What Makes a Business Practice “Unfair or Deceptive” Under Massachusetts Chapter 93A

Massachusetts Business Attorney · Business Law

Almost every business dispute I see in Massachusetts eventually raises the same question: is this “just” a contract or billing dispute, or is it an unfair or deceptive practice under Chapter 93A, the state’s consumer protection law? The answer matters, because a 93A violation can bring multiple damages and attorney’s fees that an ordinary contract claim cannot.

The statute itself does not define “unfair” or “deceptive.” The meaning comes from federal law, the Attorney General’s regulations and decades of court decisions. This article walks through those sources and conduct courts have, and have not, found to cross the line.

What the statute says

G.L. c. 93A, § 2 has three parts:

• Section 2(a) declares unlawful “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
• Section 2(b) tells courts that, in construing § 2(a), they will be guided by how the Federal Trade Commission and the federal courts interpret § 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)), as those interpretations develop over time.
• Section 2(c) authorizes the Attorney General to adopt regulations interpreting § 2(a), so long as they are not inconsistent with those federal interpretations.

Massachusetts courts are guided by federal law, not bound by it, and the Supreme Judicial Court has said unfair or deceptive conduct is best discerned from the circumstances of each case (Kattar v. Demoulas, 433 Mass. 1 (2000)).

The Attorney General’s regulations: 940 CMR 3.00

Using the § 2(c) power, the Attorney General has issued general regulations at 940 CMR 3.00. They address specific practices such as false advertising, deceptive pricing, misrepresentations, home improvement transactions, refund and cancellation policies, landlord-tenant matters and price gouging.

The catch-all is 940 CMR 3.16. Under it, an act or practice violates § 2 if:

1. It is oppressive or otherwise unconscionable in any respect;
2. A business fails to disclose to a buyer or prospective buyer any fact that might have influenced the buyer not to enter into the transaction;
3. It fails to comply with existing statutes, rules, regulations or laws meant for the protection of the public’s health, safety or welfare and intended to provide Massachusetts consumers protection; or
4. It violates the Federal Trade Commission Act, the federal Consumer Credit Protection Act or other federal consumer protection statutes within the purview of § 2.

Not every legal violation is automatically a 93A violation

Section 3.16(3) is broad, and plaintiffs often argue that breaking some other law is automatically a 93A violation. The Supreme Judicial Court has rejected that reading. In Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 165 (2013), a bar patron died after falling down a staircase that had been built without permits and in violation of the State Building Code. The Court held that a building code violation can support 93A liability, but that qualifying as a public-safety regulation “does not mean that a violation of the building code necessarily qualifies” as a 93A violation. The conduct must still be unfair or deceptive and occur in trade or commerce. Liability was upheld because the owners knowingly skipped the permits to avoid compliance costs.

A violation also does not pay off without harm. In Hershenow v. Enterprise Rent-A-Car Co., 445 Mass. 790 (2006), consumers claimed a rental car damage waiver violated a state statute. The Court held that, because the waiver caused them no loss, they could not recover. A causal connection between the conduct and a loss is essential.

What makes a practice “unfair”

The starting point is PMP Associates, Inc. v. Globe Newspaper Co., 366 Mass. 593 (1975). Following standards the FTC had developed, the SJC asked:

1. Whether the practice is within at least the “penumbra” of some common-law, statutory or other established concept of unfairness;
2. Whether it is “immoral, unethical, oppressive, or unscrupulous”; and
3. Whether it causes substantial injury to consumers, competitors or other businesspeople.

In PMP itself, the Boston Globe refused to sell advertising space to the plaintiff. The Court held that a newspaper’s mere refusal to deal, without more, was not unfair. The test is not a mechanical checklist, but courts continue to cite it. Other cases add two lessons:

• “Everyone does it” is not a defense. In Commonwealth v. DeCotis, 366 Mass. 234 (1974), mobile home park operators charged residents a fee when they sold their homes, for no services at all. The SJC held the fee unfair even where it may have been disclosed up front, and said an industry-wide practice would not be a defense.
• Legal rights can be used unfairly. In Kattar v. Demoulas, the defendants had a legal right to foreclose, but used it as retribution against a man who refused to testify as they wanted. The SJC held that the legality of the underlying conduct is not necessarily a defense.

