MIAMI BUSINESS LITIGATION: DECEPTIVE AND UNFAIR TRADE PRACTICES AND “PASS-THROUGH” CHARGES

The Florida Deceptive and Unfair Trade Practices Act (FDUTPA) provides a means for customers to sue a business which deceptively charges additional fees. When a business conducts itself in an unlawful, unfair, or deceptive manner to its own customers, the business’ competitor may also assert a FDUTPA claim for the harm that these practices indirectly cause. Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

FDUTPA is a Florida statute that permits litigants to sue if they were damaged from “[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce.” § 501.204, Florida Statutes. “An unfair practice is ‘one that ‘offends established public policy’ and one that is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.’” PNR, Inc. v. Beacon Prop. Mgmt., Inc., 842 So. 2d 773 (Fla. 2003). “[D]eception occurs if there is a ‘representation, omission, or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.” Millennium Communications & Fulfillment, Inc. v. Office of the Attorney Gen., 761 So.2d 1256 (Fla. 3d DCA 2000). “A deceptive or unfair trade practice constitutes a somewhat unique tortious act because, although it is similar to a claim of fraud, it is different in that, unlike fraud, a party asserting a deceptive trade practice claim need not show actual reliance on the representation or omission at issue.” State, Office of Attorney Gen., Dept. of Legal Affairs v. Commerce Commercial Leasing, LLC, 946 So. 2d 1253 (Fla. 1st DCA 2007). “The issue when considering a claim under the Act is whether the alleged practice was ‘likely to deceive a consumer acting reasonably in the same circumstances.’” Id.

One type of potentially deceptive practice is “pass-through” charges. Florida businesses will often apply separate charges in addition to the agreed upon price at the point of sale or in an invoice, or otherwise disguise the basis for a charge. Sales tax is the most common pass-through charge, but a business can charge the customer for nearly any expense. There is nothing inherently unlawful about these types of charges; however, the charge must be accurately presented to the consumer and not otherwise be contrary to the parties’ contract. An example of a deceptive practice may be when businesses portray fabricated charges as pass-through business expenses, but then keep the monies for themselves. E.g. Bowe v. Pub. Storage, 1:14-CV-21559-UU, 2014 WL 12029270 (S.D. Fla. July 2, 2014) (finding that it is a violation of FDUTPA for a company to portray an insurance charge as if it was being sent to the insurer, when in fact much of it was being retained). Such charges can trick consumers into believing that the price of a product or service is lower than what it truly is or that the additional charges are universally incurred in the industry like a tax.

Deceptive charges can affect competitors in addition to consumers. A competitor may lose sales because customers were deceived into believing that the price was lower than it actually was. For example, consider two internet service providers. Internet Provider A advertises a price of $50 a month, while Internet Provider B charges $60 per month. If Internet Provider A deceptively charges $15 in various additional “fees” which are actually just additional profit, the true price of Internet Provider A’s services is $65. A price conscious consumer may be deceived by the charges and patronize Internet Provider A, never knowing that Internet Provider B does not also issue these additional charges. Such conduct would harm Internet Provider B, even though it was not a party to the transaction, because consumers who knew the truth would have patronized Internet Provider B. A business which has been harmed by a competitor’s deceptive conduct may sue under FDUTPA even though it was not itself actually part of the transactions. Caribbean Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach County, Inc., 169 So. 3d 164 (Fla. 4th DCA 2015) (finding that a business may sue under FDUTPA for a competitor’s unfair or deceptive business practices with its own customers). For a competitor to sue under FDUTPA for deceptive practices with their consumers, the competitor must show that the deceptive conduct independently harmed both the competitor and the consumer. CEMEX Constr. Materials Florida, LLC v. Armstrong World Indus., Inc., 3:16-CV-186-J-34JRK, 2018 WL 905752 (M.D. Fla. Feb. 15, 2018) (finding that both harm to a consumer and the competitor is required for a competitor suit under FDUTPA); Orange Lake Country Club, Inc. v. Castle Law Group, P.C., 617CV1044ORL31DCI, 2017 WL 6406866 (M.D. Fla. Dec. 15, 2017) (finding that misrepresentations about the efficacy of services did not actually harm the plaintiff party, dismissing the FDUTPA count). A business may sue its competitor for deceptively charging its own customers false pass-through charges if the business can show that the deceptive conduct harmed both itself and the consumers.

Peter Mavrick is a Miami business litigation lawyer, and represents business litigation clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.