Pa. Unfair Trade Practices and Consumer Protection Law Investigations—Frequently Asked Questions

By: Christopher D. Carusone

It is inevitable. At some point, every company in the consumer product and services industry in Pennsylvania will find itself on the other end of a consumer complaint filed with the Pennsylvania Office of Attorney General. For some companies, these complaints are one-offs, settled informally with a consumer protection agent acting as a mediator. For other companies, these complaints become full-blown government investigations and enforcement actions. While a variety of consumer protection statutes apply to the Pennsylvania consumer product and service industry, the attorney general relies upon the Unfair Trade Practices and Consumer Protection Law most. Below is a list of the most common questions that companies ask me during these investigations—and my answers.

What Is the Pennsylvania Unfair Trade Practices and Consumer Protection Law?

The Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. Section 201-1 et seq., is a Pennsylvania statute that prohibits “unfair methods of competition” and “unfair or deceptive acts or practices.” The UTPCPL, along with its regulations, 37 Pa.Code Section 301 et seq., are geared toward companies in the consumer product and service industries. Violations of other statutes, such as the Telemarketer Registration Act, can also be violations of the UTPCPL.

What Are ‘Unfair Methods of Competition’ and ‘Unfair or Deceptive Acts or Practices’?

There are 20 descriptions of unfair and deceptive methods of competition and business practices outlined in the UTPCPL. These specific descriptions fall into seven main categories:

• False descriptions of products/services.
• Improper advertising.
• Referral/pyramid schemes.
• Telemarketing violations.
• Failure to adhere to warranties.
• Knowing of the failure to timely ship merchandise as promised.
• Improper contractual provisions.

There is also a catchall provision prohibiting “any other fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding.”

Who Enforces the UTPCPL?

The Pennsylvania Office of Attorney General (OAG), Public Protection Division, Bureau of Consumer Protection is the primary government agency that enforces the UTPCPL. It can also be enforced by district attorneys and by consumers through private lawsuits.

How Does the OAG Decide to Initiate an Investigation Under the UTPCPL?

It is very common for consumers to submit complaints to the OAG for one reason or another. Even the best companies can be the subject of some consumer complaints. Most of the time, an OAG consumer protection agent acts as a mediator, and the complaint is resolved without a formal investigation. However, when there is a sufficient number of complaints against a company that appears to demonstrate a pattern of misconduct, the OAG will often open a formal investigation into the company. Consumer complaints are not the only thing that can result in a formal investigation. The OAG conducts industrywide investigations of industries that are under scrutiny by other state attorneys general or the Federal Trade Commission (FTC). The absence of a consumer complaint against a company is not a basis to terminate the OAG’s investigation.

What Are the Powers of the OAG During an Investigation Under the UTPCPL?

The OAG has the statutory authority to issue subpoenas and to compel the production of records and testimony during its investigation.

A formal investigation by the OAG typically begins with a letter from a deputy attorney general assigned to the Bureau of Consumer Protection seeking the production of voluminous company records. This typically leads to negotiation with the OAG because the production process can take several months to a year. During the investigation, the OAG will typically present the company with a proposed settlement agreement called an Assurance of Voluntary Compliance (AVC). These proposed agreements are usually very one-sided, and signing it as is in an effort to quickly conclude the investigation can haunt a company for years to come. If a mutually acceptable AVC cannot be negotiated, the OAG will typically file a lawsuit in the Pennsylvania courts of common pleas. It is important for companies to understand that the filing of an AVC or lawsuit may lead to the issuance of a press release, resulting in negative publicity.

What Are the Consequences of Violating the UTPCPL?

The OAG has the authority to seek a temporary or permanent injunction under the UTPCPL, the terms of which can disrupt the company’s operations if not properly negotiated or challenged. The OAG can also seek the payment of substantial restitution to consumers and civil penalties of $1,000 to $5,000 per violation. More importantly, however, the OAG may petition the courts to order the dissolution, suspension, or forfeiture of the right of the company to do business in Pennsylvania for violating the terms of an injunction. These consequences do not include treble damages and attorney fees available to consumers who have the right to bring a private cause of action under the UTPCPL.

How Can My Company Avoid Future UTPCPL Investigations?

One of the best ways to protect a company from becoming the subject of an investigation under the UTPCPL is to perform regular preventive maintenance. Companies in the consumer goods and/or services market should review their policies and procedures annually to ensure compliance with the UTPCPL and other consumer protection standards, which are constantly evolving. Companies should also monitor the number and types of consumer complaints submitted to the OAG (Bureau of Consumer Protection), Better Business Bureau and social media platforms for patterns that could attract government attention.