CONSUMER PROTECTION LAWS I FALSE ADVERTISING I FRAUD – Fraud, False Advertising and Unfair Competition Law the Correlation   

CONSUMER PROTECTION LAWS I FALSE ADVERTISING I FRAUD – Fraud, False Advertising and Unfair Competition Law the Correlation

September 24, 2021

Consumer protection laws protect consumers from deceptive business practices such as false advertising, fraud and unfair competition.

Consumer Protection Laws, what purpose do they serve?

Consumer protection laws are those laws adopted to protect consumers and instill safeguards to prevent harmful corporate practice. By adopting laws at the federal and state level businesses and large corporations are subject to liability in the event they place defective products into the stream of commerce, participate in deceptive business practices such as false or misleading advertisement or engage in other fraudulent practices.  Consumer protection laws serve several purposes, including:

• Consumer protection laws provide consumers recourse in the event they suffer harm as a result of fraudulent or deceptive business practices.
• Consumer protection laws encourage businesses to make safer products and/or take corrective measures once they are on notice of the danger (i.e.: product recalls, market withdrawals and safety alerts).
• Consumer protection laws require corporations to be transparent and honest with product labeling and advertisement.
• Consumer protection laws inhibit or give rise to corporate liability in the event a business has participated in fraudulent or misleading corporate practice.

False Advertising and Encouraging Transparency

False advertising appears whenever incomplete, misleading or false information is published regarding a product or service. Advertisement is deemed any information regarding a product or service that is furnished by the seller, sales team or manufacturer.  Laws that give rise to a false advertising causes of action fall under consumer protection laws because they are laws geared to protect buyers in the marketplace in that they encourage sellers, manufactures and sales teams to be transparent regarding the products and services they are providing to the public.

Unfair Competition Laws Prohibit Illegal and Fraudulent Business Practice

Fraud, false advertising, illegal business practices are causes of action that fall under California unfair competition laws.California unfair competition laws (“UCL”) are laws designed to prevent businesses and corporations for participating in unlawful, unfair or fraudulent business practices. While UCL includes redress for false, deceptive or misleading advertisement, its scope is larger in that recourse may be sought by consumers, businesses or other parties whom suffered a loss or incur damages as a result of unfair business practices.

Fraud a Case Study: How Consumer Protection Laws Designed to Prevent False Advertising and Unfair Competition Encourage Transparency

California plaintiffs purchased 400,000 defective personal computers. At the time these personal computers were marketed and sold the computers contained a defective microchip called a “Super 1/0” chip which controlled the operation of the floppy disk drive. Ultimately the defective floppy disk controller (“FDC”) improperly wrote data to, and improperly read data from, the floppy disks, resulting in data corruption.  Despite being on notice of this defect, the corporate defendant failed to disclose this to potential customers and actively concealed the FDC defect. Corporate executives directed that company to continue selling the defective computers issuing a warranty while knowing that the computers had defective FDCs. The plaintiffs in this action alleged several causes of action in their underlying complaint against the defendant, including causes of action for: common law fraud, false advertising, unfair competition law (UCL) and unjust enrichment.

SOURCE: Collins v. eMachines, Inc. (2011) 202 Cal. App. 4th 249; 134 Cal. Rptr. 3d 588; 2011 Cal. App. LEXIS 1626

False Advertising, Unfair Competition Laws, and Fraudulent Business Practices are further discussed in the articles below:

• FRAUD – What Constitutes Fraud In California? What Does A Cause Of Action For Fraud By Intentional Misrepresentation In California Mean?
• FRAUD – WHAT CONSTITUTES FRAUD IN CALIFORNIA? WHAT DOES A CAUSE OF ACTION FOR FRAUD BY FALSE PROMISE IN CALIFORNIA MEAN?

• FRAUD VIA FALSE PROMISE OR PROMISSORY FRAUD
• INTENTIONAL FRAUD AND DECEIT
• CONVERSION OR BREACH OF FIDUCIARY DUTY 

• FRAUDULENT CONCEALMENT OR CONCEALMENT FRAUD
• FRAUD – What Constitutes Fraud In California? What Does A Cause Of Action For Fraud By Concealment In California Mean?
• FRAUD – Legal Liability For Fraud – Civil Tort For Conversion Or Breach Of Fiduciary Duty
• CONSTRUCTIVE FRAUD OR NEGLIGENT MISREPRESENTATION is embedded herein
• CORPORATE LAW – Corporations Claiming Personhood and Fiduciary Duties
• FRAUD I BREACH OF FIDUCIARY DUTY – What is Constructive Fraud?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Fiduciary Duties Are Owed? A Fiduciary Owes The Duty Of Confidentiality. What Happens If A Fiduciary Breaches Their Duty Of Confidentiality?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Fiduciary Duties Are Owed? A Fiduciary Owes The Duty Of Undivided Loyalty. What Happens If A Fiduciary Breaches Their Duty Of Undivided Loyalty?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Fiduciary Duties Are Owed? A Fiduciary Owes The Duty To Use Reasonable Care. What Happens If A Fiduciary Breaches Their Duty To Use Reasonable Care?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Is A Fiduciary Duty? What Does A Breach Of Fiduciary Duty Mean? What Is A Fiduciary?

• FRAUD I CONSTRUCTIVE FRAUD I BREACH OF FIDUCIARY DUTY – What Is The Statute Of Limitations In Fraud, Constructive Fraud And Breach Of Fiduciary Cases 

Fraud Verdicts are discussed below:

• BREACH OF CONTRACT I FRAUD I VERDICT – Homeowner Recovers $1.63 Million In Damages Against Mortgage Fraud Broker In Fraud, Negligent Misrepresentation, Breach Of Fiduciary Duty Action
• BREACH OF CONTRACT I BUSINESS LAW – FRAUD DAMAGES IN BREACH OF CONTRACT – COMPANY FAILS TO PAY FORMER PRESIDENT’S SHARES, PRESIDENT SECURES VERDICT FOR $553,000
• FRAUD I BREACH OF FIDUCIARY – Drew Brees Alleges Breach Of Fiduciary Duty Against SD Jeweler Vahid Moradi
• FRAUD I BREACH OF FIDUCIARY – Jury awards Brees $6 million in Jewelry Fraud Lawsuit
• BREACH OF CONTRACT I FRAUD I VERDICT – Homeowner Recovers $1.63 Million In Damages Against Mortgage Fraud Broker In Fraud, Negligent Misrepresentation, Breach Of Fiduciary Duty Action
• FRAUD – Legal Liability for Fraud – Civil Tort for Conversion or Breach of Fiduciary Duty

Fraud Damages and Remedies available for breach of Unfair Competition Laws are further discussed below:

• FRAUD I DAMAGES I CIVIL LITIGATION – Punitive Damages Vs. Compensatory Damages
• FRAUD I DAMAGES I CIVIL LITIGATION – What Are Punitive Damages?
• BUSINESS FRAUD I CORPORATE FRAUD – Payment From The Victims Of Corporate Fraud – VCFCF: Victims Of Corporate Fraud Compensation Fund
• BUSINESS FRAUD I CORPORATE FRAUD I DAMAGES – Compensation For “Aggrieved Person” Who Has Obtained A “Final Judgment” Against A Corporation Based Upon The Corporation’s Fraud, Misrepresentation Or Deceit – VCFCF: Victims Of Corporate Fraud Compensation Fund

Consumer Protection Laws protecting against Fraud, False Advertising and Unfair Competition Law