DOT Issues Guidance on the Interpretation of Unfair and Deceptive Practices
October 10, 2022
On August 29, 2022, DOT published guidance meant to inform the public and regulated entities like airlines of its interpretation of the terms “unfair”, “deceptive”, and “practices” as they relate to DOT’s authority to prohibit unfair and deceptive trade practices in air transportation and the sale of air transportation.
This is an “interpretive rule”. As a result, DOT believed it could issue it without issuing a notice-and-comment rulemaking. Because it was issued without notice-and-comment, and as DOT confirms, this “guidance” lacks the force and effect of law.
As background, DOT has authority under 49 U.S.C. 41712 to investigate alleged instances of unfair and deceptive practices, and to decide whether a U.S. or foreign air carrier has engaged in unfair or deceptive practices in air transportation or the sale of air transportation. If DOT finds that such conduct has occurred, it has the statutory authority to penalize a carrier up to $3,738 per violation, per day. The following is a summary of DOT’s interpretations of some of these key terms:
DOT’s definition of “unfair” and related guidance on its elements:
DOT defines a practice as being “unfair” if it “causes or is likely to cause substantial injury, which is not reasonably avoidable, and the harm is not outweighed by benefits to consumers or competition.” DOT also notes that it can choose to act against an unfair practice even before a substantial injury takes place, or when it deems that an unfair practice is likely to cause a substantial injury to take place.
DOT’s definition of “deceptive” and related guidance on its elements:
DOT defines a practice as being “deceptive” to consumers if the practice is “likely to mislead a consumer, acting reasonably under the circumstances, with respect to a material matter.” DOT views deception from the perspective of an ordinary consumer acting reasonably in the circumstances, which includes consideration of an airline’s statements or representations from the viewpoint of a consumer, and consideration of how clear, conspicuous, and significant the airline’s statement or representation is, how familiar the public with the product, and the availability of alternate sources of information to the public.
DOT’s view of the term “practices” and final points included in the guidance document:
DOT indicated that it did not find it necessary to define the term “practice” as it maintains that its aviation consumer protection regulations can always be deemed as directed at the practices of airlines or ticket agents, which includes actions or policies carried out by the airline that affect consumers. Lastly, DOT did not consider it necessary to find proof of intent to establish either unfairness or deceptiveness, meaning that a final determination on unfairness or deceptiveness rests solely on the Department’s definitions and interpretations on whether something is unfair or deceptive.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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