Guidance Regarding Interpretation of Unfair and Deceptive Practices, 52677-52681 [2022-18170]
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Federal Register / Vol. 87, No. 166 / Monday, August 29, 2022 / Rules and Regulations
6.5a, which categorically excludes from
further environmental impact review
rulemaking actions that designate or
modify classes of airspace areas,
airways, routes, and reporting points
(see 14 CFR part 71, Designation of
Class A, B, C, D, and E Airspace Areas;
Air Traffic Service Routes; and
Reporting Points), and paragraph 5–6.5i,
which categorically excludes from
further environmental review the
establishment of new or revised air
traffic control procedures conducted at
3,000 feet or more above ground level
(AGL); procedures conducted below
3,000 feet AGL that do not cause traffic
to be routinely routed over noise
sensitive areas; modifications to
currently approved procedures
conducted below 3,000 feet AGL that do
not significantly increase noise over
noise sensitive areas; and increases in
minimum altitudes and landing
minima. As such, this action is not
expected to result in any potentially
significant environmental impacts. In
accordance with FAA Order 1050.1F,
paragraph 5–2 regarding Extraordinary
Circumstances, the FAA has reviewed
this action for factors and circumstances
in which a normally categorically
excluded action may have a significant
environmental impact requiring further
analysis. Accordingly, the FAA has
determined that no extraordinary
circumstances exist that warrant
preparation of an environmental
assessment or environmental impact
study.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
The Amendment
In consideration of the foregoing, the
Federal Aviation Administration
amends 14 CFR part 71 as follows:
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T–232 Barrow, AK (BRW) to Northway, AK (ORT)
Barrow, AK (BRW)
VOR/DME
OCOCU, AK
FIX
Bettles, AK (BTT)
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Fairbanks, AK (FAI)
VORTAC
IMARE, AK
WP
CUTUB, AK
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FIX
Big Delta, AK (BIG)
VORTAC
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Northway, AK (ORT)
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Issued in Washington, DC, on August 23,
2022.
Scott M. Rosenbloom,
Manager, Airspace Rules and Regulations.
[FR Doc. 2022–18426 Filed 8–26–22; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 399
[Docket No. DOT–OST–2019–0182]
RIN 2105–ZA18
Guidance Regarding Interpretation of
Unfair and Deceptive Practices
Office of the Secretary (OST),
U.S. Department of Transportation
(DOT).
ACTION: Guidance regarding
interpretation of unfair and deceptive
practices.
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AGENCY:
The U.S. Department of
Transportation (DOT or the Department)
is issuing a guidance document to
inform the public and regulated entities
SUMMARY:
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PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for 14 CFR
part 71 continues to read as follows:
■
Authority: 49 U.S.C. 106(f), 106(g); 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order JO 7400.11F,
Airspace Designations and Reporting
Points, dated August 10, 2021, and
effective September 15, 2021, is
amended as follows:
■
Paragraph 6011 United States Area
Navigation Routes.
156°47′17.22″
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about DOT’s interpretation of the terms
unfair, deceptive, and practices as it
relates to its statutory authority to
prohibit unfair or deceptive practices.
The Department is taking this action to
better define the terms unfair and
deceptive in response to an Executive
order issued by President Biden on July
9, 2021, on promoting competition in
the American economy.
DATES: This final guidance document is
effective August 29, 2022.
ADDRESSES: This guidance will appear
on the Department’s aviation consumer
protection website at https://
www.transportation.gov/airconsumer/
guidance-aviation-rules-and-statutes.
The Department’s final rule regarding
unfair and deceptive practices and
related documents are available on the
docket at https://www.regulations.gov;
follow the online instructions for
accessing DOT–OST–2019–0182.
FOR FURTHER INFORMATION CONTACT:
Robert Gorman, Kimberly Graber, or
Blane Workie, Office of Aviation
Consumer Protection, U.S. Department
of Transportation, 1200 New Jersey Ave.
SE, Washington, DC 20590, 202–366–
9342, 202–366–7152 (fax);
PO 00000
52677
robert.gorman@dot.gov;
kimberly.graber@dot.gov; or
blane.workie@dot.gov (email).
SUPPLEMENTARY INFORMATION:
Background
The Department’s authority to
regulate unfair and deceptive practices
in air transportation or the sale of air
transportation is found at 49 U.S.C.
