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Consumer Transactions
South Texas College of Law Houston
Steiner, Mark E.

Consumer Transaction Outline
Fall 2013 – Steiner
Chapter 1 – Introduction to the DTPA
I.                    Overview of the Texas Deceptive Trade Practices Act
a.       Introduction
                                                               i.      DTPA is liberally construed, underlying purpose is to protect consumers
                                                              ii.      DTPA 17.50 creates a private right of action for the injured consumer
1.       A consumer may maintain an action where any of the following constitute a producing cause of economic damages or damages for mental anguish:
a.       The use/employment by any person of a false, misleading, or deceptive act or practice that is:
                                                                                                                                       i.      On the laundry list; and
                                                                                                                                      ii.      Relied on by a consumer to the consumer’s detriment;
b.       Breach of express or implied warranty;
c.        Any unconscionable action or course of action by any person; or
d.       The use/employment by any person of an act or practice in violation of the Insurance Code
                                                            iii.      Statement of elements:
1.       Plaintiff is a “consumer” as defined in statute;
2.       Defendant committed one of the four defined violations; and
3.       Violation was the producing cause of economic or mental anguish damages
b.       The Definition of “Consumer”
                                                               i.      One must establish “consumer status” in order to have standing to sue under DTPA
                                                              ii.      Definition of “consumer”
1.       An individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services, except that the term does not include a business consumer that has assets of $25MM or more, or that is owned or controlled by a corporation or entity with assets of $25MM or more
                                                            iii.      Goods
1.       Tangible chattels or real property purchased or leased for use
                                                            iv.      Services
1.       Work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods
c.        The “Two-Part Test”
                                                               i.      Seek or Acquire
1.       If merely borrowing something, no acquisition
2.       Third party beneficiary can be consumer as long as transaction specifically required OR intended to benefit third party and the good/service was rendered to benefit third party
3.       Primary Intended Beneficiary vs. Incidental Beneficiary
a.       Primary Intended
                                                                                                                                       i.      Employees of insurance policy purchased by employer
                                                                                                                                      ii.      Cemetery buried wrong body, moved it . . . mother dealt with D, but mom and kids are consumers b/c services were intended for benefit of decedent’s immediate family
b.       Incidental
                                                                                                                                       i.      Any benefit derived from purchase or lease of goods/services by person merely gratuitous and incidental to other person
1.       Hotel guest is incidental beneficiary of K b/t hotel and security
2.       Good/service are purchase/lease for primary purpose of benefitting business and any use/benefit of those products extends only incidentally to employee, so employee is not consumer
3.       Will beneficiaries injured by estate counsel’s malpractice
4.       Employee is incidental beneficiary of K b/t security and management company where hospital is located
4.       DTPA cause of action does not survive death or original consumer
a.       Not provided in statute
b.       Parents of dead child cannot sue for defective pool
c.        Consumer’s estate/individual beneficiaries of estate are not consumers themselves, so can’t pursue claim
5.       DTPA claims cannot be assigned
a.       Purpose of DTPA is for aggrieved consumers to seek redress
b.       A downstream buyer could sue a remote seller for breach of an implied warranty, but cannot sue under DTPA
c.        There must be a “personal” aspect in being “duped” that does not pass to subsequent buyers the way a warranty does
                                                              ii.      By Purchase or Lease
1.       A gratuitous act is not a purchased good or service
a.       Free legal services à no consumer standing
2.       One does not have to pay for goods or services to be a consumer
a.       Seek repair of car under warranty obligating D to repair w/o compensation; P satisfies first prong even though no payment; warranty repairs necessarily a part of the car purchase
                                                            iii.      Any Goods or Services
1.       Goods
a.       Tangible chattels or real property purchased or leased for use
                                                                                                                                       i.      Must be “for use” but don’t have to use up (resale, breeding stock)
                                                                                                                                      ii.      Tangible goods
1.       In general, money is not a good
2.       Credit is not a good or service
a.       Lending of money not good/service
b.       Money
                                                                                                                                       i.      When borrower’s objective is to obtain good/service and the loan merely provides the means for obtaining the good/service, then the borrower qualifies as a consumer
                                                                                                                                      ii.      When borrower’s sole objective is a loan does not become a consumer merely because lender provides services incidental to loan that are not independent objectives of the transaction
                                                                                                                                    iii.      A homebuyer is entitled to consumer status as to all parties who sought to enjoy the benefit of the transaction, including the lender
2.       Services
a.       Work, labor, or service for purchase or lease for use, in

   Advertising of any sale by fraudulently representing that a person is going out of business;
18.    Advertising, selling, or distributing a card which purports to be a prescription drug identification card issued under Section 4151.152, Insurance Code, in accordance with rules adopted by the commissioner of insurance, which offers a discount on the purchase of heath care goods or services from a third party provider, and which is not evidence of insurance coverage, unless:
a.       The discount is authorized under an agreement between the seller of the card and the provider of those goods and services or the discount or card is offered to members of the seller;
b.       The seller does not represent that the card provides insurance coverage of any kind; and
c.        The discount is not false, misleading, or deceptive;
19.    Using or employing a chain referral sales plan in connection with the sale or offer to sell of goods, merchandise, or anything of value, which uses the sales technique, plan, arrangement, or agreement in which the buyer or prospective buyer is offered the opportunity to purchase merchandise or goods and in connection with the purchase receives the seller’s promise or representation that the buyer shall have the right to receive compensation or consideration in any form for furnishing to the seller the names of other prospective buyers if receipt of the compensation or consideration is contingent upon the occurrence of an event subsequent to the time the buyer purchases the merchandise or goods;
20.    Representing that a guarantee or warranty confers or involves rights or remedies which it does no have or involve, provided, however, that nothing in this subchapter shall be construed to expand the implied warranty of merchantability as defined in Sections 2.314 through 2.318 and Sections 2A.212 through 2A.216 to involve obligations in excess of those which are appropriate to the goods;
21.    Promoting a pyramid promotional scheme, as defined by Section 17.461;
22.    Representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts replaced;
23.    Filing suit founded upon a written contractual obligation of and signed by the defendant to pay money arising out of or based on a consumer transaction for goods, services, loans, or extensions of credit intended primarily for personal, family, household, or agricultural use in any county other than in the county in which the defendant resides at the time of the commencement of the action or in the county in which the defendant in fact signed the contract; provided, however, that a violation of this subsection shall not occur where it is shown by the person filing such suit he neither knew or had reason to know that the county in which such suit was filed was neither the county in which the defendant in fact signed the contract;