Google's recent ban of ads for payday loans highlights the issue of deceptive trade practices. If you've been sued in Texas for deceptive trade practices, here's what you need to know.
In May, the Atlantic reported on Google's decision to ban ads for payday loans- those high-interest, hard-to-pay-off loans that lenders sell to predominately low-income borrowers. Payday loans might bridge a gap between paychecks, for instance, or cover an unexpected car maintenance expense.
Those who sell payday loans claim they're simply meeting market demand by helping someone in a tough financial situation buy groceries, for example, or otherwise make ends meet. But the interest rates on these loans are often exorbitantly high, which can make it next to impossible for many borrowers to make good on repayment.
On its face, a payday loan generally is not deceptive - most loans presumably state the interest rate, for instance - but the manner in which they're marketed and sold might be. Ultimately, this led Google to take action.
The recent news opens a conversation about deceptive trade practices here in Texas.
The Texas Deceptive Trade Practices Act
Texas's consumer protection law is the DTPA, originally enacted in the 1970s. This law prohibits a range of "deceptive trade practices," from misrepresentations in goods and services to breaches of warranty and failure to disclose.
The DTPA's broad scope means there is significant "gray area" subject to interpretation. It's rather easy for your business to face liability. You may have thought that your sales and marketing methods were sound and lawful, only to face the threat of litigation from a business or consumer.
Steps You Can Take
If you've been sued in Texas for deceptive trade practices, the first step is to determine whether the actions for which you've been accused are prohibited under Section 17.46(b) of the DTPA.
The second step is to make a plan for defending yourself against the lawsuit. Under the DTPA, you face economic damages for the business's or consumer's losses, as well as the prospect of triple damages if you are found to have acted intentionally. Attorney fees are also on the table as a potential award against you.
Lastly, you may want to consider revising your business policies and procedures to ensure compliance or reduce the likelihood of future litigation.