PROPOSED RULEMAKING
OFFICE OF ATTORNEY GENERAL
[ 37 PA. CODE CHS. 301 AND 311 ]
Unfair Market Trade Practices; Automotive Industry Trade Practices
[48 Pa.B. 267]
[Saturday, January 13, 2018]The Office of Attorney General (OAG), Public Protection Division, proposes to amend Chapter 301 (relating to automotive industry trade practices) and add Chapter 311 (relating to unfair market trade practices) to read as set forth in Annex A.
A. Effective Date
This proposed rulemaking will go into effect upon final-form publication in the Pennsylvania Bulletin and will be retroactive to January 1, 2000.
B. Contact Person
For further information on this proposed rulemaking, contact Tracy W. Wertz, Chief Deputy Attorney General, Antitrust Section, or Joseph S. Betsko, Senior Deputy Attorney General, Antitrust Section, Office of Attorney General, Strawberry Square, 14th Floor, Harrisburg, PA 17120, (717) 787-4530. This proposed rulemaking is available on the Office of Attorney General's web site at www.attorneygeneral.gov.
C. Statutory Authority
This rulemaking is proposed under the authority of section 3.1 of the Unfair Trade Practices and Consumer Protection Law (act) (73 P.S. § 201-3.1), regarding the statutory rulemaking authority of the OAG, section 506 of The Administrative Code of 1929 (71 P.S. § 186), regarding general rulemaking authority, and sections 918 and 919 of The Administrative Code of 1929 (71 P.S. §§ 307-2 and 307-3) read in pari materia with the act.
D. Purpose and Background
This proposed rulemaking is designed to improve, enhance and update the OAG's unfair methods of competition and unfair or deceptive acts or practices regulations. The specific purpose of this proposed rulemaking is described in more detail under the summary of proposal.
E. Summary of Proposal
The OAG enforces and administers the act. The OAG has determined that it is necessary for the enforcement and the administration of the act to amend the existing automotive industry trade practices regulations to provide adequate protections to consumers regarding the inspection of motor vehicles and the written disclosure of certain attributes of a motor vehicle's roadworthiness. The OAG has also determined that it is necessary for the enforcement and the administration of the act to add regulations concerning unfair market trade practices and to clarify false advertising.
The OAG has long taken the policy position that unfair market trade practices constitute unfair methods of competition and unfair or deceptive acts or practices in violation of the act in line with Federal jurisprudence interpreting section 5 of the Federal Trade Commission Act (FTCA) (15 U.S.C.A. § 45). During and following a public hearing on Senate Bill 848 from the 2013-14 session before the Senate Judiciary Committee on June 25, 2013, the OAG heard comments from Senate Judiciary Committee members and bill opponents that the proposed legislation would be redundant to the act and that the OAG should use the act to address the unfair market trade practices. After conducting extensive legal research, the OAG agrees with the comments.
Presently, consumers in this Commonwealth have been disadvantaged by the lack of a clear articulation of Commonwealth law that makes it easy to understand that consumers can recover regardless of whether they have dealt directly or indirectly with the defendant or defendants for injury resulting from anticompetitive conduct. For example, the Relafen court significantly discounted Pennsylvania consumer recovery in a settlement. In re Relafen Antitrust Litigation, 225 F.R.D. 14, 23-24 (D. Mass. 2004). The OAG has determined that a new regulation under the act will remedy this unfair vacuum in consumer protection.
Pennsylvania courts have held that section 5 of the FTCA is virtually the same as section 3 of the act (73 P.S. § 201-3) and that Pennsylvania courts may look to decisions under the FTCA for guidance in interpreting the act. Com., by Creamer v. Monumental Properties, Inc., 459 Pa. 450, 462, 329 A.2d 812, 818 (1974); and Pirozzi v. Penske Olds-Cadillac-GMC, Inc., 605 A.2d 373, 376 (Pa. Super. 1992). Pennsylvania courts have interpreted that a violation of Federal or State statutes aligned with the purpose of the FTCA and the act constitutes a violation of the act since the act is ''broad enough to encompass all claims of unfair and deceptive acts or practices in the conduct of any trade or commerce.'' Ash v. Continental Ins. Co., 593 Pa. 523, 530 (2007). Section 5(a)(1) of the FTCA provides that ''[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.'' The OAG determines that it logically follows that a violation of section 5 of the FTCA constitutes a violation of the act because this conclusion incontrovertibly falls within the scope of the General Assembly's basic policy choice in section 3 of the act that ''[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. . .are hereby declared unlawful.''
The United States Supreme Court has held that section 5 of the FTCA protects consumers from unfair competitive practices regardless of the effect on competition unlike the Federal antitrust laws. FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 239 (1972). Rulings under the FTCA have held antitrust violations to constitute an unfair and deceptive practice. FTC v. Indiana Fed'n of Dentists, 476 U.S. 447, 454, 106 S. Ct. 2009, 2016, 90 L. Ed. 2d 445 (1986); FTC v. National Lead Co., 352 U.S. 419, 428-30 (1957); FTC v. Cement Inst., 333 U.S. 683, 688, 68 S. Ct. 793, 797, 92 L. Ed. 1010 (1948); and Ciardi v. F. Hoffman-La Roche, Ltd., 762 N.E.2d 303 (Mass. 2002).
The OAG has taken notice of Lisa Hunt v. Bayer Corp., Feb. Term 2005, No. 1038 (Phila. Com. Pl.), where the court recognized price-fixing to be a violation of the act. The OAG has also taken notice of In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig., 64 F.Supp.3d 665 (E.D. Pa. 2014), where the court held that anticompetitive schemes are redressable under the act. The OAG has also taken notice of Commonwealth v. TAP Pharmaceutical Products, Inc., 885 A.2d 1127 (Pa. Cmwlth. 2005), where the court recognized that purchasers may recover monetarily regardless of whether the defendant or defendants were dealt with directly or indirectly. Further, the OAG has taken notice of Com. ex rel. Zimmerman v. Nickel (Nickel), 26 Pa. D. & C. 3d 115, 120, where the court held that ''an act or practice need not be deceptive in order to be declared 'unfair.''' The court in Nickel looked to FTC v. Sperry and Hutchinson Co., 405 U.S. 233, 244-45 n. 5 (1972), for guidance on what constitutes unfairness.
