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33 Air & Space Law. 1 (2020)

handle is hein.journals/airspaclaw33 and id is 1 raw text is: THE AIR L A AMERICAN BAR ASSOCIATION & SPACE W Y B R VOLUME 33, NUMBER 1, 2020 Why DOT Should Interpret Deceptive Practices Using a Reasonable Consumer Standard By David Heffernan and Brian Doll The U.S. Department of Transpor- tation's (DOT's) primary source of statutory authority to regulate air- line consumer practices derives from section 411 of the Federal Aviation Act (codified at 49 U.S.C. § 41712), which prohibits air carri- ers and ticket agents from engaging in unfair or deceptive practices and unfair methods of competition. DOT frequently cites section 41712, particularly its prohibition of decep- tive practices, as primary (and often exclusive) statutory authority for a wide range of regulations and enforcement actions.1 Although DOT has enjoyed this authority since Congress deregulated the domestic airline industry in the late 1970s and early 1980s, DOT has never conducted a rulemaking to interpret the term unfair or deceptive prac- tices. That will change: DOT has initiated a rulemaking to define the phrase 'unfair or deceptive practices.'2 DOT and the courts have recognized that section 41712 is modeled on the Federal Trade Commission's (FTC's) substantively identical authority under section 5 of the Federal Trade Commission Act.3 Neither sec- tion 41712 nor section 5 defines the terms unfair and deceptive. Unlike DOT, however, the FTC has pub- lished detailed formal interpretations of unfairness and deception, including multipart tests that require objective evidence (not merely the subjective judgment of a regulator) to support a finding of a violation. DOT now has proposed to codify those FTC definitions of unfairness and deception in DOT's regulations.4 The FTC defines deception by relying on a reasonable consumer standard. The FTC does not reg- ulate to protect the uninformed consumer, but, rather, assumes that consumers have a minimal obligation to seek out available information before making a purchase decision and should not expect the government to pro- tect them if they fail to do so and are unhappy with their purchase. If, however, a vendor (whether by represen- tation or omission) actually and materially misleads (or engages in conduct that is likely to mislead) consumers who have taken reasonable steps to inform themselves, the FTC may deem such conduct to be a deceptive practice. The FTC's rationale is that such deceptive con- duct distorts the information available to the reasonable consumer, and it therefore may be appropriate for the government to intervene in the marketplace to prohibit the conduct when the deception is material and reason- able consumers were actually deceived. DOT's proposed definition of deception follows the FTC's lead by relying on a reasonable consumer standard. DOT's proposal, however, does not explain how to interpret the standard. This article addresses that issue. It begins by explaining how the FTC, in applying its test for deception, determines what con- stitutes reasonable consumer behavior. Next, the article examines how DOT has at times strayed from a reasonable consumer point of reference toward a more expansive approach to regulation and enforce- ment. Finally, the article concludes that DOT should adopt the FTC's test for deception (as DOT has pro- posed) and, in doing so, rely solely on a reasonable consumer standard. continued on page 8 Published in The Air & Space Lawyer, Volume 33, Number 1, 2020. © 2020 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

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