State Consumer Protection Acts: An Empirical Investigation of Private Litigation
Joshua D. Wright
George Mason University - Antonin Scalia Law School, Faculty
November 12, 2010
Searle Civil Justice Institute Preliminary Report, 2009
Since the 1960s, all fifty states and the District of Columbia have enacted state consumer protection acts (CPAs). These acts were a response to increased demands for consumer protection and business regulation, criticism of the Federal Trade Commission’s consumer protection efforts, and a sense that common law causes of action available to consumers were too strict. Originally considered "mini-FTC Acts," CPAs were intended to increase the resources available to pursue consumer protection cases. Their proponents see them as a vital complement to the FTC’s limited consumer protection efforts, necessary to allow plaintiffs to overcome the strict limitations on common law causes of action and to provide adequate incentives for individuals to challenge unfair and deceptive business practices.
However, there is increasing concern that these acts do more than simply supplement FTC enforcement, but expand the scope of consumer protection litigation beyond well-established avenues of consumer protection. Critics fear that by combining private rights of action, generous remedies, and vague definitions of illegal conduct, without including any requirement that CPA litigation serve the public interest, CPAs may encourage frivolous claims and attorney-driven class actions that ultimately hurt, rather than protect consumers.
The Searle Civil Justice Institute (SCJI) seeks to inform policy debates with systematically collected and rigorously analyzed empirical data. Despite clear relevance to the key policy questions, there is an absence of such analysis on state consumer protection acts. Little systematic information is available on magnitude, trends, or nature of litigation under state CPAs.
In this Preliminary Report, the SCJI State Consumer Protection Acts Task Force begins the process of creating a more complete picture of state consumer protection acts. The SCJI has engaged in a massive data collection and analysis effort, collecting information on CPAs in all fifty states, assembling a database of about 17,000 court decisions, and closely examining 500 of these decisions. The SCJI also commissioned a panel of consumer protection experts to serve as a "Shadow Federal Trade Commission." This Shadow FTC examined a sample of consumer protection decisions and considered how they would fare under relevant FTC standards. The analysis presented in this Preliminary Report was conducted according to the SCJI Research Protocol and has been subjected to independent peer review. The results contained in this Preliminary Report fully and accurately reflect the results of SCJI’s data collection and analysis.
This Preliminary Report marks the beginning of rigorous analytical examination of state consumer protection acts. It is denoted as preliminary for two reasons. First, SCJI intends to continue its empirical work on CPAs by developing an analysis of the impact of state CPAs on consumer welfare. Second, SCJI is prepared to refine its work based on future studies, critiques, and ongoing debate.
Number of Pages in PDF File: 90
Date posted: November 14, 2010