The OAG is aware of the holding in Commonwealth v. Golden Gate Nat'l Senior Care LLC (Golden Gate), 158 A.3d 203 (Pa. Cmwlth. 2017) where the court did not liberally construe the act and, in so doing, added pleading requirements which the General Assembly did not see fit to include. Specifically, the Golden Gate court emphasized the judicial shorthand of ''false advertising'' and engrafted a requirement of advertising which is not found in section 2(4)(v) of the act (73 P.S. § 201-2(4)(v)). The Golden Gate court imported language from section 43(a)(1)(B) of the Lanham Act (15 U.S.C.A. § 1125(a)(1)(B)), which expressly requires ''commercial advertising or promotion.'' The General Assembly did not expressly require commercial advertising in section 2(4)(v) of the act. The Golden Gate court relied on the Lanham Act, the construction of which is shaped by the fact that only direct competitors, not consumers, have standing to sue. ''Virtually all of the courts that have considered what categories of plaintiffs have standing under § 43(a) have recognized, indeed emphasized, that that section was intended to protect commercial interests.'' Guarino v. Sun Co., Inc., 819 F.Supp. 405, 407 (D.N.J. 1993), aff'd sub nom. See also Serbin v. Ziebart Int'l Corp., Inc., 11 F.3d 1163 (3d Cir. 1993).
The OAG notes Kelly v. Penguin Putnam, Inc., 2000 WL 33711074, at *2 (Pa. Com. Pl. Nov. 29, 2000), which stated '''false advertising' is judicial shorthand for the practice that § 201(2)(4)(v) prohibits: falsely representing the characteristics of goods or services. The resolution of a § 201(2)(4)(v) claim does not depend on any other definition of advertisement.'' The OAG further notes that the Pennsylvania Supreme Court's affirmance of the elements for section 2(4)(v) of the act as set forth in DiLucido v. Terminix Int'l, Inc. (DiLucido), 450 Pa. Super. 393, 401, 676 A.2d 1237, 1240—41 (1996), and Com. v. Hush-Tone Indus., Inc. (Hush-Tone), 4 Pa. Cmwlth. 1, 21 (1971), is presently controlling authority for section 2(4)(v) of the act. DiLucido, 450 Pa. Super. at 1240. Weinberg v. Sun Co., Inc. (Weinberg), 740 A.2d 1152, 1167 (Pa. Super. 1999), aff'd in part, rev'd in part, 565 Pa. 612, 777 A.2d 442 (2001) (Supreme Court reversed only as to its holding that reliance is required in a private action under the act). The courts in DiLucido and Hush-Tone modeled the elements for section 2(4)(v) of the act on FTCA jurisprudence. Weinberg, 740 A.2d at 1168; Hush-Tone, 4 Pa. Cmwlth. at 21-22.
There must be ''some representation.'' FTC v. Patriot Alcohol Testers, Inc., 798 F.Supp. 851, 855 (D. Mass. 1992). ''Most deception involves written or oral misrepresentations, or omissions of material information. Deception may also occur in other forms of conduct associated with a sales transaction. The entire advertisement, transaction or course of dealing will be considered. The issue is whether the act or practice is likely to mislead, rather than whether it causes actual deception.'' In re Cliffdale Associates, Inc., 103 F.T.C. 110, 1984 WL 565319, at *46 (1984). Considering that the Federal Trade Commission standard that is applied to false advertising or any act of representing in the context of section 2(4)(v)—(vii) of the act is consistent with the purpose of protecting the public interest, the OAG determines that this approach is the most appropriate model for the act.
The OAG proposes to codify these rulings and determinations, and to further define what constitutes unfair methods of competition and unfair or deceptive acts or practices under the act which are necessary for the enforcement and administration of the act. Because this proposed rulemaking codifies, in large part, conduct found to be in violation of the so-called catch-all provision of the act and section 5 of the FTCA and because of the compelling nature of the public interest in the remedial quality of the act, this proposed rulemaking, if approved on final-form rulemaking, will apply retroactively to January 1, 2000. This is tempered by the 6-year statute of limitations for private actions under the act. 42 Pa.C.S. § 5527(b) (relating to six year limitation); Gabriel v. O'Hara, 368 Pa. Super. 383, 396, 534 A.2d 488, 495 (1987).
The OAG proposes to define ''rebate,'' ''person in interest'' and ''moneys or property, real or personal'' as used in section 4.1 of the act (73 P.S. § 201-4.1). Based on practical experience, the OAG has observed that the payment of rebates do not negate the harm. Therefore, rebates do not constitute a defense to the award of a permanent injunction, payment of costs and restitution, and a civil penalty. The OAG also seeks to clarify the meaning of ''person in interest'' to reflect that the Commonwealth is not precluded to recover restoration under section 4.1 of the act to resolve confusion regarding the term inherent in Golden Gate. The Pennsylvania Supreme Court considered and issued opinions contemporaneously in Com. v. TAP Pharmaceutical Products (TAP Pharma.), 626 Pa. 1, 94 A.3d 350 (2014), and Meyer v. Cmty. Coll. of Beaver Cty., 625 Pa. 563, 568, 93 A.3d 806, 809 (2014) (Meyer II). Through these two cases, the Pennsylvania Supreme Court considered whether a governmental entity, namely the Commonwealth, could recover under section 4.1 of the act and whether a governmental entity could be liable under the act. The Pennsylvania Supreme Court held in TAP Pharma. that the Commonwealth was likely not harmed by the unfair or deceptive trade practice once rebates were considered and remanded the case back to the Commonwealth Court to determine whether there was any financial harm to be restored after considering rebates. The Pennsylvania Supreme Court's protracted analysis on the rebate issue, to determine if there were any damages to award, establishes that the Pennsylvania Supreme Court necessarily considered the Commonwealth to be a ''person in interest.'' Otherwise, the remand would have been for nothing. As TAP Pharma. and Meyer II are two sides of the same coin, it is clear that the Pennsylvania Supreme Court passed at the opportunity to exclude governmental entities from restoration under section 4.1 of the act which is conclusively implicit in its TAP Pharma. holding. This proposed rulemaking clarifies the term to include the Commonwealth.
