Rule2022-18170
Guidance Regarding Interpretation of Unfair and Deceptive Practices
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 29, 2022
Effective
August 29, 2022
Issuing agencies
Transportation Department
Abstract
The U.S. Department of Transportation (DOT or the Department) is issuing a guidance document to inform the public and regulated entities about DOT's interpretation of the terms unfair, deceptive, and practices as it relates to its statutory authority to prohibit unfair or deceptive practices. The Department is taking this action to better define the terms unfair and deceptive in response to an Executive order issued by President Biden on July 9, 2021, on promoting competition in the American economy.
Full Text
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<title>Federal Register, Volume 87 Issue 166 (Monday, August 29, 2022)</title>
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[Federal Register Volume 87, Number 166 (Monday, August 29, 2022)]
[Rules and Regulations]
[Pages 52677-52681]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18170]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 399
[Docket No. DOT-OST-2019-0182]
RIN 2105-ZA18
Guidance Regarding Interpretation of Unfair and Deceptive
Practices
AGENCY: Office of the Secretary (OST), U.S. Department of
Transportation (DOT).
ACTION: Guidance regarding interpretation of unfair and deceptive
practices.
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SUMMARY: The U.S. Department of Transportation (DOT or the Department)
is issuing a guidance document to inform the public and regulated
entities about DOT's interpretation of the terms unfair, deceptive, and
practices as it relates to its statutory authority to prohibit unfair
or deceptive practices. The Department is taking this action to better
define the terms unfair and deceptive in response to an Executive order
issued by President Biden on July 9, 2021, on promoting competition in
the American economy.
DATES: This final guidance document is effective August 29, 2022.
ADDRESSES: This guidance will appear on the Department's aviation
consumer protection website at <a href="https://www.transportation.gov/airconsumer/guidance-aviation-rules-and-statutes">https://www.transportation.gov/airconsumer/guidance-aviation-rules-and-statutes</a>. The Department's
final rule regarding unfair and deceptive practices and related
documents are available on the docket at <a href="https://www.regulations.gov">https://www.regulations.gov</a>;
follow the online instructions for accessing DOT-OST-2019-0182.
FOR FURTHER INFORMATION CONTACT: Robert Gorman, Kimberly Graber, or
Blane Workie, Office of Aviation Consumer Protection, U.S. Department
of Transportation, 1200 New Jersey Ave. SE, Washington, DC 20590, 202-
366-9342, 202-366-7152 (fax); <a href="/cdn-cgi/l/email-protection#3a4855585f484e145d5548575b547a5e554e145d554c"><span class="__cf_email__" data-cfemail="89fbe6ebecfbfda7eee6fbe4e8e7c9ede6fda7eee6ff">[email protected]</span></a>;
<a href="/cdn-cgi/l/email-protection#6f0406020d0a1d031641081d0e0d0a1d2f0b001b41080019"><span class="__cf_email__" data-cfemail="c6adafaba4a3b4aabfe8a1b4a7a4a3b486a2a9b2e8a1a9b0">[email protected]</span></a>; or <a href="/cdn-cgi/l/email-protection#7c1e101d1219520b130e1715193c181308521b130a"><span class="__cf_email__" data-cfemail="7a18161b141f540d150811131f3a1e150e541d150c">[email protected]</span></a> (email).
SUPPLEMENTARY INFORMATION:
Background
The Department's authority to regulate unfair and deceptive
practices in air transportation or the sale of air transportation is
found at 49 U.S.C. 41712 (``section 41712'').\1\ Section 41712(a) gives
the Department the authority to investigate and decide whether an air
carrier, foreign air carrier, or ticket agent is engaged in an unfair
or deceptive practice in air transportation or the sale of air
transportation. In addition to this general provision, Congress has
also defined two specific practices as being unfair or deceptive.\2\
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\1\ In addition to section 41712, the Department's authority to
regulate unfair and deceptive practices is based in the Department's
rulemaking authority under 49 U.S.C. 40113, which states that the
Department may take action that it considers necessary to carry out
this part, including prescribing regulations.