The concept also evolves. In Commonwealth v. Fremont Investment & Loan, 452 Mass. 733 (2008), the SJC affirmed a preliminary injunction against a subprime lender whose home loans combined features that made default and foreclosure almost certain. The Court rejected the argument that the lender was being judged by a new standard because the industry had not considered those loans unfair at the time.

What makes a practice “deceptive”

Deception is about the effect on the customer, not the seller’s state of mind. In Aspinall v. Philip Morris Companies, Inc., 442 Mass. 381 (2004), a class action over “Lights” cigarettes, the SJC explained that an advertisement is deceptive when it has the capacity to mislead consumers, acting reasonably under the circumstances, to act differently than they otherwise would have. The test is objective. The Attorney General’s regulations likewise use a “capacity or tendency” to deceive standard (940 CMR 3.05(1)).

According to Aspinall, a successful deception claim does not require proof that the plaintiff relied on the representation, or that the defendant intended to deceive, or even that the defendant knew the statement was false. A deceptive act caused by negligence can be actionable, but not every negligent act is unfair or deceptive (Swanson v. Bankers Life Co., 389 Mass. 345 (1983)).

Business-to-business claims under § 11

Consumers sue under § 9. A business that is injured by another business’s unfair or deceptive conduct sues under § 11. Section 11 requires that the conduct occurred “primarily and substantially” within Massachusetts.

Courts have long expected more before calling conduct between businesses unfair. In Levings v. Forbes & Wallace, Inc., 8 Mass. App. Ct. 498 (1979), the Appeals Court wrote that the objectionable conduct must attain a “level of rascality” that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce. That phrase is still widely quoted.

The SJC has since moved away from it. In Massachusetts Employers Ins. Exch. v. Propac-Mass, Inc., 420 Mass. 39 (1995), the Court called the “rascality” language “uninstructive” and said the crucial factors are the nature of the challenged conduct and its purpose and effect. The sophistication of the parties still matters, though. The SJC has recognized that a business party may have to show more than a less sophisticated party would, because some conduct is common practice between businesses (Anthony’s Pier Four, Inc. v. HBC Associates, 411 Mass. 451 (1991); Lambert v. Fleet National Bank, 449 Mass. 119 (2007)).

For the demand letter and pre-suit steps in a business case, see Chapter 93A demand letters when a business sues a business.

Breach of contract alone is not enough

This is the most common issue in business cases. As the SJC put it in Propac, a breach of contract alone does not amount to an unfair act or practice under § 2 (citing Whitinsville Plaza, Inc. v. Kotseas, 378 Mass. 85 (1979)). Something more is required, and the “more” usually involves using the contract, or a breach of it, as a weapon:

• Breaching to gain leverage. In Anthony’s Pier Four, a party with a right to approve a developer’s plans withheld approval as a pretext to force the developer to pay more than the contract required. The SJC held that knowing use of a contract right to extract financial concessions was a willful 93A violation, even between sophisticated parties.
• Coercive conduct while the contract is in force. In Propac, the SJC upheld a 93A finding where a party’s breach was undertaken as leverage to destroy the other party’s rights under the agreement and had a “coercive quality.”

On the other side of the line:

• Refusing to pay a bill because you dispute the amount does not, by itself, give rise to a 93A claim (Levings).
• A good faith dispute over whether money is owed or performance is due “is not the stuff of which a c. 93A claim is made” (Duclersaint v. Federal National Mortgage Ass’n, 427 Mass. 809 (1998)).
• Breaking off incomplete negotiations for a commercial loan renewal was not unfair, because every businessperson should expect that the other side may change its mind before a deal is done (Lambert).

