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DTCI: The sleeping giant - Indiana’s Deceptive Consumer Sales Act

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By Jason Massaro 
 

massaro-august-mug Massaro

Indiana’s Deceptive Consumer Sales Act, I.C. 24-5-0.5 et seq., is a fairly complicated statute clothed in relative obscurity. The DCSA’s complexity is due partly to the way it is written, its scope, and the numerous cross-references to other conduct and statutes that fall within its purview. This article will introduce the statute, discuss its uses, implications, and its application to various types of transactions.

The basics of the DCSA

The purpose of the DCSA is to “protect consumers from suppliers who commit deceptive and unconscionable sales acts” and to “encourage the development of fair consumer sales practices.” I.C. 24-5-0.5-1(b). The DCSA has an occurrence-based statute of limitations of two years, which begins to run after the occurrence of a deceptive act. I.C. 24-5-0.5-5(b). Despite the cross-reference to numerous other statutes – a violation of which constitutes a deceptive act – the DCSA’s statute of limitations controls. Id. An action may be brought by a consumer or the attorney general and class actions are specifically allowed. I.C. 24-5-0.5-4(a)-(c). However, the DCSA has certain notice provisions that are conditions precedent to a consumer’s right to bring an action. These notice provisions impose a sort of statute of limitations themselves that must be complied with or certain causes of action will be barred. I.C. 24-5-0.5-5(a).

“Deceptive Acts” and key players

Section 3 of the DCSA sets out particular conduct that constitutes “deceptive acts” under the statute. I.C. 24-5-0.5-3(a) generally states that a “supplier may not commit an unfair, abusive, or deceptive act, omission, or practice in connection with a consumer transaction.” A “supplier” is defined as a “seller … or other person who regularly engages in or solicits consumer transactions, including soliciting a consumer transaction by using a telephone facsimile machine to transmit an unsolicited advertisement ... .” I.C. 24-5-0.5-3(a)(3). A supplier “includes a manufacturer, wholesaler, or retailer, whether or not the person deals directly with the consumer.” I.C. 24-5-0.5-2(a)(3).

In turn, a “consumer transaction” is defined as “a sale, lease, assignment, award by chance, or other disposition of an item of personal property, real property, a service, or an intangible, except securities and policies or contracts of insurance issued by [authorized] corporations … with or without an extension of credit, to a person for purposes that are primarily personal, familial, charitable, agricultural, or household, or a solicitation to supply any of these things ... .” I.C. 24-5-0.5-2(a)(1). The term “consumer transaction” also encompasses a transfer of structured settlement payment rights, certain unsolicited advertisements sent by fax, and the collection of or attempt to collect a debt by a debt collector as defined by the Fair Debt Collection Practices Act (hereinafter “FDCPA”). I.C. 24-5-0.5-2(a)(1)(A)-(C).

A more intimate look at scope

While I.C. 24-5-0.5-3(a) generally prohibits deceptive acts in connection with consumer transactions, I.C. 24-5-0.5-3(b) specifically sets forth violations that constitute deceptive acts. As of the date of this article, there are 37 delineated conducts and statutory violations, both state and federal, defined as deceptive acts. The expanse of what constitutes a “consumer transaction” coupled with the myriad ways that the DCSA defines “deceptive acts” makes it clear that the Legislature intended the scope of the DCSA to be both liberally construed and broad in its application. For example, among the conduct defined as “deceptive acts” are Indiana statutory violations, interstate commerce, and violations of certain federal statutes. I.C. 24-5-0.5-3(a)-(b).

To illustrate, it is a deceptive act under the DCSA to violate federal statutes such as the FDCPA and the federal Telephone Consumer Protection Act. I.C. 24-5-0.5-3(a)-(b). Furthermore, it is a deceptive act to violate Indiana statutes pertaining to three-day “Cooling Off Period” notice requirements, Indiana’s Home Improvement Contract Act, and Indiana’s Deceptive Commercial Solicitations Act. A deceptive act is also committed when a supplier attempts to engage in a consumer transaction where the supplier knows or should reasonably know that the purported consumer transaction has approval or characteristics that it does not. I.C. 24-5-0.5-3(b)(1). In addition, it is a deceptive act when the supplier knows or should reasonably know that the subject of the consumer transaction is not of a particular standard or quality. I.C. 24-5-0.5-3(b)(2). Another deceptive act occurs when a supplier references a sponsorship, approval or affiliation that he knows or should know does not exist. I.C. 24-5-0.5-3(b)(7).

