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Consumer Protection Statute Gutted by Lame Duck Legislature

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What consumer hasn’t felt as if they’ve been taken advantage of by an unscrupulous actor in a consumer transaction? Who hasn’t noticed an unauthorized charge on a credit card bill? Who doesn’t know someone who has been the victim of a bait and switch on a product purchased online or been charged for services not performed by a vendor? Virtually every consumer in the state of Ohio, whether they know it or not, has been affected by deceptive and unconscionable business practices undertaken by rip-off artists who are out there right now just looking for their next victim to prey upon or scam to participate in.

Until recently, Ohio residents could pursue such deceptive practices under an effective piece of legislation known as the State Consumer Sales Practices Act. This legislation was enacted 30 years ago with the intent to not only compensate victims who had been wronged, but to punish those who chose to deceive consumers. The statute provides for both compensatory and punitive remedies for consumers to both make victims whole and to deter future bad acts and deceptive practices. Unfortunately, a consumer’s ability to go after these bad actors is about to be undone.

On Thursday, December 15, 2006, Sub Bill 117 passed in the House of Representatives and was approved in a late night session in the Senate. The legislation seeks to limit the damages that consumers can recover after being defrauded by unscrupulous actors. The Bill eliminates non-economic damages, including recovery for the humiliation, aggravation and emotional distress caused by the deceptive practice, and allows only for the recovery of “out-of-pocket” losses to the consumer capped at $5000. That means no compensation for the time spent chasing down the wrongdoer to correct the damage that’s been done, not to mention other damages such as the effect the fraud may have on a consumer’s credit. The fact is that in most cases, it will cost the consumer more to retain a lawyer than they will recover if they pursue the wrongdoer. Similarly, no penalty will exist to stop the bad acts of the wrongdoer as the legislation eliminates the punitive remedy available to consumers which, as a matter of law, can triple the damages awarded by a jury where deceptive conduct is proven. In other words, under this new legislation, if a wrongdoer participates in deceptive conduct and gets caught, there is nothing to deter the wrongdoer from paying back what was taken from that victim and moving on to the next victim without penalty or reasonable recourse for the victim.

If this Bill is signed into law by the outgoing governor of Ohio, as appears is the case, Ohio will essentially have placed the welcome mat out for businesses whose ethics leave much to be desired, and Ohioans will be ripe for the picking with no reasonable mean of recourse or recovery under the law.