Joe Dye Culik
What is the North Carolina Unfair and Deceptive Trade Practices Act? Who Does (and Doesn’t) It Apply
The North Carolina Unfair and Deceptive Trade Practices Act is a mouthful to say, but for good reason – it is one of the most powerful laws in North Carolina. As its name indicates, the North Carolina Unfair and Deceptive Trade Practices Act (or “UDTPA,” for short) prohibits businesses from engaging in unfair or deceptive acts or practices. Violating the UDTPA subjects a defendant to potential treble (triple) damages, costs, and attorney’s fees. It has a four-year statute of limitations.
What does the UDTPA prohibit? And, who does (or doesn’t) it apply to? This post answers these questions.
First, some background. The UDTPA is based on a similar federal law, the Federal Trade Commission Act. In fact, the FTC Act also prohibits unfair conduct. The North Carolina legislature realized that the FTC Act was only enforceable by the federal government, though, so we passed our own version. The UDTPA is a statute of broad application and is enforceable by anyone engaged in “commerce” within North Carolina. That is, you if someone violates it in a transaction with you, you can sue them.
The principal prohibition in the UDTPA is concise but powerful, stating “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.” G.S. § 75-1.1.
“Unfair” is the operative word. Courts use various standards to determine whether an act or practice is unfair, including if the act
violates industry standards,
violates established public policy,
is immoral, unethical, or unscrupulous,
substantially injures consumers,
is an inequitable assertion of the party’s power or position, or
has the tendency to deceive.
As you can see, the range of conduct it covers is wide, and its interpretation is somewhat subjective, leaving judges and juries wide latitude to determine what is or is not unfair.
There is one important restriction, however. The UDTPA does not apply to “learned professionals.” This is called the “Learned Professional Exemption.” The language of statute states that the UDTPA “does not include professional services rendered by a member of a learned profession.” Interestingly, the Learned Professional Exemption was not part of the UDTPA when it was originally enacted, but was added later on.
What profession counts as a “learned” profession is a question that has been litigated vigorously. Many so-called professional persons have understandably argued that the UDTPA is inapplicable to them. Not surprisingly, the people who claim that the professionals did them wrong tend to disagree.
Originally, the Learned Professional Exemption only applied to physicians, lawyers, and the clergy. But in this knowledge-based economy there are many more types of learned professionals than a few decades ago. One case explained that a learned professional is “characterized by the need of unusual learning, the existence of confidential relations, and adherence to a standard of ethics higher than that of the marketplace.”
So, in the course of interpreting the UDTPA over the years, in addition to attorneys, doctors, and ministers, the Learned Professional Exemption has been extended to hospital administrators, owners of a medical facility, infertility specialists, chiropractors, nurses, veterinarians, architects, and engineers. If a professional like one of the foregoing, commits alleged conduct in the course of performing their job, it is likely that they cannot be sued under the UDTPA.
On the other hand, just because someone is a beneficiary of the Learned Professional Exemption does not mean that they cannot be sued at all. Other claims, such as negligence or fraud, may be available. The main effect of barring UDTPA claims is to prohibit the awarding of treble damages, and to avoid the sort of nebulous definition of the term “unfair” when applied to professionals.
If you feel you have been treated unfairly or deceptively in business in North Carolina contact us at 980.999.3557 to see if we can help. DYE CULIK PC is a Charlotte, North Carolina law firm.