Deceptive Trade Practices in Colorado

Marketing and advertising sometimes bring to mind the famous saying, “if it sounds too good to be true, it probably isn’t.” Advertising agencies are paid thousands to make a company’s product attractive to consumers by claiming it is endorsed by a trusted agency—e.g. “approved by the American Dental Association”—or contains the highest quality ingredients—for example, “made with 100% all-natural ingredients.” While many products live up to advertisers’ or manufacturers’ claims, some do not. When any business or person misleads the public through false activities or claims, it could be considered a “deceptive trade practice.”

Consumers can encounter Deceptive trade practices in trade, commerce, and consumer transactions involving goods and services. Federal and state laws do not condone the use of deceptive trade practices. The Federal Trade Commission Act and federal legislation such as the Uniform Deceptive Trade Practices Act (UDTPA) are designed to regulate deceptive and unfair trade practices [1].

Every state has adopted some form of the Act in its statutes. The Colorado Consumer Protection Act [2] provides public and private consumer protection.  It allows individual consumers and public entities such as the Colorado Attorney General’s Office to bring actions against businesses or individuals engaged in deceptive or unfair business practices. Like many other similar laws, its purpose is to provide consumers who have suffered a financial or personal loss with legal recourse for their injuries, including provisions for the payment of compensation.

If you suspect you’ve been the victim of deceptive trade practices, you can fight back and obtain compensation for your injury. Contact Help in Colorado so we may give you legal guidance regarding your case.

Examples of Deceptive Trade Practices

A widely recognized example of deceptive trade practices is using misleading facts. However, there are many others, such as [3]:

  • Fake endorsements that cause misunderstanding or confusion regarding the approval, certification, or sponsorship of goods or services. This deceptive trade practice involves a company saying that a product is approved, certified, or sponsored by a well-known individual or organization, when, in fact, it’s not.
  • Using deceptive representations of the geographic origin of goods or services.
  • False advertising, which includes claims that goods or services have specific qualities, ingredients, characteristics, benefits, or uses that they don’t actually have. This deceptive trade practice involves a company lying to or intentionally misleading consumers to get them to buy a product.
  • Counterfeiting—i.e. claiming that used or second-hand goods are new or original—is another common deceptive trade practice.
  • Misrepresenting a product includes representing goods or services as of higher quality, standard, model, or style to charge a higher price.
  • Taking advantage of consumers is another wide example of deceptive trade practice. It includes stating that goods or services are needed when they are not. It is, for example, a deceptive trade practice when a consumer takes their car to a brake shop and the shop tells the consumer the brake pads must be replaced for safety reasons when they are actually fine.
  • Bait and switch is another common practice that includes advertising products at a different price or quantity than they are actually sold. This deceptive trade commonly involves a company that advertises a product for sale at a very attractive price. When the consumer attempts to purchase, that product is claimed to be out of stock. However, a “similar” product is offered at a higher price.

Harm Caused by Deceptive Trade Practices

Most deceptive trade practice cases involve economic harm caused by the seller. The consumer paid a higher value for the product than the value they received. The consumer may have had to pay additional monies for the repair or replacement of the product.

In 2010, for example, Dannon was ordered to pay about $45 million in damages to plaintiffs in a class-action lawsuit due to false claims about their two yogurt products, Activia and DanActive [4]. Advertisements for the yogurt claimed it had “clinically proven” health benefits. The company had been charging a higher price for the products than regular yogurt, and consumers were influenced to buy the products based on these claims. The advertising claims were unable to be clinically proven.

According to the Federal Trade Commission, an act or practice is deceptive when it meets the following criteria:

  1. A representation, practice, or omission that misleads or is likely to mislead the consumer. The FTC applies a test to determine whether a practice is considered misleading:
  • Prominence: Is the statement obvious enough for most consumers to notice?
  • Presentation: Is the information presented in a way that is easy to understand and doesn’t contradict other details?
  • Placement: Is information placed where consumers can see it or listen to it?
  • Proximity: Is information near the claim it qualifies?
  1. A consumer would reasonably misinterpret the representation, omission, or practice under the circumstances. Misinterpretation is subject to how many consumers would likely misunderstand the seller’s representations, omissions, or practices under the same circumstances.
  2. The misleading representation, omission, or practice is material. Material is defined as affecting the consumer’s decision to purchase.

You have the right to fair and honest treatment from the companies with which you do business. Consumers that are victims of predatory or deceptive trade practices are entitled to see justice served by punishing those who practice deception in trade and obtaining compensation for their losses. Get Help in Colorado to hold these companies responsible for their actions!

What Is the Statute of Limitations for Filing a Claim under the Deceptive Trade Practices Act?

The Federal Trade Commission Act allows a claim to be made within five years of the violation. However, states can choose to adopt the FTCA statute of limitations or define their own.

The Colorado Consumer Protection Act statute of limitations states that claims must be brought within three years after the consumer discovered or reasonably should have discovered the false, misleading, or deceptive act or practice.

An attorney will help you navigate your state’s laws, help you find evidence of a deceptive trade practice that impacted you as a consumer, and discuss your options for legal action. Working with an experienced attorney, like Ross Ziev, is the best way to make a strong case that will hold up in court.

What Kind of Compensation Can I Expect in a Deceptive Trade Practice Lawsuit?

The Federal Trade Commission Act does not specify compensation as a remedy for deceptive trade practices. Their remedies are intended to stop the practice through injunctions, cease and desist orders, and seize profits from such companies.

State consumer protection acts set forth the actual remedies available to claimants. States may determine the amount of statutory damages available to plaintiffs. Depending on the amount of harm done to the plaintiff, the state can assess treble damages. If the deceptive trade practice was criminal, the state could award punitive damages to punish the defendant. Many states also authorize the award of payment of attorney’s fees by the defendant.

The State of Colorado places a cap on the amount of compensation claimed where a person or business prevails in a claim. You may be entitled to damages [5]:

  • Equal to the greater of $500.
  • The actual damages incurred, should they exceed the minimum award of $500.
  • Three times the exact damage amount incurred if it is shown that the defendant acted in bad faith.

In addition to the damages stated above, you may also be entitled to court costs and attorneys’ fees for prosecuting your case.

Ross Ziev is an experienced Denver, CO lawyer who’s dedicated to getting you the justice you deserve. He will use his legal expertise to see that the at-fault party is held accountable for their actions and you obtain compensation for your injury. You won’t have to pay anything out of your own pocket and don’t owe us anything until a successful outcome!

Contact Legal Help in Colorado online or call us at (303) 351-2567.

References

[1] https://www.ftc.gov/legal-library/browse/statutes/federal-trade-commission-act

[2] https://www.findlaw.com/state/colorado-law/colorado-deceptive-trade-practices-laws.html

[3] https://www.justia.com/consumer/deceptive-practices-and-fraud/false-advertising/

[4] https://www.findlaw.com/legalblogs/courtside/dannon-yogurt-settles-with-consumers-for-45-mil/

[5] All numbers as of May 2022