Unfair and Deceptive Trade Practices

Created September 1,1998
  1. The Law

    1. Who is covered by the law?
  2. What are "Unfair or Deceptive Trade Practices?"

  3. Some Examples of Unfair or Deceptive Practices

  4. What Can I Do if I Have Been Victimized By One Of These Practices? 


The Law

Both Massachusetts and United States laws prohibit the use of "unfair or deceptive" practices by businesses. These practices are regulated by the Federal Trade Commission at the federal level and by the Attorney General's Office of Consumer Protection at the state level.

Both the federal and state laws prohibit a series of specific practices and, in addition, prohibit any other practice that is determined to be unfair or deceptive to the consumer. These laws typically provide both for enforcement by the government to stop the practice and individual actions for damages brought by consumers who are hurt by the practices. This article will describe the kinds of actions that are prohibited by these laws and how consumers can use these laws to their advantage.

Who is covered by the law?

The Massachusetts Act limits coverage to unfair and deceptive acts "in the conduct of trade or commerce." This means that to be covered, the person committing the unfair or deceptive act must be in business. Sales between two private individuals, neither of whom are in the business of regularly selling are generally not covered by the Act. Therefore, a sale of a used car by the owner of the car wouldn't be covered if the owner is not otherwise a car dealer. Other than this basic category of exceptions, however, the law applies very broadly to most commercial transactions including real estate rentals and sales, to service businesses, and to any type of commercial sale of goods.

The Massachusetts law is also limited in its coverage of phone solicitations and other kinds of transactions that involve out of state sellers. These kinds of transactions are covered by the Federal law because they involve actions in more than one state. The federal law is very much like the state one and generally prohibits the same actions but it is enforced by the Federal Trade Commission rather than the state Attorney General's office.

What are "Unfair or Deceptive Trade Practices?"

Unfair and Deceptive practices are just what they sound like. They take place when someone in the position of a seller acts unfairly to or deceives a buyer. In Massachusetts the common types of unfairness and deception are specifically prohibited by Attorney General regulations but even if not mentioned specifically in the regulations, any other act that meets this definition is unlawful. In deciding whether a practice not specifically mentioned in the law is illegal, the courts consider whether it violates some established concept of fairness, whether it is immoral or unethical, whether it is likely to cause substantial harm to consumers and whether it is dishonest and/or violates the general notion of fair dealing between sellers and buyers.

The buyer does not have to intend to act unfairly. There is no intent requirement. If the conduct is conduct that most people would consider unfair, it is illegal whether or not the seller meant to act unfairly.

The action must be either unfair OR deceptive. It doesn't need to be both.

Some Examples of Unfair or Deceptive Practices

Massachusetts regulations provide some specific examples of actions that are considered unfair and deceptive. Below are some examples of these actions:

  1. False advertising and other misrepresentations - advertising and statements which have the tendency to mislead are illegal. These include:
    • actual false statement in advertisements about a products quality, ingredients, or effectiveness
    • fake testimonials and endorsements
    • pictures of the wrong merchandise in ads trying to sell some other item that imply the picture is of the item being sold
    • faked pictures of the product performing in a way that it cannot actually perform
    • Use of prices in ads that are not the real price of the merchandise described or pictured
    • Advertising sale items that are not actually available to convince people to visit the sellers store or business or sending flyers with some sale items and some sale items where the actual items that are on sale are not clearly identified.
    • "Bait and Switch" advertising - this is a technique by which the seller advertises an item for sale at a particularly good price or on particularly good terms but does not really want to sell that item. When the consumer comes to their business after seeing the advertisement the seller discourages the purchase of the advertised item and instead tries to convince the buyer to purchase a different item for a higher price or on less favorable terms. The seller's techniques for discouraging the purchase of the object can vary and can include refusing to demonstrate, show or discuss the advertised item, representing that the item is not a good product or it has a poor guarantee or doesn't work properly, demonstrating a defective or poorly performing example of the product, and failing to have the item available to purchase (unless the advertising accurately and clearly stated the limitations on availability).
    • Deceptive statements of guarantees in advertisements - the statement must identify the nature of the guarantee and who is offering it (the manufacturer, the seller or someone else), what parts of the product are covered and what is required of the consumer to make a claim under the guarantee.
    • If an ad says that a product is "unconditionally guaranteed" or says "satisfaction or your money back" or words to that effect, the use of the term is deceptive unless the seller will refund the full purchase price, replace the product or repair the product and the BUYER has the right to choose which of these alternatives he or she wants.
  2. Deceptive Pricing Practices - The law also regulates the use of price representations and practices. Below are some of the common pricing practices that the law prohibits:
    • Claiming that the item is on sale by artificially and untruthfully pretending the product usually sells for a price higher than its normal price. The price represented to be the products "regular" price must be a real price that the product in fact sold for during some significant time in the recent past in the seller's own stores.
    • Misrepresenting the price that the same product is sold at by competitors
    • Placing fake price stickers on merchandise with higher than actual prices so that the product appears to be marked down when in fact it isn't
    • Claiming that a product may be purchased for one price when in fact the actual price is higher
    • Advertising an item at a very good price to induce customers to come in and then only selling the item at that price if the purchaser also buys another more expensive product.
    • Using the terms "special price" or "priced for sale" or "clearance priced" or similar terms when the items are not being sold at reduced prices and without clearly disclosing the actual former price or the percentage reduction from the former price that is actually being offered.
  3. Charging for good or services at higher rates than the marked, published or advertised price;
  4. Giving an unrealistically low estimate for a job in order to get it and then charging for a variety of "extras" to increase the price of the job when those extras should clearly have been included in the regular price of the job.

