Obtaining relief for deceptive practices under FDUTPA.

• Author: Federbush, David J.
• Position: Florida Deceptive and Unfair Trade Practices Act

Deception is by far the most employed prong of Florida's Deceptive and Unfair Trade Practices Act (the "act"). (1) This article is the third in a series (2) on FDUTPA's prohibitions (3) on unfair, deceptive, and unconscionable acts or practices in the conduct of any trade or commerce. It explores the standards for proving practices deceptive and for recovery of actual damages by or on behalf of individual and business consumers. It also discusses whether nonconsumer private plaintiffs can bring any claims under the act.

The Meaning of "Deceptive"

FDUTPA, patterned after the Federal Trade Commission Act, (4) provides that in construing its prohibitions, due consideration and great weight shall be provided to the interpretations of the FTC and the federal courts relating to the FTC act's parallel prohibitions (on unfair or deceptive acts or practices). Amendments to FDUTPA enacted this past legislative session, effective July 1, 2001, designate such interpretations as those in effect as of that date. (5)

Since its 1993 amendments FDUTPA has further provided that a violation may be based on, inter alia, the standards of unfairness and deception set forth and interpreted by the FTC and the federal courts. (6) The 2001 amendments designate the standards as those in effect July 1, 2001. In determining whether a practice is deceptive, Florida courts have sometimes cited to FTC administrative and federal court precedent, (7) and more recently have begun expressly to adopt at least the bare bones of the FTC's current deception standard (in effect since 1983). Last year the Third DCA, in Millenium Communications & Fulfillment, Inc. v. Office of the Attorney General, (8) observed that this FTC standard was enunciated in Southwest Sunsites, Inc. v. FTC, 785 F. 2d 1431 (9th Cir. 1986): "The Commission will find deception if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment."

The Southwest Sunsites opinion correctly noted that this (tightened) standard was adopted by the FTC in a 1984 administrative decision (imposing a cease and desist order); that decision relied on and appended the FTC's 1983 "Deception Statement." (9) Subsequent federal decisions have also relied on that statement. (10)

The Third DCA confirmed that the standard requires proof of probable, not possible, deception; that the potential deception must be of consumers acting reasonably in the circumstances, not just any consumers; and that the deception must be likely to cause injury to a reasonable relying consumer. Five months later, the First DCA followed the Third in applying this FTC standard. (11)

The standard reflects, and federal precedent confirms, that intent to deceive, or intent that the recipient of the representation rely on it, are not elements of proof that a practice is "deceptive." (12) Also, in contrast to Florida common law, (13) actionable omissions are not limited to certain categories of transactions. FDUTPA's prohibition on "deceptive" practices is thus much broader than Florida common law's prohibition on fraudulent practices. (14)

The FTC's deception statement contains a good deal more guidance than the above one-sentence formulation, and it expressly derives from a large number of previously decided cases and some previously promulgated rules. Many of the general principles the statement articulates are familiar from other areas of the law. FDUTPA's "due consideration and great weight" mandate would appear to require those general principles, as well as holdings thereunder in cases (finally) decided by the FTC or federal courts, to be applied by the Florida courts in adjudicating motions to dismiss, for summary judgment, and for injunctive relief, and in ruling at bench trials. At least three reported Florida FDUTPA decisions have explicitly applied FTC case holdings in finding practices deceptive or nondeceptive. (15) For such claims as may be permitted to go to trial by jury, (16) courts presumably will issue jury instructions deriving from the statement and conforming FTC precedent as to the general standards for proving a practice deceptive and for recovering damages resulting therefrom (see infra). Courts might also deem it appropriate, on a case-by-case basis, to give more specific instructions; e.g., "If you find that the practice meets the following definition of a `bait and switch,' (17) you shall find it deceptive." Such application of precedent may effectively reduce the evidentiary burden in proving that a practice is likely to mislead consumers acting reasonably in the circumstances. The practitioner would therefore be well advised to review the FTC statement in its entirety.

