Defining Deceptive Acts and Practices: FTC and Dodd-Frank Compliance Standards

A practice is deceptive if it misleads or is likely to mislead a reasonable consumer, that is, a typical customer acting under normal circumstances. Deception does not require an outright false statement. It can occur through incomplete explanations, omitted details, or messages that create a misleading overall impression. For example, a customer is shown an advertisement listing a vehicle for a very low price.

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Only later, after spending hours at the dealership, do they learn the advertised price requires a $3,000 cash-down payment and an additional $1,500 fee for a mandatory fabric protection package, none of which was clearly disclosed in the ad or at the start of the negotiation. Because the customer could not reasonably anticipate or avoid these costs based on the initial information, The practice may be considered deceptive. Regulators evaluate the full message a consumer receives, not just individual words or disclosures.