What Is an Unfair Trade Practice?Unfair trade practices refer to the use of various deceptive, fraudulent, or unethical methods to obtain business. Unfair business practices include misrepresentation, false advertising or representation of a good or service, tied selling, false free prize or gift offers, deceptive pricing, and noncompliance with manufacturing standards. Such acts are considered unlawful by statute through the Consumer Protection Law, which opens up recourse for consumers by way of compensatory or punitive damages. An unfair trade practice is sometimes referred to as “deceptive trade practices” or “unfair business practices.” Show
Key Takeaways
Understanding Unfair Trade PracticesUnfair trade practices are commonly seen in the purchase of goods and services by consumers, tenancy, insurance claims and settlements, and debt collection. Most states’ unfair trade practices statutes were originally enacted between the 1960s and 1970s. Since then, many states have adopted these laws to prevent unfair trade practices. Consumers who have been victimized should examine the unfair trade practice statute in their state to determine whether they have a cause of action. Unfair trade practices are commonly seen in the purchase of goods and services by consumers, tenancy, insurance claims and settlements, and debt collection. In the United States, unfair trade practices are addressed in Section 5(a) of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” It applies to all individuals engaged in commerce, including banks, and sets the legal standard for unfair trade practices, which may be deemed unfair, deceptive, or both. Below are lists of unfair and deceptive practices as per the rule: Unfair PracticesAn act is unfair when it meets the following criteria:
Deceptive PracticesAn act or practice is deceptive when it meets the following criteria:
Examples of Unfair Trade Practices in InsuranceUnfair trade practices can happen in any industry but are significant enough to prompt the National Association of Insurance Commissioners (NAIC) to issue guidance related to the sale of insurance products. The NAIC defines unfair trade practices in the following ways:
The NAIC considers a deceptive trade practice to be any of the above acts coupled with the conditions below:
The Commissioner would NOT levy a civil penalty, place an insurance producer on probation, or suspend a producer's license for which of the following actions? a. Having been convicted of a felony What is an unfair trade practice quizlet?Unfair Trade Practices Act (7) Prohibits all practices considered by the State as an unfair method of competition or a deceptive practice. Misrepresentation/False Advertising of Policies.
What unfair trade practices involve?Unfair business practices include misrepresentation, false advertising or representation of a good or service, tied selling, false free prize or gift offers, deceptive pricing, and noncompliance with manufacturing standards.
Which of the following is an example of a producer being involved in an unfair trade practice?Which of the following is an example of a producer involved in an unfair trade practice of rebating? Telling a client that his or her's first premium will be waived if he/she purchased the insurance policy today. At distribution, all amounts received by the employee are tax free.
Which unfair trade practice involves an agent suggesting that an insurance policy is like a share of stock?Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? The correct answer is "Misrepresentation".
|