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Open Letter to Gretchen Whitmer

Governor Gretchen Whitmer

Re: Consumer Protection in Michigan

Dear Governor Whitmer:

I write to you today in order to bring to your attention the state of consumer protection law within the state of Michigan and need for immediate action to modernize those statutes and provide basic protections which are afforded to the residents of other states.

  1. Motor Vehicles – Even though car purchases are among the largest purchases made by most consumers, Michigan law currently offers no protection to consumers concerning pricing, condition or the validity of titles to motor vehicles. While the prior administration and many current legislators believe that protections exist for car sales under the Michigan Consumer Protection Act, MCL 445.901 et seq ., that statute has not applied to car transactions since 1999 when the Michigan Supreme Court decided the Smith v Globe Life case that exempted most businesses from coverage under that statute.

    In the absence of any protection under the MCPA, consumers had to rely on other, more specific statutes, for protection against unfair pricing, warranty, defects, and title issues.

    As to pricing, Michigan Law formerly prohibited car dealers from refusing to sell a vehicle at an advertised price. While consumers had no guarantee of knowing the purchase price of a vehicle before negotiating for its purchase, the Item Pricing and Advertising act clearly barred dealers from increasing the price above the advertised amount. Unfortunately, one of the first acts of the Snyder administration was to initiate changes to that statute, removing car dealers from the list of regulated merchants. With that revision, Michigan consumers were left with no protection against dishonest dealers who would manipulate the price of a vehicle after assessing the consumer’s ability to pay an interest in the vehicle. This unfair behavior undermines consumer’s confidence in the market and encourages businesses to price gouge.
  2. MCPA – The Michigan Consumer Protection Act was formerly one of the nations strongest consumer protection statutes, with many of the most common frauds barred and strong remedial provisions. Following the ruling in Smith v Globe Life , the MCPA has been relegated to the scrap heap of ineffectual statutes (see What’s Left After Smith. The ruling in Smi th – contrary to the plain language of the statute and prior controlling authority – rendered virtually every regulated business beyond the reach of the statute. That ruling has given license to lower courts to use Smith as a broom to clear its docket of virtually all consumer protection claims, irrespective of whether the analysis in Smith actually controls. (See Newton). This reading of the statute is at odds not only with controlling judicial principals, but also with the construction of this same provision, incorporated from a uniform act, construed by other states.

    The absence of an effective remedy for false, fraudulent and misleading acts undercuts consumer confidence, particularly in large transactions, and thus acts as a drag on the Michigan economy. Likewise, the availability of fungible goods in neighboring states with effective remedies, creates unnecessary competition for consumer businesses. For example, the Ohio Sales Practices Act which is similar to Michgan’s Consumer Protection Act, still covers car dealers. Thus, for consumers within driving distance to Ohio, those consumers could purchase the same vehicle on either side of the border, but enjoy enormous protections if they purchase in Ohio. In an economy where so many purchases are of fungible goods, consumers would be wise to forego their Michigan auto purchase in favor of taking a quick trip to Toledo.

    Michigan must restore coverage of the MCPA to all merchants and repeal the exemptions of section 4 of the MCPA.

    Additionally, the MCPA has lagged behind other similar statutes in providing adequate remedies for willful misconduct. For businesses that operate systemically in bad faith with the intent of taking advantage of consumers, the monetary remedy is only to return money which has been wrongfully taken. If the only realistic consequence of defrauding many consumers is the return of money to those who complain, there statute hardly provides a disincentive for misconduct.

    Michigan should enact enhanced damages for those businesses who act willfully or within an established pattern or practice of misconduct.

These items are in desperate need of correction to lift Michigan from the ranks of the worst states for consumer protection. I hope that you will consider taking action to restore consumer’s confidence in our market place.

Ian B. Lyngklp
Lyngklip & Associates, Consumer Law Center, PLC
FCRA Insight

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