I. Study Authority And Scope

House Joint Resolution No. 143 (1994) (attached as Appendix A), established a joint subcommittee to study issues related to the Virginia Consumer Protection Act (hereinafter "VCPA"), specifically, investigation, enforcement, funding, coverage, and private rights of action. The subcommittee was comprised of seven legislative members: Delegates Gladys Keating, Dwight Jones, Robert Orrock, and Mitchell Van Yahres (chairman), and Senators Henry Maxwell, Robert Calhoun, and Thomas Norment (vice chairman).

II. VCPA's Legislative History and Current Statutory Scheme

VCPA was enacted in 1977 (Acts of Assembly, Chapter 635). Consisting of §§ 59.1-196 through 59.1-207, VCPA forms Chapter 17 of Title 59.1 of the Code of Virginia ("Trade and Commerce"). Except for 1978, 1984, and 1985, VCPA has been amended by the General Assembly in some fashion every year since its passage. Most amendments occurred in 1981, 1982, 1987, and 1988. During the 1994 Session, Code sections were amended that dealt with exclusions and prohibited practices.

VCPA's basic statutory scheme is to define terms, set forth exclusions, enumerate prohibited practices, provide mechanisms for investigation and enforcement, and authorize civil penalties and relief.

A. Coverage

VCPA attacks misrepresentation -- both intentional and unintentional -- used as an inducement to contract in "consumer transactions." Consumer transactions include (i) the advertisement, sale, lease, or offering for sale or lease of goods, land, intangibles or services to be used primarily for "personal, family or household" purposes; (ii) business opportunities to be conducted from a residence by an individual; and (iii) services related to finding a job.

The rules governing consumer transactions apply to "suppliers." Suppliers are (i) sellers or lessors who advertise, solicit or engage in consumer transactions or (ii) manufacturers or distributors who advertise and sell or lease goods or services to be resold or leased by other persons in consumer transactions.

B. Exclusions

Conduct excluded from VCPA includes any aspect of a consumer transaction (i) authorized by state or federal law or regulation, (ii) regulated by the Federal Consumer Credit Protection Act (popularly known as the "Truth in Lending Act"), or (iii) subject to the Landlord and Tenant Act or the Virginia Residential Landlord and Tenant Act, unless the act or practice constitutes a misrepresentation or fraudulent act or practice under VCPA. (This is a 1994 amendment.) Innocent acts by publishers or other advertising media in publishing or disseminating an advertisement that violates VCPA are also excluded.

Businesses excluded from VCPA include (n banks, savings and loan associations, credit unions, small loan companies, public service corporations and insurance companies regulated and supervised by the State Corporation Commission or a comparable federal regulating body and (ii) employment agencies licensed under Chapter 13 of Title 54.1.

C. Prohibited Practices

In a consumer transaction, VCPA prohibits suppliers from committing (i) a violation of any statute which incorporates VCPA into its provisions (discussed in IV of the report), (ii) any listed "prohibited practice" under VCPA, or (iii) any other deceptive practice. The true substance of VCPA is its prohibited practices, which currently comprise 32 enumerated practices. Examples include misrepresenting goods or services as those of another; misrepresenting the source, sponsorship, approval, certification, quantities, characteristics, ingredients, uses, benefits, standard, quality, grade, style, model, or origin; advertising or offering used, repossessed, blemished, deteriorated, irregular, imperfect, or reconditioned goods for sale "without clearly and unequivocally" disclosing such in the advertisement or offer; advertising goods or services with the intent not to sell as advertised or at prices or upon terms advertised; making false or misleading statements about the reasons for, the existence of, or the amount of price reductions; using, in a contract, any liquidated damage clause, penalty clause, or waiver of defense which, under some other substantive law, is unenforceable; attempting to collect such damages or penalties; or using any other deception, fraud, false pretense, false promise, or misrepresentation in connection with a consumer transaction.

D. Investigation And Enforcement

1. Government Actions

If requests for information or documents are unproductive, investigative orders may be issued by the circuit courts when the Office of the Attorney General, Commonwealth's attorneys, or attorneys for any county, city or town have reasonable cause to believe that a supplier has violated, is violating, or is about to violate VCPA. Reasonable cause requires less of a showing than probable cause -- the standard for obtaining a criminal search warrant -- and may, for example, be found in a supplier's newspaper advertisement or promotional materials.

Government attorneys may sue under VCPA for injunctions, civil penalties, costs, and restitution for individuals. In actions brought by government attorneys, the court may award relief for an entire class of victims, including those who are not identified until after trial. For willful violations of VCPA, the court may impose additional civil penalties and costs. Government attorneys may also enter into a written assurance of compliance with any supplier covered by VCPA.

2. Private Actions

Any person who suffers loss for an unintentional violation of VCPA may file a private civil action for actual damages or $100, whichever is greater, plus reasonable attorney's fees. "Person" includes individuals and corporations.