The Untapped Potential of the Kansas Consumer Protection Act

Publication year2005
Pages36-42
CitationVol. 74 No. 4 Pg. 36-42
Kansas Bar Journals
Volume 74.

74 J. Kan. Bar Assn. 4, 24-27, 36-42 (2005). The Untapped Potential of the Kansas Consumer Protection Act

Kansas Bar Journal
74 J. Kan. Bar Assn. 4, 24-27, 36-42 (2005)

The Untapped Potential of the Kansas Consumer Protection Act

By Amy Fellows

The Kansas Consumer Protection Act(fn1) (KCPA/Act) provides consumers with a unique opportunity to recover the full amount of their damages or, if greater, a civil penalty (and in some instances an enhanced civil penalty or punitive damages), without paying the attorney fees and expenses associated with obtaining that recovery. Pursuant to the Act, a court has the authority to award reasonable attorney fees (on a contingent or hourly basis) and expenses to a prevailing KCPA plaintiff, along with civil penalties of up to $10,000 per violation.(fn2) The potential for this extensive recovery exists for both individuals and sole proprietors in a wide range of situations. In addition to enumerating several nonexclusive per se violations in the KCPA itself - as well as other statutes(fn3) - the Kansas Legislature has also encouraged courts to take an expansive view of the application of the protection afforded by the Act. As with most remedial statutes, the KCPA "should be interpreted broadly in favor of the consumer."(fn4)

I. Who is Covered by the Act?

The KCPA offers some unique and expansive definitions of parties who may be protected by and subject to the Act's requirements.

A. The potential plaintiff

The KCPA protects not only an individual, but also any sole proprietor "who seeks or acquires property or services for personal, family, household, business, or agricultural purposes."(fn5) A farmer qualifies as a "consumer."(fn6) A principal or member of a corporate entity may qualify as well, depending on the capacity in which the injury was suffered.(fn7) However, a surety for a loan agreement would not be considered a consumer because the surety does not "seek or acquire" property or services.(fn8)

B. The possible defendant

Anyone in the chain of production, distribution or sale - a "supplier" - is bound by the Act's requirements so long as that "person(fn9) . . . in the ordinary course of business, solicits, engages in, or enforces consumer transactions, whether or not dealing directly with the consumer."(fn10) Debt collection agencies and advertising agencies can be included as well.(fn11) In State ex rel. Miller v. Midwest Service Bureau of Topeka,(fn12) the Kansas Supreme Court created a specific test for determining whether an independent debt collection agency falls within the Act's definition of "supplier:"

"(1) The debt sought to be enforced came into being as a result of a consumer transaction;

(2) the parties to the original consumer transaction were a "supplier" and a "consumer" as defined by in the act; and

(3) the conduct complained of, either deceptive or unconscionable, occurred during the collection of, or an attempt to collect, a debt, which arose from the consumer transaction and was owed by the consumer to the original supplier."(fn13)

Attorney debt collectors are also subject to the KCPA's requirements.(fn14)

In fact, "[t]he Kansas Supreme Court has defined the term 'supplier' broadly to include entities that merely facilitate transactions."(fn15) In Cooper v. Zimmer Holdings, Inc.,(fn16) the U.S. District Court, District of Kansas cited Alexander v. Certified Master Builders Corp.(fn17) as an example of the expansive nature of this term:

"In Alexander, . . . defendant argued that it should not be included in the definition of a supplier because it was a trade agency that merely informed or accommodated its members in a transaction. The [Kansas Supreme] Court, however, found that defendants played a material role in the transactions in question. The facts indicated that defendant promoted the home building industry, distributed a brochure to the general public encouraging them to contract with defendant's members, and advertised its programs in newspapers. Under these facts, the court concluded that defendant was a supplier under K.S.A. § 50-624(i). Moreover, the court rejected defendant's argument that it was merely an accommodating party and, thus, should not be termed to be a supplier in light of the fact that it solicited consumers through its advertising and distribution of brochures."18

Based upon the Kansas Supreme Court's analysis in Alexander , the sales representatives in Cooper were found to be "suppliers" under the KCPA since they "played a material role in soliciting sales from . . . customers" of the manufacturer. 19

An individual's ordinary business or employment activities can render that person a "supplier" even when engaging in a sale or service outside of work. In Heller v. Martin ,20 a licensed real estate salesperson was found to be a "supplier" when she sold her own residence outside of work.21 Thus, tradesmen who engage in "side jobs" outside of their regular employment - such as residential or automotive repair - can be subject to the Act as well.

