CONSUMER PROTECTION FOR PSYCHIC FRAUD by Michael K Botts, Attorney at Law 421 W. 87th Stre
CONSUMER PROTECTION FOR PSYCHIC FRAUD
by Michael K Botts, Attorney at Law
421 W. 87th Street, Suite 1
P.O. Box 33008
Kansas City, Missouri 64114
[Michael Botts is the Secretary of CSICOP's Legal and Consumer
NOTICE: This discussion is for general information purposes only.
Please consult with the law of your state for more-specific
information as to your rights and liabilities.
All of the normal consumer protection laws apply to psychic and
One of the most perplexing problems in the area of consumer
protection is that consumers are reluctant to seek redress. The
causes of this reluctance are often cited as the costs of
litigation, time, fear, and embarrassment. Practical
considerations against seeking redress include the facts that
consumer grievances often involve relatively small amounts of
money, evidence is hard to find, the courts are not generally
educated in this area of law, and the opposition is generally
fanatical and always seems to have limitless financial resources.
Exposure of the frauds and the sanctions of the courts are the only
weapons available to fight the wolves who wait for the sheep who
are "born every minute". This discussion lists some of the more
commonly available remedies.
CONTRACT law concerns the bargained-for relationships between
individuals. When a party to the contract breaches the agreement,
the other party is entitled to a judgement to put him back in the
position he would have been in if there had been no breach.
Contract damages are only compensatory for the breach of the
contract. Only in rare circumstances are punitive damages
available. Attorney fees are only recoverable if it is written
into the contract. Contract remedies are generally inadequate in
consumer fraud, because the underlying contract is usually
TORT law concerns actions to recover for personal injuries. Tort
remedies are designed to compensate for the injury. Punitive
damages are often available in tort cases for the specific purposes
of penalizing the tort-feasor, sending a message to the tort-feasor
to not do that tort again, and sending a message to the public in
general that that action will not be tolerated by the courts.
Attorney fees are generally not recoverable unless specifically
allowed by statute.
STATUTORY remedies are those specifically allowed in state and
federal laws. There are many consumer protection statutes that
specifically regulate such areas as consumer credit and finance.
However, those laws are not usually applicable to psychic and
health frauds. The primary individual remedies for actual frauds
are the state consumer fraud statutes, commonly known as UDAP
statutes, an acronym for Uniform Deceptive Acts and Practices.
FRAUD AND RELATED THEORIES:
COMMON-LAW FRAUD requires proof of 1) a false representation,
usually of fact, 2) "scienter" -- the speaker's knowledge that the
fact is false, 3) the speaker's intent that the victim rely on the
false representation, 4) the victim's reliance on the false
representation, and 5) damage to the victim as a result of the
Common-law fraud usually must be proven by "clear and convincing
evidence", which is a slightly higher standard of proof than the
normal civil standard of a "preponderance" of the evidence.
STATUTORY FRAUD UNDER THE FEDERAL TRADE COMMISSION ACT (FTC)
becomes "deception". Contrary to common-law fraud, "deception"
does not require a showing of intent, scienter, actual reliance,
or damage, and even actual deceptions are unnecessary. A deception
may be established by proof that the practice has a tendency of
capacity to deceive even a significant minority of consumers. The
standard of proof is the lower "preponderance" standard.
The FTC Act is used by the Federal Trade Commission, but it is the
model for many states' UDAP rulings.
STATUTORY FRAUD UNDER STATE UNIFORM DECEPTIVE ACTS AND PRACTICES
LAWS (UDAP) is also classified as deception, which is generally
defined as in the FTC Act. Deception can be found where there is
no breach of contract or warranty, and even where there is no
negligence. The essence of deception is not evil intent, negligent
behavior, or even breach of agreement, but simply being mislead by
a seller's statement of actions.
UNCONSCIONABILITY is the legal theory that will rescind an
agreement when the agreement is found to be such that no reasonable
person would have offered and no reasonable person would have
accepted. Unconscionability looks to the facts surrounding the
agreement and the relative bargaining positions of the parties.
The court looks for gross unfairness.
