Liability Expanded Under Pennsylvania’s Consumer Protection Law

In a bold decision that has put businesses on notice, the Supreme Court of Pennsylvania held that the state’s consumer protection law does not require consumers to prove that a commercial vendor intended to deceive them but only that there was a likelihood of confusion that the consumer relied on to their financial detriment.  This means that sellers of consumer goods and services may face increased exposure for civil lawsuits.

In Gregg v. Ameriprise Fin. Inc., 2021 Pa. LEXIS 608 (Pa. Feb. 17, 2021), a married couple Gary and Mary Gregg sought financial planning advice from Defendant Robert Kovalchik, an advisor and insurance agent for Ameriprise Financial Inc.  Kovalchik advised the Greggs to liquidate prior life insurance policies and open up a new life insurance policy with him.  Kovalchik also persuaded the Greggs to give him $300 a month that the Greggs believed Kovalchik was depositing in the new policy. 

Unbeknownst to the Greggs, Kovalchik did not place their money in the new policy.  Instead, he used their money to purchase IRA’s and growth funds that paid him large commissions. The Greggs sued Kovalchik and Ameriprise under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (CPL) claiming that they violated the catch-all provision. 

Pennsylvania’s CPL identifies 20 unfair methods of competition and unfair or deceptive acts.  The law also contains a broad “catch-all” provision that makes it unlawful to engage “in any other fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding.”  73 P.S. § 201-2(4)(xxi)(1996). 

The state’s highest court held that consumers who bring a claim under this catch-all provision do not need to prove that a party intended to engage in deception because the Pennsylvania Legislature amended this provision to add to phrase “deceptive conduct.” 

“It is the capacity to deceive rather than the actor’s state of mind that renders conduct actionable.” Id. at *21. The court went on to explain that this creates a strict liability standard which makes sense because “the vendor is in a better position to determine whether the representation might be deceptive.”  Id. at *28. Consumer protection laws recognize the unequal bargaining power in the marketplace between a consumer and a seller.  Their purpose is to put the parties on equal footing by eradicating unfair or deceptive business practices. If you believe that an individual or business has taken advantage of you, they may have violated your state’s consumer protection law. 

McOmber McOmber & Luber, P.C. has experienced lawyers licensed in Pennsylvania and New Jersey who fight against those who engage in unscrupulous business practices and cause you financial harm. Please contact us online, call our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, or Newark office at 973-878-9040 to find out more.