Ignoring The Rule Of Caveat Emptor In The Application Of Consumer Protection Statutes

In a recent court victory (go here for court ruling) against a foreclosure rescue operator accused of preying on financially distressed homeowners and using equity stripping techniques to rip them off, the Washington State Attorney General's Office successfuly applied its state's Consumer Protection Act in seeking to have the operator's conduct to be found in violation of the statute.

In its Trial Memorandum, the AG's office cited a decision of the U.S. Supreme Court in support of the proposition that the rule of caveat emptor has no application when applying consumer protection laws, and in my view, deserves highlighting here:

• There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.

FTC v. Standard Education Society, 302 U.S. 112, 116 (1937).