The OAG also proposes to define ''fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding,'' ''deceptive conduct'' and ''unfair conduct'' in line with the OAG's original arguments to the Pennsylvania Supreme Court that the catchall ''was designed to cover generally all unfair and deceptive acts or practices in the conduct of trade or commerce'' to which the Pennsylvania Supreme Court unambiguously stated ''[w]e agree.'' Com., by Creamer v. Monumental Properties, Inc., 459 Pa. 450, 478, 329 A.2d 812, 826 (1974). Moreover, the definitions are in line with the original legislative intent from 1968 ''that this package gives Pennsylvania the strongest consumer-protection laws in the States,'' Legislative Journal: House of Representatives, 1968 Sess. vol. 1, no. 40, at 1231 (July 8, 1968). The Pennsylvania Supreme Court has consistently mandated that the act is to be liberally construed to effect its object of preventing unfair or deceptive practices. Com., by Creamer v. Monumental Properties, Inc., 459 Pa. 450, 460 (Pa. 1974). Because the act is a statute that must be liberally construed to effectuate its objective to prevent unfair or deceptive business practices, the definition of ''unfair methods of competition'' and ''unfair or deceptive acts or practices'' as provided in section 2(4) of the act should not be considered exhaustive. See Blizzard v. Floyd, 149 Pa. Cmwlth. 503, 505-06, 613 A.2d 619, 621 (Pa. Commw. Ct. 1992). In other words, for a statute that must be liberally construed, a definition of a term and any enumeration therein should not be considered exhaustive. See Blizzard v. Floyd, 149 Pa. Cmwlth. 503, 505-06, 613 A.2d 619, 621 (Pa. Cmwlth. Ct. 1992).
The OAG further takes notice of the 1976 amendments to the act which deleted the very restrictive civil investigative demand authority and retained the definition of ''documentary material'' while granting the OAG rulemaking authority. A principle of statutory construction is to ascertain legislative intent and to give effect to all provisions of a statute. 1 Pa.C.S. § 1921 (relating to legislative intent controls); Com., Dept. of Environmental Resources v. Butler County Mushroom Farm, 499 Pa. 509, 513, 454 A.2d 1, 3 (1982); Hospital Association of Pennsylvania v. MacLeod, 487 Pa. 516, 524 (1980). Sections 918 and 919 of The Administrative Code of 1929, as supplemented by section 204(d) of the Commonwealth Attorneys Act (CAA) (71 P.S. § 732-204(d)), authorize the OAG to issue subpoenas to investigate commercial and trade practices and to require the production of documentary material related to those practices. By reading The Administrative Code of 1929 and the act as one since both relate to protecting consumers from detrimental practices in the conduct of trade and commerce, this proposed rulemaking would give effect to the retained definition which is used nowhere else in the act. 1 Pa.C.S. § 1932 (relating to statutes in pari materia); Com., Dept. of Environmental Resources v. Butler County Mushroom Farm, 499 Pa. 509, 517-20 (1982); and Girard School District v. Pittenger, 481 Pa. 91, 100 (1978).
The OAG further takes notice of In re Lorazepam & Clorazepate Antitrust Litigation, 205 F.R.D. 369, 386 (D.D.C. 2002), for the proposition that the OAG can release consumer claims under the act sounding in antitrust or unfair methods of competition under section 204(c) of the CAA. The Federal court found that the CAA granted the OAG the functional equivalent of parens patriae powers to permit the OAG to represent citizens and to settle and release their claims for violations of State and Federal antitrust law.
The heading of Part V is proposed to be amended to reflect that the OAG administers the consumer affairs program that was once administered by the formerly autonomous Pennsylvania Bureau of Consumer Protection. Consequently, the powers and duties in section 918 of The Administrative Code of 1929 are the powers and duties of the Attorney General under section 204(d) of the CAA. It logically follows that the Attorney General is authorized to investigate practices occurring in trade or commerce under section 918(1) of The Administrative Code of 1929 and to issue subpoenas under section 919(a) of The Administrative Code of 1929, once The Administrative Code of 1929 and the CAA are read together.
''The operative provision of the Unfair Trade Practices and Consumer Protection Law provides: 'Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. . .are hereby declared unlawful.''' Gabriel v. O'Hara, 368 Pa. Super. 383, 391, 534 A.2d 488, 492 (1987). The operative provision of the act provides the General Assembly's basic policy choice which guides this proposed rulemaking. The OAG proposes to amend Chapter 301 and add Chapter 311 to read as set forth in Annex A.
Proposed § 301.2(6) (relating to advertising and sales presentation requirements) requires a motor vehicle dealer to inspect a motor vehicle not more than 30 days prior to the sale of the motor vehicle.
Proposed § 301.4(10) (relating to general provisions—motor vehicle dealer) clarifies that compliance with § 301.2(5) is still required notwithstanding any use of ''AS IS'' under § 301.4(9).
Proposed § 311.3(a) (relating to general provisions—unfair market trade practices) prohibits all contracts, combinations and conspiracies intended to impose resale price maintenance restraints.
Proposed § 311.3(b) prohibits all contracts, combinations and conspiracies between competitors for the purpose of price-fixing.
Proposed § 311.3(c) prohibits all contracts, combinations and conspiracies between competitors to allocate markets, reduce output or allocate customers.
Proposed § 311.3(d) prohibits all contracts, combinations and conspiracies intended to tie the sale of a commodity or service upon the purchase of another commodity or service.
Proposed § 311.3(e) prohibits all contracts, combinations and conspiracies for the purpose of reciprocal dealings.
Proposed § 311.3(f) prohibits all contracts, combinations and conspiracies to effectuate a group boycott.
Proposed § 311.3(g) prohibits actual monopolization.
Proposed § 311.3(h) prohibits attempted monopolization.
