|State Name||Consumer Protection Litigation Grade|
State Consumer Protection or Deceptive Trade Practices Acts are intended to protect consumers from businesses taking advantage of them. In a free-market economy, both consumers and businesses must be treated fairly. Some state consumer protection statutes are too ambiguously worded and encourage excessive litigation that does harm to local businesses and state economies.
What does a consumer have to show to bring a lawsuit?
Why does this matter?If the standards to bring a claim are too lax, frivolous lawsuits will abound. We recommend using the requirements needed to prove fraud under the tort system: proof of a false statement, intent to deceive, reliance on the false statement, and actual harm.
What damages are recoverable in private lawsuits?
Why does this matter?In sticking with the goal of consumer protection statutes, it is important that the damages reimburse the consumer for economic harm and disincentivize bad behavior without being excessive. State consumer protection acts should not create alternative tort litigation routes.
Does the defendant automatically have to pay a winning plaintiff’s legal fees?
Why does this matter?Requiring businesses to automatically pay the consumer's attorneys' fees (and not requiring the reverse when the business wins) would encourage potentially frivolous litigation against local businesses and add to the cost of goods sold.
Are class actions allowed in consumer protection litigation?
Why does this matter?Consumer Protection statutes are meant to reimburse individual consumers who have experienced specific financial harm. For states that choose to include a class action option, it is important to limit recovery to out-of-pocket losses so the class action mechanism can't be abused to bring excessive litigation. ALEC does not recommend one option over the other, so this factor is not ranked.