Page 7 - John Hundley 2009

Sharp Thinking

No. 19 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. April 2009

Fraud Is Not Required for Claim

Under Illinois “Consumer Fraud Act”

By John T. Hundley, Jhundley@lotsharp.com, 618-242-0246

Its full name is a mouthful: the “Illinois Consumer Fraud and Deceptive
Business Practices Act.”

Perhaps that is why courts and commentators often call it merely the
“Consumer Fraud Act”.

But as a recent decision of the Appellate Court shows, some legal significance
is lost when the Act (815 ILCS 505) is referenced by that short moniker.

From its outset, there have been tensions between the Act and other areas of law. How is an
action under the Act different from common-law fraud? When a violation is based on a business
transaction, must the violation be more than a breach of contract? Does the Act benefit only consumers?

In Demitro v. General Motors Accept. Corp., __ Ill.App.3d __, 902 N.E.2d 1163 (2009), the First
District addressed the first two of those questions. In Demitro, a vehicle owner went
into default while off work due to a medical disability. GMAC started the process for
seizing possession, but after the owner contacted it and agreed to GMAC taking an
immediate withdrawal of one installment from his bank account, it issued a letter stat-
ing it would not exercise its “repo” rights for seven days and demanding that the owner
bring the account current during that period. Within two days, how-
ever, the vehicle was seized. GMAC then demanded payment in full of the principal
balance on the loan, plus repo charges, as a condition for return of the vehicle. When
that payment was not forthcoming, GMAC had the vehicle sold, even though the
owner offered to bring the account current as demanded in the seven-day letter.

In hearing GMAC’s challenge to the judgment for the owner, the panel first noted that while most
cases under the Act deal with alleged fraud or deception, the Act is not so limited. It prohibits any
“[u]nfair methods of competition and unfair or deceptive acts or practices, including but not limited to the
use or employment of any deception, fraud,” etc. (§ 2, emphasis added). The Act’s broader scope is
further evidenced by the direction that the Act be construed like the Federal Trade Commission Act
provision prohibiting “unfair methods of competition” (15 U.S.C. § 45), by a series of sections dealing with
specific actions deemed to violate the Act (815 ILCS 505/2A et seq.), and by the legislature’s decrees that
violations of certain other acts are violations of the Act (e.g., 815 ILCS 505/2Z). Hence the Demitro panel
unanimously ruled that a plaintiff “may allege that conduct is ‘unfair’ under the [Act] without alleging
that it was deceptive.”

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
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