Unlawful and Unfair Practices under the CFA Lawyer Manual

Unlawful practices under the CFA

Violations of the CFA include:

• Any deception, fraud, false pretense or false promise  
• Any practice prohibited by the UPDTA
• Any unfair practice
• Any misrepresentation or the concealment, suppression or omission of any material fact, with the intent that others rely on the concealment, suppression or omission of material fact

A "material fact" is one:

• Where a person would have acted differently knowing the correct information, or
• Which concerns the type of information upon which a person would be expected to rely in making a decision. Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 221 Ill. Dec. 389, 675 N.E.2d 584 (1996).

Must you show need for actual deception, reliance, and damages?

No, the practices are unlawful whether or not the client has in fact been misled, deceived or damaged. It is well settled that the consumer's actual reliance on the misrepresentation is not a requirement under the CFA.

However, under Section 10a, only persons who suffer actual damage as a result of the misrepresentation can bring an action under the Act, and case-law establishes that the violation must proximately cause the injury. Thus, you may have to prove your client's reliance on the misrepresentation because a party must have relied on the wrong to some extent in order to establish proximate cause. As a result, a party cannot make a misrepresentation claim where a party was not deceived. Zekman v. Direct Am. Marketers, Inc., 286 Ill.App.3d 462, 675 N.E.2d 994 (1st Dist. 1997).

You also have to show that the misrepresentation or omission was made to induce reliance. 815 ILCS 505/2.

What you do not have to prove

On the other hand, you do not have to prove:

• The seller's intent to deceive. Violation of the Act may be based on innocent or negligent misrepresentation; and
• The seller's knowledge of statement's falsity, or scienter. The statement need not even be false if it is misleading, or creates a likelihood of consumer confusion or misunderstanding.

It is not necessary to allege or prove that the defendant acted in bad faith. Even a good faith misrepresentation is actionable. Capiccioni v. Brennan Naperville, Inc., 339 Ill. App.3d 927, 933 (2003). See also Duran v. Leslie Oldsmobile, Inc., 229 Ill. App. 3d 1032 (1992)

Certain sales practices are per se unlawful under CFA

They are identified at Sections 2A through 2KK. For purposes of car cases, unlawful sales practices include:

• Refusal or failure to return a down payment upon seller's rejection of a credit application
• Any regularly conducted business activity of a seller or lender who, in any one calendar year, has been determined by a court to have committed 3 or more violations of certain consumer protection statutes, including the Motor Vehicle Retail Installment Sales Act, 815 ILCS 375
• Any person held by a court to have violated any Illinois statute regulating the extension of credit
• Collusive repossessions or resales to one who is not a good faith purchaser for value, or resales at a price intended to increase the amount of deficiency
• Collection activities against a spouse who is not a co-signer, where the default is less than 30 days and the goods or services were not necessaries
• Failure to make certain disclosures in: any advertisement, display or price tag which permits periodic payments
• Any collection activities against an employer, unless a 5 day notice is given and the default exceeds 30 days
• A car dealer or seller who issues coupons for the purchase of a motor vehicle. Also one who issues coupons for purchase of any other goods at the dealership, who represents that the price is less than the regular price, and who fails to specify the discount
• In credit transactions, using the words "bank rates" or "bank financing" when the seller or lender is not a bank
• Unless a vehicle is sold "as is," an automobile dealer's failure to assume a specified share of repair costs of power train components for a specified period. "Power train" refers to the engine block, head, all internal engine parts, oil pan and gaskets, water pump, intake manifold, internal and external parts of the transmission, torque converter, drive shaft, universal joints, internal and external parts of the rear axle and rear wheel bearings. The Dealer's Contribution for a car 2 years old or less is 50% of parts and labor; a car 2 to 3 years old 25%; a car 3 to 4 years old 10%; and none for a car over 4 years old 
• Advertising services as "factory authorized" unless the services are performed by factory authorized personnel
• Where a retail transaction is conducted in a language other than English, the consumer must be provided a notice in the consumer's language that states that the obligations of the written agreement were explained to the consumer in her native language
• Violations of certain designated consumer statutes
• Failure to send certain notices to co-signers before undertaking collection action or reporting them to credit agencies
• Misrepresenting the effect of the use of gasohol as a motor vehicle fuel on motor vehicle warranties
• Advertising that a seller is a wholesaler unless that person meets the statutory definition of wholesaler, or advertising the sale of a particular item of merchandise at wholesale, unless that person can substantiate significant savings on his price as compared to the price offered by retailers in the trade area  
• Knowing violations of other identified Illinois consumer protection statutes (815 ILCS 505/2Z), including the Automotive Repair Act, 815 ILCS 306/1

The Automotive Repair Act prohibits every repair facility from starting work which exceeds $100 without specific authorization from the consumer given after the facility provides a written estimate as specified in the Act. The facility must maintain the estimates for 2 years. There are limits to what a facility can charge beyond the written estimate. Other provisions require the facility to:

• Disclose certain information on invoices, itemizing the cost of the repair performed; 
• Provide in writing specific information regarding any warranties on repair parts or labor;
• Post prominent signs on the premises relating to the consumer's rights; and
• Allow a consumer to remove the vehicle after payment of certain specified items. Other provisions prohibit the facility from engaging in specified practices.

