The holiday season is the perfect time to be reminded of consumer protections—both what we should expect of those who sell consumer goods and services and what a merchant can advertise or promise to customers.
A relative of mine recently signed up with a fitness center for a wellness program that involved weight loss and exercise. It promised that if she lost 10 pounds in six weeks, she would get her money back. She did follow the program and she reached her weight loss goal.
Yet, when she asked about the money back guarantee, she was surprised to discover that they claimed that the “money back” would come only in the form of a gym membership.
However, nothing the fitness center ever communicated had mentioned this possibility.
Know your consumer rights
My relative had fallen victim to a false premise, misrepresentation or knowing concealment. These are all trade practices that are typically banned by state consumer protection laws.[1]
In Maryland, the Consumer Protection Act (CPA) sets minimum statewide standards to protect consumers by prohibiting “unfair, abusive, or deceptive trade practices.”[2] Generally, these banned practices involve a false or misleading oral or written statement that can deceive or mislead a consumer.
Had the “money back guarantee” – in the form of a gym membership – been presented to my relative as the one way the fitness center could return the program fee, then she would not have been able to accuse the center of a “knowing concealment” or “omission of a material fact.” But since it was not stated anywhere in the signed paperwork, she now could bring a CPA claim against the center.
When can you file a Consumer Protection Act claim?
While the CPA offers broad protections, there are limits as well. First, to file a lawsuit or claim for injury or loss as a result of a prohibited practice against a merchant, one can only be a “consumer.” The definition of a consumer is an “actual or prospective purchaser, lessee, or recipient of consumer goods, consumer services, consumer realty, or consumer credit.” In other words, the CPA does not authorize one business to sue another business because of unfair competition.
Second, the item purchased must be a “consumer good.” Therefore, the act protects those who have purchased goods for household purposes, but not for other uses. For example, the courts have denied claims where something was bought for business and not pleasure. One such case involved a yacht that a salesperson bought to use as a demonstration model. Even though the yacht was defective, the buyer did not have a valid CPA claim. In that case, the buyer was not a “consumer” nor was the yacht a “consumer good.”
Who pays for the attorney?
Normally, each side in a lawsuit is responsible for paying its own attorneys. However, a violation of this Act can be a very expensive proposition. If you engage in an unfair, abusive or deceptive trade practice as a seller and are caught, you may have to pay the consumer’s reasonable attorneys’ fees. Therefore, the CPA can be a strong tool for a consumer plaintiff.
However, one should realize that the CPA can be a double-edged sword and also benefit a defendant merchant. If it appears, at any time, that an action has been brought in bad faith or is of a frivolous nature, the offending party may be ordered to pay the other party their reasonable attorneys’ fees. Therefore, it is very important to determine if all requirements have been met by both the consumer and merchant.
A little knowledge goes a long way
While my relative did get healthier, she is still trying to get her money returned and may end up in court seeking damages as a result of the CPA violations.
The lesson to be learned from all of this is to know your rights both as a consumer and as a merchant. Don’t get stuck with an unwanted gym membership or paying the other side’s attorneys’ fees for an unsupported or inappropriate lawsuit.
Here’s wishing you all a chance to enjoy the holiday season in good financial shape whether you are a buyer or a seller.
Alice Kelley Scanlon is a member of Anderson & Quinn, LLC, a law firm based in Rockville, Maryland, that provides individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need.
[1] Other states have similar consumer protections; the District of Columbia’s version is known as the Consumer Protection Procedures Act.
[2] Maryland Commercial Law Article § 13-303.
The information contained in this article is general in nature and is not offered as legal advice for any particular situation. The opinions and conclusions in this blog post are solely those of the author. Any links provided by the author in this article are for informational purposes only and by doing so the author does not adopt or incorporate their contents. See our Disclaimer for additional details.
