Consumer Rights Flashcards
Elements of DTPA Claim
- π= consumer
- ∆ is connected with the transaction
- ∆ committed actionable conduct
- ∆’s violation was a producing cause
- Damages to π
Who has standing to bring a DTPA claim?
A consumer
Consumer
Someone who seeks or acquires, by purchase or lease, goods or services for use
Statutory Exemptions: The DTPA does not apply to -
- Certain business consumers with assets > $25 mm
- Professions giving advice, judgments, or opinions
- Media or publishers, unless knew falsity
- Certain Transactions
a. over $500,000, not including residence
b. over $100,000 if represented by attorney - Personal Injury Claims (except medical expenses, lost wages, and mental anguish damages)
Five Categories of Actionable Conduct
- Laundry List Violation
- Breach of Warranty
- Violation of Chapter 541 of the Insurance Code
- Unconscionable action or course of action
- Violation of Tie-in Statute
Laundry List Violation (basic)
Conduct specifically defined as trade practices which are false, misleading, or deceptive
+ Reliance
Most Common Laundry List Violations
- Misrepresentation of goods or services
- Misrepresentation of repairs
- Warranty Fraud
- Misrepresenting Work Performed
Common Misrepresentations of Goods or Sevices
- Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have.
- 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 actual of another
- Misrepresentation of a contract agreement
- Misrepresentation by omission (requires knowledge and intent)
Unconscionability
Conduct that takes advantage of a consumer’s lack of knowledge, ability, experience or capacity to a grossly unfair degree.
“Gross unfairness”
Must be glaring, noticeable, flagrant, complete, and unmitigated
Warranties with respect to Goods
- Express Warranties
- Implied Warranty of Merchantability
- Implied Warranty of Fitness for a Particular Purpose
- Implied Warranty of Title
Source of Warranties with respect to goods
UCC
Source of Warranties with respect to services
Common Law
Warranties with respect to Services
- Express Warranties
- Implied Warranty that Services performed in a good and workman-like manner
- New Home Construction Warranties
a. Implied Warranty of Habitability
b. Implied Warranty that the house was built in a good and workman-like manner
When does the implied warranty of performance in a good and workman-like manner apply?
Services for the repair or modification of existing tangible goods
Cannot be disclaimed
Damages Available under the DTPA
- Economic Damages, including lost wages and medical expenses
- Actual damages for violations of tie-in statutes
- Additional discretionary damages for knowing or intentional violations
- Mental anguish when violations are knowing and intentional
[Mandatory Attorney’s Fees]
Standard for Mental Anguish Damages
Violation was committed knowingly and intentionally +
Sufficient direct evidence to show the nature, degree, and severity of the mental anguish which causes a substantial disruption in the consumer’s daily routine
To be effective, a waiver of the DTPA must -
- Be in writing
- Be conspicuous (10 pt. + and bold)
- State prescribed content
- Signed by the consumer who is
a. in a similar bargaining position, AND
b. represented by an attorney
Defenses to the DTPA
Statutory Complete Defenses
Mere Breach of Contract
As is Contractual Language
NOT COMMON LAW DEFENSES
Statutory Complete Defenses
- Written Notice of Third Party Information
2. Rejection of full payment settlement offer
Written Notice of Third Party Information
Must be done at time of transaction
Must be relying on information from a governmental agency or other 3rd party source
Not applicable if ∆ knew the information was incorrect
Rejection of full payment settlement offer
If the consumer rejects a ∆’s offer to pay the consumer all of their claimed damages and all attorney’s fees within 30 days of receiving notice of the consumer’s claim, ∆ will have no liability under DTPA.
For an “as is” clause to be sufficient, it must be -
- Freely negotiated
- Between similarly sophisticated parties
- Part of the basis of the bargain, AND
- In an arm’s length transaction
An “as is” clause will not bar a DTPA claim if any of the following occur -
- Procured by fraud or fraudulent inducement
- Seller impaired buyer’s ability to inspect the goods
- Merely boilerplate in a contract of adhesion
Statute of Limitations for DTPA
2 years
Deadline for pre-suit notice letter
60 days prior to filing
Required content of pre-suit notice letter
- A description in reasonable detail of the consumer’s specific complaint
- Dollar amount of damages claimed, AND
- A separate dollar amount of attorney’s fees incurred
Qualified Settlement Offer Requirements
- Made within 60 days of DTPA Notice
- In writing
- Offer a dollar amount for damages, AND
- Offer a separate amount for attorney’s fees
How does a qualified settlement offer limit damages?
If the offer is the same as, substantially the same as, or more than the amount of damages the π actually receives after trial, the consumer’s recovery will be limited to the lesser amount offered or the amount found by the trier of fact; will also limit attorney’s fees.