Examples at a glance

Conduct the courts found unfair or deceptive:

• Charging mobile home owners a resale fee for no services (DeCotis).
• Withholding a contractual approval as a pretext to force financial concessions (Anthony’s Pier Four).
• Foreclosing, though legally permitted, as retribution for refusing to testify (Kattar).
• Knowingly building a staircase without permits, in violation of the building code, to avoid compliance costs (Klairmont).
• Making home loans structured so that foreclosure was all but certain (Fremont, at the preliminary injunction stage).

Conduct the courts found was not: a newspaper simply refusing to sell ad space (PMP), a good faith dispute over what is owed (Levings; Duclersaint), walking away from unfinished negotiations (Lambert), and a statutory violation that caused no loss (Hershenow). Each case turned on its own facts.

Defenses and damages, briefly

Whether conduct is unfair or deceptive is only the first question. There are also exemptions, the injury and causation requirements, the “primarily and substantially” requirement for business claims, and the effect of a reasonable settlement offer. Those are covered in defenses to Chapter 93A claims in Massachusetts. For how multiple damages and fees work, see “I can get 3x the damages in a 93A lawsuit”.

Frequently Asked Questions

Does Chapter 93A define “unfair or deceptive”?

No. Section 2(a) prohibits unfair or deceptive acts in trade or commerce without defining them. Courts are guided by federal interpretations of the FTC Act, the Attorney General’s regulations at 940 CMR 3.00, and Massachusetts case law, including the PMP Associates unfairness factors.

Do I have to prove the business intended to deceive me?

No. The Supreme Judicial Court has held that a deception claim does not require proof that the defendant intended to deceive or that the plaintiff relied on the statement. The question is whether the practice had the capacity to mislead a reasonable consumer. You still must show the conduct caused you a loss.

Is a breach of contract a Chapter 93A violation?

Not by itself. A breach of contract alone does not violate Chapter 93A. Courts look for something more, such as knowingly breaching or misusing a contract right to force concessions the contract does not require.

Is every violation of another law automatically a 93A violation?

No. Under 940 CMR 3.16(3), violating certain consumer-protection laws can be a 93A violation, but the Supreme Judicial Court has held that the conduct must still be unfair or deceptive and occur in trade or commerce, and the plaintiff must show a resulting loss.

Is the standard different when one business sues another?

Business claims are brought under Section 11. The Supreme Judicial Court has called the old “level of rascality” phrase uninstructive and focuses on the nature, purpose and effect of the conduct, but a sophisticated business may still need to show more than a consumer would.

Getting help with a Chapter 93A question

Whether you are deciding if you have a claim or responding to one, the analysis turns on the facts. Learn more in Chapter 93A: when you have a legal claim as a homeowner or business owner, or if a demand has already arrived, my business received a demand letter. You can also review our Massachusetts business law services or contact our office at 978-273-8337.

Related Articles

• Let the seller beware: the Massachusetts Chapter 93A Consumer Protection Act
• Massachusetts debt collection rules and Chapter 93A
• Defenses to Chapter 93A claims in Massachusetts
• Chapter 93A demand letters when a business sues a business

About the Author

Richard Alan Gaudet, Esq. is a Massachusetts attorney at the Law Offices of Richard Alan Gaudet, LLC in Middleton, Massachusetts, who advises businesses and individuals on collections, Chapter 93A claims and commercial disputes. His practice focuses on professional license defense, business law and litigation, family law, and landlord representation, serving clients across Northern, Eastern, and Central Massachusetts. Reach him at 978-273-8337 or rgaudet@gaudetlawoffice.com. Office: 35 Village Rd., Ste 100, Middleton, MA 01949.

ABOUT THIS ARTICLE

This article was prepared by a Massachusetts attorney and is provided solely for general informational and educational purposes directed to members of the general public. It does not constitute legal advice and does not create an attorney-client relationship. The law applicable to any particular situation depends on the specific facts and circumstances of that matter. Readers are encouraged to seek the advice of a licensed Massachusetts attorney before taking any action.