Florida Business Litigation Lawyer Blog
Another article discusses how a business can lawfully sue a competitor under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) when the competitor issues deceptive charges against its own customers. Several recent cases have explained that whether a charge is unlawfully deceptive is highly dependent on the exact language of the charge. Minor nuances as to the way a charge is phrased can make the difference between conduct that is unlawfully deceptive under FDUTPA and conduct which is legitimate and lawful. Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.
A company may violate FDUTPA by issuing charges to its customers which deceptively appear to be taxes or fees that are being passed to the customer. Charges such a service charges, filing fees, and sales tax may properly be passed to the customer as long as those charges accurately reflect what they are for and paid for that purpose. As an example, a company may not charge a customer for a sales tax when the product or service purchased is not actually subject to sales tax.
Generally, a company cannot portray a charge as being a pass-through expense when the moneys paid are being retained by the company. Latman v. Costa Cruise Lines, N.V., 758 So. 2d 699 (Fla. 3d DCA 2000) (“We […] conclude that where the cruise line bills the passenger for port charges but keeps part of the money for itself, that is a deceptive practice under FDUTPA. Reliance and damages are sufficiently shown by the fact that the passenger parted with money for what should have been a ‘pass-through’ port charge, but the cruise line kept the money”); Harrison v. Lee Auto Holdings, Inc., 45 Fla. L. Weekly D1038 (Fla. 1st DCA Apr. 29, 2020) (finding that charging a fee which appears to be a fee paid to the government, when some of that money was in fact retained as profit, is unlawful).
The precise phrasing of the charged matter is important. While a “port fee” might suggest a government fee, the term “port charges” does not necessarily have the same implication. Premier Cruise Lines, Ltd., Inc. v. Picaut, 746 So. 2d 1132 (Fla. 5th DCA 1999) (“port charges are not limited to taxes and fees associated with the ship’s port stay”). Charges are not unlawful under FDUTPA if they suggest that the money is directed to the charging company rather than a third-party. Costa v. Kerzner Int’l Resorts, Inc., No. 11-60663-CV, 2011 WL 2519244 (S.D. Fla. June 23, 2011) (finding that a reasonable consumer would not believe that charges labeled “fee” or “service charge” were pass-through charges); Latman v. Costa Cruise Lines, N.V., 758 So. 2d 699 (Fla. 3d DCA 2000) (“the term ‘cost recovery fee’ itself implies that the company will keep the money collected as ‘recovery’ for its costs”); Vorst v. TBC Retail Group, Inc., 12-CV-80013, 2012 WL 13026643 (S.D. Fla. Apr. 12, 2012) (finding that an “oil disposal fee” did not suggest that it was a pass through charge without some other representation concerning the origin of the expense).
A company does not violate FDUTPA by retaining the monies from a charge when the company describes the charge as accommodating two different expenses, one of which is to be directed to another party and one of which is to be retained by the company expected to be retained by the company. Costa v. Kerzner Intern. Resorts, Inc., 11-60663-CV, 2011 WL 2519244 (S.D. Fla. June 23, 2011) (finding that contract properly disclosed that fee line item was based upon a housekeeping expense in addition to a service fee, because some of that money was directed to housekeeping).
The company issuing the charges need not actually affirmatively express that it is a pass-through expense. “The Court will not require Plaintiff to identify any statements or representations by Defendants as to how the fees would be calculated in order to state a claim of deception or falsity; Defendants chose the descriptive terms and if they do not accurately describe what is being charged and collected, such conduct is actionable under the FDUTPA.” Deere Constr., LLC v. Cemex Constr. Materials Florida, LLC, 198 F. Supp. 3d 1332 (S.D. Fla. 2016); see Coleman v. CubeSmart, 328 F. Supp. 3d 1349 (S.D. Fla. 2018) (“Like the contestants in the You Don’t Say television show, remaining silent about also receiving an additional portion for a commission and extra profit […] could leave a reasonable net impression that no other portion besides an expense reimbursement would be paid to [the company]”). Pass-through charges are a proper way for businesses to allocate expenses directly to their customers, provided they are not deceptive as to their origin. Whether a charge violates FDUTPA will depend on the precise language of the charges and the extent of disclosure made by the company.
Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents business litigation clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.