Texas Deceptive Trade Practices Act

The Texas Deceptive Trade Practices Act (the “DTPA”) is a powerful statute that provides consumers of goods or services (including real estate) with relief for certain acts by the Sellers of such goods or real property, such as a residential home. Its express purpose is “protecting “consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty, and providing “efficient and economical procedures to secure such protection.”

The DTPA, which is found in chapter 17 of the Texas Business and Commerce Code, is a favorite of Texas Plaintiff’s lawyers because it may provide for recovery of considerable damages over-and-above the economic damages sustained by a consumer.

To seek relief under the Texas DTPA, you must qualify as a consumer. A consumer may be an individual, partnership, corporation, LLC or even a state agency.

The Texas Business and Commerce Code Section 17.46 has a laundry list of 25 prohibited acts that are considered false, misleading, or deceptive acts or practices.

Some prohibited acts include:

• causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services;
• representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he does not;
• representing that a guarantee or warranty confers or involves rights or remedies which it does not have or involve; and
• failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed.

Because the DTPA is very broad and is constantly being interpreted by Texas Courts, it is very difficult to explain in a short summary. If you are involved in a legal dispute in which fraud or other wrongful conduct is alleged, whether in your real estate transaction, or your purchase of other goods, you should contact us for a consultation.

Exemptions to The Texas Deceptive Trade Practices Act (the “DTPA”)

Attorneys (or other similar professionals), Real Estate brokers & Realtors are oftentimes exempt from DTPA claims. This exemption, however, will not apply in cases of fraud or misrepresentation.

Section 17.49 (c) and (i) of the DTPA provides:

(c) Nothing in this subchapter shall apply to a claim for damages based on the rendering of a professional service, the essence of which is the providing of advice, judgment, opinion, or similar professional skill; and

(i) Nothing in this subchapter shall apply to a claim against a person licensed as a broker or salesman under Chapter 1101, Occupations Code, arising from an act or omission by the person while acting as a broker or salesperson.

If it seems like Section 17.49(c) and (i) gives Attorneys, Real Estate Brokers and Realtors a free pass from this consumer protection law, but that’s not true. Here’s the exception to the exception:

This exemption does not apply to:

1. an express misrepresentation of a material fact that cannot be characterized as advise, judgement, or opinion;
2. a failure to disclose information in violation of Section 17.46 (b)(24); or
3. an unconscionable action or course of action that cannot be characterized as advice, judgement, or opinion.