Proposed § 311.3(i) prohibits joint monopolization.
Proposed § 311.3(j) prohibits incipient conspiracies to monopolize.
Proposed § 311.3(k) codifies the holdings in Ash v. Continental Ins. Co., 593 Pa. 523, 530 (2007), and Com., by Creamer v. Monumental Properties, Inc., 459 Pa. 450, 478 (1974), that the general prohibition provision is intended to cover generally all unfair and deceptive acts or practices in the conduct of trade or commerce.
Proposed § 311.4 (relating to misrepresentation) realigns the construction of representing and advertising in line with FTCA jurisprudence and the plain language of the act.
Proposed § 311.5 (relating to catchall) codifies the holdings in Ash v. Continental Ins. Co., 593 Pa. 523, 530 (2007), and Com., by Creamer v. Monumental Properties, Inc., 459 Pa. 450, 478 (1974), that the catchall is to cover generally all unfair and deceptive acts or practices in the conduct of trade or commerce.
Proposed § 311.6 (relating to nonexhaustivity) codifies the holdings in Ash v. Continental Ins. Co., 593 Pa. 523, 530 (2007), and Com., by Creamer v. Monumental Properties, Inc., 459 Pa. 450, 478 (1974), that the general prohibition provision is intended to cover generally all unfair and deceptive acts or practices in the conduct of trade or commerce and that the per se violations, however enumerated, do not limit or otherwise circumscribe the basic policy choice in the general prohibition provision.
Proposed § 311.7 (relating to trade and commerce) codifies the holding in Com. v. Percudani, 844 A.2d 35, 48 (Pa. Cmwlth. 2004), as amended (Apr. 7, 2004), opinion amended on reconsideration, 851 A.2d 987 (Pa. Cmwlth. 2004), that a buyer-seller relationship is not relevant in the context of the definitions of ''trade'' and ''commerce.''
Proposed § 311.8 (relating to enforcement) implements the inherent investigative function of enforcement to gather documentary material, as defined by the act, and made necessary to satisfy the ''reason to believe'' standing requirement under section 4 of the act (73 P.S. § 201-4).
Proposed § 311.9 (relating to payment of costs and restitution) reflects the economic reality that the payment of rebates do not reduce the amount to be restored to a person in interest under section 4.1 of the act.
Proposed § 311.10 (relating to direct or indirect recovery) is designed to be in accord with and based on the definitions of ''trade'' and ''commerce'' under the act and codify the holding of TAP Pharma. and Valley Forge Towers South Condominium v. Ron-Ike Foam Insulators, Inc., 393 Pa. Super. 339, 574 A.2d 641, 645 (Pa. Super. 1990), affirmed, 605 A.2d 798 (Pa. 1992).
Proposed § 311.11 (relating to civil penalty) sets the amount of the civil penalty for a violation of the act within the statutory limit and is to be assessed for each violation in accord with 1 Pa.C.S. § 1930 (relating to penalties for each offense).
Proposed § 311.12 (relating to private action) limits private actions to actual harm.
Proposed § 311.13 (relating to interpretation) interprets section 204(c) of the CAA as providing the functional equivalent of parens patriae authority to settle on behalf of consumers for claims brought under the proposed regulation and to interpret the powers and duties in The Administrative Code of 1929 as supplemented by the CAA.
Proposed § 311.14 (relating to retroactivity) applies Chapter 311 retroactively to January 1, 2000. Consumer claims are subject to a 6-year statute of limitations under 42 Pa.C.S. § 5527(b).
F. Paperwork
This proposed rulemaking will not increase paperwork and will not create new paperwork requirements.
G. Benefits, Costs and Compliance
Through this proposed rulemaking, consumers will be further protected from unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce by unscrupulous businesses. The clear articulation of the proposed unfair trade practices regulations will make the regulations easier to understand by the public and will facilitate compliance.
This proposed rulemaking will not have adverse fiscal impact on the Commonwealth or its political subdivisions. This proposed rulemaking will not impose new costs on the private sector or the general public.
H. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P.S. § 745.5(a)), on December 27, 2017, the OAG submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House and Senate Judiciary Committees. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria in section 5.2 of the Regulatory Review Act (71 P.S. § 745.5b) which have not been met. The Regulatory Review Act specifies detailed procedures for review prior to final publication of the rulemaking by the OAG, the General Assembly and the Governor.
I. Public Comments
Interested persons are invited to submit written comments, objections or suggestions about this proposed rulemaking to the Antitrust Section, Office of Attorney General, Strawberry Square, 14th Floor, Harrisburg, PA 17120 within 30 days after publication of this proposed rulemaking in the Pennsylvania Bulletin. Comments submitted by facsimile will not be accepted.
Comments also may be submitted by e-mail to antitrust@attorneygeneral.gov. If an acknowledgement of electronic comments is not received by the sender within 2 working days, the comments should be retransmitted to ensure receipt. Electronic comments submitted in any other manner will not be accepted.
J. Public Hearing
The OAG will hold a public hearing for the purpose of accepting comments on this proposed rulemaking at 10 a.m. on February 12, 2018, in the Large Conference Room, 14th Floor, Strawberry Square, Harrisburg, PA 17120.
Individuals wishing to present testimony at the hearing shall, at least 1 week in advance of the hearing, notify Lisa Long, Office of Attorney General, 14th Floor, Strawberry Square, Harrisburg, PA 17120, (717) 787-4530. Oral testimony will be limited to 10 minutes for each witness. Witnesses shall submit three written copies of statements at the hearing. Each organization shall designate one witness to present testimony on its behalf.
Persons with a disability who wish to attend the hearing and require an auxiliary aid, service or other accommodation to participate should contact Lisa Long at (717) 787-4530 to discuss how their needs may be accommodated.
