In August of 2021, Governor McKee signed into law a significant change to Rhode Island’s Deceptive Trade Practices law. Prior to August 2021, the state’s Deceptive Trade Practices law was held to be inapplicable to “all those activities and businesses which are subject to monitoring by state or regulatory bodies.” State v. Piedmnont, 382 A.2d 819, 821-22 (R.I. 1978). Given the number of consumer transactions (involving, for example, credit card issuers, insurance/investments, automobiles, manufacturers, etc.) that are monitored by state and/or federal regulatory bodies (such as the Department of Health, the Department of Business Regulation, the Federal Reserve Board, the Federal Trade Commission and the myriad federal agencies that regulate consumer-focused industries), the protections afforded by the Deceptive Trade Practices law (R.I. Gen. Laws § 6-13.1-1, et seq.) were, as a practical matter, applicable to only a small number of consumer transactions.
The 2021 Law changed that by giving the Attorney General, who had advocated for the passage of the 2021 Law, the power to bring, on behalf of the State of Rhode Island, a Deceptive Trade Practices’ action against any person that “is using, has used, or is about to use any method, act, or practice declared to be unlawful” so long as the allegedly deceptive “activity or conduct . . . in compliance with orders . . . or rules of . . . state government agency” (R.I. Gen. Laws § 6-13.1-4(b)).
Therefore, the 2021 Law now permits such Deceptive Trade Practices actions whenever a business, alleged to have committed a Deceptive Trade Practice, is not in compliance with the orders or rules of the relevant state or federal regulatory body. The 2021 Law effected change to Rhode Island’s Deceptive Trade Practices law in two other ways as well:
- initial violations may now be punished by a civil penalty of up to $10,000 (prior law had provided that an injunction must first be in place to impose such a large fine), and
- the new legislation also increased the damages available to private litigants from $200 to $500 per violation and provides for treble damages.
Since the Governor’s signature on the bill, the Attorney General, who has lauded the new legislation for providing his Office with “better equip to protect consumers against unfair business practices” has brought numerous actions under it, moving, for example, against many automotive dealerships, a remediation/restoration company, and a document processing company. In pursuing these and other alleged violations of the Deceptive Trade Practices Act, the Attorney General will often make use of the “civil investigative demand” (“CID”) provision, contained within the Deceptive Trade Practices law (see R.I. Gen. Laws § 6-13.1-7(a) and (e)), as, according to the Attorney General, the CID is “one way for to get the information need . . . determine whether or not a business or individual is engaged in unfair or deceptive practices and, if necessary, take enforcement action on behalf of Rhode Island consumers.”
These CID letters often prove to be – even for the most law abiding of companies that will ultimately have no issue demonstrating their compliance with the Deceptive Trade Practices Act – rather burdensome for a business to respond to; but with the assistance of experienced counsel in this area, these CID’s can be readily answered, and, even, used to bring the Attorney General’s investigation to an expeditious close. Experienced counsel can also raise potential defenses available under the new law, which has yet to be interpreted by our State Supreme Court, which asserted defenses may also result in a much more expedited resolution of an Attorney General Deceptive Trade Practices Act action.
If your business has received or anticipates receiving an Attorney General CID letter pursuant to Rhode Island’s Deceptive Trade Practices Act, immediate consultation with experienced counsel should be sought. Please contact PLDO Partner Aaron L. Weisman at 401-824-5100 or email [email protected].
