The Ohio Consumer Sales Practices Act

The Ohio Consumer Sales Practices Act (hereinafter the CSPA) covers any act or practice committed by a "supplier" in the course of a "consumer transaction." A consumer is defined by O.R.C. 1234.01(C) as "a person who engages in a consumer transaction with a supplier." A supplier is defined as "a seller, lessor, assignor, franchisor, or other person engaged in the business of effecting or soliciting consumer transactions, whether or not he deals directly with the consumer. O.R.C. 1345.01(D). "Consumer transaction" does not include transactions between persons, defined in sections 4905.03 and 5725.01 of the Revised Code, and their customers; transactions between certified public accountants or public accountants and their clients; transactions between attorneys, physicians, or dentists and their clients or patients; and transactions between veterinarians and their patients that pertain to medical treatment but not ancillary services.

Just as important as the law is the interpretation of the law by the Courts. Some of the decisions affecting the coverage of the law is listed below.

(1974), 41 Ohio Misc. 57, 322 N.E.2d 367: upheld the Constitutionality of the CSPA against a challenge that its application to transactions between Ohio businesses and non-Ohio consumers made it an impermissible burden on interstate commerce.

The Ohio Supreme Court has held that the CSPA is a remedial law that must be liberal construed. State ex rel Celebrezze v. Hughes (1991), 58 Ohio St.3d 273, 569 N.E.2d 1059; Einhorn v. Ford Motor Co (1990), 48 Ohio St. 3d 27, 548 N.E.2d 933; see also State ex rel Celebrezze v. Howard (1991), 77 Ohio App.3d 387, 602 N.E.2d 665; Renner v. Proctor & Gamble (1988), 54 Ohio App.3d 79, 561 N.E.2d 959.

The Consumer Sales Practices Act applies to home improvement contracts and contracts for home repair. Reichart v. Ingersoll (1985), 18 Ohio St.3d 220, 480 N.E.2d 802; Finn v. Krumroy Construction Co. (1990), 68 Ohio App.3d 480, 589 N.E.2d 58; Martin v. Bullinger (1988) 43 Ohio App.3d 136, 539 N.E.2d 681; Teman v. Joseph, No. 15-86-23, 1989 WL 156188 (3rd Dist. Ct. App., Van Wert, 12-29-89). Vannes v. Bigelow, No. L-88-368, 1989 WL 80919 (6th Dist Ct. App. Lucas, 7/21/89); Collins v. Kingsmen Enterprises, No. 66433, 1995 WL 23345 (8th Dist. Ct. App., Cuyahoga, 1-19-95); Tucker Construction, Inc. v. Kitchen, No. 16636, 1995 WL 89431 (9th Dist. Ct. App. Summit 3-1-95).

The CSPA prohibits any supplier from committing an "unfair," "deceptive," or "unconscionable" act or practice in connection with a consumer transaction. Court decisions involving the CSPA are collected and maintained by the Ohio Attorney General in a Public Information File. The law gives some specific prohibitions that violate the law at O.R.C. 1345.02(B), which states

(B) Without limiting the scope of division (A) of this section, the act or practice of a supplier in representing any of the following is deceptive:

1. >That the subject of a consumer transaction

has sponsorship, approval, performance characteristics, accessories, uses, or benefits that it does not have;

(2) That the subject of a consumer transaction is of a particular standard, quality, grade, style, prescription, or model, if it is not;

(3) That the subject of a consumer transaction is new, or unused, if it is not;

(4) That the subject of a consumer transaction is available to the consumer for a reason that does not exist;

(5) That the subject of a consumer transaction has been supplied in accordance with a previous representation, if it has not, except that the act of a supplier in furnishing similar merchandise of equal or greater value as a good faith substitute does not violate this section;

(6) That the subject of a consumer transaction will be supplied in greater quantity than the supplier intends;

(7) That replacement or repair is needed, if it is not;

(8) That a specific price advantage exists, if it does not;

(9) That the supplier has a sponsorship, approval, or affiliation that he does not have;

(10) That a consumer transaction involves or does not involve a warranty, a disclaimer of warranties or other rights, remedies, or obligations if the representation is false.

