July 1, 2009 marked a significant event in the development of the rights of consumers in Iowa. On that date, Chapter 714H of the Iowa Code, creating a private right of action for consumer fraud, went into effect.
Chapter 714H was long overdue. Surprisingly, although Iowa has a long history protecting the rights of its citizens, it was the last state in the nation to adopt a law specifically allowing consumers to sue for consumer fraud. For several reasons, consumer fraud statutes significantly ease the burden for consumers who have suffered losses as a result of unscrupulous business tactics.
Consumers may bring a claim under Chapter 714H whenever businesses engage in "unfair and deceptive business practices." When those occur, consumers will no longer need to prove that the businesses "intended" to defraud them-a proof that is seldom easy to discovery-and no longer need to prove that they were "justified" in relying on the sales presentations and advertising-a requirement that frequently lead businesses to be a deceptive seller blaming the victim for being foolish enough to believe the seller's deceptive statements.
Another very important feature of Chapter 714H is that it allows a consumer to recover attorney's fees as well as actual damages. Since many consumer frauds involve relatively small sums, before the enactment of Chapter 714H, many Iowa consumers could not afford to bring a lawsuit for sales fraud because their attorney's fees would exceed the amount that they would likely recover. The new statute provides that attorney fees "shall" be awarded to a successful consumer. The statute also allows for liquidated or punitive damages of up to three times actual damages for cases involving intentional unfair or deceptive practices.
The Iowa statute does create many exempted categories for professionals whose conduct is regulated by other laws.
The Iowa statute also specifically allows for class actions to be brought. Class actions are frequently the best tool for preventing large businesses with substantial financial resources from engaging in systematic, deceptive and misleading sales practices.
Although Iowa's statute is still new, a number of individual and class actions have been filed raising claims under the statute-including several by Brady Preston Gronlund. We look forward to continuing to represent Iowa victims of unfair and misleading business practices.