Unfair competition laws are intended to ensure that consumers who enter a business deal receive the benefit of the bargain they were promised. They also protect competing businesses from each other, as they prevent businesses from using unfair or illegal practices to undermine competitors. These laws apply to all industries in Maryland. Furthermore, the laws are broadly applicable to an array of conduct that is considered unfair or deceptive.

It is essential for businesses located in or with commercial interests in Maryland to understand the scope of these federal and state laws. Furthermore, consumers who feel they have been tricked, deceived, or negatively impacted by other unfair practices would do well to understand and apply these concepts should negotiations for a solution fail. Unfair competition practices, including fraud, deception, or other dishonest practices, may be harmful to consumers, and competing businesses might find their reputations or business rations unfairly damaged or disparaged. In such cases, a consumer or damaged business can bring legal action against the business employing unfair practices.

Get a private evaluation of your claims from our Baltimore business attorneys at the Heyman Law Firm by calling (410) 305-9287.

How Unfair Competition Might Damage Your Business in Maryland

Unfair competition is more than unethical business practices. It almost always involves fraud or deception, and a business or consumer who is harmed by unfair competition may bring legal action to recover damages. Since business competition is an inherent part of our economy, it is sometimes difficult to determine if a defendant has truly engaged in unfair competition or if their practices are ethically questionable but perfectly legal.

One example is when a business passes off goods or products as their own when, in reality, they come from another company or business. The defendant might sell these goods as their own and enjoy the profits from the deception, while the business that actually created the goods gets nothing. For example, suppose a supplier of grocery store items decides to sell certain canned goods under the brand name of a particular company because that company’s name is associated with high-quality products. Next, suppose the canned goods in question actually come from a lesser-quality dealer or seller. In that case, the dealer of grocery items is committing fraud, and the other businesses who are being deceived may take legal action.

Another possibility is that one business wants to eliminate a competitor, so it launches an advertising campaign that contains misleading and false information about its competitor to ruin its reputation. If the other business can prove that the information in the advertising campaign is false and damaging, they may recover damages.

How Unfair Competition or Illegal Business Practices Affect Consumers in Maryland

Under federal law, the Federal Trade Commission Act or FTC Act is the most common means for a company to face legal action regarding unfair competition affecting a consumer. Other sources of law that may give rise to legal liability include the Sherman Act and its prohibitions on conspiracies to set, maintain, stabilize, or increase prices among competitors.

Under Section 5 of the FTC Act codified at 15 U.S.C. § 45(a)(1), Business practices and methods of competition that affect commerce are unlawful if they are unfair or deceptive. Statements made to a prospective client, including assurances, inducements, and advertisements can give rise to legal liability under this act. However, there are certain elements that must be met to bring a viable cause of action under the FTC Act.

First, the business or agent of the business must make a promise, representation, or engage in a practice that is likely to mislead a consumer. Second, the consumer must act reasonably under the circumstances and understand the representation or statement in a way that is also reasonable under the circumstances. Third, the representation or inducement made by the business must be material. A material representation is one that is likely to influence behavior or the decision-making process. Representations that are non-material or merely incidental to the dealing do not give rise to a valid cause of action.

Both goods and services are covered under the FTC Act. It is important to remember that the standard is what a reasonable consumer would believe. The “literal truth” is not a defense nor the standard through which a court would analyze the scenario. Rather, a court will look to determine how the reasonable consumer would interpret the representation.

While the federal FTC Act does not provide consumers with a right to bring a private lawsuit, consumer complaints can lead to federal regulatory enforcement action against alleged unfair and deceptive practices. Defending and resolving such claims can result in enormous expenses, significant business interruptions, or even closure under egregious circumstances.

Legal Remedies for Unfair Competition in Maryland

If you purchased a good or service from a business that you believed violated laws regarding unfair competition, or if a competing business is using deceptive methods to disparage or harm your business, you have legal options worth exploring. An attorney can help you take action to stop the unfair practices and possibly get you compensation for damages you might have sustained.

Consumer Complaints

According to Md. Code, Comm. Law Art., § 13-401(a), you may file a consumer complaint if you purchased something that was falsely advertised or otherwise not what you were promised. For example, you might have purchased a vintage designer dress from a business that curates and sells vintage designer clothing. However, when you received the dress, it was very clearly a fake. You can file a consumer complaint against the business that sold you the vintage dress. While this is not exactly the most aggressive form of legal action, it may yield results. Complaints may be investigated and referred to the FTC in many cases.

Cease and Desist Orders

Another option is to get a cease and desist order against the offending business. According to § 13-403(a), if unfair competition has caused harm to your business, you may request a hearing on the matter. At the hearing, evidence may be presented to support your claims that the offending business has violated laws of unfair competition. Under subsection (b), if it is determined by a preponderance of the evidence that the offending business has committed a violation, it will be ordered to cease and desist. A cease and desist order might also require the offending business to pay restitution and take affirmative steps to correct their behavior.

Action for Damages

Getting a business to stop unfair competition and deceptive business practices is not always easy. Many offenders simply ignore things like cease and desist letters or consumer complaints. Many others believe they are doing nothing wrong. If you are at the end of your rope or want to solve the problem before it becomes worse, you can file a civil action for damages, according to § 13-408.

Since this is a formal civil lawsuit, you must come prepared with evidence of the defendant’s deceptive or fraudulent conduct. You must also have evidence of how your business was affected, including the loss of sales or damage to your overall professional reputation. If successful, you may recover damages to compensate for how your business suffered because of the defendant’s fraudulent or deceptive business practices. In some cases, a plaintiff’s business is damaged irreparably, and damages may be extremely high.

Situations Involving Unfair Competition in Maryland

Maryland’s Consumer Protection Act (MCPA) does authorize an individual consumer to hire an attorney and to file a private lawsuit against the company or organization engaging in unlawful or unfair trade practices. Codified in the Maryland Commercial Law Code at § 13-301, the statute prohibits deceptive trade practices, including any false, misleading, or falsely disparaging written or oral statements, visuals, or other representations which have the effect, tendency, or capacity to mislead or deceive consumers.

The law prohibits representations regarding goods or services that falsely state endorsements or sponsorships that the dealer or merchant is (1) affiliated with a certain group, company, or person, (2) that the condition of the good is new when it is second-hand or refurbished, (3) any material fact, (4) that other goods or services are of inferior quality, (5) advertisements for goods or services that the offeror does not intend to make available at the stated price, and (6) advertisements of a deal without intent to supply sufficient quantity.

An array of other prohibited practices are set forth in the law. A failure to understand these prohibitions can lead to private lawsuits that can result in significant damages as well as the plaintiff’s costs and attorneys’ fees.

Work with an Experienced Maryland Business Litigation & Unfair Competition Lawyer

Litigation attorney William Heyman of the Law Firm of William S. Heyman pursues a balanced approach to unfair competition law, working to ensure that businesses do not run afoul of the law and are vigorously defended against lawsuits and regulatory actions. To schedule a confidential legal review, call (410) 305-9287 or contact us online today.