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False Advertising & Fraudulent Sales Practices

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Every day in California companies take advantage of consumers, customers and average people with their false and deceptive business practices. To try to put an end to these practices and protect innocent consumers, the California legislature enacted the Consumer Legal Remedies Act (CLRA), California Civil Code 1750. This is a set of laws that prohibits companies from engaging in 24 specific types of false, misleading, deceptive and fraudulent practices. If a company engages in one of the illegal acts, it must pay damages to the consumer that was harmed and can face an injunction from the courts that force it cease its specific practice.

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What Acts are Prohibited by the CLRA?

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The following list of business practices are made illegal by the CLRA, meaning that businesses cannot engage in them, otherwise they will have to pay the consequences.

 

1. Passing off goods or services as those of another.

2. Misrepresenting the source, sponsorship, approval or certification of goods or services.

3. Misrepresenting the affiliation, connection or association with, or certification by, another.

4. Using deceptive representations or designations of geographic origin in connection with goods or services.

5. Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or qualities that they do not have or that a person has a sponsorship, approval, status, affiliation or connection that he or she does not have.

6. Representing that goods are original or new if they have deteriorated unreasonably or are altered, reconditioned, reclaimed, used or secondhand.

7. Representing that goods or services are of a particular standard, quality or grade or that goods are of a particular style or model, if they are not.

8. Disparaging the goods, services or business of another by false or misleading representation of fact.

9. Advertising goods or services with intent not to sell them as advertised.

10. Advertising goods or services with intent not to supply reasonably expectable demand, unless the advertisement discloses a limitation of quantity.

11. Advertising furniture without clearly indicating that it is unassembled if that is the case.

12. Advertising the price of unassembled furniture without clearly indicating the assembled price of that furniture if the same furniture is available assembled from the seller.

13. Making false or misleading statements of fact concerning reasons for, existence of, or amounts of price reduction.

14. Representing that a transaction confers or involves rights, remedies or obligations which it does not have or involve, or that are prohibited by law.

15. Representing that a part, replacement, or repair service is needed when it is not.

16. Representing that the subject of a transaction has been supplied in accordance with a previous representation when it has not.

17. Representing that the consumer will receive a rebate, discount, or other economic benefit, if earning the benefit is contingent on an event to occur after the transaction.

18. Misrepresenting the authority of a salesperson, representative, or agent to negotiate the final terms of a transaction.

19. Inserting an unconscionable provision in a contract.

20. Advertising that a product is being offered at a specific price plus a percentage of that price unless: (A) the total price is set forth in the advertisement; and (B) the specific price plus a specific percentage of that price represents a markup from the seller’s costs or from the wholesale price of the product.

21. Selling or leasing goods in violation of Chapter 4 of Title 1.7 (concerning “Grey Market Goods”).

22. Disseminating unsolicited prerecorded messages without consent.

23. The home solicitation, as defined in subdivision (h) of section 1761, of a consumer who is a senior citizen where a loan is made encumbering the primary residence of that consumer for the purposes of paying for home improvements and where the transaction is part of a pattern or practice in violation of either subsection (h) or (i) of Section 1639 of Title 15 of the United States Code or paragraphs (1), (2), and (4) of subdivision (a) of Section 226.34 of Title 12 of the Code of Federal Regulations.

24. Prohibiting mortgage brokers and lenders, “directly or indirectly, to use a home improvement contractor to negotiate the terms of any loan that is secured, whether in whole or in part, by the residence of the borrower and that is used to finance a home improvement contract or any portion” thereof.

 

As you can see, the list of activities that are prohibited are very broad and expansive. The intent is to put an end to anything that results in a consumer being deceived or misled. And it really levels the playing field when consumers are harmed.

 

What are some examples of false or deceptive business practices?

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Companies engage is so many of these bad acts that it is impossible to list them all. Some of these practices are really deceptive and obvious. Other times, their practices are not clever and are sneaky, so an average consumer won’t even realize they were taken advantage of. Below are some common examples to help understand.

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Misrepresenting the source, sponsorship, approval or certification of goods or services.

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This is when a company says a product has a certification or sponsorship when it does not. For example if an auto dealer advertises a car as certified preowned, when really it is not. There is a certain criteria the vehicle has to meet to be “certified” pre-owned. But if the car doesn’t actually meet the criteria it doesn’t have the certification, even though the dealer tells you it does.

 

Another example would be advertising a product that is approved or sponsored by some entity or agency when it is not. For example if a food or drug company tells you that something is FDA approved, but it is not.

 

Using deceptive representations or designations of geographic origin in connection with goods or services.

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This occurs often when a company make certain claims that a product has some connection with a certain place. For example, if a company that sells bottled water claims that water comes from the purest, untouched mountains in the Switzerland, when if reality they bottle water from some other place. Or if a cheese company advertises their cheese as being French when it is actually made in US dairies.

