UDAAP is an acronym representing laws that prohibit Unfair, Deceptive, or Abusive Acts or Practices in the context of trade or business. This includes misrepresentation, deception, false advertising, or false promises. These laws emerged following the Dodd-Frank Wall Street Reform and Consumer Protection Act that was enacted in response to the 2008 financial crisis. The ultimate goal with these laws is geared towards protecting consumers involved in financial transactions, educating consumers on their rights, and allowing them access to information and resources to best inform their decisions.
The organizations which regulate and enforce UDAAP laws are the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). The FTC expanded the initial UDAAP laws in 2004 to include unfair and deceptive acts and practices. Some standards for unfairness, in particular, include if it causes or is likely to cause substantial injury to consumers, the injury is not reasonably avoidable by consumers, and the injury is not outweighed by countervailing benefits to consumers or to competition.
The Unfair Competition Law, Business & Professions Code 17200-17209, is California’s UDAP statute prohibiting unlawful business practices and deceptive advertising. In order to sue for unfair competition, you must have suffered some actual damages, such as lost money or property. To sue for unlawful practices, you must be able to prove the defendant intended to destroy competition. A consumer that suffers damages from a business’s practices may be able to sue under a different statute if the defendant’s intent to destroy competition is unclear or not proven.
Both consumers and businesses can file a lawsuit under the Unfair Competition Law within four years of the discovery of the unfair act or when the wrongful act should have been discovered. California also requires that plaintiffs seeking relief must send a special pre-suit notice. The plaintiff may recover punitive damages and restitution, but they may not seek multiple damages. The cost of attorney’s fees should be recovered after a successful case, as well. Examples of violations of the Unfair Competition Law include offenses such as bait-and-switch marketing or falsely advertising a retail store’s prices.
There is also another type of UDAP statute in California called the Consumer Legal Remedies Act (CLRA), California Civil Code Sections 1750-1784), which protects consumers from false advertising and unfair business practices. In contrast to the Unfair Competition Law, CLRA allows the plaintiff to recover compensatory damages, punitive damages, and attorney’s fees.
UDAAP and Arbitration
Arbitration is an out-of-court proceeding where a neutral third-party (the arbitrator) hears all the evidence from both sides and makes a decision about the case, which may or may not be binding. Binding arbitration, the most common type of arbitration, means that the decision is enforceable in a court of law and participants agree to abide by the decision. Some contracts allow for non-binding arbitration, meaning that either party is free to reject the arbitrator’s decision and take the dispute to court, although this is less common.
Arbitration has many advantages over traditional litigation, including being faster, more flexible in scheduling, and more efficient. Arbitration also avoids the hostility that can accompany court cases, remains confidential, and allows for an arbitrator who is a professional in the field to be selected instead of a judge who may not have familiarity with the issues at hand.
If you have a UDAAP claim, chances are we can bring your claim in arbitration. Arbitration is a very useful tool for resolving disputes, and Agruss Law Firm, LLC can help. With our expert guidance, we bring the big companies to the table and provide the support needed to get your bills corrected, credit reports fixed, improper fees refunded, and more. Let us pick up the sword for you; you have nothing to lose.
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