False Advertising and Price Gouging

False Advertising and Price Gouging

The Texas Deceptive Trade Practices Act Protects Consumers from Opportunists

By Armstrong & Lee LLP

September 11, 2017Major disasters like Hurricane Harvey reveal the great potential of ordinary people to help each other and do good.  The outpouring of support both from inside and outside our community to help rebuild our towns and cities has been uniquely inspiring.  Still, Harvey has also brought to light opportunistic behavior by unscrupulous businesses to take advantage of consumers in their time of greatest need.

In Texas, false advertising and price gouging in advance of, during, or following a disaster are disgraceful and illegal practices.  The Texas Deceptive Trade Practices Act (DTPA), in particular, provides robust remedies for consumers who are victimized by false advertising and price gouging.

Who Can Bring a Suit?

Any individual, partnership, corporation, or association is considered a “Consumer” who may file suit for a violation of the DTPA.  However, a business consumer (such as a small business) is not eligible to sue under the DTPA if it has, or is controlled by another company with, assets of $25 million or more.

What Constitutes a Violation of the DTPA?

All false, misleading, or deceptive acts or practices in the conduct of trade or commerce are unlawful in Texas.  The DTPA provides a “laundry list” of examples of actionable unlawful conduct.  Some of the most common violations include:

  • advertising goods or services with intent not to sell them as advertised, such as advertising gasoline at a certain price but selling it at a marked-up price at the pump;
  • knowingly making false or misleading statements of fact concerning the need for parts, replacement, or repair service, such as claiming that a used car is in good mechanical condition and not in need of repairs;
  • 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, such as that a new or used car did not suffer flood damage;
  • taking advantage of a disaster declared by the governor by selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excessive price, or demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine, or another necessity, such as gouging prices for gasoline, bottled water, or bread in advance of a hurricane; or
  • Passing off goods or services as those of another, such as claiming that a product is a name brand when, in fact, generic.

These are just a few of the deceptive practices that are prohibited under Texas law.  Moreover, the DTPA provides that the “laundry list” of deceptive practices found at Section 17.46 of Texas Business & Commerce Code is non-exclusive—meaning that other misleading or deceptive practices may be actionable even if not listed in the statute.

It is also a violation of the DTPA for a person or business to engage in any act or practice which takes advantage of a consumer’s lack of knowledge, ability, experience, or capacity to a grossly unfair degree to the consumer’s detriment—especially where there is a clear disparity in the bargaining power between the parties.  Likewise, a breach of an express or implied warranty is a violation of the DTPA.

How Much Can a Consumer Recover in a DTPA Lawsuit?

The damages that a consumer may recover include not only his or her actual damages (for example, the amount of money overpaid for fuel, food, or medicine), but if the conduct was intentional, a consumer may recover three times the amount of his or her actual damages and damages for any mental anguish suffered.  A consumer who prevails in a lawsuit will also be entitled to his or her attorneys’ fees and court costs.

Conclusion

Texas law provides strong protections for consumers against unfair, misleading, and fraudulent business practices.  Nonetheless, it is important to consult a knowledgeable attorney regarding your DTPA lawsuit as there are certain procedural requirements that must be met before suit can be properly filed, including a pre-suit notice requirement.  If you have been victimized by an unfair or deceptive business practice, please contact us today for a free consultation at the phone number at the top of this page or in the contact form provided.