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Unfair Competition Statute

California’s ‘Little FTC Act’
is the principal consumer protection statute
used by state and local prosecutors


California’s general purpose unfair competition statute is found at Business & Professions Code §17200 et seq. Known as California’s “Little FTC Act,” §17200 is the principal consumer protection statute used by state and local prosecutors in California today.

In addition, because of its broad private standing provision, §17200 has drawn increased interest as a vehicle for private lawsuits.

This provides a brief overview of this important business law statute.

§17200 provides, in relevant part: “Unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice,” as well as “unfair, deceptive, untrue or misleading advertising” and acts violating California’s false advertising statute, Bus. & Prof Code §17500.

As a result of the statutory cross-reference to §17500, “any violation of the false advertising law necessarily violates the unfair competition law.” Comm. on Children’s Television v. General Foods (1983) 35 Cal.3d 197, 210.

But the unfair competition statute goes well beyond false advertising as a result of its well-known three-pronged prohibition on unlawful, unfair or fraudulent business acts or practices. These terms cover a wide range of business behaviors, giving §17200 its broad scope.

Like its parent statute (FTC Act §5, 15 U.S.C. §45), California’s unfair competition statute has application to the two traditional areas of trade regulation law: false advertising/consumer protection matters and antitrust matters. (See People v. National Assoc. of Realtors (1981) 120 Cal.App.3d 459, 474.)

Indeed, the modern view is that §17200 is a true parallel to FTC Act §5, which prohibits both “unfair methods of competition and unfair or deceptive acts or practices.” (People v. National Assoc. of Realtors, supra, at 472 – 473 (§5 is the “federal equivalent of our unfair competition statutes”).)

Federal court decisions construing §5, while not binding, are “more than ordinarily persuasive” in interpreting §17200, “in view of the similarity of language and obvious identity of purpose of the two statutes…” People v. National Research (1962) 201 Cal.App.2d 765, 772 – 773.

However, as a result of its additional prohibition on “unlawful business acts or practices,” §17200 extends beyond the scope of its parent statute into other aspects of business law.

General theories of liability

In addition to its prohibitions on “false advertising” and violations of §17500, the unfair competition statute provides three more general theories of liability:

1. UNLAWFUL ACTS OR PRACTICES. Under this provision, “unfair competition” includes “anything that can properly be called a business practice and…is forbidden by law.” Barquis v. Merchant Collection Ass’n (1972) 7 Cal.3d 111, 117; People v. McKale (1979) 25 Cal.3d 626 (1979).

The court of appeal in Saunders v. Superior Court (1994) 27 Cal.App.4th 832, recently summarized the standard as covering any business act “forbidden by law be it civil or criminal, federal, state or municipal, statutory, regulatory or court-made.” Id. at 839. (See also, Diaz v. Kay-Dix Ranch (1970) 9 Cal.App. 3d 588 (violation of federal immigration laws).)

Thus, a business act or practice in violation of any California law triggers §17200.

Examples of business practices found to be “unfair competition” within the meaning of §17200 include violations of: the Labor Code (People v. Los Angeles Palm (1981) 121 Cal.App.3d 35 (unlawful wage payments); the Health & Safety Code (People v. McKale (1979) 25 Cal.3d 626 (1979) (violations of mobile home park regulations); People v. Casa Blanca Convalescent Homes (1984) 159 Cal.App.3d 509, 530 (unlawful conditions at nursing home); the Civil Code (Hernandez v. Atlantic Finance Co. (1980) 105 Cal.App.3d 65 (unlawful credit practices); the Penal Code (People v. Sakai, 56 Cal.App.3d 53l (1976) (violation of California’s Endangered Species Act); and many others.

2. UNFAIR ACTS OR PRACTICES. California has traditionally drawn from the very broad FTC Act §5 guidelines enunciated by the Federal Trade Commission and the federal courts to define what is “unfair.”

In FTC v. Sperry & Hutchinson, 405 U.S. 233, 244 (1972), the U.S. Supreme Court noted the relevant factors to be:

“(1) whether the practice…offends public policy…; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers.”

In California, the “unfairness” prong of §17200 is “intentionally broad, thus allowing courts maximum discretion to prohibit new schemes to defraud. [Citation]”

The test of whether a business practice is unfair “involves an examination of [that practice’s] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant’s conduct against the gravity of the harm to the alleged victim…[Citations.]” Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 647; citing State Farm v. Superior Court (1996) 45 Cal.App.4th 1093, 1102.

An earlier formulation of California’s unfairness standard, also cited with approval in Podolsky, supra, is that “an ‘unfair’ business practice occurs when [the practice] offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” (See also People v. Casa Blanca Convalescent Homes, supra, at 530.)

