September 24, 2021
Consumer protection laws protect consumers from deceptive business practices such as false advertising, fraud and unfair competition.
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:
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.
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.
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