JOSH SHAPIRO,
Attorney GeneralFiscal Note: 59-9. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 37. LAW
PART V. [BUREAU OF CONSUMER PROTECTION] OFFICE OF ATTORNEY GENERAL
CHAPTER 301. AUTOMOTIVE INDUSTRY TRADE PRACTICES§ 301.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Advertisement—An oral, written or graphic statement which offers for sale a particular motor vehicle or motor vehicle goods and services or which indicates the availability of a motor vehicle or motor vehicle goods and services, including a statement or representations made in a newspaper, periodical, pamphlet, circular, other publication or on radio or television; contained in a notice, handbill, sign, billboard, poster, bill, catalog or letter; placed on a web site, in a mobile application, on a social media outlet or on any other electronic platform; or printed on or contained in a tag or label which is attached to merchandise.
* * * * * § 301.2. Advertising and sales presentation requirements.
With respect to an advertisement or sales presentation offering or making available for sale a new or used motor vehicle or maintenance service or repair on a new or used motor vehicle, the following will be considered unfair methods of competition and unfair or deceptive acts or practices:
* * * * * (5) The representation in an advertisement or sales presentation that a motor vehicle or motor vehicle goods or services are of a particular style, model, standard, quality or grade if they are of another or if the representation conflicts with a written notice or disclosure required under this chapter. For the purposes of this chapter, a motor vehicle which is offered for sale is represented to be roadworthy, and the advertiser or seller shall disclose in writing prior to sale the following conditions if the advertiser or seller knows or should know that the conditions exist in the motor vehicle:
(i) Frame bent, cracked or twisted.
(ii) Engine block or head cracked.
(iii) Vehicle unable to pass State inspection.
(iv) Transmission damaged, defective or so deteriorated as to require replacement.
(v) Vehicle flood damaged.
(vi) Differential damaged, defective or so deteriorated as to require replacement.
(6) A motor vehicle dealer or advertiser may not offer a motor vehicle for sale unless a certified inspection mechanic designated by the motor vehicle dealer has inspected the motor vehicle in accordance with 67 Pa. Code Chapter 175 (relating to vehicle equipment and inspection). The inspection may not occur more than 30 days prior to the sale of the motor vehicle by the motor vehicle dealer.
[(6)] (7) The making of a representation or statement of a fact in an advertisement or sales presentation if the advertiser or salesperson knows or should know that the representation or statement is false and misleading or if the advertiser or salesperson does not have sufficient information upon which a reasonable belief in the truth of the representation could be based.
[(7)] (8) The advertising by a motor vehicle dealer or repair shop of a motor vehicle for sale or of a motor vehicle repair or maintenance service in which the advertisement does not disclose the business name and address of the advertiser or the word ''dealer.''
[(8)] (9) The advertising by a motor vehicle dealer or repair shop of the price or specific dollar amount of a motor vehicle or motor vehicle repair or maintenance service unless the price includes charges of any type which are necessary or usual prior to delivery of the vehicle or service to a purchaser, including but not limited to charges for freight, handling and vehicle preparation but excluding taxes and registration and licensing costs in the case of a new or used motor vehicle and including all parts and labor in the case of motor vehicle service. If a manufacturer advertises the price of a new motor vehicle and the name of a specific motor vehicle dealer is mentioned in the advertisement, the advertised price shall include charges for freight, handling and dealer preparation which charges are necessary or usual prior to delivery of the vehicle to a purchaser by the named motor vehicle dealer.
[(9)] (10) The advertising by a motor vehicle dealer of a motor vehicle for sale at a specified price if the price does not include equipment with which the models of motor vehicles are minimally equipped by the manufacturer unless the advertisement clearly and conspicuously discloses that the equipment is not included in the advertised price.
[(10)] (11) The use, by a motor vehicle dealer or manufacturer in an advertisement for the sale of motor vehicles, of such terms as ''standard factory equipment'' or ''fully equipped'' or words of similar meaning; except that an advertiser is not prohibited from identifying certain specified equipment as standard factory equipment if such is in fact true.
[(11)] (12) The advertising by a motor vehicle dealer or manufacturer of a motor vehicle for sale in which the year, make, model and series, if the advertised motor vehicle has a designated model or series, are not clearly disclosed.
[(12)] (13) The advertising by a motor vehicle manufacturer, dealer or repair shop in which the advertisement states directly or by implication that the price of the motor vehicle or motor vehicle maintenance or repairs advertised is a reduction from the usual price, including but not limited to those advertisements which contain either a specific dollar amount of reduction or a percentage of reduction from usual selling price, unless the price from which a reduction is indicated is the usual price at which the advertised goods or services, or both, have been sold or offered for sale. For the purposes of this paragraph, the terms ''sale,'' ''discount,'' ''price cut,'' ''special,'' ''savings,'' and other similar words or phrases shall be deemed to indicate a price reduction advertisement.
[(13)] (14) The advertising by a motor vehicle manufacturer, dealer or repair shop of a price reduction in the sale of a motor vehicle or motor vehicle maintenance or repair services unless the advertised sale price constitutes a bona fide substantial reduction from the usual selling price or the advertisement discloses the actual dollar amount of reduction or percentage of reduction.
[(14)] (15) The advertising by a motor vehicle manufacturer, dealer or repair shop of a price reduction in the cost of motor vehicles or motor vehicle maintenance or repair services for which the manufacturer, dealer or shop in whose name the advertisement is placed does not maintain records necessary to establish the usual selling price of the motor vehicles, goods or services upon which the price reduction is advertised. The records shall be maintained for a period of 60 days following the termination of the offer and shall be made available for inspection by the Bureau upon demand during business hours. The failure of a manufacturer, dealer or repair shop to substantiate the usual selling price through documentation shall constitute a presumption that the price reduction advertisement was not predicated upon a reduction from the usual selling price and that the claimed reduction was neither substantial nor bona fide as required in paragraph [(13)] (14).
[(15)] (16) The use, by a motor vehicle dealer in an advertisement for the sale of motor vehicles of such terms as ''at wholesale'' or other similar phrases.
[(16)] (17) The advertising by a motor vehicle dealer or repair shop of the immediate availability of a new motor vehicle or motor vehicle goods and services with the intent not to supply reasonably expectable public demand unless the advertisement discloses a specific limitation of quantity.