O.R.C. 1345.02(D) covers transactions involving rebates or similar rewards.

Listed below is some of the Court decisions involving unfair or deceptive acts and practices.

O.R.C. 1345.02(B)(5) makes it deceptive to represent that "the subject of a consumer transaction has been supplied in accordance with a previous representation, if it has not. Thus, failure to perform as promised is a violation of the CSPA. A deceptive act per se.

O.R.C. 1345.02(B)(10) states that it is deceptive to represent that "a consumer transaction involves or does not involve a warranty, a disclaimer of warranties or other rights, remedies, or obligations if the representation is false." In Brown v. Lyons (1974), 43 Ohio Misc. 14, 322 N.E.2d 380, the court held that a supplier’s failure to honor an implied warranty of merchantability is a deceptive act or practice that violates O.R.C. 1345.02(B)(10). This is a deceptive act per se.

O.R.C. 1345.03 defines an "unconscionable" act. It states,

(A) No supplier shall commit an unconscionable act or practice in connection with a consumer transaction. Such an unconscionable act or practice by a supplier violates this section whether it occurs before, during, or after the transaction.

(B) In determining whether an act or practice is unconscionable, the following circumstances shall be taken into consideration:

(1) Whether the supplier has knowingly taken advantage of the inability of the consumer reasonably to protect his interests because of his physical or mental infirmities, ignorance, illiteracy, or inability to understand the language of an agreement;

(2) Whether the supplier knew at the time the consumer transaction was entered into that the price was substantially in excess of the price at which similar property or services were readily obtainable in similar consumer transactions by like consumers;

(3) Whether the supplier knew at the time the consumer transaction was entered into of the inability of the consumer to receive a substantial benefit from the subject of the consumer transaction;

(4) Whether the supplier knew at the time the consumer transaction was entered into that there was no reasonable probability of payment of the obligation in full by the consumer;

(5) Whether the supplier required the consumer to enter into a consumer transaction on terms the supplier knew were substantially one-sided in favor of the supplier;

(6) Whether the supplier knowingly made a misleading statement of opinion on which the consumer was likely to rely to his detriment;

(7) Whether the supplier has, without justification, refused to make a refund in cash or by check for a returned item that was purchased with cash or by check, unless the supplier had conspicuously posted in the establishment at the time of the sale a sign stating the supplier's refund policy.

In order for an act or practice to be found unconscionable under 1345.03, as opposed to unfair or deceptive under O.R.C. 1345.02, the consumer must prove the supplier acted "knowingly." State ex rel Celebrezze v. Ferraro (Montgomery 1989), 63 Ohio App.3d 168, 578 N.E.2d 492; Clayton v. McCary (N.D. Ohio 1976), 426 F.Supp. 248.

In determining whether an act or practice is unconscionable, O.R.C. 1345.03(B)(1) states the court must consider the following: "Whether the supplier has knowingly taken advantage of the inability of the consumer reasonably to protect his interests because of his physical or mental infirmities, ignorance, illiteracy, or inability to understand the language of an agreement." This provision is similar to common law fraud but is much less strict in its requirements. It was interpreted expansively by the court in Brown v. Lyons (1974), 43 Ohio Misc. 14, 322 N.E.2d 380.

Unconscionability may be based on a court’s "intuitive repugnance" for a practice that offends the traditional notions of fair play. Santiago v. S.S. Kresge Co. (1976), 2 Ohio Ops.3d 54.

