The Attorney General provides alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern.

Michigan’s Consumer Protection Act, MCL 445.901 et seq (MCPA), provides remedies to consumers who are the victims of a host of "unfair, unconscionable, or deceptive methods acts or practices." The Attorney General's office also receives inquiries from small businesses that are the targets of unethical business practices involving goods or services.

Does the Michigan Consumer Protection Act apply to these unethical practices when the victim is a business instead of an individual consumer? The answer is: it depends.

The issue of whether the protections of the MCPA extend to businesses involves interpretation of the definition of "trade or commerce." The MCPA states:

"Trade or commerce" means the conduct of a business providing goods, property, or service primarily for personal, family or household purposes and includes the advertising, solicitation, offering for sale or rent, sale, lease, or distribution of a service or property, tangible or intangible, real, personal, or mixed, or any other article, or a business opportunity…

If a business engages in an unfair, unconscionable, or deceptive method, act, or practice in a transaction with another business, the MCPA does not protect the unsuspecting business when the goods, property, or service involved are not "primarily for personal, family or household purposes." In other words, if the transaction involves a 5,000-gallon container of industrial process acids (or any similar product that isn’t for personal, family, or household purposes), a business shouldn’t look to the provisions of the Michigan Consumer Protection Act for help.

But what happens if the product or service at issue is a product that can be used primarily for personal, family, or household purposes but just happens to have been bought by a business entity instead? Courts have struggled to decide whether the protections of the MCPA should apply to those situations.

For example, in one Michigan Court of Appeals case involving alleged unfair and deceptive trade practices against a manufacturer of a truck, the Court rejected application of the MCPA. The Court noted that the purchaser testified that he used the truck "primarily for my business," had the company logo painted on a side panel, and had a hydraulic lift for business reasons. Under these facts, the Court found that the truck was not sold "primarily for personal, family or household purposes."

In another example, a federal district court addressed a defendant drug manufacturer’s argument that a state governmental agency (Medicaid) could not recover under the MCPA because the agency was not a "consumer." The court rejected the argument since the drugs at issue were ultimately consumed for "personal" use -- even if not purchased by a "person."

The question of whether the Michigan Consumer Protection Act applies to purchases by businesses may ultimately depend on the nature of the goods, property, or services that are purchased. If the business purchased the item or service primarily for business or commercial use rather than personal use, the MCPA will not help the complaining business.

Courts have also begun to accept the argument that a business may sue an unethical competitor under the MCPA in certain circumstances even where the business has not bought a thing from the competitor. In order to successfully use the MCPA in these circumstances, the business must establish that the unethical competitor’s practices are likely to cause harm to consumers.

In short, businesses may sometimes use the Michigan Consumer Protection Act to sue other businesses engaging in unfair, unconscionable, or deceptive methods, acts or practices. The lawsuit’s success will depend upon the nature of the product or service being purchased and whether consumers, rather than solely businesses, may be harmed by the unethical firm’s conduct.

To illustrate the problem, let us say that a full-time teacher supplements his or her income with a small business to paint houses during the summer. The teacher purchases three items on the same day from the same retailer. The teacher buys a toaster for household use, a ladder to be used in the seasonal house-painting business, and a DVD for use in the classroom. In the event of a problem, a literal reading of the consumer protection law says that the teacher has rights under the Consumer Protection Act if there is a problem with the toaster, but that the teacher may not have the same legal protection for the ladder or the DVD since neither was purchased for personal or household use.

The Attorney General's Consumer Protection Division may be contacted at:

Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909

517-373-1140
Fax: 517-241-3771

Toll free: 877-765-8388

www.michigan.gov/ag (online complaint form)

Consumers interested in receiving electronic mail notification of Attorney General Consumer Alerts can sign up on the Attorney General’s home page (www.michigan.gov/ag) under "Desktop Direct." You may also sign up to receive notice of press releases and formal opinions. Examples of consumer alerts issued in the past several months include: Fraudulent E-mail—Thieves Intend to Steal Your Personal Information; Identity Theft Information for Michigan Consumers; Nigerian and Counterfeit Cashier’s Check Scams.