Thus §17200 provides a “wide standard to guide courts of equity” in determining what constitutes unfair business conduct. (Motors Inc. v. Times Mirror Co. (1980) 102 Cal.App.3d 735, 738 – 739.)

3. FRAUDULENT ACTS OR PRACTICES. Although historically the least-used provision of §17200, the “fraudulent act or practice” provision has recently been the subject of more detailed appellate analysis.

It is now clear that the usual elements of fraud, including intent to defraud, misrepresentation of material fact, reliance, and injury do not apply to this theory of liability, and that in their place is the general standard of deception governing §17500.

“The ‘fraud’ prong of Bus. & Prof. Code §17200 is unlike common law fraud or deception. A violation can be shown even if no one was actually deceived, relied upon the fraudulent practice, or sustained any damage. Instead, it is only necessary to show that members of the public are likely to be deceived.” Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 647 – 648, citing, State Farm v. Superior Court (1996) 45 Cal.App.4th 1093, and Comm. on Children’s Television v. General Foods (1983) 35 Cal.3d 197. See also Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 839.

Standing and pleading issues

The California attorney general and the district attorneys share public enforcement authority for §17200 cases. (§17204, §17206, and §17207 also provide authority for designated city attorneys and other public agencies.)

Public actions under both §17200 and §17500 are brought in the name of the people of the State of California. Actions for civil penalties may only be brought in the name of the people. (§17206.)

In a significant difference from the FTC Act, §17204 provides a private right of action for individuals and organizations, acting on their own behalf or “on behalf of the general public.”

This private standing has been held to include:

  1. individual consumers or classes of consumers (Bondanza v. Peninsula Hospital, (1979) 23 Cal.3d 260);
  2. business competitors (United Farmworkers of America v. Superior Court (1975) 47 Cal.App.3d 344); and
  3. organizational plaintiffs (Committee on Children’s Television v. General Foods (1983) 35 Cal.3d 197).

Pleading standards are generous under §17200. Only ultimate facts, and not each specific deceptive or unfair act, must be alleged. See detailed discussion of requirements in Committee on Children’s Television, supra. Actions must be commenced within four years “after the cause of action accrued.” (§17208.)


The remedies of §17200 are cumulative of one another and of other remedies under California law. (§17205.) Those remedies include:

INJUNCTIVE RELIEF — “Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction.” (§17203)

The highlighted language was added in 1992, ensuring availability of an injunction regardless of whether the acts of unfair competition are continuing, past, or as yet only proposed.

There is wide latitude for judicial discretion under these statutes. “[T]he legislature…intended by this sweeping language to permit tribunals to enjoin ongoing wrongful business conduct in whatever context such activity might occur.” Barquis, supra, 7 Cal.3d at 111.

All parties, public and private, have access to this injunctive relief.

CIVIL PENALTIES — The violator “shall be liable for a civil penalty not to exceed $2,500 for each violation,” but only in cases brought by the attorney general, district attorneys, and other designated public agencies. (§17206)

A “per victim” test is applied to the determination of the number of violations of §17200 and §17500, permitting substantial aggregation of penalties. (See People v. Superior Court (Jayhill) (1973) 9 Cal.3d 283; People v. Bestline Products Inc. (1976) 61 Cal.App.3d 879.) The imposition of a civil penalty for each violation of §17200 is mandatory (People v. National Ass’n of Realtors (1984) 155 Cal.App.3d 578), and the court is to consider a prescribed set of factors in determining civil penalties, including the nature and seriousness of the misconduct, the number of violations, the length and persistence of the misconduct, the willfulness of the acts, and the defendant’s assets, liabilities, and net worth. (§17206(b).)

“Unless otherwise expressly provided, the remedies or penalties provided by [§§17200 – 17208] are cumulative to each other and to the remedies or penalties available under all other laws of this state.” (§17205) (Toomey, supra at 22; People v. Dollar Rent-A-Car (1989) 211 Cal.App.3d 119.)

RESTITUTION — “The court may make such orders…necessary to restore to any person in interest any money or property…acquired by means of such unfair competition.” (§17203.) Restitution and disgorgement are clearly available (Children’s Television, supra; People v. Powers (1992) 2 Cal.App.4th 330), but other damages cannot be recovered. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254.) Consumer agency costs can also be recovered under section 17206(c).

Thomas A. Papageorge, head deputy district attorney in charge of the consumer protection division of the Los Angeles District Attorney’s Office, co-authored “California White Collar Crime” (1995) with Robert C. Fellmeth.