as vehicles. It makes clear that the manufacturer’s express limited warranty generally maintains that it will repair or replace or adjust defective components of – for instance – a car during a fixed period of time or for an established number of odometer miles. The implied warranty is known as warranty of merchantability, or the state by which a motor vehicle is in average condition, properly labeled and fit for ordinary, safe and reliable transportation. This is an automatic warranty, and cannot be disclaimed when an express warranty exists. Thus, under this warranty in every lemon law complaint, the manufacturer remains at risk (Swann, 2002). References: Alderman, R., (n.d.). The Texas Deceptive Trade Practices Act 2005: still alive and well. Journal of Texas Consumer Law, pp. 74-89. Alderman, R., 2009. The Texas Deceptive Trade Practices Act in context: not all that bad. Available at: http://www.peopleslawyer.net/consumer-law-basics/presentations/RichardAlderman-paper.pdf [Accessed 1 August 2010]. Brown v. Card Service Center, ___F.3d __, 2006 WL 2788476 Chastain v. Koonce, 700 S.W.2d 583 [Tex. 1985] Fair Debt Collection Practices Act Gillingwater, C., 2010. File an FDCPA civil lawsuit over debt collection violations. Available at: http://consumer-rights.suite101.com/article.cfm/file-an-fdcpa-civil-lawsuit-over-debt-collection-violations [Accessed 2 August 2010]. Heidenreich v. Toyota Motor North America Inc., N.D., Fla., No. 4:10-CV-0035-RH-WCS Larson, A. 2003. The Fair Debt Collection Practices Act (FDCPA) Available at: http://www.expertlaw.com/library/consumer/fair_debt_collection.html#2 [Accessed 2 August 2010]. Ledger, E.B., 2010. California Toyota Recall Attorney Explains the Difference between Toyota Economic Loss Cases and Personal Injury Cases. Available at: http://www.ledgerlaw.com/personal-injury-lawyer/toyota-recall-attorney/california-toyota-recall-attorney-explains-the-difference-between-toyota-economic-loss-cases-and-personal-injury-cases/ [Accessed 2 August 2010]. Madden, M.S., 1993. Strict products liability under Restatement (Second) of Torts §402A: “Don’t throw out the baby with the bathwater.” Available at: http://digitalcommons.pace.edu./lawfaculty/150 [Accessed 1 August 2010]. Magnuson-Moss, 15 USC §2310 Parkway Corporation v. Woodruff 901 S.W.2d. 434 [Tex. 1995] Paula, V., 2010. Toyota faces class action suits. Available at: http://www.lexology.com/library/detail.aspx?g=8e9e9861-dd6e-43ef-831e-24743f577677 [Accessed 2 August 2010]. Riverside National Bank vs. Lewis 603 S.W.2d 169 [Tex. 1980] Rudnick, J., 2009. What is UDP? What is Consumer Fraud? Available at: http://www.newjerseylemonlawlawyerblog.com/2009/02/what_is_udap_1.html [Accessed 29 July 2010]. Steenson, M., 2009. Proximate cause in civil damage cases. Journal of Law and Practice. Available at: http://lawandpractice.wordpress.com/2009/03/01/proximate-cause-in-civil-damages-act-cases/ [Accessed 1 August 2010]. Swann, S., 2002. Motor vehicle litigation: warranty and consumer protection law. Available at: http://www.abanet.org/legalservices/lamp/cle/swann.pdf [Accessed 2 August 2010]. Texas Business & Commerce Code Texas Deceptive Practices Act Virginia Motor Vehicle Warranty Enforcement Act Wuorio, J., 2010. The basic ten steps to stop identity theft cold. Available at: http://moneycentral.msn.com/content/banking/financialprivacy/p33715.asp [Accessed 1 August 2010]. Zwisler, C.E. & Wallman, K.L., 2009. USA: California and Montana courts invalidate common franchise arbitration provisions. International Distribution Institute. Available at: http://www.idiproject.com/news-print.ucw?id=170 [Accessed 1 August 2010]. Read More