 

Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or qualities that they do not have or that a person has a sponsorship, approval, status, affiliation or connection that he or she does not have.

 

This is a very common practice manufacturers use. In the simplest terms it is when they tell you a product has certain qualities or characteristics when that is not true. For example a frying pan advertised as being 100% stainless steel, but in reality it is not 100% stainless steel. Or a juice company that claims its juice is made from only fresh apples when it actually is not. Or a skin cream that states it will eliminate wrinkles when there is no proof or testing to support that claim.

 

Advertising goods or services with intent not to sell them as advertised.

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This is another common trick that companies use to get you to come to the store to buy something and then they change it on you. For example if a company advertises a complete stereo system and then when you go to the store to buy it they tell you all the parts and pieces actually don’t come with it and you have to pay extra for them.

 

Advertising goods or services with intent not to supply reasonably expectable demand, unless the advertisement discloses a limitation of quantity.

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This is another common trick. Companies will advertise something at a really low price and they know customers will swarm to their store to buy it. But the company only intends to sell a few of those items at that sale price and then everyone else has to pay a higher price. This happens a lot during Black Friday.

 

Representing that the consumer will receive a rebate, discount, or other economic benefit, if earning the benefit is contingent on an event to occur after the transaction.

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Another unethical and illegal trick companies use is to advertise a special deal or discount. But when you go to the store you find out the rebate, discounter or promotion comes with strings attached. In other words, you don’t automatically receive it, like advertised. There is some other step or action needed on your part to get it. For example you might have sign up for something or provide them with personal information or purchase something else. This practice is prohibited.

 

As you can see the list will go on an on. In all the circumstances the consumer is the one who suffers. If you think that a company is doing something wrong or illegal, or you think a company is lying or using deceptive advertisements, or if you think you got scammed or cheated by a company, contact us for free advice. You may be entitled to compensation. We’ll let you know what your rights are.

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Can I sue if I was taken advantage of by a company?

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The CLRA defines a “consumer” as “an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes." If you bought a good or service for personal, not business, purposes and the company used any of the illegal prohibited practices you likely have a case.

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What are my rights if a company deceives me, lies to me, or cheats me under the CLRA?

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Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person to recover. So if you suffered actual damages, or loss, or didn’t get what you were entitled to and paid for, you can sue the company to recover those losses and obtain compensation. You can also ask the court and judge to issue an injunction against the company. This is basically an order from the court that forces the company to stop the illegal practice. For example: if an advertisement they are making is false, the court may order them to take it down. This way you are helping other consumers and customers not get scammed.

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If a Company Violates the CLRA, It Pays For Your Attorney

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Additionally, if the company is committing a deceitful business practice and is in violation of the CLRA, they are obligated to pay for your attorney’s fees and costs. This is another great protection that the law provides. Otherwise, many people would not sue for these violations because the harm they suffered is often not that great compared to the cost of an attorney.

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The CLRA allows you to bring a class action against the shady company to help others too

 

Another right that the CLRA provides is the ability for a consumer to bring a class action law suit against the company. A class action is a type of lawsuit where one individual can bring a lawsuit on behalf of herself and a group of people. This is allowed when many people have suffered a similar type of harm so they would all have similar claims against a defendant.

This is perfect when a company engages in an unfair business practice. Why? Because if the company is engaging in such a practice, like a false claim about a product, it won’t just be you that will be taken advantage of by the company, but also everyone else who bought the product as well. If other people don’t realize the scam, they will unknowingly have been cheated. But if you realize it, you can bring a class action lawsuit to sue for your own rights and the rights of everyone else. You’ll be performing a great civic duty by doing this. And a class action lawsuit can be a powerful tool used to enforce your rights and to force companies to correct their practices.

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How long do I have to sue if the company deceived, tricked or lied to me?

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If the company has committed a violation under the Consumer Legal Remedies Act, the statute of limitations in three years. That means you have three years time, from the commission of the unfair practice to bring a lawsuit against the company.

However, 30 days or more prior to filing a lawsuit, you must notify the company via certified mail and ask the business to correct, repair, replace or rectify the goods or services you claim are in violation of the CLRA.

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Once the company receives this notice, they will have 30 days to correct the violation and to stop the illegal practice and to compensate you for your loss. If they do, that is great, because then it is not necessary to sue them. If they don’t, then you can bring a lawsuit to have the court enforce your rights for you.  

 

If you think a company has cheated you or is engaging in an unethical practice that violates the Consumer Legal Remedies Act, contact us for a free consultation and evaluation. We are experienced with the tricks companies play and know all the technical requirements of the CLRA needed to make the companies stop doing what they are doing and provide you compensation.

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