\2\ See 49 U.S.C. 41712(b) (failing to notify the purchaser of
such an electronic ticket of its expiration date, if any, is unfair
or deceptive within the meaning of section 41712(a)); 49 U.S.C.
41712(c) (failing to disclose the name of the air carrier providing
the air transportation, as required by statute, is unfair or
deceptive within the meaning of section 41712(a)).
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[[Page 52678]]
The Department also has general authority to issue regulations
necessary to carry out section 41712. Many of the Department's existing
aviation consumer protection rules were issued under the authority of
section 41712, including but not limited to the tarmac delay rule,\3\
the full-fare advertising rule,\4\ the prohibition on post-purchase
price increases,\5\ and the rules on oversales and denied boarding
compensation.\6\
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\3\ 14 CFR 259.4.
\4\ 14 CFR 399.84(a).
\5\ 14 CFR 399.88(a).
\6\ 14 CFR part 250.
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Section 41712 does not define ``unfair,'' ``deceptive,'' or
``practice.'' On December 7, 2020, the Department issued a final rule
titled ``Defining Unfair or Deceptive Practices'' (``UDP Final
Rule'').\7\ In this rule, the Department noted that section 41712 was
modeled on section 5 of the Federal Trade Commission (FTC) Act.\8\ The
Department explained that while section 5 vests FTC with broad
authority to prohibit unfair or deceptive practices in most industries,
Congress granted the Department the exclusive authority to prohibit
unfair or deceptive practices of air carriers and foreign air carriers.
The Department noted that DOT and FTC share the authority to prohibit
unfair or deceptive practices by ticket agents in the sale of air
transportation.
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\7\ 85 FR 78707 (December 7, 2020); available at <a href="https://www.federalregister.gov/documents/2020/12/07/2020-26416/defining-unfair-or-deceptive-practices">https://www.federalregister.gov/documents/2020/12/07/2020-26416/defining-unfair-or-deceptive-practices</a>.
\8\ 15 U.S.C. 45.
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Accordingly, DOT determined that it was appropriate to define the
terms ``unfair'' and ``deceptive'' in ways that reflect both FTC
precedent and DOT's own long-standing interpretation of those terms.
Specifically, DOT defined a practice as being unfair to consumers if
``it causes or is likely to cause substantial injury, which is not
reasonably avoidable, and the harm is not outweighed by benefits to
consumers or competition.'' \9\ DOT defined a practice as being
deceptive to consumers ``if it is likely to mislead a consumer, acting
reasonably under the circumstances, with respect to a material matter.
A matter is material if it is likely to have affected the consumer's
conduct or decision with respect to a product or service.'' \10\ Like
FTC, the Department stated that proof of intent is not necessary to
establish either unfairness or deception.\11\ The Department found it
unnecessary to define ``practice.'' \12\
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\9\ 14 CFR 399.79(b)(1).
\10\ 14 CFR 399.79(b)(2).
\11\ 14 CFR 399.79(c).
\12\ 85 FR 78710.
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Among its major provisions, the UDP Final Rule requires DOT to
employ its definitions of ``unfair'' and ``deceptive'' when issuing
future rulemakings or taking future enforcement action.\13\ The rule
provided, however, that if Congress directs DOT by statute to issue
regulations specifically declaring a practice to be unfair or
deceptive, then DOT may do so without reference to the general
definitions.\14\ The rule also clarified that if a specific regulation
already applies to the conduct at issue, then the Department may rely
on the terms of that regulation.\15\
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\13\ 14 CFR 399.75(a)(rulemaking); 399.75(b)(enforcement).
\14\ 14 CFR 399.75(a).
\15\ 14 CFR 399.79(d).
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On July 9, 2021, the President issued Executive Order 14036,
``Promoting Competition in the American Economy.'' \16\ That Order
directed the Department to take a number of actions to protect aviation
consumers, including that the Department start development of proposed
amendments to its definitions of the terms ``unfair'' and ``deceptive''
in section 41712. Pursuant to the Executive Order, DOT stated that it
would fulfill the requirements of the Executive Order by issuing an
interpretive rule (i.e., this guidance document) that would clearly
apprise the public of the Department's interpretation of the
definitions of the terms ``unfair'' and ``deceptive.'' \17\
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\16\ <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/">https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/</a>.
