Business Law Breakdown: What businesses need to know about the Texas DTPA

What is the Texas DTPA? The Texas Deceptive Trade Practices Consumer Protection Act is as its name suggests, a statute that is designed to protect consumers from deceptive trade practices.

The Texas DTPA essentially allows any business to be sued by one of its customers if that customer believes that the business has provided misleading information in connection with a transaction, or engaged in some sort of unconscionable action or coercive action.

The good news is that the statute does allow you to take certain actions to help limit your business’s exposure to DTPA claims in the future. One of the scary things about the DTPA is how broadly it defines what constitutes a deceptive trade practice under the statute. There are about 31 specific categories of actions the statute constitutes as ‘deceptive trade practices.’ Those include:

• Representing that goods and services have characteristics that they don’t have
• Advertising goods and services with the intent not to sell those goods and services as advertised
• Representing a contract that, for instance, has benefits or rights it doesn’t have
• Withholding information from the consumer about goods and services if in doing so you’re trying to induce the consumer to enter into a transaction with you

If a consumer prevails under the Texas DTPA, he or she can recover significant damages that in most instances will be much higher than can be recovered in a breach of contract action. The exposure in a DTPA lawsuit can also be significantly higher than your exposure in a breach of contract action.

What steps can a business owner or manager take now to help limit the exposure of your business to a DTPA claim?

1. Have a lawyer take a look at your contracts. A lawyer can make sure your contracts have the specific statutory limitations in them that will give you the best protection in the statute.

2. If you think you have a customer that you believe is in the process of asserting a DTPA claim against you, talk to a lawyer. A lawyer can help you investigate the complaint and draft an appropriate response as well as an appropriate settlement offer in response to that demand letter that should be forthcoming.

Have more questions about protecting your business from DTPA claims or other legal questions? Contact our office today.