There are 4 ways to use the Texas Deceptive Trade Practices Act to initiate a claim:

1. Unconscionable Acts. This occurs when a merchant takes advantage of a consumer’s lack of knowledge, ability, experience, or capacity to a grossly unfair degree. This is basically fraud, extreme dishonesty, or abhorrent act. Think used car salesman selling a buyer a lemon knowing it will break down after a few miles.

2. Breach of Warranty. This will include a variety of warranties:

• Express Warranty: Written or verbal warranty.
• Implied Warranty of Merchantability: Item purchased does what it is supposed to do. This is not written or stated verbally.
• Warranty of Fitness for a Particular Purpose: Item purchased performs the specific job the sales person claimed it would perform.

3. Insurance Code. Any violation of the insurance code will automatically be actionable under the DTPA and its favorable damage provisions will apply. The insurance code is a whole separate consumer protection statute which governs insurance companies dealings with their insureds.

4. DTPA Laundry List. The DTPA provides a list of 27 violations which must be specifically listed in a petition against a defendant. A few of the more commonly used violations enumerated in Section 17.46(b) are:

(1)  passing off goods or services as those of another;

(5)  representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he does not;

(12)  representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law;

(14)  misrepresenting the authority of a salesman, representative or agent to negotiate the final terms of a consumer transaction;

(17)  advertising of any sale by fraudulently representing that a person is going out of business;

(20)  representing that a guarantee or warranty confers or involves rights or remedies which it does not have or involve…

(22)  representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts replaced;

(24)  failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed;

These provisions are relatively self-explanatory, however there are other violations which fall under the auspices of the DTPA, and to be certain that your potential claim may be filed under The Act, you should consult with a knowledgeable attorney to discuss your particular facts.

The default rule under the Deceptive Trade Practices Act is that it is not subject to waiver, and any such waiver is void. However, in order for a seller or provider of services to establish the defense of ‘waiver’ to a lawsuit claiming a Texas Deceptive Trade Practices Act violation, that merchant must abide by the express provisions of the act’s Section 17.42 prior to providing the goods or services to the consumer: (emphasis added)

(1) the waiver is in writing and is signed by the consumer.
(2) the consumer is not in a significantly disparate bargaining position; and:
(3) the consumer is represented by legal counsel in seeking or acquiring the goods or services.

(b) A waiver under Subsection (a) is not effective if the consumer’s legal counsel was directly or indirectly identified, suggested, or selected by a defendant or an agent of the defendant.

(c) A waiver under this section must be:
(1) conspicuous and in bold-face type of at least 10 points in size; (2) identified by the heading “Waiver of Consumer Rights,” or words of similar meaning; and
(3) in substantially the following form:

“I waive my rights under the Deceptive Trade Practices-Consumer Protection Act, Section 17.41 et seq., Business & Commerce Code, a law that gives consumers special rights and protections. After consultation with an attorney of my own selection, I voluntarily consent to this waiver.”

The main points to remember are that in order for a merchant’s waiver to be effective it must be clearly written and readable in bold font, signed by the consumer, use substantially the above phrasing, and the consumer must be represented by an attorney, which the merchant did not select for the consumer.

The above provisions make waiver a very difficult defense to clearly establish because although consumers often sign waivers of rights when making purchases, the DTPA will likely not be included in those waivers. This makes consultation with an attorney all the more important when you believe you have a DTPA claim, because although not all situations warrant a full DTPA lawsuit, some situations will warrant the issuance of a statutory DTPA demand letter, and other situations will warrant no action because the merchant committed no violation. Your rights as a consumer are valuable, don’t abandon them without a full review of the facts by a knowledgeable professional.

One can only assert a claim under the DTPA is one is a “consumer” under the act and under the court decisions which have interpreted it. Under section 17.45(4) a consumer is:

…an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services, except that the term does not include a business consumer that has assets of $25 million or more, or that is owned or controlled by a corporation or entity with assets of $25 million or more.

So the range of parties which would be considered “consumers” is quite broad, and to “seek or acquire” does not require a contractual relationship, an actual purchase, or any payments made. Additionally, a person who seeks or acquires goods or services on another person’s behalf who will be the ultimate user will qualify as a consumer if there was intent to benefit a 3rd party by the buyer. Any gratuitously provided goods or services will not qualify the buyer as a ‘consumer,’ unless the goods were paid for by another party.

“Goods” is defined to mean “tangible chattels or real property purchased or leased for use,” and real estate is included.  “Services” is defined to mean “work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods.” Just about anything can qualify as a good or a service, however the specific list of items which should definitely not be considered goods includes: money, accounts receivable, stock, options contracts, certificates of deposit, the proceeds of an insurance policy, trademarks, a limited partnership interest, and lottery tickets. The requirement that the purchase must be for ‘use’ is broand enough to include any use, including resale or investment.