\17\ ``Procedures in Regulating Unfair or Deceptive Practices,''
87 FR 5655 (Feb. 2, 2022).
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Guidance Regarding Interpretation of Unfair and Deceptive Practices
The purpose of this guidance document is to provide the public and
regulated entities with greater transparency with respect to DOT's
Office of Aviation Consumer Protection (OACP)'s interpretation of the
terms that are found in section 41712 and defined in the Department's
regulations at 14 CFR 399.79. This guidance document does not have the
force and effect of law, is not legally binding in its own right, and
will not be relied on by the Department as a separate basis for
enforcement or other administrative penalty beyond the underlying
authorities in statute and regulation.
Elements of Unfairness
In the Department's final rule titled ``Defining Unfair or
Deceptive Practices'' (``UDP Final Rule''), DOT defined a practice as
``unfair'' if it ``causes or is likely to cause substantial injury,
which is not reasonably avoidable, and the harm is not outweighed by
benefits to consumers or competition.'' \18\ We will address each
element in turn.
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\18\ 14 CFR 399.79(b).
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1. ``Causes or Is Likely To Cause''
In keeping with FTC precedent, DOT is of the view that a practice
may ``cause'' harm even if it is not the only cause of the harm, and
even if it is not the most proximate cause of the harm.\19\ Moreover,
the Department is not required to wait for substantial injury to take
place before taking action against an unfair practice. The Department
may take action against practices which are ``likely to cause''
substantial injury as well.\20\ When making such determinations, DOT
examines not only the probability of the harm occurring, but also the
magnitude of the injury if it does occur. As FTC has observed, ``a
practice may be unfair if the magnitude of the potential injury is
large, even if the likelihood of the injury occurring is low.'' \21\
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\19\ Opinion of the Commission, In the Matter of LabMD, Inc.
(July 19, 2016) at 10, available at <a href="https://www.ftc.gov/system/files/documents/cases/160729labmd-opinion.pdf">https://www.ftc.gov/system/files/documents/cases/160729labmd-opinion.pdf</a> (``LabMD'').
\20\ FTC has similar authority to declare a practice unfair if
it is likely to cause substantial injury. See 15 U.S.C. 45(n).
\21\ LabMD at 10.
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2. ``Substantial'' Injury
The UDP Final Rule uses the terms ``harm'' and ``injury''
interchangeably.\22\ The Department did not define ``substantial
injury'' in the UDP Final Rule, other than observing that the term
``would necessarily exclude trivial or speculative'' harm.\23\
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\22\ 14 CFR 399.79(b).
\23\ 85 FR 78710 n. 25.
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Substantial injury would be determined by the totality of the
circumstances. As FTC has written, ``it is well established that
substantial injury may be demonstrated by a showing of a small amount
of harm to a large number of people, as well as a large amount of harm
to a small number of people.'' \24\ Substantial harm is typically of an
economic nature. For example, the Department has found that delay in
providing refunds to consumers constitutes substantial harm to
consumers who did not receive the service they paid for and did not
have
[[Page 52679]]
access to their money for a significant time.\25\ However, it is well
established that harm need not be financial in order to be substantial.
For example, the Department found that delaying passengers on the
tarmac for a substantial length of time without the opportunity to
deplane or without adequate food, water, lavatory facilities, and
medical attention imposes substantial harm.\26\ Substantial harm may
also be found in intangible injury, such as to an individual's privacy
or reputation.\27\ Extended delays in obtaining relief, and the time
and expense of pursuing a claim, can also constitute substantial
harm.\28\
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\24\ LabMD at 9.
\25\ See Order and Settlement Agreement, Nov. 23, 2021
(available at <a href="https://www.transportation.gov/sites/dot.gov/files/2021-11/Air%20Canada%20-%20Order%20And%20Settlement%20Agreement.pdf">https://www.transportation.gov/sites/dot.gov/files/2021-11/Air%20Canada%20-%20Order%20And%20Settlement%20Agreement.pdf</a>)
(``Air Canada Order'') at 5.