Deceptive practices specific to automobile sales, repos, and repairs

Deceptive repossession conduct include the following:

• The creditor has no right to repossess or falsely promise it won't repossess;
• A repair shop seizes a car unlawfully and tows it away from the owner's property where a repair bill is overdue;
• Creditor agrees to allow payments to be made after their due date and then repossesses the car before the agreed date;
• Creditor is involved in revolving repossession or "churning" schemes; and
• Creditor fails to send proper notices to clients after repossession or violates Commercial Code.

Deceptive conduct in repairs include:

• Charging beyond estimates without consent;
• Padding bills for repair work not performed or parts not used;
• Misrepresenting which repairs are necessary or the work that has been done, or misrepresenting warranty coverage;
• Failing to correct inadequate repairs; and
• Charging for unauthorized repairs, keeping the vehicle for failure to pay for unauthorized repairs or both.

Deceptive conduct in automobile sales include:

• Selling a used car as new or failing to disclose that a car is used;
• Misrepresenting a vehicle's characteristics, year of manufacture, durability or performance qualities, or omitting material facts about the same;
• Pricing misrepresentations, including those concerning discounts, bait and switch, what the purchase price includes, negotiations for higher than list price without disclosing list price, increases in price for a financed sale, and misrepresentations that a price is low, competitive, or at book level when its not;
• Failing to disclose material damage to a car or defects before sale;
• Misrepresenting warranties being offered;
• Adding on or "packing" charges for extended warranties, insurance, preparation, undercoating, rust-proofing, without consumer's knowledge/consent, or that have no real value;
• Dealer kick-backs from the lender when the financing rate is higher than the rate at which the lender buys car loans from the dealer;
• Undisclosed dealer profit on service contracts, insurance and extended warranties, or where these add-ons provide little or no meaningful benefit;
• Charging illusory fees such as documentary fees, or other fees that falsely appear to be required by a government agency, which provide little or no benefit to the consumer;
• Failing to return a trade-in, or selling the trade-in, before the deal is consummated, or where dealer cancels the sale;
• Failing to integrate material oral representations into the contract; interference with the buyer's right to read the contract; failure to give the buyer a copy of the contract or provide a contract with blank spaces;
• Violation of FTC rules, including the Used Car Rule (see below);
• Tampering with odometers, failing to disclose accurate odometer readings, and misrepresenting a car's mileage (also see the Federal Odometer Act, 49 U.S.C. §32705(a), which provides for mandatory treble actual damages or $1,500, whichever is greater, plus attorneys fees);
• Failing to disclose that a car had previously been returned pursuant to a state lemon law;
• Misrepresenting that dealer has good title to the car when it does not (e.g., stolen car);   
• Intentional filing of collection suits in improper forums, or other abuse of process; and
• Yo-Yo Sales. This is where the consumer believes the sale is final and is given possession of the car by the dealer, who later tells the consumer to return the car because the financing has fallen through. If the buyer does not return the car or agree to re-write the transaction on less favorable terms, the dealer will repossess the car. This can be a UDAP violation where the sale has not been expressly conditioned on final credit approval, or where the financing did not really fall through, or where the dealer knew it would fall through or represented it would not.

Unfair practices under the CFA

The CFA prohibits unfair or deceptive practices in trade or commerce. Robinson v. Toyota Motor Credit Corporation, 201 Ill. 2d 403 (2002). Unfair acts that are not deceptive are actionable under the CFA. Robinson at 417-418. The Court will examine three factors to determine whether conduct is "unfair" within the meaning of the CFA:

• Whether the practice offends public policy
• Whether it is immoral, unethical, oppressive, or unscrupulous
• Whether it causes substantial injury to consumers. Robinson at 417-418

It is not necessary to satisfy all three criteria to establish an unfair practice. Id.

Is charging an excessively high price sufficient to establish a claim under the CFA?

An excessive price alone generally is insufficient to establish a claim for "unfairness" under the CFA. Likewise, the fact that the parties were in unequal bargaining positions is not alone a basis to establish a claim under the CFA. There must be something else about the defendant's conduct, in addition to the high price, that must violate public policy, be so oppressive as to leave the consumer with little alternative but to submit, and injure the consumer. People ex rel. Hartigan v. Knecht Services, Inc., 216 Ill. App. 3d 843, 575 N.E.2d 1378, 159 Ill. Dec. 318 (1991); Saunders v. Michigan Ave. Nat. Bank, 278 Ill. App. 3d 307, 662 N.E.2d 602, 214 Ill. Dec. 1036 (1st Dist. 1996).