Under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), the Pennsylvania Office of Attorney General (OAG) Consumer Protection Section regularly conducts investigations of companies doing business in Pennsylvania for unfair and deceptive business practices in the consumer product and service industries. While the UTPCPL has been in force for years and has always permitted the Attorney General’s Office to recover statutory penalties and restitution on behalf of consumers, it did not allow the OAG to recover the costs of its investigation unless it was voluntarily agreed to as part of a settlement. Until now.
Key Changes Introduced by the 2024 Fiscal Code Bill
Buried deep inside Pennsylvania’s new budget signed on July 11, 2024, is a provision permitting Pennsylvania courts to award not only the costs of the OAG’s investigation but also the value of any time spent by its attorneys in investigating and enforcing the UTPCP (attorneys’ fees). This provision is part of the annual Fiscal Code bill (Act 54 of 2024), which accompanies the general appropriations bill, and was included at the very last minute as part of the budget process. This explains why the business community was not alerted ahead of time and not given an opportunity to object.
Implications for Businesses Under Investigation
Unfortunately, this new cost/fee-shifting provision of the UTPCPL will present a real problem for the business community. This new power will force companies under investigation to consider the OAG’s costs and attorneys’ fees when deciding whether to fight it out in court or settle. These costs/attorneys’ fees may far exceed the statutory penalties and restitution recoverable by the OAG. It may also embolden the OAG to pursue questionable cases and force settlements, using its new power as unfair leverage. Finally, this new provision will boost the OAG’s budget for consumer protection investigations, allowing it to broaden its enforcement efforts.
Strategic Responses for the Business Community
So, what can the business community do about this?
- First, trade organizations should consider industry-wide legal challenges to the new Fiscal Code bill, which is potentially vulnerable as not having been properly enacted under the Pennsylvania Constitution.
- Second, businesses should carefully review their business practices to avoid becoming targets of OAG consumer protection investigations.
- Finally, businesses should also consider the potential costs/attorney fees awards and charting their litigation strategy in such cases.