This is by no means a complete list - these are only examples of the kinds of conduct that are covered. If you think the average person would consider a practice unfair or deceptive, it probably is.

What Can I Do if I Have Been Victimized By One Of These Practices?

The law provides that both the consumer and the state Attorney General can enforce the law. For a consumer to enforce the law in Court, they must first send the merchant a "30 Day Demand Letter." The only exception to the requirement that you first send this letter is when the merchant brings a legal action against you. Under those circumstances you can raise the unfair or deceptive practice in the same lawsuit as either a defense or a counterclaim against the merchant whether or not a demand letter has been sent.

A "30 Day Demand Letter" is a letter than describes your complaint, describes the harm you have suffered as a result of the merchant's practice and states how you want the complaint resolved. To meet the requirements of the law, the letter must:

  • Provide your full name and address so that you can be contacted to resolve the matter;
  • Provide a complete and detailed description of the practice or practices you are complaining about. You should include dates, descriptions of personnel who were involved and any other facts that would help the merchant investigate your claim and determine how to respond to it.
  • Explain how you were harmed by the action
  • Explain what you want done to resolve the complaint to your satisfaction. If this involves paying you or refunding you money you should state an amount.

You should send this letter to the merchant by certified mail, return receipt requested. If the merchant is a chain store, you should send the demand both to the manager of the local store and to the corporate headquarters if possible. Keep a copy of this letter and the certified mail receipts that you receive back. A sample letter is provided at the end of this article.

Once you send this letter, the merchant has 30 days to respond to your demand with a written offer of settlement (or, if the merchant believes you have no basis for your claim, a rejection of the claim).

If the merchant responds, you must then decide whether to accept the offer of settlement made. You should consider the offer carefully. If you reject an offer of settlement and decide to go to court, and the court finds that the original settlement offer was reasonable, you will be limited to the amount offered and will not be able to collect your fees or costs of bringing the lawsuit.

If the merchant fails to respond or you consider the offer inadequate you can proceed to file a case in court. Depending on the amount of damages involved and the type of transaction involved your case may be brought in the Small Claims court, the District Court, the Housing Court or the Superior Court. We strongly recommend at least consulting with an attorney before proceeding to court. In the event you win in court, you will ordinarily be able, under the consumer protection law, to have your attorney's fees paid by the merchant, so there are frequently attorneys available who will handle these matters without an advance payment if they believe your claims are valid and the merchant has resources.

If a case is filed in Court and the Court finds either that the merchant made no offer of settlement or an inadequate one, and the Court finds that your claims are valid, the court can award either your actual damages or $25.00, whichever is greater, plus your costs and fees in bringing the case. If the Court also finds that the merchants conduct was "willful or knowing" the Court can award you between two and three times your actual damages to punish the merchant for their conduct. In determining the damages involved, the court will generally look to out of pocket losses - real losses to you - rather than "emotional distress" kinds of injury.

Either instead of or in addition to bringing your own claim, you may want to tell the Office of the Attorney General or the Office of Consumer Affairs about the problem. These offices work together to investigate deceptive practices and in cases where a merchant seems to be engaging in a pattern of deceptive or unfair conduct will frequently bring actions to change their practices. For information about how to make complaints, call (617) 727-7780 or (888) 283-3757 or click here to make a complaint inquiry to the Office of Consumer Affairs.

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