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An Overview of California Unfair Competition Law

  • By:sierralit

The consequences of unfair business competition include commodity price manipulation, which rapidly drives up the costs of purchasing consumer goods. Although the United States government under the auspices of agencies such as the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) enforce consumer protections, each state has implemented unfair competition laws to close federal loopholes and/or create laws not covered under federal jurisdiction.

Some states pass loosely worded statutes that benefit businesses, especially large corporations that employ high-powered attorneys. States such as California make consumer protection a major priority by passing comprehensive and strictly enforced legislation.

California’s Unfair Competition Law

California Unfair competition Law (UCL) had its legal roots planted back in 1872. An amendment to the original UCL passed in 1933 expanded the law to prevent “any person [from] performing an act of unfair competition.” Several amendments passed after 1933 have strengthened the enforcement of unfair business competition.

The California UCL includes five broadly defined examples of unfair competition:

  • An unlawful business act or practice
  • An unfair business act or practice
  • A fraudulent business act or practice
  • Unfair, deceptive, untrue or misleading advertising
  • Any act prohibited by Sections 17500-17577.5

Section 17203 of the California UCL allows courts to order injunctions to prohibit the unfair business practice of limiting competition.

The UCL Protects Consumers against False Advertising

Most of the false advertising claims filed in California courts use definitions number four and five as grounds to pursue false advertising cases. Courts examine an advertisement’s complete impression on consumers, such as words, images, and product packaging. Courts historically determined if advertisements mislead consumers if any of the impressions deceive consumers into making purchase they would not typically make. With the passage of Proposition 64, plaintiffs now must demonstrate false advertising has caused an injury or financial loss. Moreover, courts differ on whether “omissions of material facts” that mislead consumers represent violations of the UCL.

The Legal Bond between the UCL and Other California Consumer Protection Laws

The State of California tries to pass consumer protection laws that support and complement other consumer protection laws, as well as bolster consumer protection laws that require more enforcement powers. For example, many plaintiffs file lawsuits that charge companies with violating provisions of both Section 17200 and Section 17500.

California courts often do not consider differences between the two definitions of unfair competition. However, Section 17500 only prohibits false advertising, while Section 17200 takes consumer protection to the next level by forbidding “fraudulent business acts or practices” that are not linked to misleading advertising. Another major difference between the two consumer protection sections is that Section 17500 requires plaintiffs to prove a business knew about making false advertising claims. On the other hand, Section 17200 litigates under civil liability statutes that do not require the proof of prior knowledge.

Plaintiffs that file lawsuits based on violations of Sections 17200 and/or 17500 also frequently claim violations of the California Consumers Legal Remedies Act (CLRA). The CLRA protects California consumers against specified activities the law describes as unfair and deceptive business practices. Some California plaintiffs bypass the UCL to use the more comprehensive CLRA for consumer protection lawsuits.

The ambiguous wording and complicated enforcement provisions of the California UCL leave many victims wondering how they can seek justice for being on the receiving end of unfair business practices. We strongly encourage anyone that has experienced deceptive business practices to contact our law office and speak with one of our licensed attorneys who specialize in litigating California consumer protection cases.

Posted in: Consumer Fraud, False Advertising, Online Scams
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