Is Your Business Running Afoul of the Maryland Consumer Protection Act?
If you do business within Maryland involving selling, lending, leasing, renting, or creating bailments of any consumer services, goods, or realty, you need to understand the Maryland Consumer Protection Act to make sure you do not violate its requirements. Consumers could file a complaint with the Maryland Attorney General’s Office or sue your company directly for money damages and their attorney fees.
A Maryland business attorney can talk to you, provide legal advice, and evaluate your business practices to help you answer the question, Is your business running afoul of the Maryland Consumer Protection Act?
What Is the Maryland Consumer Protection Act?
The Maryland Consumer Protection Act (MCPA) is a state law that makes it easier for consumers to file lawsuits for unfair or deceptive trade practices than it was under common law. Before the MCPA, people could only sue for deceit or for breach of express or implied warranty.
Those causes of action were difficult for consumers to win because they had to prove the defendant knew the statements were false. Even then, the defendant could claim that any untrue statements were mere “puffery.”
In 1973, Maryland General Assembly enacted the Maryland Consumer Protection Act to give consumers a private right of action when they are harmed by certain types of false or misleading statements about a consumer good or by the act of misleading the public through omissions. There have been multiple revisions and updates to the MCPA, which now covers unfair and deceptive in these areas of commercial transactions:
Attempts to collect consumer debts
Consumer credit
Educational services
Selling, renting, lending, leasing, or creating bailments of any consumer services, goods, or realty
Offers to sell, rent, lend, lease, or create bailments of any consumer services, goods, or realty.
In general, broad categories including debt collection practices, residential real estate, and motor vehicles.
Companies can face civil penalties and have to pay compensation to consumers who can successfully prove they experienced harm as a result of fraud, deceit, or unfair trade practices.
How Does the MCPA Define Illegal Trade Practices?
Section 13-301 of the Maryland Code, Commercial Law, says these actions can constitute “unfair, abusive, or deceptive trade practices” that violate the MCPA:
Attempting to mislead or deceive consumers with false or misleading statements either verbally or in writing.
Making false statements verbally or in writing for the purpose of disparaging a product or service.
Falsely claiming a good or service has an approval or sponsorship that does not exist.
Claiming a good or service contains an ingredient or provides a benefit that it does not.
Stating the merchant has an approval or affiliation that it does not.
Trying to sell used, damaged, or reconditioned consumer goods as new.
Representing goods or services as having a quality or grade they do not.
Withholding information the consumer needs, if not revealing the information would be deceptive to the consumer.
Falsely portraying the goods or services of another person or company’s goods or services in a negative manner.
Offering items or services the person or company does not actually intend to sell or rent.
Making untrue comparisons to the current price of an item and the price a competitor charges or the company itself claims to have charged for this item in the past.
Any type of knowingly false or deceptive representation.
These examples are only a portion of the conduct the statute defines as unfair, abusive, or deceptive trade practices. The actual statute prohibits additional conduct that tends to deceive consumers. Also, violating provisions in any of a great number of other Maryland laws, including real property and financial services transactions, intended to protect consumers can be grounds for legal action under the MCPA.
Who Is Exempt from the MCPA?
Three broad categories of businesses do not fall under the MCPA:
Service professionals who go through a certification process in their own industry, for example:
Medical doctors
Dentists
Members of the clergy
Attorneys
Architects
Accountants
Professional engineers
Some other professionals
2. Advertising professionals like printers, publishers, and radio or television stations. Publishers or printers who print advertisements that might violate the MCPA are only exempt if they were unaware the ads infringed on the MCPA or if their business practices violated the MCPA. Also, broadcasters can be subject to the MCPA if they knew they ran deceptive ads or if their business practices breached the requirements of the MCPA.
3. Public service companies that are subject to the regulations of the Public Service Commission.
Other than the limited exceptions noted above, these professions could get disciplined by their industry’s regulatory bodies if their conduct violates the applicable rules of conduct for their industry but they do not fall under the authority of the MCPA.
Remedies Available to Consumers Under the MCPA
The MCPA offers several options to consumers who believe they have been treated unfairly in a business transaction. The individual could:
File a complaint or claim with the Consumer Protection Division of the Maryland Attorney General’s Office. The Attorney General’s Office could investigate the allegations and file a lawsuit against the company or offer help with negotiation, mediation, or arbitration of the dispute.
File a lawsuit in circuit court seeking compensation for their losses due to the unfair business practice.
Raise the protections of the MCPA as a defense if a company takes action against the consumer.
The Attorney General can also initiate an investigation against a business if there is reason to suspect the company engages in unfair business practices that violate the MCPA.
Recoverable Damages in MCPA Lawsuits
Under the Maryland Consumer Protection Act (MCPA), a judge or jury can award money damages, including reasonable attorney fees of the plaintiff’s attorney. A company that loses a lawsuit under the Act might have to pay the compensation the state court awards to the plaintiff as well as the attorney fees for their own lawyer and the other side’s lawyer.
The MCPA covers a vast range of businesses and transactions. A Maryland business attorney can help you stay compliant with the MCPA. Contact Steve today.