Deceptive act cross-reference

I.C. 24-5-0.5-3, entitled “Deceptive Acts,” sets forth numerous acts and statutory violations that constitute deceptive acts under the statute. However, in I.C. 24-5-0.5-10, the statute contains additional conduct that constitutes deceptive acts. Some of the referenced conduct in section 10 relates to certain consumer transactions that require permits or other licenses. I.C. 24-5-0.5-10(a)(1)(A)-(C). Section 10 also discusses deceptive pyramid promotional schemes. I.C. 24-5-0.5-10(a)(3).

Furthermore, section 10 sets forth a “catch-all” regarding solicitations to enter into contracts that are “oppressively one-sided or harsh,” that contain terms that “unduly limit[] [a] person’s remedies,” or that contain a “price [that] is unduly excessive.” I.C. 24-5-0.5-10(b)(1)-(3). However, to violate this portion of the statute, there must be the very nebulous showing that there was “unequal bargaining power that led the person to enter into the contract or agreement unwillingly or without knowledge of the terms ... .” I.C. 24-5-0.5-10(b). A supplier may take advantage of a rebuttable presumption in such circumstances that the consumer had “knowledge of the terms of [the] contract … if the person signs a written contract.” I.C. 24-5-0.5-10(b). The ambiguity of subsection 10(b)(1)-(3) can be very troublesome. In turn, I.C. 24-5-0.5-12 states that making false representations that a supplier has a doctorate or other professional degree in commercial transactions is a deceptive act. I.C. 24-5-0.5-12.

Conditions precedent under the DCSA

Proving a deceptive act is insufficient to give a consumer standing to bring and succeed on certain causes of action. The DCSA provides for two types of actionable deceptive acts. The first is an “uncured” deceptive act. I.C. 24-5-0.5-2(a)(7). The second is an “incurable” deceptive act. I.C. 24-5-0.5-2(a)(8).

“Uncured deceptive act” means a deceptive act where the damaged consumer has given requisite and timely notice to the supplier under I.C. 24-5-0.5-5(a) and, after such notice, there has either been no “offer to cure” by the supplier to the consumer within 30 days after such notice or the deceptive act has not been cured “within a reasonable time after the consumer’s acceptance of the offer to cure.” I.C. 24-5-0.5-2(7). On the other hand, an “incurable deceptive act” is simply a “deceptive act done by a supplier as part of a scheme, artifice, or device within intent to defraud or mislead … .” I.C. 24-5-0.5-2(a)(8).

No intent need be shown with regard to an uncured deceptive act. However, intent is as essential element to proving an incurable deceptive act. Moreover, the notice and cure provisions apply only to an uncured deceptive act in actions brought by individual consumers as opposed to the attorney general. No notice requirements apply to incurable deceptive acts. I.C. 24-5-0.5-2(7), (8); I.C. 24-5-0.5-5(a). What constitutes proper notice is articulated in I.C. 24-5-0.5-5(a). With regard to an uncured deceptive act, not only must a consumer comply with the time limitations set forth by the statute but the “notice shall state fully the nature of the alleged deceptive act and the actual damage suffered therefrom … .” I.C. 24-5-0.5-5(a). In sum, to be an actionable uncured deceptive act, a consumer must give proper and timely notice and the supplier must refuse or fail to offer to cure and actually cure the deceptive act. I.C. 24-5-0.5-2(5)-(8); I.C. 24-5-0.5-5(a).

