This article was originally published in the Union Leader and can be found here.
NH Legal Perspective: Shielding Your Business From Unfair Trade Practice/Consumer Protection Claims
By: Rob Miller
May 18, 2019
New Hampshire’s Unfair Trade Practice Act, RSA 358-A, also known as the “Consumer Protection Act” governs conduct in nearly every business sector. It can be used as a sword by businesses to police the conduct of their business competitors, suppliers or vendors.
It is also a powerful legal hammer that can be wielded by consumer-plaintiffs alleging fraud, misrepresentation or other unfair business conduct by most businesses or professionals in a commercial transaction. Because of this, Unfair Trade Practice Act claims are frequently litigated claims in New Hampshire’s state and federal courts – and they are not to be trifled with.
Claims made under the act carry a serious payload of up to treble damages and the mandatory award of attorney’s fees and costs to the prevailing party. These claims are challenging to defend, and create significant potential areas of legal exposure for any company transacting business in New Hampshire.
As a business owner, you must keep up on the constant changes in this area of law to best protect your business from exposure under the act. Recent litigated or settled cases have taught the following expensive lessons:
• You must understand and monitor what your management team and client-facing employees, especially your sales and marketing teams, are telling your clients or customers about your products and services.
• You must understand specifically what your written materials and advertising pieces say about your products or services, and their uses, applications and benefits, and that those representations are accurate.
• You must understand how and what your website and other social media tools are communicating about your product or business.
• You must understand whether your IT department is fully compliant with the act in how it is building the back end of your website and social media platforms.
What constitutes a violation
The New Hampshire legislature has already predetermined that certain categories of conduct constitute unfair competition and/or an unfair act or practice. Some of the more common types of unfair or deceptive practices that lead to litigation include:
• Disparaging the goods, services or business of another by false/misleading statements.
• False advertising.
• Misuse of the internet, social media, or search engine optimization tools to redirect internet traffic or cause marketplace confusion about a company or product.
• Unauthorized use of trademarks, or company or product names in search engine optimization code.
• Representing that goods or services are of a standard, quality or grade that they are not.
• Representing that goods or services have characteristics, uses or benefits that they don’t.
• Causing marketplace confusion about the approval or certification of goods or services.
• Causing likelihood of marketplace confusion about a company’s affiliations, connections, or associations.
• Representing that goods have ingredients or quantities that they don’t have
• Representing that a professional has a status or affiliation that he/she doesn’t have.
• Using deceptive representations or designations of geographic origin in connection with goods or services (e.g. claiming something is “Made in the USA” if it isn’t).
• Representing that goods are original or new if they are altered, reconditioned, reclaimed, used or secondhand.
Questionable business conduct not falling neatly one of these more common categories can still violate the act if the acts complained of reach a certain level of “rascality.” The New Hampshire Legislature has also made the violation of at least two dozen other statutes an automatic violation of the act, which can expose your business to unsuspected liability. Finally, violations of the act affecting similarly situated groups of consumers can give rise to class actions.
Understanding your business’ potential exposure in all of these area is critical.
How to use the act to protect your business
I regularly perform Unfair Trade Practice audits on my clients’ business operations. We focus, in particular, on representations made in written documents accompanying products or services, representations being made by sales and marketing teams, claims made in marketing and advertising materials, and what is being said and done on websites and social media, both in the outward-facing content, and in the metadata behind it. A whole new class of claims is developing from improper use of trademarks, company names or product names via search engine optimization and other efforts that may not even be understood by your company’s executive team.
Investing in a properly-constructed Unfair Trade Practice compliance audit now can save you from the headaches, distraction and expense of a litigation down the road.