The Hidden Consequences Rapid Growth

The Deceptive Trade Practices Act is a valuable tool afforded by the Texas legislature. However, as your small business grows, you need to put protocols in place to protect your business.  

By: Rahul B. Patel

The oil and gas industry has provided pleasing economic relief to many areas across South Texas; however, with the growth and demand, certain unintended consequences are also becoming more prevalent. As business and demand in South Texas grows, the potential for you or your business to get hit with a lawsuit or fall prey to predatory practices has also increased. Since the oil and gas industry’s enterprises are rooted in the goods and services industry, understanding the protections afforded by the Texas Deceptive Trade Practices Act (DTPA) is paramount in understanding the both the protections and the pitfalls your business faces as it grows.

To provide some brief history, the Texas legislature passed the DTPA in 1973. The DTPA was passed as a consumer protection law created to protect consumers from receiving (and businesses from providing) negligent or deceitful products or services such as breach of warranty, unconscionability and misrepresentation. This law soon became known as one of the leading consumer protection laws in the United States, and as a benchmark of justice.

So how does this law work, and how does it affect your business? The intent of this law is to allow the consumer to recuperate any damage and attorneys fees if a provider of goods or services commits an infraction of the DTPA. A violation of DTPA applies to false, misleading and deceptive trade practices in association with the transaction of a good or service. Thus, it is not only an important tool that protects you and your business as you engage with contractors, agents and service providers for your business – it brings up potential issues for you, the provider, as well.

Thus, as your agents and employees sell products and services in the field, it is ever more vital to ensure that the material, information and promises they make do not violate the DTPA. Proper training, guidance and review of your print material and contracts is increasingly important as your business grows.

In addition, if a jury finds that a provider did, in fact, commit an infraction of the DTPA, the questions of whether or not the defendant committed this violation knowingly comes to the surface of the claim. That is why it is ever more important to “know” what your employees and agents are saying and that what you have authorized them to say does not violate the DTPA.

If it is found that a provider deliberately committed a DTPA violation, a victim could be rewarded up to three times the economic damages (also known as treble damages). At times, mental anguish fees may be compensated to the consumer if he or she provides physical manifestations. The DTPA also allows the award of attorney fees in all cases where the plaintiff is victorious or visa versa in cases where a consumer files a false or unfounded claim against you, the service provider.

When properly used, the DTPA serves as a system of checks and balances against abusive, misleading and deceitful trade practices. It is important to be aware of this law and the way it works in order to avoid any risks that could potentially affect you or your business. As a business owner, always remember to be vigilant about creating, implementing and enforcing good, sound business practices to avoid the business pitfalls.

Rahul B. Patel is the managing partner of Patel Gaines Attorneys at Law. This article is not intended to provide legal advice, and it does not establish attorney-client privilege. For more information about the author, call Patel Gaines at 210-460-7787 or visit www.patelgaines.com