Good Cop, Bad Cop: Market Competitors, UDAP Consumer Protection Laws, and the U.S. Mortgage Crisis

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Loyola of Los Angeles Law Review, Vol: 43, Issue: 4, Page: 1251

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article description
State unfair or deceptive acts or practices statutes (UDAPs) offer consumers broad protections against abusive business activity. However, although UDAPs could have been used to combat predatory lending during the housing bubble, the laws generally failed to detour the predatory lending that fueled the mortgage crisis. One reason that UDAPs did not play a bigger role in litigating against predatory lending is that states limit or deny UDAP standing for business competitors. Because businesses often lack a transactional nexus with other competitor businesses in their marketplace, this Article argues that UDAPs should provide businesses with representative standing free of an injury-in-fact requirement. This reform would allow businesses who suffer a diminished capacity to compete when their competitors act in unfair ways to engage in industry self-policing by using UDAPs to litigate against abusive business practices in their marketplace.