Delaware News


Unfair Business Practices Bill Passes Senate, Ready for Governor’s Signature 

Department of Justice | Department of Justice Press Releases | News | Date Posted: Tuesday, June 15, 2021


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Legislation passed by the State Senate on Tuesday is one step away from ensuring Delawareans are protected from unfair business practices by a statute as protective as the law in nearly every other state.

House Bill 91, sponsored by Rep. David Bentz, D-Newark, and Sen. Trey Paradee, D-Dover, amends Delaware’s Consumer Fraud Act to explicitly add unfair practices to the list of prohibited practices. The Consumer Fraud Act, passed in 1965, already bans deceptive business practices, but Delaware is one of only six states that do not explicitly ban unfair or unconscionable practices.  Passing the legislation was one of Attorney General Kathy Jennings’ top legislative priorities for 2021.

“Some issues are complicated; this one is not,” said Attorney General Jennings. “A second-grader could tell you that unfair behavior is wrong, so it’s no surprise that most adults assume it’s illegal. In truth, we’re one of a small handful of states where it’s not explicitly illegal for businesses to use unfair practices like high-pressure sales tactics or price gouging. That’s not company we want to keep. Thanks to Rep. Bentz and Sen. Paradee, it won’t be anymore.”

“Being able to defend consumers against unfair and unscrupulous business practices sounds like a common-sense protection that already should be in place, so it was troubling to learn that Delaware has a loophole in the law,” said Rep. David Bentz, the lead sponsor of HB 91. “We’ve seen some businesses use tactics that range from questionable to outright despicable more and more, and our justice department has been unable to take action. By passing this bill, we will take a stand against deceptive, high-pressure and coercive practices. We will level the playing field for the countless companies that conduct business the right way and protect consumers from the unethical actions of these other entities.”

“In a world of deceptive advertising, shady online marketplaces and unscrupulous salesmen out to make a fast buck, consumers deserve to know Delaware has their back if they get ripped off,” said Sen. Trey Paradee, the Senate prime sponsor of HB 91. “Unfair and deceptive business practices cast a shadow on reputable businesses, undermine competition and erode consumer confidence. Delaware has a well-deserved reputation as a business-friendly state and this law will only enhance our standing by establishing that bad behavior will not be tolerated in the First State.”

Federal law has prohibited unfair business practices since 1938, and the laws of 44 states and the District of Columbia prohibit unfair or unconscionable practices. Because of Delaware’s weaker Consumer Fraud Act, consumers – and businesses acting as consumers – are vulnerable to unethical or injurious actions that they would be shielded from in other states.

In the wake of the Cambridge Analytica scandal – wherein a British consulting firm was allowed to collect millions of Facebook users’ personal information without their consent – the Federal Trade Commission, the attorneys general of California and the District of Columbia, and others took enforcement actions against Facebook. Delaware was unable to take similar action on this scandal, and in general Delaware’s lack of a prohibition on unfair practices prevents it from participating fully in many multistate investigations on consumers’ behalf.

Price gouging would also be made illegal by HB 91. While price gouging was banned during the pandemic under the authority of Gov. Carney’s emergency powers, Delaware is one of the only states that lacks permanent authority to take action against price gouging in a state or national emergency.

Other unfair acts that could be covered by HB 91 include:

  • high-pressure sales tactics
  • coercive conduct (e.g., conditioning return of a down payment on a consumer’s agreement to forfeit part of it)
  • unequal knowledge between consumers and merchants (e.g., defective merchandise, dangerous products or sales tactics, failure to provide copies of contracts)
  • hidden unaffordability (e.g., loans that direct consumers to pay a minimum amount set at a level such that the consumer will never pay off the loan)
  • unethical post-sale tactics (e.g., failure to honor refund policies or warranties, charging for goods or services that consumers didn’t request)
  • advertising adult products to children

HB 91 will now go to Governor Carney to be signed into law.