\26\ See ``Enhancing Airline Passenger Protections,'' 74 FR
68983 (Dec. 30, 2009); available at <a href="https://www.federalregister.gov/documents/2009/12/30/E9-30615/enhancing-airline-passenger-protections">https://www.federalregister.gov/documents/2009/12/30/E9-30615/enhancing-airline-passenger-protections</a> (also noting that the rule was also premised on an
airline's statutory duty to provide ``safe and adequate'' interstate
air transportation).
\27\ Mishandling the private information of consumers may be
considered an unfair or deceptive practice within the meaning of
section 41712. See <a href="https://www.transportation.gov/individuals/aviation-consumer-protection/privacy">https://www.transportation.gov/individuals/aviation-consumer-protection/privacy</a>; see also LabMD at 19 (``the
privacy harm resulting from the unauthorized disclosure of sensitive
health or medical information is in and of itself a substantial
injury under section 5(n),'' even without further evidence that the
information was used to cause further harm); Spokeo, Inc. v.
Robbins, 578 U.S. 330 (2016) ``intangible injuries may nevertheless
be concrete'' for purposes of satisfying the case or controversy
requirement of standing in Article III courts).
\28\ Air Canada Order at 5; see also DOT Order 2009-9-8 (2009)
at 5.
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3. Not Reasonably Avoidable
For a practice to be unfair, the harm must not have been reasonably
avoidable by the consumer.\29\ For example, a lengthy tarmac delay
imposes unavoidable harm because the passenger lacks the opportunity to
deplane. It has also been the longstanding view of OACP that it would
be an unfair practice for a carrier to fail to provide a refund, on
request, for flights to or from the United States that were canceled or
significantly changed by the carrier, in part because the harm was not
reasonably avoidable by the traveler. We came to this conclusion even
if the passenger purchased a ``non-refundable'' ticket. We concluded
that a consumer acting reasonably would believe that he or she was
entitled to a refund under U.S. law if the carrier cancelled or
significantly changed the flight, regardless of the reason for the
cancellation or significant change. We further concluded that a
reasonable consumer would not believe that it is necessary to purchase
a more expensive refundable ticket in order to be able to recoup the
ticket price when the airline fails to provide the service paid for
through no action or fault of the consumer, because reasonable
consumers understand that ``refundable'' tickets are valuable because
they ensure a refund if the passenger cancels the flight.\30\ The
Department has issued a notice of proposed rulemaking that would
propose to codify OACP's interpretation that section 41712 requires
airlines to provide prompt refunds when a carrier cancels or makes a
significant change and the passenger does not take an alternative
flight offered by the airline, including when the original ticket
purchased is non-refundable.\31\
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\29\ See FTC Policy Statement on Unfairness, available at
<a href="https://www.ftc.gov/public-statements/1980/12/ftc-policy-statement-unfairness">https://www.ftc.gov/public-statements/1980/12/ftc-policy-statement-unfairness</a> (FTC generally does not intend to second-guess the wisdom
of consumer decisions, but it does intend to halt seller behavior
that ``unreasonably creates or takes advantage of an obstacle to the
free exercise of consumer decisionmaking.'')
\30\ Air Canada Order at 5.
\31\ 87 FR 51550 (August 22, 2022), available at <a href="https://www.federalregister.gov/documents/2022/08/22/2022-16853/airline-ticket-refunds-and-consumer-protections">https://www.federalregister.gov/documents/2022/08/22/2022-16853/airline-ticket-refunds-and-consumer-protections</a>.
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The Department looks at this element from the perspective of an
ordinary consumer acting reasonably under the totality of the
circumstances. For example, we have found that a passenger who
triggered an airline's fraud-detection system and lost frequent flyer
miles could have reasonably avoided that harm by not repeatedly
entering fictitious information into the airline's reservation
system.\32\
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\32\ DOT Order 2016-12-11, at 3.
