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INTERPLAY WITH CONSUMER PROTECTION STATUTES

The Federal Trade Commission Act, as amended, was one of the first laws to protect consumers from unfair and deceptive acts or practices in commerce. Additionally, most states have now adopted either the Uniform Deceptive Trade Practices Act1 or enacted similar statutes that protect consumers and other businesses from unfair and deceptive acts or practices in commerce. These consumer-oriented statutes are typically limited to the sale of goods or services and transactions for personal, family, household, and similar purposes. While there is a variance in these statutes as to what constitutes an unfair and deceptive trade act or practice, the following activities are typically prohibited under all consumer-oriented deceptive trade practice statutes: (1) passing off goods or services as those of another; (2) causing confusion or misunderstanding as to the source or approval of goods or services; (3) falsely representing that goods or services have sponsorship, approval, or benefits that they do not have; (4) disparaging the goods, services or business of another by false or misleading representations; and (5) engaging in any other conduct that creates a likelihood of confusion or of misunderstanding. Federal and state consumer-oriented laws usually allow both business competitors and consumers to sue a business or person that has engaged in a deceptive trade practice. In many states, aggrieved consumers may obtain treble damages and collect attorney's fees.

Twisting

What is Twisting?

Purchasing Groups

The Liability Risk Retention Act of 1986 provides for the formation of purchasing groups to buy insurance. Such groups must be made up of members or companies with similar risk exposure due to their involvement in similar businesses. The groups must meet the regulatory requirements of the states in which they are organized, but, due to preemption by the Act, some regulatory requirements of other states in which the groups do business do not have to be met.

Suits by Intended Beneficiaries

Causes of Action

The Duty of Reinsurers to Follow the Fortune of Cedant Insurers

Most reinsurance contracts by which an insurance company cedes or reinsures a portion of the coverage for policyholders to a reinsurer call for the reinsurer to "follow the fortune" of the insurer. Thus, the reinsurer is expected to pay the reinsured percentage of a claim without questioning how the insurer handled the claim. The follow the fortune doctrine is an extension of the "utmost good faith" that by tradition has governed the relationship of the ceding insurer to the reinsurer.