The Fair Business Practices Act was established to protect consumers from predatory business practices and give businesses an ethical framework to follow. As with any statute, consequences for violating it result in penalties. And let me tell you, the FBPA penalties are not to be taken lightly– they can truly make or break your business. In this article, we’ll discuss some must-know nuances embedded in FBPA penalties and how to avoid them.
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How FBPA Penalties Work
FBPA stands for the Fair Business Practices Act. The FBPA outlines laws and standards for businesses to abide by in order to protect themselves and consumers. With any governing legislation, violations are met with penalties. Whether it is a consumer complaint of a civil lawsuit brought by a customer or a State investigation, penalties are ever present under the FBPA and are nothing to take lightly. If a dealer violates the FBPA, the state will penalize the dealer for every individual violation, rather than being charged one lump sum penalty. For example, let’s say a dealer is overcharging ETR fees for 500 of its customers. Rather than hitting the dealership with one fine upon discovery, the state could levy a fine or assess a fine for each instance. So instead of one penalty, the dealer incurs 500 violations and, consequently, 500 individual fines.
It’s a different sort of analysis for the consumer. It’s not about the harm to the general public, it’s about the harm to that consumer. So what was the harm of the dealer’s misrepresentation, or the dealer’s concealment of information about the dealer’s unfair practice to that consumer? That’s an analysis you have to perform case by case and that’s where you get into damage analysis in any lawsuit or any demand, to actually analyze what the damages are for the dealer’s act.
As you can imagine, FBPA penalties can drown a dealership in financial ruin if they are not careful or lack the knowledge necessary to avoid/navigate them.
FBPA Penalty Nuances
What’s interesting about the Fair Business Practices Act that’s different than a lot of statutes is it includes an amount for treble damages in the event of an intentional act. If it is found that the dealer intentionally attempted to harm the consumer through its acts, then the dealer could be liable for something called treble damages. “Treble” is not a word you use often, not a word I would expect most dealers to know either, but it’s a legal word that is incredibly nuanced and important. Simply put, “treble” means triple. So in the event, there’s a $10 damage if it’s trebled, it’s $30 in damage.
This is where the Fair Business Practices Act becomes a real thorn in the side for a lot of dealers. A dealer might sell an $8,000 2013 Accord with 120,000 miles on it, have a Fair Business Practices Act violation, and commit an unfair business practice that harms the consumer. In depositions and discovery, if the consumer can prove, show, or establish that the dealer acted with intent, that $8,000 damage becomes $24,000 damage. On the other side of this, the dealer thought they were selling this relatively affordable car, it’s not worth all that much. We’re not talking about a new Lamborghini, we are talking about a 2013 Accord with over 100,000 miles on it. Next thing they know, they’re paying an attorney to defend a lawsuit tens of thousands of dollars and they’re also getting hit with a $20,000, $30,000, $40,000 Fair Business Practices Act treble damage violation. These can be big deals.
Now, the Secretary of State can fine based on each violation and the consumer sues for the actual damage incurred, potentially travel damages. There are also some other attorneys’ fees, potentially punitive damages, and other things. But the Treble is specific to the Fair Business Practices Act and can truly spiral causing deeply expensive damage to car dealers.
The Takeaway
Dealers must understand the FBPA through and through and operate their dealership in alignment with the statutes outlined. Doing so will save you a world of legal headaches and expensive mistakes. It is, however, common for dealers to unknowingly violate the FBPA because they simply do not understand the statutes or they did not read it thoroughly enough. This is where legal consultation becomes important and necessary. The right law firm will proactively help you navigate the FBPA and ensure you are crossing your t‘s and dotting your i‘s.
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