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4. Harm Not Outweighed by Benefits to Consumers or Competition
Finally, the harm must not be outweighed by benefits to consumers
or to competition. Like FTC, the Department recognizes that some
practices may be harmful to consumers in some respects, but beneficial
to consumers in other respects. For example, offsetting benefits may
include lower prices or a wider availability of products and services
resulting from competition. The Department seeks to regulate practices
that are harmful to consumers in their net effects.\33\ Importantly,
the Department does not compare the harm to the consumer against the
benefits that the airline or ticket agent may obtain from the
practice.\34\ The Department's determination to regulate an unfair and
deceptive practice would also be informed by a regulatory impact
analysis.
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\33\ Air Canada Order at 5; see also the Department's oversales
rule, 14 CFR part 250, which also reflects this balance. The rule is
carefully crafted to allow airlines to oversell flights in order to
fill seats that would have otherwise gone empty due to ``no-shows.''
In exchange for this ability to overbook flights (which would
otherwise be unfair or deceptive), the Department requires airlines
to compensate and provide protections to passengers who were
involuntarily denied boarding in accordance with the rule. See DOT
Order 2020-6-5.
\34\ See Air Canada Order at 6 (finding that the practice of
retaining passenger funds for canceled flights beyond the time
frames allowed by law conveyed no benefit to consumers, even if the
practice may have benefited the airline).
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5. Public Policy Considerations
As we noted in the UDP Final Rule, DOT has a broad statutory
responsibility to consider a wide variety of public policies enumerated
by Congress.\35\ In fact, Congress has directed the Department in
carrying out its aviation economic programs such as regulations under
section 41712 to consider certain enumerated factors as being in the
public interest. These factors include ``the availability of a variety
of adequate, economic, efficient, and low-priced services without
unreasonable discrimination or unfair or deceptive practices'' and
``preventing unfair, deceptive, predatory, or anticompetitive practices
in air transportation.'' \36\ DOT considers public policy as
established by both the Executive branch (e.g., regulation, Executive
Order \37\) and the Legislative branch (e.g., statute, sense of
Congress) of the Federal Government as appropriate, when determining
whether a practice is unfair.
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\35\ 85 FR 78710.
\36\ 49 U.S.C. 40101(a).
\37\ E.g., Executive Order on Catalyzing Clean Energy Industries
and Jobs Through Federal Sustainability, <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federal-sustainability/">https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federal-sustainability/</a>; Biden Administration Advances the Future of
Sustainable Fuels in American Aviation, <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/09/fact-sheet-biden-administration-advances-the-future-of-sustainable-fuels-in-american-aviation/">https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/09/fact-sheet-biden-administration-advances-the-future-of-sustainable-fuels-in-american-aviation/</a>.
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As a public policy matter, the Department has found that
discriminatory conduct in and of itself constitutes an unfair practice.
In this regard, orders of the Department and its predecessor Civil
Aeronautics Board (CAB) support the position that violations of
statutes that prohibit discrimination constitute unfair and deceptive
practices. For example, the CAB determined that unlawful disparate
treatment of consumers by a carrier in its ticket-by-mail procedures
based on the consumer's ZIP code, which had the effect of
discriminating against African-Americans in New York City, is an
[[Page 52680]]
unfair practice.\38\ The Department has also consistently found that
violation of the Air Carrier Access Act, which prohibits U.S. and
foreign air carriers from discriminating against passengers with
disabilities, is an unfair practice.\39\ Similarly, the Department has
found that discrimination against individuals based on their race,
color, national origin, religion, ancestry or sex is an unfair
practice.\40\
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\38\ Miscellaneous Economic Orders, 78 C.A.B. 860 (1978): Docket
33219, Enforcement re Ticket-by-Mail, order 78-8-101, available via
HeinOnline.
\39\ See, e.g., DOT Order 2018-11-8.
\40\ See, e.g., DOT Order 2012-5-2.
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Elements of Deception
In the UDP Final Rule, DOT defined a practice as ``deceptive'' if
it ``is likely to mislead a consumer, acting reasonably under the
circumstances, with respect to a material matter. A matter is material
if it is likely to have affected the consumer's conduct or decision
with respect to a product or service.'' \41\ We will address these
elements in turn.