UNFAIRNESS under both the state UDAP and federal FTC laws is a
fall-back theory where the practice is not illegal, but it is
offensive to society's sense of justice. There are currently two
tests -- the original FTC test, which most states have recognised,
and a new FTC test, which has not yet been widely adopted by the
states. In the old FTC standard for "unfairness", which is still
recognized by most states, the courts apply the following test:
1) whether the practice offends public policy, 2) whether the
practice is immoral, unethical, oppressive, or unscrupulous, and
3) whether the practice causes substantial injury to consumers.
The new FTC test is 1) the injury must be substantial, 2) the
injury must not be outweighed by any countervailing benefits to
consumers or competition that the practice promotes, and 3) the
injury must be one that the consumers themselves could not
reasonably have avoided.
Emotional or other subjective harm will not ordinarily be
considered as injury in finding unfairness.
WARRANTY LAW under the Uniform Commercial Code (UCC) is the legal
theory of promises defining an affirmation of fact or promise made
by the seller to the buyer that has a natural tendency to cause the
buyer to purchase the property as a warranty. An express warranty
does not require any formal words such as "warrant" or "guarantee".
There does not even have to be any words -- a warranty may be
created by a picture or by the seller's conduct. Warranties are
easily created. Warranties only apply to goods.
STATE CONSUMER PROTECTION (UDAP) STATUTES:
Alabama Code, Section 8-19-1.
Alaska Statutes, Section 45.50.471.
Arizona Revised Statutes, Section 44-1521.
Arkansas Statutes, Section 70-901.
California Civil Code, Section 1750.
California Business & Professional Code, Sections 17200 and 7500.
Colorado Revised Statutes, Section 6-1-101.
Connecticut General Statutes, Section 42-110a.
Delaware Code, Title 6, Section 2511.
District of Columbia Code, Section 28-3901.
Florida Statutes, Section 501.201.
Georgia Code, Sections 106-701 and 106-1201.
Hawaii Revised Statutes, Sections 480 and 481A.
Idaho Code, Section 48-601.
Illinois Revised Statutes, Chapter 121 1/2, Sections 261 and 311.
Indiana Code, Section 24-5-0.5-1.
Iowa Code, Section 714.16.
Kansas Statutes, Section 50-623.
Kentucky Revised Statutes, Section 367.110.
Louisiana Revised Statutes, Section 51:1401.
Maine Revised Statutes, Title 5, Section 206.
Maine Revised Statutes, Title 10, Section 1211.
Maryland Commercial Law Code, Section 13-101.
Massachusetts General Laws, Chapter 93A.
Michigan Compiled Laws, Section 445.901.
Minnesota Statutes, Sections 8.31 and 325D.43.
Mississippi Code, Section 75-24-1.
Missouri Revised Statutes, Section 407.010.
Montana Code, Section 30-14-101.
Nebraska Revised Statutes, Sections 59-1601 and 87-301.
Nevada Revised Statutes, Sections 598.360 and 41.600.
New Hampshire Revised Statutes, Section 358-A:1.
New Jersey Statutes, Section 56:8-1.
New Mexico Statutes, Section 57-12-1.
New York Executive Law, Section 63(12).
New York General Business Law, Sections 349 and 350.
North Carolina General Statutes, Section 75.1.
North Dakota General Statutes, Section 51-15-01.
Ohio Revised Code, Section 1345.01.
Oklahoma Statutes, Title 15, Section 751.
Oklahoma Statutes, Title 78, Section 51.
Oregon Revised Statutes, Section 646.605.
Pennsylvania Statutes, Title 73, Section 201-1.
Rhode Island General Laws, Section 6-13.1-1.
South Carolina Code, Section 39-5-10.
South Dakota Codified Laws, Section 37-24-1.
Tennessee Code, Section 47-18-101.
Texas Business and Commercial Code, Section 17.41.
Utah Code, Sections 13-2-1, 13-5-1, and 13-11-1.
Vermont Statutes, Title 9, Section 2451.
Virginia Code, Section 59.1.196.
Washington Revised Code, Section 19.86.010.
West Virginia Code, Section 46A-6-101.
Wisconsin Statutes, Section 100.21.
Wyoming Statutes, Section 40-12-101.
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