News & Media

Texas Deceptive Trade Practices Act – Public perception can mean more than actual existence
May 17, 2018

By: Monica Rey Bailey

Regardless of if the shirt fits, think twice before you wear it.

Under the Texas Deceptive Trade Practices Act (“DTPA”), what a business or individual puts forth to the general public can be held deceptive regardless of the actual relationship between the parties.

We recently came across this issue in a case centered on a shirt.  A business owner, proud of his company, provided his independent contractors with shirts which displayed the name of the company.  Wearing the shirt was not a requirement of the job, as the shirt was not a uniform or part of a mandated outfit; however, many of the independent contractors did wear the shirt while on jobs for the business.  This business owner never thought someone would think the independent contract was an employee, as the contractual agreement between the business and the client specifically identified the individuals performing the work as independent contractors, and the independent contractor business cards specifically identified the workers as such.  Regardless, a client sued the business, alleging deception as to the source of the services, as the shirt worn lead the client to believe he was being serviced by an employee of the business – not a subcontractor. The client alleged he would not have chosen the business had he known actual services were to be performed by an independent contractors and not employees of the business.

Before the passage of the DTPA, it was difficult – if not impossible – for innocent consumers to hold businesses legally accountable in court for intentionally harming the public.  The DTPA enabled consumers to hold companies liable for trade practices found to be false, misleading or deceptive, and recover damages from said businesses for such bad acts.[1]  So while in most situations a shirt is usually just a shirt, under the protection of the DTPA, if a shirt causes confusion about who is actually providing goods or services, and an innocent consumer is injured or otherwise harmed, the shirt can become a vehicle to liability.  In fact, a shirt can open a business up to a “laundry list” of issues under the DTPA – thirty-one (31) acts for which consumers may sue under if the consumers relied on “the shirt” to their detriment.[2]  If the consumer can show the person acted “knowingly,” the consumer receive an award of up to three (3) times the damages.[3]

One of the laundry list items proscribes actions that cause “confusion or misunderstanding as to the source, sponsorship, approval or certification of good or services.”[4]  A jury is usually the factfinder in a DTPA claim, who decides if the facts and circumstances show a person’s actions were “knowingly” – meaning, if the person knew they were causing confusion or misunderstanding to a consumer, said tortfeasor will likely be liable for treble damages.[5]  Another important factor about the DTPA is a victorious consumer is entitled to reimbursement of the attorney’s fees spent in obtaining said recovery.[6]  Due to the extremely high costs associated with litigation, this reimbursement could dwarf the amount of the actual damage award.  Remember, while DTPA claims can arise from overt acts clearly intended to deceive a consumer, a DTPA claim can also arise without such overt tactic – such as an independent contract wearing your company’s shirt while perform working for you.  The business owner was proud of his company name and of the people who performed services for him, but did not recognize a consumer could be confused by something as simple as a company name on a shirt.

How can you protect you and your business?  Be clear!  If someone is wearing a shirt with your business logo, make sure their nametag or other identification information clearly states the person is an independent contractor.  When booking appointments, remind consumers, by telephone or by email, the services being provided are going to be performed by independent contractors.  Always keep in mind consumers are listening to the words being used in describing the services or goods being providing.  Take time to educate yourself on the DTPA “laundry list” and make sure the contractors you use know the provisions of the DTPA and understand what types of acts, however harmless they may seem, can open them and you up to a DTPA claim.  If you have any question or would like to discuss how best to protect your business, please give our firm a call.

[1]  “False, misleading, or deceptive acts in the conduct of any trade or commerce are hereby declared unlawful and are subject to action by the consumer protection division under … this Code.” Texas Business and Commerce Code. Sec. 17.46.

[2]  Texas Business and Commerce Code Sec. 17.46(a)(1)-(31).

[3]  Texas Business and Commerce Code Sec. 17.50(b)(1).

[4]  Texas Business and Commerce Code Sec. 17.46(a)(2).

[5]  Texas Business and Commerce Code Sec. 17.50(b)(1).

[6]  Texas Business and Commerce Code Sec. 17.50(d).