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\41\ 14 CFR 399.79(b)(2).
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1. Likely To Mislead a Consumer
First, the practice must be likely to mislead the consumer. As FTC
has explained, express misrepresentations, implied representations, and
omissions are all potentially actionable.\42\ A failure to provide
services as promised (whether by contract or otherwise) can also be
deceptive.\43\
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\42\ FTC 1983 Policy Statement on Deception, available at
<a href="https://www.ftc.gov/public-statements/1983/10/ftc-policy-statement-deception">https://www.ftc.gov/public-statements/1983/10/ftc-policy-statement-deception</a>.
\43\ Id.; see also DOT Order 2013-3-12 (airline acted
deceptively when it stated on its website that certain conditions of
carriage, including EU-mandated compensation for cancelled flights,
would apply to international travel to and from the U.S., but then
refused to abide by those conditions).
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The Department's full-fare advertising rule is based on its
authority to prohibit deceptive practices.\44\ Put simply, this rule
requires advertised prices for air transportation to be the entire
price to be paid by the customer to the carrier, or agent, for such air
transportation. The Department based its rule on evidence that
consumers believed that they were going to pay a particular advertised
price for air transportation, only to find that the price was
substantially higher due to additional taxes and fees.\45\ The rule
also requires any charges that are listed as components of the entire
price (e.g., taxes) not to be false or misleading.
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\44\ 14 CFR 399.84(a).
\45\ <a href="https://www.federalregister.gov/documents/2011/04/25/2011-9736/enhancing-airline-passenger-protections">https://www.federalregister.gov/documents/2011/04/25/2011-9736/enhancing-airline-passenger-protections</a>.
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We have also found that advertising a fare that is no longer
available, or failing to have a reasonable number of seats available at
the advertised fare, is deceptive.\46\ The Department has also found
that an airline's failure to comply with its publicly posted Customer
Service Plan is deceptive, because the carrier failed to abide by its
commitment to provide services as promised.\47\
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\46\ DOT Order 2022-2-6. While this practice is deceptive even
in the absence of a specific regulation, we have also found that
this practice violates the full-fare advertising rule, 14 CFR
399.84(a).
\47\ DOT Order 2018-5-27; DOT Order 2016-8-33.
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2. Acting Reasonably Under the Circumstances
Like FTC, the Department views deception from the perspective of an
ordinary consumer acting reasonably in the circumstances.\48\ FTC has
noted that entities are not responsible for the unreasonable
interpretations of a handful of individuals, or for broad statements of
feeling or opinion.\49\ Likewise, in the preamble to the UDP Final
Rule, we noted that willful, intentional, or reckless consumer behavior
that leads to self-imposed harm would likely not be covered.\50\
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\48\ On occasion, the Department receives complaints from
sophisticated consumers who were not personally deceived by a
practice because they are unusually knowledgeable. We have rejected
airlines' claims that such complaints must be dismissed because the
individual complainants themselves were not deceived. We reasoned
that we must view the practice from the perspective of the ordinary
consumer who may be unaware of the deception and are therefore less
likely to file complaints. See, e.g., DOT Order 2016-12-12.
\49\ See DOT Order 92-5-60 (1992) (finding that the terms of an
airline's frequent flyer programs were not deceptive simply because
consumers may have assumed that airlines could not make such changes
to the program, or were surprised that miles could not be sold, when
the terms of the plan themselves were clear); DOT Order 2012-12-11
(airline did not commit a deceptive practice by failing to warn a
passenger that his actions would trigger its fraud-detection system
when the passenger acted unreasonably in accessing the airline's
reservation system).
\50\ We have issued specific guidance regarding cases where
passengers intentionally purchase fares that they know or should
have reason to know are mistaken. See <a href="https://www.transportation.gov/airconsumer/mistaken-fare-policy-statement-050815">https://www.transportation.gov/airconsumer/mistaken-fare-policy-statement-050815</a>. Mistaken fares are also governed by the rule relating to
post-purchase price increases, 14 CFR 399.88.