[(17)] (18) The advertising by a motor vehicle dealer of a specific motor vehicle offered for sale where no advertised vehicle is in the stock of the advertiser on the date of placing the advertisement unless the advertisement states ''Not in Stock'' or ''Order Yours Now'' or other phrases of similar import which will clearly indicate that the vehicles are not available for immediate delivery and the period of time in which delivery will be made.
[(18)] (19) The advertising by a motor vehicle manufacturer, dealer or repair shop of a sale or promotion in connection with the sale of a motor vehicle or motor vehicle maintenance or repair services unless the advertisement clearly and conspicuously discloses the expiration date, if any, and other conditions of the sale or promotion, including but not limited to whether the supply of vehicles or other sale goods is limited and, if so, in what manner.
[(19)] (20) The advertising or presenting for sale by a motor vehicle dealer of a motor vehicle previously used as an ''executive'' or ''demonstrator'', or with any prior usage which is required to be noted on a Pennsylvania Certificate of Title or which appears on the title of a state through which the dealer has acquired ownership unless the advertiser or salesperson clearly and conspicuously discloses the prior usage.
[(20)] (21) The advertising by a motor vehicle dealer of a motor vehicle for sale at a price or price comparison which represents less than the total cash price to be paid by a retail purchaser unless the advertisement clearly and conspicuously discloses that the price is offered with reference to a trade-in or other method of price reduction and discloses the amount of such allowance. A set-off, discount, trade-in allowance, or other price reduction shall be shown as a specific dollar reduction from the advertised price required in this paragraph and shall be incorporated with the advertised price.
[(21)] (22) The advertising by a motor vehicle dealer of the price which will be paid by the dealer for trade-in vehicles unless the price of the motor vehicles offered for sale by the dealer to the owner of a trade-in vehicle is within the range of prices at which the dealer usually sells the vehicles and is not increased because of the amount offered for the trade-in vehicle.
[(22)] (23) The advertising by a motor vehicle dealer of a specific price to be paid by the dealer for trade-in vehicles unless either the advertised price will be paid for trade-in vehicles, regardless of their condition or age or unless the advertisement clearly and conspicuously discloses conditions which trade-in vehicles shall meet before the price is paid.
[(23)] (24) The advertising by a motor vehicle dealer that a range of prices, such as, ''up to $700'' or ''as much as $700,'' will be paid by the dealer for trade-in vehicles unless the advertisement clearly and conspicuously discloses the criteria which the dealer uses to determine the amount to be paid for a particular vehicle.
[(24)] (25) The advertising or presenting for sale by a motor vehicle manufacturer, dealer or repair shop in which a warranty or guaranty is referred to or offered unless the manufacturer, dealer or repair shop complies with all requirements of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (15 U.S.C.A. §§ 2301—2312) and 16 CFR Parts 700—703 (relating to rules, regulations, statements and interpretations under the Magnuson-Moss Warranty Act).
[(25)] (26) The use in an advertisement or sales presentation by a motor vehicle manufacturer, dealer or repair shop of the term ''satisfaction guaranteed or your money back,'' ''free trial period,'' or other similar phrases when the advertiser or salesperson does not intend to promptly make a full refund or fails to make full refund within a reasonable period of time not to exceed 5 days. A reasonable conditions or limitations on such offer must be clearly and conspicuously disclosed at the time of making the offer.
[(26)] (27) The advertising by a motor vehicle dealer or repair shop that it will perform a ''tune-up'' on a motor vehicle unless the specific work to be performed is set forth and, if a price is advertised, unless the advertisement clearly and conspicuously discloses whether the advertised price includes parts or labor, or both.
§ 301.4. General provisions—motor vehicle dealer.
(a) With regard to a motor vehicle dealer, the following will be considered unfair methods of competition and unfair or deceptive acts or practices:
* * * * * (9) Where no express warranty is given, attempting to exclude the implied warranties of merchantability and fitness for a particular purpose in the sale of a motor vehicle purchased primarily for personal, family or household purposes unless the following notice in at least 20-point bold type is prominently affixed to a window in the motor vehicle so as to be easily read from the outside and is brought to the attention of the prospective purchaser by the seller:
This vehicle is sold without any warranty. The purchaser will bear the entire expense of repairing or correcting any defects that presently exist and/or may occur in the motor vehicle unless the salesperson promises in writing to correct such defect or promises in writing that certain defects do not exist.
This paragraph prohibits the use of the term ''AS IS'' unless the sales contract, receipt, agreement or memorandum contains the following information in a clear, concise and conspicuous manner on the face of the document; the notice shall be in addition to the window statement required by this paragraph and may not contradict an oral or written statement, claim or representation made directly or by implication with regard to the quality, performance, reliability or lack of mechanical defects of a motor vehicle which is offered for sale:
AS IS
THIS MOTOR VEHICLE IS SOLD AS IS WITHOUT ANY WARRANTY EITHER EXPRESSED OR IMPLIED. THE PURCHASER WILL BEAR THE ENTIRE EXPENSE OF REPAIRING OR CORRECTING ANY DEFECTS THAT PRESENTLY EXIST OR THAT MAY OCCUR IN THE VEHICLE. (10) When a motor vehicle is not roadworthy at the time the motor vehicle is offered for sale, using the term ''AS IS'' as set forth in this section does not satisfy the written disclosure requirement in § 301.2(5) (relating to advertising and sales presentation requirements).
[(10)] (11) Failing to forward to the proper Commonwealth agency amounts and forms tendered by a purchaser, such as sales tax and transfer and registration fees, within the time prescribed by law.
(b) If the sales presentation and agreement of sale has been effected in a language other than English, the written information, notice and disclosures required by subsection (a) shall be given in the principal language in which the sale was transacted as well as English.
(Editor's Note: The following chapter is proposed to be added and printed in regular type to enhance readability.)
CHAPTER 311. UNFAIR MARKET TRADE PRACTICES Sec.
311.1. Scope. 311.2. Definitions. 311.3. General provisions—unfair market trade practices. 311.4. Misrepresentation. 311.5. Catchall. 311.6. Nonexhaustivity. 311.7. Trade and commerce. 311.8. Enforcement. 311.9. Payment of costs and restitution. 311.10. Direct or indirect recovery. 311.11. Civil penalty. 311.12. Private action. 311.13. Interpretation. 311.14. Retroactivity. 311.15. Waiver of rights. § 311.1. Scope.