Common Law Duties of Insurance Companies
- Contractual duties
- Duty of Good Faith and Fair Dealing
- Stowers Doctrine
Insurance Company’s Duty of Good Faith and Fair Dealing
Duty to settle claim with policyholder when liability has become reasonably clear
Stowers Doctrine
Duty to exercise reasonable care in handling third party claims against its insured
Elements of a claim under Chapter 541
- π= person
- ∆= person
- ∆committed actionable conduct
- ∆’s violation was a producing cause
- Actual Damages to π
Person =
Broadly define to include an individual, corporation, and insurance company, or any entity engaged in the business of insurance
(usually also a consumer)
Actionable Conduct under Chapter 541
- DTPA Laundry List Violation
- Misrepresentation of insurance policy
- False advertising regarding the business of insurance
- Misrepresenting to a claimant a material fact or policy provision relating to the coverage at issue
- Failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement once liability has become reasonably clear
- Refusing to pay a claim without conducting a reasonable investigation
Remedies available under Chapter 541
- Actual Damages
- Additional Discretionary Damages, if knowing and intentional
- Mandatory Attorney’s fees
- Broad Equitable relief
What does Chapter 542 provide?
A private cause of action for a penalty for the insurance company’s failure to promptly pay a claim
Timeline of Events under Chapter 542
Initial Contact: within 15 business days of receipt of claim, acknowledge receipt, begin investigation, and request additional information
Deadline for Decision: within 15 business days of receipt of all requested information, accept or reject
Deadline for payment: within 5 business days of acceptance
Amount of Recovery under Chapter 542
- Interest penalty at 18% per year on the amount of the claim
- Reasonable and necessary attorney’s fees
Standing under the FDCPA
Provides redress to a consumer against any debt collector who violates the FDCPA’s standards for debt collection activities related to a debt
Consumer under the FDCPA
Any natural person obligated to pay a debt
Debt under the FDCPA
Any obligation of a consumer to pay money arising out of a transaction, which is primarily for person, family, or household purposes
Debt Collector under the FDCPA
Any person who is in business for the principal purpose of collecting debts or who regularly collects or attempts to collect debts due or asserted to be owed to another
Debt Collector under the FDCPA does not include
The creditor A legal process server A nonprofit debt counseling service A fiduciary An official of the government acting in an official capacity
Four Areas Covered by the FDCPA
- Third Party Communications
- Mandatory Disclosures
- Prohibited Acts
- Prohibited False or Misleading Communications
When may a debt collector contact a third party?
A debt collector is generally restricted from contacting 3rd parties for the purpose of collecting a debt without the consent of the consumer.
A debt collector may do so in order to find or locate the consumer
In making third party communications, the debt collector -
- Must properly identify himself
- May not state that the consumer owes any debt
- May not state that they are a debt collector or that they are doing a debt collection
- May not communicate by post card
- Contact third parties once he knows the debtor is represented by an attorney
Mandatory Disclosures under the FDCPA
- Validation Notice
2. Mini-Miranda Warning
Validation Notice: when
Within 5 days of contact
Validation Notice: how
Must tell the consumer in writing
Validation Notice: What
- The amount owed
- The name of the creditor
- Notice that debtor may request verification of the debt within 30 days of receipt of the notice, and if no verification is received, the debt collector will assume the debt to be valid
Mini-Miranda Warning: when
In the initial communication with the consumer
Reminder in subsequent communications
Mini-Miranda Warning: how
Orally or in writing
Mini-Miranda Warning: what
- Attempting to collect a debt
2. Any information collected will be used for that purpose
Prohibited Acts under the FDCPA
- Contacting a consumer at any inconvenient time or place
- Communication with a consumer represented by an attorney w/o attorney’s consent
- Calls to place of employment, once employer’s objection is known
- Harassment or abuse
Prohibited False or Misleading Communications under FDCPA
- Representing that they are a member or acting with governmental authority
- Misrepresenting the amount or character or nature of any debt
- Falsely implying that the debt collector is an attorney
- Implying that the failure to pay the debt is a crime or the debtor could be sent to jail
- Any other false, deceptive, or misleading representations or means in collection of a debt
Bona Fide Error Defense
It is an affirmative defense to a claim under the FDCPA if the violation was not intentional and reasonable procedures had been adopted by the debt collector to ensure the violation would not happen, but happened besides the procedures.
Debt Collector has the burden of proof.
Standing under the TDCA
The TDCA allows any person to sue for a violation of any chapter of the TDCA. The TDCA prohibits conduct by both debt collectors and third party debt collectors.
Third Party Debt Collector under the TDCA
generally the same as a debt collector under the FDCPA
Debt Collector under the TDCA
any person who, directly or indirectly, engaged in debt collection
Prohibited Acts under the TDCA
- Threats of coercion, violence, or criminal prosecution
- Harassing telephone calls or other types of abuse
- Unfair or unconscionable means - includes charging or collecting interest, fees, or incidental expenses unless it is specifically authorized by the contract made the basis of the debt.
- Fraudulent misrepresentations and deception: (mandatory disclosures)
Remedies under the FDCPA
- Actual damages
- Civil penalty of up to $1,000 per case in the discretion of the court
- Reasonable and necessary attorney’s fees
Remedies under the TDCA
- Actual damages
- Civil penalty at least $100 per violation
- Attorney’s fees
- Criminal liability
