This is the fourth 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, Part Two: Who Must Worry About The CSPA?, and Part Three: How Can You Avoid Being Sued Under The CSPA?
How do you know what violates the CSPA?
This is the biggest question that you must know to make sure your company does not get into trouble. But there is no simple answer. In many areas of the law the axiom “Don’t do anything stupid” will allow you to avoid problems. While this applies to the Consumer Sales Practices Act (CSPA), one must go beyond this simple advice to fully understand the pitfalls of the CSPA.
First, there are three different ways that the state has defined what a CSPA violation is. The first and most straightforward is the Ohio Revised Code. That is the Ohio law passed by the Ohio legislature. This forms the basis of the CSPA. However, under that law, the Ohio attorney general is permitted to draft rules that supplement the CSPA. Those rules have the force and effect of any of the laws passed by the legislature. Finally, courts also create part of the CSPA. When a consumer sues a supplier and wins, that case becomes part of the law of Ohio. That means if a consumer sues a company for what the consumer claims to be an unfair or deceptive act, if the court agrees with the consumer, that act becomes an unfair and/or deceptive act for all other suppliers. The court is then required to send its decision to the Ohio Attorney General. The Attorney General has a catalog of all CSPA cases. Those are stored in what is referred to as the Public Inspection Files (PIF). What makes this so important is that by placing them in the PIF, the law considers all consumers and suppliers as having knowledge that those acts are now considered either unfair or deceptive. Any supplier committing that act is now in violation of the CSPA.
As a result, sometimes it is very difficult to understand what violates the CSPA. In some cases, perfectly innocent activities can be found to be in violation. For instance, one court has found that the use of subcontractors, without advanced written notification to the consumer, is a violation (Teeters Constr v Dort). While there is a strong argument that not disclosing the use of subcontractors is only a violation when the supplier attempts to blame the subcontractor and does not stand behind his own work, that argument may not stand up in court. To be safe, when using a subcontractor, you should disclose that fact. If you don’t, never try to hide behind the subcontractor. Accept the subcontractor’s work as your own and, if necessary, sue your subcontractor for their failure to do the job in a workmanlike manner. But honor all warranties to your customer. To do otherwise would put you in violation of the CSPA.
Because of the numerous ways CSPA violations are created and can arise, you should review your policies and procedures, as well as your contracts and work practices regularly. The same is true for advertising, giveaways, and the like. It is very easy to make a mistake and find yourself in violation of the CSPA.
Continue reading this series on the CSPA
- Part Five: How Does Someone Violate the CSPA?
- Part Six: What Should You Do if Someone Files a CSPA Suit Against Your Business?
- Part Seven: The Importance of a Supplier’s Knowledge Under 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.
