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SBM Consumer Law Section Report Finds Michigan Consumer Protection Act "Toothless"

5/4/09

Michigan's central consumer protection law is now "toothless" due to court decisions exempting numerous businesses, according to a study released today by the State Bar of Michigan Consumer Law Section.

The study, titled "Consumers at Risk: Are Most of Michigan's Worst Business Practices Exempt from Our Consumer Protection Act?", examined businesses on the state Attorney General's list of top 10 consumer complaints for 2008. It found that 72 percent of businesses generating the most complaints are exempt from the state's Consumer Protection Act due to Michigan Supreme Court decisions. That includes nearly all the businesses in the top three complaint categories—credit and finance; gasoline, fuel and energy; and telecommunications, satellite and cable TV.

"This report shows state Supreme Court decisions exempting whole categories of businesses from consumer protection laws have left consumers unprotected," said report co-author Gary M. Maveal, professor and associate dean at University of Detroit Mercy Law School. The report was co-authored by Gary M. Victor, professor at Eastern Michigan University College of Business, and Frederick L. Miller, attorney with UAW Legal Services Plan.

The Michigan Consumer Protection Act (MCPA), which provides tools for the state Attorney General and consumers to respond to unfair and deceptive business practices, was passed in 1976. Until 1999, the Act was applied to many regulated businesses when they engaged in unfair or deceptive practices, In 1999, the state Supreme Court found that an entire area of business—credit insurance companies—was exempt from the law. This broad exemption decision was reaffirmed and extended in 2007 in a decision finding residential builders and other businesses licensed under the Occupational Code exempt from the MCPA. Because of these rulings, companies whose general area of practice is authorized by federal, state, or local licensing laws are most likely no longer subject to the MCPA's consumer protections.

"The weakening of the MCPA Act comes at a time when consumer protection is needed more than ever," said Victor. "Our economy requires consumer protection laws to protect consumers and prevent honorable businesses from being put at a competitive disadvantage by businesses using unfair or deceptive practices. Exempting mortgage companies, used car dealers, cable TV companies, and home improvement contractors from the MCPA is not good for consumers or free, fair competition."

The position expressed in the report is that of the Consumer Law Section and not the State Bar of Michigan. The State Bar does not have a position on this matter.

Read the Full Report

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