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How Can You Avoid Being Sued Under The CSPA?

By April 21, 2017May 16th, 2023No Comments

Gavel laying on a blockThis is the third in a series of blog discussions about Ohio’s consumer laws. The blogs are designed to raise awareness of a part of business owner’s potential pitfalls of these laws and how they can be avoided. You do not want to find yourself on the wrong side of a CSPA lawsuit. Catch up on this series on the CSPA with Part One: Ignore Ohio Consumer Law at Your Own Peril and Part Two: Who Must Worry About The CSPA?

How to reduce your risk of being sued

Your best defense to reduce the risk of being sued under the Consumer Sales Practices Act (CSPA) is to follow every business owners’ mantra: “Don’t do anything stupid.” While this mantra prevents most violations, parts of the CSPA are so technical that this advice only goes so far.  The best way to understand how the CSPA impacts your business is to review your contracts, policies, advertisements and warranties and make certain they are in compliance.  For businesses that have industry-specific rules, special attention must be paid to those operational areas.

Generally, if a Supplier follows the below guidelines, it will greatly reduce the risk of violating the CSPA.  These guidelines, developed by the Ohio Attorney General, set out some minimum standards.  The various statutes and rules (as well as case law) of the CSPA requires Sellers (or “Suppliers”) to:

  • Accurately represent the characteristics of a product or service.
  • Honor guarantees and warranties.
  • Make no misrepresentations about the nature of their business, their products or services, the prices of their goods, or the terms of a transaction.
  • Not mislead consumers.
  • Not take advantage of a consumer’s illiteracy, mental disability, physical disability, or inability to understand the terms of a sale.
  • Not sell a product or service knowing the consumer cannot afford or substantially benefit from it.
  • Disclose important exclusions and limitations in advertisements.
  • Not sell used items as new.
  • Not use bait-and-switch tactics to trick consumers into paying higher prices.

Most of these guidelines are common sense practices that all good business owners follow. However, sometimes it is not that simple.  For example, a contractor is hired to put in a new concrete driveway.  As part of that job, the contractor hires a subcontractor to remove the old concrete. If the subcontractor makes a mistake and damages the homeowner’s property, you as the contractor would expect the subcontractor to pay to repair the damages. However, under the CSPA, the homeowner will hold the contractor responsible and if the contactor tells the homeowner to sue the subcontractor, he has just violated the CSPA. The contractor must be responsible for all damages caused by any subcontractor he hires.  There are even some courts that imply failure to notify the consumer of the use of subcontractors is a violation of the CSPA.

This is but one example to show how important it is to know the CSPA and make sure you comply with it. Reading the CSPA law and rules is not enough to protect yourself because Ohio consumer laws also involve court interpretations that businesses are expected to comply with. A simple misunderstanding with a customer or a subcontractor can quickly escalate into an ugly, time consuming and expensive situation.

Continue reading this series on the CSPA

 

Gertsburg Licata is a full-service, strategic growth advisory firm focusing on business transactions and litigation, M&A and executive talent solutions for start-up and middle-market enterprises. It is also the home of CoverMySix®, a unique, anti-litigation audit developed specifically for growing and middle-market companies.

This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.

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