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What Are Unfair Business Practices?

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  • Written By: M. Lupica
  • Edited By: John Allen
  • Last Modified Date: 08 April 2014
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Unfair business practices occur when a business acts in a manner that breaches the general consumer trust in such businesses. They can apply to a number of industries — from the obvious in the purchase of various products and services to less obvious cases such as debt collection and tenancy matters. Generally, in order to qualify for an unfair business practice, the act taken by the business in question must have involved fraud, misrepresentation, or an act that by its commission alone implicates the business in having leveraged terms that are excessively unfair.

Most jurisdictions have unfair business practices laws in place to protect consumers from such practices. Generally, the statutes will outline the type of act that can give rise to an unfair business practices claim and state the remedy that will be granted in a given situation. Most commonly, the remedy is restitution, but where appropriate, the court will grant an injunction to cease the practice in question. If the circumstances are particularly egregious, the court may mandate punitive damages or an injunction to cease operations altogether. Many jurisdictions now have a requirement that anyone filing a claim for unfair business practices suffer some sort of tangible financial damage in order to collect an award.

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One circumstance that could give rise to an unfair business practices claim is fraud or misrepresentation to consumers in the operation of the business. For example, a car dealership may advertise a used car for sale with an indication that the engine, brakes, or some other aspect of the vehicle has been replaced with brand new parts. If the vehicle in question has not, in fact, been maintained in the manner stated by the company in its advertising then it may constitute an unfair business practice by means of fraud. The purchaser of the vehicle would likely be entitled to restitution in the amount of the difference between the price paid and the car’s value without the misrepresented improvements.

Unconscionability — excessively unfair terms due to a large disparity in bargaining power — is something that is less easy to prove, but some circumstances nonetheless give rise to this kind of claim. A drug company that is offering an experimental cancer treatment drug on the market with the condition that anyone who purchases and uses the drug may not sue the company for any reason may give rise to an unfair business practices action due to unconscionability. The existence of a life threatening illness and the resulting desperation to find a cure creates a strong potential for a disparity in bargaining power. A clause that takes advantage of such desperation in that manner is likely to be held as unconscionable.

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