This chapter establishes what are determined to be unfair methods of competition and unfair or deceptive acts or practices by a person engaged in trade or commerce, but may not be interpreted to limit the power of the Attorney General to determine that another practice is unlawful under the act.
§ 311.2. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Act—Unfair Trade Practices and Consumer Protection Law (73 P.S. §§ 201-1—201-9.3).
Commodity—Real or personal property, or any other thing of value that is bought, leased or sold.
Communication—Every manner or means of disclosure, transfer or exchange, and every disclosure, transfer or exchange of ideas or information, whether orally, by document or electronically, or whether face to face, by telephone, mail, personal delivery, electronic transmission or otherwise.
Deceptive conduct—A method, act or practice including that which has the capacity or tendency to deceive.
Designee—An authorized deputy attorney general of the Office of Attorney General.
Documentary material—The original or a copy of designated documents, including writings, drawings, graphs, charts, photographs, electronically-created data and other compilations of data, in addition to the term as defined in section 2 of the act (73 P.S. § 201-2).
Market structure—The interrelationship of sellers and buyers at all levels of distribution of a commodity or service including manufacturers, suppliers, distributors, wholesalers and retailers.
Marketing—Process or technique of promoting, selling and distributing a commodity or service.
Person—The term as defined in section 2 of the act.
Puffery—Boastful claim which is:
(i) Transmitted or otherwise published over television, radio or Internet as a paid advertisement intended for mass distribution.
(ii) Expressly conveyed as not intended to be information material to a transaction decision.
(iii) Understood by the target audience as not intended to be information material to a transaction decision.
(iv) Characterized by broad, vague and commendatory language in the form of an opinion regarding a commodity or service as distinguished from claims asserting levels of service or measurable attributes of commodities.
Rebate—A partial refund of the cost of a commodity or service to incentivize the sale of that commodity or service.
Service—
(i) An activity, not covered by the definition of ''commodity,'' which is performed in whole or in part for the purpose of financial gain.
(ii) The term does not include labor performed by natural persons as employees of others.
Trade and commerce—The term as defined in section 2 of the act.
Transaction—The exchange or transfer of a commodity or service.
Unfair conduct—A method, act or practice, without necessarily having been previously considered unlawful, which violates public policy as established by any statute, common law, or otherwise within at least the penumbra of any common law, statutory, or other established concept of unfairness; or which causes substantial injury to a victim.
§ 311.3. General provisions—unfair market trade practices.
With respect to a person engaged in trade or commerce, all of the following are considered unfair methods of competition and unfair or deceptive acts or practices:
(1) A contract, combination or conspiracy between two or more persons at different levels of market structure to fix minimum prices for a commodity or service at one or more levels of market structure.
(2) A contract, combination or conspiracy between two or more persons at the same level of market structure to fix or otherwise stabilize prices for a commodity or service.
(3) A contract, combination or conspiracy between two or more persons at the same level of market structure to allocate marketing territories, to reduce output of commodities and services, or to allocate customers to whom commodities and services are, has been or will be marketed.
(4) A contract, combination or conspiracy between two or more persons to condition or to have the effect of conditioning the sale of one commodity or service upon the purchase of another commodity or service.
(5) A contract, combination or conspiracy between two or more persons when the sale of a commodity or service is conditioned upon the seller's purchase of commodities or services produced or performed by the buyer.
(6) A contract, combination or conspiracy between two or more persons at the same level of market structure to persuade or to coerce suppliers or customers to refuse to deal with another person.
(7) Actual monopolization, in which a person acquires or retains actual monopoly power through competitively unreasonable practices.
(8) Attempted monopolization, in which a person not yet in possession of actual monopoly power, purposefully engages in competitively unreasonable practices that create a dangerous probability of monopoly power being achieved.
(9) Joint monopolization, in which two or more persons conspire to jointly retain or acquire monopoly power, when actual monopoly power is achieved through competitively unreasonable practices.
(10) Incipient conspiracies to monopolize, in which two or more persons not yet in possession of monopoly power, conspire to seize monopoly control of a market but where monopoly power has not yet actually been achieved.
(11) Any other unfair or deceptive conduct.
§ 311.4. Misrepresentation.
Under section 2(4) of the act (73 P.S. § 201-2(4)):
(1) ''Representing'' includes any communication which conveys an impression of a purported fact, excluding puffery, whether expressed, implied, omitted or otherwise concealed, which actually deceives or has a capacity or tendency to deceive a substantial segment of its audience, and which is likely to make a difference in a transaction decision.
(2) ''Advertising'' includes any marketing communication which conveys an impression of a purported fact, excluding puffery, whether expressed, implied, omitted or otherwise concealed, which actually deceives or has a capacity or tendency to deceive a substantial segment of its audience, and which is likely to make a difference in a transaction decision.
§ 311.5. Catchall.
Under section 2(4) of the act (73 P.S. § 201-2(4)), ''fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding'' includes unfair or deceptive conduct.
§ 311.6. Nonexhaustivity.
Under section 2(4) of the act (73 P.S. § 201-2(4)), ''unfair methods of competition and unfair or deceptive acts or practices'' and any enumeration therein may not be construed to be exhaustive.
§ 311.7. Trade and commerce.
Under section 3 of the act (73 P.S. § 201-3):
(1) The role of a person as a buyer, seller or third party is not dispositive as to whether a transaction itself constitutes trade and commerce.
(2) ''Trade'' and ''commerce'' include, without exception, all classes of transactions involving any commodity or service.
§ 311.8. Enforcement.
Whenever the Attorney General requires documentary material to determine whether there is reason to believe that a person is using or about to use any method, act or practice declared unlawful under the act and determines it would be in the public interest, the Attorney General may authorize a designee to require the attendance and testimony of witnesses and the production of documentary material. For this purpose under section 919 of The Administrative Code of 1929 (71 P.S. § 307-3), a designee may:
(1) Issue subpoenas, examine witnesses and receive evidence necessary for all actions within the authority of the Attorney General under the act.