The definitions of “cure” and “offer to cure” are found in I.C. 24-5-0.5-2(a)(5) and (a)(6), respectively. The terms must be read together; but to rectify the deceptive act, a supplier must make a specific offer, in writing, to, inter alia, adjust or rescind the transaction and also include an offer to pay “a minimum additional amount” of money “as compensation for attorney’s fees, expenses, and other costs that a consumer may incur in relation to the deceptive act.” I.C. 24-5-0.5-2(a)(5). The statute limits the “minimum additional amount” of money necessary to constitute a proper offer to cure to, depending on the circumstances, a minimum of $500 and a maximum of $4,000 per violation. The supplier must then actually cure the deceptive act.

Exemplary application of the DCSA

To illustrate the DCSA’s practical application, we can look to Indiana’s HICA. The HICA requires that a “home improvement supplier” provide a completed “home improvement contract” to a “consumer” before it is signed by the consumer. I.C. 24-5-11-10(a). Under the HICA, the contract must contain certain elements specifically set forth by the HICA. I.C. 24-5-11-10(a). Failure to provide a proper contract constitutes a deceptive act under both the HICA and the DCSA. I.C. 24-5-11-14; I.C. 25-5-0.5-3(b)(24). The DCSA provides the procedures, remedies and penalties associated with committing this deceptive act.

In the example given (and assuming, for simplicity, no attorney general involvement), if the failure to provide the requisite contract was part of a scheme with intent to defraud or mislead, such conduct would be an incurable deceptive act under the DCSA. If there were no such intent, the deceptive act may possibly become an actionable uncured deceptive act if and only if the consumer timely and adequately complies with the notice provisions and statute of limitations set forth in the DCSA. The supplier must then fail to make an offer to cure and actually cure the deceptive act.

Damages under the DCSA

If a consumer has standing, he may bring an action “for the damages actually suffered ... as a result of the deceptive act or [$500], whichever is greater.” I.C. 24-5-0.5-4(a). “Actual damages” means “the difference in value between that which the plaintiff parted with and that which he received.” McCormick Piano & Organ Co. v. Geiger, 412 N.E.2d 842, 853(Ind. App. 1980). A court “may increase damages for a willful deceptive act in an amount not to exceed the greater of…three (3) times the actual damages…or [$1,000].” I.C. 24-5-0.5-4(a)(1)-(2). If the consumer is at least 60 years of age, that is, a “senior consumer,” he may also seek treble damages, if appropriate. I.C. 24-5-0.5-4(i). The court “may [also] award attorney fees” to the prevailing party. I.C. 24-5-0.5-4(a).

In an action brought by the attorney general under I.C. 24-5-0.5-4(c), if the court finds that the supplier “knowingly violated” either section 3 or 10, the court may impose a “civil penalty” of not more than [$5,000] per violation. I.C. 24-5-0.5-4(g). There are other civil penalty provisions available to the attorney general depending on the violation.

Affirmative defenses

The DCSA sets forth certain affirmative defenses available to a supplier. One such affirmative defense requires a showing, by a preponderance of the evidence, that a “bona fide error [occurred] notwithstanding the maintenance of procedures reasonably adopted to avoid the error … .” I.C. 24-5-0.5-3(d). A supplier may also assert that the “alleged deceptive act was one made in good faith … without knowledge of its falsity and in reliance upon the oral or written representations of the manufacturer” or other individual from whom the supplier acquired the product. I.C. 24-5-0.5-3(e). Furthermore, a supplier may assert that the “product has been altered by a person other than the defendant to render the product completely incapable of serving its original purpose.” I.C. 24-5-0.5-3(h). The DCSA contains additional affirmative defenses that relate to other statutory claims and can be found in I.C. 24-5-0.5-3.

Conclusion

An attorney representing businesses, in any capacity, or reviewing claimed contractual violations by consumers, should make it a point to be well-versed in the DCSA. Given its construction and scope, there is a steep learning curve to fully understanding the DCSA. The DCSA seems to be a double-edged sword. On the one hand, it provides numerous traps for an unwary supplier. On the other hand, an uninformed consumer may forever lose significant avenues of redress. Even if one is not an attorney practicing in classic consumer law, the existence of this sleeping giant and the traps and treasures it holds are worthy of study.•

Mr. Massaro is the owner of The Massaro Legal Group LLC in Fishers, Indiana. He is a board member for DTCI and chairs its Business Litigation Section. The opinions expressed in this column are those of the author.
 

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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