Representation, Omission or Practice Likely to Mislead

Pursuant to the statement, both express and implied claims may be actionable. Actionable express claims are not limited to extracontractual ones; for example, the statement cites precedent holding that failure to perform, consistently and promptly, services promised under a warranty or by contract can be deceptive. In this regard note that the economic loss rule has been held not to apply to FDUTPA claims, (18) and thus a FDUTPA deception claim may lie in some common law breach of contract and warranty situations.

One type of deception through an implied claim is the "bait and switch" scenario, where the (implied) offer to sell the baiting product is not bona fide. An example is advertising to sell eyeglasses at a designated price, but when the customer arrives, disparaging those eyeglasses or claiming they are unavailable and instead offering eyeglasses with a higher profit margin. (19) Also, objective claims, e.g., Firestone's claim that its tire "stop[s] 25 percent quicker," (20) make implied representations that they have a "reasonable basis", i.e., that there are specific grounds for them. The Firestone ad was held to imply that the 25-percent claim was substantiated by scientific tests. In a later decision cited in the statement, the Seventh Circuit held drug efficacy claims were others "for which the only reasonable basis ... would be a valid scientific or medical basis." (21)

Omissions of material information may also be actionable, when its disclosure is necessary to prevent a claim, practice, or transaction from being misleading. For example, advertising that a product prevents baldness was held deceptive for failing to disclose that most baldness is of the hereditary male pattern type and cannot be prevented by the product. (22) An omission may be misleading even in the absence of an affirmative representation. The statement notes, for example, that the FTC has held that sales of hazardous or systematically defective products without adequate disclosures are misleading, as are the sale of late-model used cars without revealing the particular uses to which they have been put. A subsequent FTC decision opines, hypothetically, that omissions on subjects on which the seller has said nothing, in circumstances not giving meaning to the silence, would be nondeceptive ("pure omissions," e.g., the life expectancy of clothes, or a bean canner's policy on trade with Chile). (23)

While the statement suggests that practices other than representations or omissions can be deceptive, in almost all such cases there is some implied claim that is not met or explanatory information that is not disclosed. For example, the nature or appearance of a product itself, absent some corrective measure, may create a false impression in the consumer's mind; e.g., toy packaging much larger than the toy it contains is deceptive as to the toy's size. (24) Also, the statement explains that merely offering a product for sale impliedly represents it is fit for the purpose for which it is sold. A visual demonstration of how a product operates can be deceptive if it fails to disclose that element(s) used are other than what they appear to be; for example, a shaving cream demonstration appearing to use sandpaper when it actually used sand applied to plexiglass. (25)

Act or Practice Considered by Reasonable Consumer

The statement makes clear that claims or presentations are to be assessed based on their net impression made on reasonable consumers. This objective reasonableness standard necessarily implies that a given consumer's subjective deception is not dispositive, although it naturally will constitute evidence of a practice's misleading nature. It is not required that all consumers reach the proffered interpretation. A practice that misleads a significant minority of reasonable consumers is deceptive, and the existence of some satisfied consumers does not constitute a defense. (26) However, an unreasonable interpretation reached by an insignificant number of consumers, e.g., that goods advertised as "Danish pastry" are made in Denmark, does not create liability. (27)

Also, when representations or sales practices are targeted to a specific audience, such as children, the elderly, or the terminally ill, the test is the effect on a reasonable member of that group. That group's legal sophistication is relevant as well.

Even as to express representations, the net impression is determined from examination of the entire context of the claims, including (for written claims) such facts as the entire document(s), the juxtaposition of the phrases therein, the nature of the claim(s), and the nature of the transaction. FTC decisions reflect that the net impression made on reasonable consumers may extend beyond the exact phraseology used. For example, ads for Geritol discussed that it could reduce tiredness in people with iron-poor blood. They were found to create the net impression that iron deficiency anemia causes most tiredness, and were held deceptive for failing to disclose that the majority of people with tiredness do not suffer from that deficiency. (28)

The presence of accurate disclosures or warnings in...