Pennsylvania’s Consumer Protection Act - Strict Liability for Deceptive Conduct
Dissecting the February 17, 2021 Gregg v. Ameriprise Financial, Inc., 2021 LEXIS 208 (Pa.) decision by the Pennsylvania Supreme Court interpreting the Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“CPL”) to be a strict liability statute, making such claims easier to prove.
Case SummaryGregg involved a husband and wife claiming that Ameriprise and its representatives made material misrepresentations to induce the Greggs into buying certain insuranceSigning paper policies. The Greggs sued under the CPL and asserted negligent and fraudulent misrepresentation claims. Ameriprise prevailed on the Greggs’ negligent and fraudulent misrepresentation claims, however, the trial court ruled in favor of the Greggs’ on the CPL claim. Ameriprise appealed, arguing that, because the Greggs did not prove at least their negligent misrepresentation claim, the Greggs could not establish deceptive conduct and win under the CPL.
On appeal, the Superior Court disagreed with Ameriprise and held that the Greggs did not have to prevail on either of their misrepresentation claims in order to prevail on their CPL claim. Critically, the Superior Court stated that the test for deceptive conduct under the CPL “is whether the conduct has the tendency or capacity to deceive, without regard to the actor’s state of mind.” With this backdrop, the Pennsylvania Supreme Court heard the appeal of Ameriprise, affirming the Superior Court. The Supreme Court specifically addressed a single question, that is, whether a strict liability standard applies to a claim under the catch-all provision of the CPL.
Holding of the CaseIn Gregg, the Supreme Court definitively held that the doctrine of strict liability applies to the catch-all provision of the CPL, 73 P.S. § 201-2(4)(xxi). The Court determined that a “plain language analysis of the relevant statutory provision leads inexorably to the conclusion that deceptive conduct under the CPL is not dependent in any respect upon proof of the actor’s state of mind.” Citing a prior decision, the Supreme Court stated that a deceptive or unfair practice is one that “has the capacity or tendency to deceive” whether or not an intention to deceive, or actual deception, is present. The decision by the Supreme Court once and for all removes any requirement for proving fraud or fraud-like conduct, actual deception or an intention to deceive. The decision does not remove the requirement that the consumer plaintiff “justifiably rely upon the unfair or deceptive business practice when making the purchasing decision.”
Takeaways for Consumers and BusinessesBy removing the state of mind requirement and making the catch-all provision of the CPL one of strict liability, the Gregg decision lowers the bar for successful CPL claims and gives the CPL’s purpose, the eradication of unfair and deceptive conduct in consumer transactions, broad effect. Consumers victimized by deceptive conduct in the marketplace now have a lower bar to prove their claims, with strict-liability replacing any requirement to prove fraudulent, intentional or even negligent conduct. Now, if a consumer justifiably relies upon deceptive conduct, intended or not, and suffers an ascertainable loss of money or property, an action may accrue. For businesses engaging in consumer transactions, using easy to understand language, educating and informing consumers, and utilizing written and signed documentation and notices, will assist in preventing and defending against CPL claims.