A supplier’s pattern of inefficiency and incompetence is a deceptive or unconscionable practice. Brown v. Lyons (1974), 43 Ohio Misc. 14, 322 N.E.2d 380; Layne v. McGowen, No. 14676, 1995 WL 316233 (2d Dist. Ct. App. Montgomery, 5-24-95); Pearson v. Tom Harrigan Oldsmobile-Nissan, Inc. No. 12411, 1991 WL 214228 (2nd Dist. Ct. App. Montgomery, 9-16-91); Brown v. Spears, No. 8897 (Muni, Franklin, 8-20-79)

A supplier who continually stalls and evades its legal obligations to consumers commits an unconscionable act. Brown v. Lyons (1974), 43 Ohio Misc. 14, 322 N.E.2d 380; Layne v. McGowen, No. 14676, 1995 WL 316233 (2d Dist. Ct. App. Montgomery, 5-24-95); Brown v. Spears, No. 8897 (Muni, Franklin, 8-20-79); Celebrezze v. Moore, No. 86CV-92-1297 (CP, Franklin, 4-30-87); State ex rel Celebrezze v. Auto Adoption Leasing, Inc., No. 88-1608 (CP, Montgomery, 7-23-90).

It has been held that where a supplier knowingly breaches its contract with the consumer, it commits an unfair and deceptive act. Zimmerman v. U.S. Diamond & Gold Jewelers, Inc., No. 14680, 1995 WL 100820 (2nd Dist. Ct.App. Montgomery , 2-8-95). Language in a few cases suggests that mere breach of contract is a CSPA violation. Gaughan v. Billingsly, No. 79-CV-05-2103 (CP, Franklin, 7-12-79); Brown v. Spears, No. 8897 (Muni, Franklin, 8-20-79).

The remedies under the law are quite friendly to the consumer. They allow for the consumer to rescind the contract underlying the consumer transaction or to sue the supplier for three time (3x) their actual damages under the contract or $200.00 whichever is greater. In some consumer cases, like construction cases, the consumer will have damages far in excess of $200.00. In those cases the consumer would be well served to seek to recover his or her damages. In other cases, like being deceived in the purchase of a $10.00 product the consumer would benefit more by going after the $200.00 per violation remedy.

Knowing that few consumers would spend their own money on a very small claim, the legislature provided that consumers are entitled to recover their attorney fees. The law states, "[f]or a violation of Chapter 1345 of the Revised Code, a consumer has a cause of action and is entitled to relief as follows:

(A) Where the violation was an act prohibited by section 1345.02 or 1345.03 of the Revised Code, the consumer may, in an individual action, rescind the transaction or recover his damages.

(B) Where the violation was an act or practice declared to be deceptive or unconscionable by rule adopted under division (B)(2) of section 1345.05 of the Revised Code before the consumer transaction on which the action is based, or an act or practice determined by a court of this state to violate section 1345.02 or 1345.03 of the Revised Code and committed after the decision containing the determination has been made available for public inspection under division (A)(3) of section 1345.05 of the Revised Code, the consumer may rescind the transaction or recover, but not in a class action, three times the amount of his actual damages or two hundred dollars, whichever is greater, or recover damages or other appropriate relief in a class action under Civil Rule 23, as amended.

(C) In any action for rescission, revocation of the consumer transaction must occur within a reasonable time after the consumer discovers or should have discovered the ground for it and before any substantial change in condition of the subject of the consumer transaction.

(D) Any consumer may seek a declaratory judgment, an injunction, or other appropriate relief against an act or practice that violates this chapter.

(E) When a consumer commences an individual action for a declaratory judgment or an injunction or a class action under this section, the clerk of court shall immediately mail a copy of the complaint to the attorney general. Upon timely application, the attorney general may be permitted to intervene in any private action or appeal pending under this section. When a judgment under this section becomes final, the clerk of court shall mail a copy of the judgment including supporting opinions to the attorney general for inclusion in the public file maintained under division (A)(3) of section 1345.05 of the Revised Code.

(F) The court may award to the prevailing party a reasonable attorney's fee limited to the work reasonably performed, if either of the following apply:

(1) The consumer complaining of the act or practice that violated this chapter has brought or maintained an action that is groundless, and the consumer filed or maintained the action in bad faith;

(2) The supplier has knowingly committed an act or practice that violates this chapter.