(2) Use the documentary material or copies thereof as the designee determines necessary in the enforcement of the act,
(i) Sharing the documentary material with any State or Federal agency, or with any person or entity that may be assisting in the investigation or prosecution of the subject matter of the subpoena.
(ii) Presenting the documentary material before any court.
(3) Invoke the aid of the Commonwealth Court or a court of record of this Commonwealth, in case of disobedience of a subpoena or the contumacy of a witness appearing before the Attorney General or a designee, to require the person subpoenaed to obey the subpoena or to give evidence or to produce documentary material relative to the matter in question.
§ 311.9. Payment of costs and restitution.
(a) If the court finds that the defendant or defendants are in violation of section 3 of the act (73 P.S. § 201-3), the payment of a rebate by the defendant or defendants to a person in interest does not constitute a defense to the imposition of a permanent injunction or to the restoration of moneys or property, real or personal, to the person of interest under section 4.1 of the act (73 P.S. § 201-4.1).
(b) Under section 4.1 of the act:
(1) ''Person in interest'' includes a person, the Commonwealth, a Commonwealth agency, municipal authority or political subdivision.
(2) ''Moneys or property, real or personal'' includes something of value including restitution, disgorgement, attorneys' fees, expert fees, investigation and litigation costs, and court costs.
§ 311.10. Direct or indirect recovery.
(a) If the court orders payment of restitution and costs under section 4.1 of the act (73 P.S. § 201-4.1) or damages under section 9.2 of the act (73 P.S. § 201-9.2), the defendant or defendants shall restore to any person in interest any moneys or property, real or personal, which may have been acquired by means of any violation of the act, regardless of whether the person in interest dealt directly or indirectly with the defendant or defendants.
(b) Under section 9.2 of the act:
(1) ''Ascertainable loss'' means any loss which is quantifiable but not speculative.
(2) ''As a result of'' means cause-in-fact or but-for theory of causation, excluding any requirement under any reliance theory under common law fraud.
§ 311.11. Civil penalty.
(a) If the court finds that a person is willfully using or has willfully used a method, act or practice declared unlawful by section 3 of the act (73 P.S. § 201-3):
(1) The person will be assessed no less than $1,000 for each violation.
(2) When the victim of the willful use of the method, act or practice is 60 years of age or older, the person will be assessed no less than $3,000 for each violation.
(b) The Attorney General or the appropriate District Attorney, acting in the name of the Commonwealth of Pennsylvania, is vested with discretion under section 8(a) of the act (73 P.S. § 201-8(a)) to exercise the right to recover a civil penalty.
(c) A payment of a rebate to a victim of the willful use of a method, act or practice declared unlawful by section 3 of the act does not constitute a defense to an award of a civil penalty.
(d) An award of civil penalty shall be in addition to other relief which may be granted under sections 4 and 4.1 of the act (73 P.S. §§ 201-4 and 204-4.1).
§ 311.12. Private action.
A private plaintiff proceeding under section 9.2 of the act (73 P.S. § 201-9.2) shall prove actual harm, excluding any incipient, attempted or threatened harm.
§ 311.13. Interpretation.
(a) The act shall be liberally construed.
(b) The independent clause in the first sentence of section 3 of the act (73 P.S. § 201-3) shall be construed to be the general prohibition provision which covers all claims of unfair methods of competition and unfair or deceptive acts or practices, except as provided in the second sentence of section 3 of the act, and shall be in addition to and not circumscribed by the per se provisions in subsection (c).
(c) The definitions and regulations cited in the participle phrase in the middle of the independent clause of the first sentence of section 3 of the act shall be construed to be per se violations of the general prohibition provision in subsection (b).
(d) The Office of Attorney General may settle and release claims brought under § 311.3 (relating to general provisions—unfair market trade practices) under section 204(c) of the Commonwealth Attorneys Act (71 P.S. § 732-204(c)) on behalf of consumers.
(e) The powers and duties in section 918 of The Administrative Code of 1929 (71 P.S. § 307-2) are the powers and duties of the Attorney General under section 204(d) of the Commonwealth Attorneys Act.
(f) The Attorney General may delegate in whole or in part the powers and duties in section 918 of The Administrative Code of 1929 to any deputy including the director of the Bureau of Consumer Protection under section 201(c) of the Commonwealth Attorneys Act (71 P.S. § 732-201(c)).
(g) The Attorney General is authorized to enforce and to bring civil actions or other proceedings, under statute or common law, including the act, State antitrust law, Federal antitrust laws, the Steel Products Procurement Act (73 P.S. §§ 1881—1887) and the Institutions of Purely Public Charity Act (10 P.S. §§ 371—385), which are among other acts as may be incidental to the exercise of the powers and functions of the Attorney General under section 918(3) of The Administrative Code of 1929.
(h) The Attorney General is authorized to investigate practices occurring in trade or commerce under section 918(1) of The Administrative Code of 1929 and to issue subpoenas under section 919(a) of The Administrative Code of 1929 (71 P.S. § 307-3(a)).
(i) The Attorney General may share documentary material with any State or Federal agency, or with any person or entity that may be assisting in the investigation or prosecution of the subject matter of the subpoena and may present documentary material before any court as the Attorney General or a designee of the Attorney General determines necessary for the enforcement of laws under which the Attorney General has standing under sections 918(3) and 919(b) of The Administrative Code of 1929.
§ 311.14. Retroactivity.
This chapter takes effect on ______ (Editor's Note: The blank refers to the effective date of adoption of this proposed rulemaking.) and is retroactive to January 1, 2000.
§ 311.15. Waiver of rights.
A waiver of this chapter by a person prior to or at the time of a commission of a violation of § 311.3 (relating to general provisions—unfair market trade practices) or any other section of this chapter is contrary to public policy and is void. An attempt by any person to have another waive his rights under this chapter will be deemed to be a violation of the act.
[Pa.B. Doc. No. 18-58. Filed for public inspection January 12, 2018, 9:00 a.m.]
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