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Unfair Business Practices Bill Passes Senate, Ready for Governor’s Signature 

Department of Justice | Department of Justice Press Releases | News | Date Posted: Tuesday, June 15, 2021


Navy blue background featuring the Delaware state seal in the center

Legislation passed by the State Senate on Tuesday is one step away from ensuring Delawareans are protected from unfair business practices by a statute as protective as the law in nearly every other state.

House Bill 91, sponsored by Rep. David Bentz, D-Newark, and Sen. Trey Paradee, D-Dover, amends Delaware’s Consumer Fraud Act to explicitly add unfair practices to the list of prohibited practices. The Consumer Fraud Act, passed in 1965, already bans deceptive business practices, but Delaware is one of only six states that do not explicitly ban unfair or unconscionable practices.  Passing the legislation was one of Attorney General Kathy Jennings’ top legislative priorities for 2021.

“Some issues are complicated; this one is not,” said Attorney General Jennings. “A second-grader could tell you that unfair behavior is wrong, so it’s no surprise that most adults assume it’s illegal. In truth, we’re one of a small handful of states where it’s not explicitly illegal for businesses to use unfair practices like high-pressure sales tactics or price gouging. That’s not company we want to keep. Thanks to Rep. Bentz and Sen. Paradee, it won’t be anymore.”

“Being able to defend consumers against unfair and unscrupulous business practices sounds like a common-sense protection that already should be in place, so it was troubling to learn that Delaware has a loophole in the law,” said Rep. David Bentz, the lead sponsor of HB 91. “We’ve seen some businesses use tactics that range from questionable to outright despicable more and more, and our justice department has been unable to take action. By passing this bill, we will take a stand against deceptive, high-pressure and coercive practices. We will level the playing field for the countless companies that conduct business the right way and protect consumers from the unethical actions of these other entities.”

“In a world of deceptive advertising, shady online marketplaces and unscrupulous salesmen out to make a fast buck, consumers deserve to know Delaware has their back if they get ripped off,” said Sen. Trey Paradee, the Senate prime sponsor of HB 91. “Unfair and deceptive business practices cast a shadow on reputable businesses, undermine competition and erode consumer confidence. Delaware has a well-deserved reputation as a business-friendly state and this law will only enhance our standing by establishing that bad behavior will not be tolerated in the First State.”

Federal law has prohibited unfair business practices since 1938, and the laws of 44 states and the District of Columbia prohibit unfair or unconscionable practices. Because of Delaware’s weaker Consumer Fraud Act, consumers – and businesses acting as consumers – are vulnerable to unethical or injurious actions that they would be shielded from in other states.

In the wake of the Cambridge Analytica scandal – wherein a British consulting firm was allowed to collect millions of Facebook users’ personal information without their consent – the Federal Trade Commission, the attorneys general of California and the District of Columbia, and others took enforcement actions against Facebook. Delaware was unable to take similar action on this scandal, and in general Delaware’s lack of a prohibition on unfair practices prevents it from participating fully in many multistate investigations on consumers’ behalf.

Price gouging would also be made illegal by HB 91. While price gouging was banned during the pandemic under the authority of Gov. Carney’s emergency powers, Delaware is one of the only states that lacks permanent authority to take action against price gouging in a state or national emergency.

Other unfair acts that could be covered by HB 91 include:

  • high-pressure sales tactics
  • coercive conduct (e.g., conditioning return of a down payment on a consumer’s agreement to forfeit part of it)
  • unequal knowledge between consumers and merchants (e.g., defective merchandise, dangerous products or sales tactics, failure to provide copies of contracts)
  • hidden unaffordability (e.g., loans that direct consumers to pay a minimum amount set at a level such that the consumer will never pay off the loan)
  • unethical post-sale tactics (e.g., failure to honor refund policies or warranties, charging for goods or services that consumers didn’t request)
  • advertising adult products to children

HB 91 will now go to Governor Carney to be signed into law.

image_printPrint


Graphic that represents delaware news on a mobile phone

Keep up to date by receiving a daily digest email, around noon, of current news release posts from state agencies on news.delaware.gov.

Here you can subscribe to future news updates.