The Kansas Supreme Court has also determined that engaging in the first of a planned succession of transactions could make one a "supplier."(fn22) In York v. InTrust Bank, N.A.,(fn23) the Court ignored InTrust's inexperience in selling residential lots and lack of past business in this area, focusing instead on the fact that InTrust intended to engage in this activity in the future. Thus, it appears a consumer could establish the defendant is a "supplier" based upon evidence of the defendant's future intent, rather than its past activity.(fn24)

C. The relationship between plaintiff and defendant

The KCPA applies to "consumer transactions" between a consumer and supplier. The Act defines these instances as "a sale, lease, assignment, or other disposition for value of property or services within this state (except insurance contracts regulated under state law) to a consumer; or a solicitation by a supplier with respect to any of these dispositions."(fn25) The Act defines "property" to include "real estate, goods,(fn26) and intangible personal property."(fn27) "Services" is defined as:

"(1) Work, labor, and other personal services; (2) privileges with respect to transportation, hotel and restaurant accommodations, education, entertainment, recreation, physical culture, hospital accommodations, funerals, and cemetery accommodations; and (3) any other act performed for a consumer by a supplier."(fn28)

An interesting extension of the Kansas Act is the inclusion of "solicitation" in the "consumer transaction" definition. In fact, the Kansas Supreme Court has found "[a] solicitation by a supplier may be sufficient to subject a supplier to the requirements and penalties of the Act regardless of whether the solicitation results in a sale, lease, or other disposition of property within the State of Kansas."(fn29)

II. What Activities are Prohibited by the Act?

A review of the nonexclusive per se violations listed in K.S.A. 50-626 and 50-627 reveals a wide variety of actions and statements, as well as concealment and omissions, prohibited by the Act. The Legislative Comments following the enumerations offer helpful insight into what the Kansas Legislature had in mind when enacting various sections. For example, "asserting that an installment contract must be paid in full irrespective of a defense, or that a supplier can garnish exempt wages" is an example of a violation of K.S.A. 50-626(b)(8) ("falsely stating, knowingly or with reason to know, that a consumer transaction involves consumer rights, remedies or obligations"), and representing "a sale is for 'seasonal clearance' or to facilitate 'going out of business,' when such is not the case" is a violation of K.S.A. 50-626(b)(10) ("falsely stating, knowingly or with reason to know, the reasons for offering or supplying property or services at sale or discount prices"). Similarly, "using legalverbiage in a manner that cannot be readily comprehended by a low-income consumer who both reads and speaks English" is an example of a violation of K.S.A. 50-627(b)(1) ("[t]he supplier took advantage of the inability of the consumer reasonably to protect the consumer's interests because of the consumer's physical infirmity, ignorance, illiteracy, inability to understand the language of an agreement or similar factor"), and "a home solicitation sale of a set of cookware to a housewife for $375 in an area where a set of comparable quality is readily available to such a housewife for $125 or less" is a violation of K.S.A. 50-627(b)(2) ("when the consumer transaction was entered into, the price grossly exceeded the price at which similar property or services were readily obtainable in similar transactions by similar consumers").

There is no requirement that a supplier must willfully or intentionally violate the KCPA.(fn30) However, both K.S.A. 50-626 and 50-627 incorporate the supplier's knowledge - actual or imputed - in a number of descriptions of per se violations. For example, most of the acts and practices proscribed by K.S.A. 50-626 are statements, actions, omissions, or concealment by a supplier undertaken "knowingly or with reason to know." Likewise, K.S.A. 50-627 orders courts to "consider circumstances of which the supplier knew or had reason to know" when determining the whether an act or practice is unconscionable.(fn31)

On the other hand, nondisclosure by a supplier without intent to conceal or harm is not a deceptive act under the KCPA.(fn32) Similarly, provision of information that later proves false is also insufficient to constitute a violation.(fn33)

A slight variation to these general rules can be found in Haag v. Dry Basement, Inc.(fn34) In Haag, the Kansas Court of Appeals found a contractor represented his services had benefits or qualities the services did not have. The contractor told the consumer...

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