The pros and cons of the Consumer Protection Act
Businesses can use it as a ‘sword’ and a ‘shield’
The New Hampshire Consumer Protection Act is one of the most frequently litigated statutes in New Hampshire’s state and federal courts. It is, at the same time, one of the most unpredictable and changing areas of state law.
The act applies to virtually every business sector. Claims made under the act carry a serious payload of up to treble damages and the mandatory award of attorney’s fees and costs to the prevailing party. These claims are challenging to defend and create significant potential areas of legal exposure for any company transacting business in New Hampshire.
To protect themselves, business owners must keep up on the constant changes in this area of law to best protect their company from exposure. They need to understand exactly how the act functions in order to better understand both the risks and remedies that the act brings to your business.
First, start thinking of this statute not as the Consumer Protection Act, but as the New Hampshire Unfair Trade Practices Act. That way, the next time you encounter an unfair or deceptive trade practice in your business dealings, you will remember that the act may provide your company a remedy, whether it is against a customer, partner, supplier or competitor.
The New Hampshire Legislature has already predetermined that certain categories of conduct constitute unfair competition and/or an unfair act or practice. If your business commits any of these acts, you could find yourself defending a lawsuit brought by a consumer, supplier, vendor or competitor. However, if a customer, supplier, vendor or competitor commits one of these acts against you, your business can also use the act as a sword to safeguard your business interests.
Some of the more common types of unfair or deceptive practices that lead to litigation:
• Disparaging the goods, services or business of another by false/misleading statements
• False advertising
• Misuse of the Internet or social media to redirect Internet traffic or cause marketplace confusion about a company or product
• Unauthorized use of trademarks, or company or product names in search engine optimization code
• Representing that goods or services are of a standard, quality or grade that they are not
• Representing that goods or services have characteristics, uses or benefits that they don’t
• Causing marketplace confusion about the approval or certification of goods or services
• Causing likelihood of marketplace confusion about a company’s affiliation, connection or association
• Representing that goods have ingredients or quantities that they don’t have
• Representing that a person has a status or affiliation that he doesn’t have
Practices not falling within one of these more common categories can still be in violation if the conduct attains a “level of rascality that would raise an eyebrow” in the business world.
The Legislature has also made the violation of at least two dozen other statutes an automatic violation of the act, which can potentially bootstrap your business into unsuspected liability. The act can also be used in a class action.
But a business can use the act as both a “sword” and a “shield” to protect itself.
To use the statute as a sword, familiarize yourself with the types of prohibited conduct and learn the other statutes that trigger automatic liability. Then, the next time your business experiences a problem with a supplier, a vendor or in other dealings, remember that the act may provide you a remedy.
To use the statute as a shield, obtain competent legal counsel to perform a Consumer Protection Act audit on your business operations. Focus, in particular, on the representations made in the written documents accompanying your products or services, the representations being made by your sales team, claims made in your marketing and advertising materials, and what is being said and done on your website and in your other social media, both in the outward-facing content, and in the metadata behind it. As with many things, an investment in compliance now can save you significant litigation expense down the road.
Attorney Robert H. Miller is a member of the management committee at Sheehan Phinney Bass + Green.