The DTPA also does not apply to a claim arising out of a written contract if the contract relates to a “transaction, project, or set of transactions related to the same project” involving consideration by the consumer of more than $100,000, although the consumer’s own residence is still covered under the act.

As you can see, the DTPA was written to be interpreted liberally by any court reviewing a case brought under it. The court is to base its interpretation of the act on the concept of maximum consumer protection, as intended by the legislature. You should have your potential claim reviewed by a knowledgeable attorney because compliance with all of the DTPA’s provisions is necessary in order to be able to use it to maximum effect. These days courts take a strict view of DTPA litigation and getting a case to a jury without a summary judgment issued by the judge requires a very strong case and full compliance with its requirements.  

If you have been burned by a time share investment and have been unable to sell your interest, you may have been contacted or attempted to contact various companies promising and even guaranteeing the sale of your property interest. Unfortunately most such companies are not being honest with you regarding any such sale, and some are committing outright fraud. This office has yet to see a time share resale agreement that does not attempt to gouge the owner in some way for an extremely excessive amount. Therefore, we recommend you stay away from all such companies or find one which commits none of the following acts. And certainly if you are contemplating entering such an arrangement you should consult a knowledgeable attorney who will review all relevant agreements and advise you on the best course of action.

Firstly, such agreements typically will send an ‘intent’ letter stating that you, the owner, fully intend to complete the transaction and sign a full agreement with the company. Some companies will use the intent letter to pressure an owner to sign the full agreement telling them that the letter of intent is binding and they must now execute the full resale agreement. This is borderline fraudulent inducement. The letter of intent does not disclose any of the terms of the resale, any moneys to be paid, and is not binding. You should not sign any such letter until you see the full agreement, so you can avoid any conflicts when you see the full agreement. Many of these companies engage in psychological manipulatino and prey on desperate and/or unsophisticated parties to entice them into a very disadvantageous resale arrangement.

The full agreement will typically require a large down payment from the owner at the time of execution as a portion of the commission paid upfront and/or a payment for future services. This payment will not be refundable whether or not the property is sold. Next, these agreements typically have no expiration date or a very long term during which time if the time share is sold the company will be due a commission, which will typically be very high. Also the agreement may state that if the agreement is terminated for any reason, the commission will still be payable within some lengthy period after the termination, if the interest is sold by the owner or anyone else. Because of this, what happens in practice is that your interest in the property will be locked up by such a company for an extended and intolerable duration, and eventually the owner will decide to sell it for a loss, and then discover that the company that was supposed to sell the interest and has otherwise done nothing, is demanding an incredibly large commission. Disregard any ‘guarantees’ in the agreement because it will not guarantee a sale price, the time frame of the sale, and it probably will not guarantee that any actions will be taken by the company to attempt to sell your time share, and usually no action will occur at all.

Typically, such agreements will have no provisions protecting your interests such as the jurisdiction, dispute resolution, the time frame within which the sale must be completed, and any of the other matters which must be included by law in a real estate sale agreement with a licensed realtor. These companies are not realtors, they are not licensed and they are not specifically regulated in Texas. You are entering a grey area of business transactions with these entities, because they are quick to open for business and quick to vanish, with your money, only to reopen under another name.

What is the DTPA?

The Deceptive Trade Practices Act was passed with the intention of deterring a wide variety of fraud, acts by omission, and underhanded sales tactics, as well as providing an efficient process of obtaining compensation for consumers. Finally, it was intended as a harsh penalty for those found to have engaged in deceptive activity.

Can the act be waived in writing?

Yes, but only if you have an attorney with you, plus other requirements. So probably not.

Statute of limitations?

2 years from the injurious act or 2 years from the date the injury should have been discovered. Extensions are possible in some situations.

What type of deception is covered?

Almost any kind, as long as it can possibly fall under one of the 28 descriptors known as the ‘laundry list’. The act expresses its intent of being liberally construed and applied.

What else is covered?

Breaches of any kind of warranty, unconscionable acts (extremely severe fraud), and violations of Texas Insurance Code (as a tie in separate statute). And a consumer can sue on all four if they all apply!

Damages?

Plenty: Only economic damages if the injury was caused by the defendant with possession of the mental state of mere ‘negligence’;
3x economic damages plus mental anguish damages if the injury was caused ‘knowingly’;
3x economic damages AND mental anguish damages if the defendant acted ‘intentionally’; the most culpable of mental states.

Economic damages are only those which may be readily and precisely calculated, such as physical damages to property or lost wages. Mental anguish damages are for extreme mental distress of sustained duration, not mere annoyance or anger that quickly passes within a week, for example.

Attorney fees and costs are also awarded in all cases where Plaintiff prevails.