Legislation that adds unfair business practices to the state’s consumer protection laws is on its way to the governor’s desk.
House Bill 91, sponsored by Rep. David Bentz, D-Newark, and Sen. Trey Paradee, D-Dover, amends Delaware’s Consumer Fraud Act to explicitly add unfair practices to the list of prohibited practices.
The bill passed with bipartisan support. The bill passed the House 39 to 0 with two absences. In the Senate, four Republicans voted no.
An amendment added language that tracked more closely with the Federal Trade Commission’s description of unfair practices.
The Consumer Fraud Act, passed in 1965, already bans deceptive business practices, but Delaware is one of only six states that do not explicitly ban unfair or unconscionable practices. Passing the legislation was one of Attorney General Kathy Jennings’ top legislative priorities for 2021, a release stated.
According to the Federal Trade Commission, Delaware ranked second per capita in consumer fraud reports.
“Some issues are complicated; this one is not,” stated Jennings. “A second-grader could tell you that unfair behavior is wrong, so it’s no surprise that most adults assume it’s illegal. In truth, we’re one of a small handful of states where it’s not explicitly illegal for business to use unfair practices like high-pressure sales tactics or price gouging. That’s not company we want to keep. Thanks to Rep. Bentz and Sen. Paradee, it won’t be anymore.”
Federal law has prohibited unfair business practices since 1938, and the laws of 44 states and the District of Columbia prohibit unfair or unconscionable practices. Because of Delaware’s weaker Consumer Fraud Act, consumers – and businesses acting as consumers – are vulnerable to unethical or injurious actions that they would be shielded from in other states, sponsors of the bill stated.
The release cited the Cambridge Analytica scandal. In that case, a consulting firm was allowed to collect millions of Facebook users’ personal information without their consent.
The Federal Trade Commission, the attorneys general of California and the District of Columbia, and others took enforcement actions against Facebook. Delaware was unable to take similar action on this scandal due to its weaker law.
Price gouging would also be made illegal by HB 91. While price gouging was banned during the pandemic under the authority of Gov. Carney’s emergency powers, Delaware is one of the only states lacking permanent authority to take action against price gouging in a state or national emergency.
Other unfair acts that could be covered by HB 91 include:
- High-pressure sales tactics
- Coercive conduct (e.g., conditioning return of a down payment on a consumer’s agreement to forfeit part of it)
- Unequal knowledge between consumers and merchants (e.g., defective merchandise, dangerous products or sales tactics, failure to provide copies of contracts)
- Hidden unaffordability (e.g., loans that direct consumers to pay a minimum amount set at a level such that the consumer will never pay off the loan)
- Unethical post-sale tactics (e.g., failure to honor refund policies or warranties, charging for goods or services that consumers didn’t request)
- Advertising adult products to children.