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However, if a representation may be interpreted in two different
but reasonable ways, one of which is false, the entity may be liable
for the misleading interpretation. Like FTC, the Department will look
to all of the factors surrounding the statement to determine
reasonableness, including how clear, conspicuous, and significant the
representation is, the familiarity of the public with the product, and
the availability of alternate sources for the information.\51\
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\51\ FTC Policy Statement on Deception, section 3.
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3. Material Matter
The Department has adopted FTC's standard that the deception must
regard a ``material'' matter, which is a matter that is likely to have
affected the consumer's conduct or decision with regard to a product or
service. In such a case, ``consumer injury is likely, because consumers
are likely to have chosen differently but for the deception.'' \52\
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\52\ FTC Policy Statement on Deception, section 4.
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For example, the Department has found that the practice of
mischaracterizing a carrier-imposed fee as a ``tax'' is deceptive.\53\
We concluded that a reasonable consumer may choose to pay a ``tax''
under the reasonable belief that a tax is unavoidable, but that same
consumer may choose to shop elsewhere in order to avoid a carrier-
imposed fee. We have also found that an airline acted deceptively when
it promised a universally available discount for prepaid baggage fees,
when that discount was not available if the customer purchased the
ticket through a third-party website.\54\ In contrast, we have found
that errors that appear only in post-purchase receipts are misleading,
but not deceptive for purposes of section 41712, because there was no
evidence in that case that an error in a post-purchase receipt
influenced the consumer's pre-purchase decision.\55\
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\53\ DOT Order 2018-5-32.
\54\ DOT Order 2013-7-11.
\55\ DOT Order 2018-5-32.
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It is important to note that the ``product or service'' is not
limited to the initial purchase, however. For example, we have found
that an airline acted deceptively when it responded to consumer
complaints about denied boarding compensation by stating that it
complied with ``DOT and FAA regulations,'' when no such regulations
existed. We found that such misrepresentations could have dissuaded
consumers from pursuing valid complaints with the Department.\56\ We
have also found that misrepresentations relating to cancellation fees
were deceptive within the meaning of section 41712.\57\
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\56\ DOT Order 2009-9-8.
\57\ DOT Order 2022-2-6.
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Practice
FTC has the statutory authority to prohibit unfair or deceptive
``acts or practices'' in or affecting commerce.\58\
[[Page 52681]]
Section 41712, however, refers only to ``practices.'' \59\ In the UDP
Final Rule, we explained that our aviation consumer protection
regulations are always directed to practices of an airline or ticket
agent, rather than isolated acts of individual employees. We also
explained that our enforcement efforts include a determination that the
conduct in question reflects a practice or policy affecting multiple
consumers, rather than an isolated incident.\60\ We concluded that ``in
general, the Department is of the view that proof of a practice in the
aviation consumer protection context requires more than a single
isolated incident. On the other hand, even a single incident may be
indicative of a practice if it reflects company policy, practice,
training, or lack of training.'' \61\
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\58\ 15 U.S.C. 45(a)(1). The FTC Act prohibits FTC from
exercising jurisdiction over ``air carriers and foreign air carriers
subject to part A of subtitle VII of title 49.'' 15 U.S.C. 45(a)(2).
That authority lies exclusively with the Department. As noted above,
FTC and DOT both have authority over the unfair and deceptive
practices of ticket agents selling air transportation.
\59\ 49 U.S.C. 41712(a) (``the Secretary may investigate and
decide whether an air carrier, foreign air carrier, or ticket agent
has been or is engaged in an unfair or deceptive practice or an
unfair method of competition in air transportation or the sale of
air transportation.'')
\60\ See, e.g., DOT Order 2018-2-7 (finding that an airline's
failure to respond timely to a single complaint did not warrant
enforcement action in the absence of evidence of a pattern or
practice).
\61\ 85 FR 78711.
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Effective Date
This guidance is effective August 29, 2022.
Issued on or about this 15th day of August, 2022, in Washington,
DC.
John E. Putnam,
General Counsel, U.S. Department of Transportation.
[FR Doc. 2022-18170 Filed 8-26-22; 8:45 am]
BILLING CODE 4910-9X-P
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