41712 (‘‘section 41712’’).1 Section
41712(a) gives the Department the
authority to investigate and decide
whether an air carrier, foreign air
carrier, or ticket agent is engaged in an
unfair or deceptive practice in air
transportation or the sale of air
transportation. In addition to this
general provision, Congress has also
defined two specific practices as being
unfair or deceptive.2
1 In addition to section 41712, the Department’s
authority to regulate unfair and deceptive practices
is based in the Department’s rulemaking authority
under 49 U.S.C. 40113, which states that the
Department may take action that it considers
necessary to carry out this part, including
prescribing regulations.
2 See 49 U.S.C. 41712(b) (failing to notify the
purchaser of such an electronic ticket of its
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The Department also has general
authority to issue regulations necessary
to carry out section 41712. Many of the
Department’s existing aviation
consumer protection rules were issued
under the authority of section 41712,
including but not limited to the tarmac
delay rule,3 the full-fare advertising
rule,4 the prohibition on post-purchase
price increases,5 and the rules on
oversales and denied boarding
compensation.6
Section 41712 does not define
‘‘unfair,’’ ‘‘deceptive,’’ or ‘‘practice.’’ On
December 7, 2020, the Department
issued a final rule titled ‘‘Defining
Unfair or Deceptive Practices’’ (‘‘UDP
Final Rule’’).7 In this rule, the
Department noted that section 41712
was modeled on section 5 of the Federal
Trade Commission (FTC) Act.8 The
Department explained that while
section 5 vests FTC with broad authority
to prohibit unfair or deceptive practices
in most industries, Congress granted the
Department the exclusive authority to
prohibit unfair or deceptive practices of
air carriers and foreign air carriers. The
Department noted that DOT and FTC
share the authority to prohibit unfair or
deceptive practices by ticket agents in
the sale of air transportation.
Accordingly, DOT determined that it
was appropriate to define the terms
‘‘unfair’’ and ‘‘deceptive’’ in ways that
reflect both FTC precedent and DOT’s
own long-standing interpretation of
those terms. Specifically, DOT defined a
practice as being unfair to consumers 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.’’ 9 DOT
defined a practice as being deceptive to
consumers ‘‘if it is likely to mislead a
consumer, acting reasonably under the
circumstances, with respect to a
material matter. A matter is material if
it is likely to have affected the
consumer’s conduct or decision with
respect to a product or service.’’ 10 Like
FTC, the Department stated that proof of
expiration date, if any, is unfair or deceptive within
the meaning of section 41712(a)); 49 U.S.C. 41712(c)
(failing to disclose the name of the air carrier
providing the air transportation, as required by
statute, is unfair or deceptive within the meaning
of section 41712(a)).
3 14 CFR 259.4.
4 14 CFR 399.84(a).
5 14 CFR 399.88(a).
6 14 CFR part 250.
7 85 FR 78707 (December 7, 2020); available at
https://www.federalregister.gov/documents/2020/
12/07/2020-26416/defining-unfair-or-deceptivepractices.
8 15 U.S.C. 45.
9 14 CFR 399.79(b)(1).
10 14 CFR 399.79(b)(2).
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intent is not necessary to establish
either unfairness or deception.11 The
Department found it unnecessary to
define ‘‘practice.’’ 12
Among its major provisions, the UDP
Final Rule requires DOT to employ its
definitions of ‘‘unfair’’ and ‘‘deceptive’’
when issuing future rulemakings or
taking future enforcement action.13 The
rule provided, however, that if Congress
directs DOT by statute to issue
regulations specifically declaring a
practice to be unfair or deceptive, then
DOT may do so without reference to the
general definitions.14 The rule also
clarified that if a specific regulation
already applies to the conduct at issue,
then the Department may rely on the
terms of that regulation.15
On July 9, 2021, the President issued
Executive Order 14036, ‘‘Promoting
Competition in the American
Economy.’’ 16 That Order directed the
Department to take a number of actions
to protect aviation consumers, including
that the Department start development
of proposed amendments to its
definitions of the terms ‘‘unfair’’ and
‘‘deceptive’’ in section 41712. Pursuant
to the Executive Order, DOT stated that
it would fulfill the requirements of the
Executive Order by issuing an
interpretive rule (i.e., this guidance
document) that would clearly apprise
the public of the Department’s
interpretation of the definitions of the
terms ‘‘unfair’’ and ‘‘deceptive.’’ 17
Guidance Regarding Interpretation of
Unfair and Deceptive Practices
The purpose of this guidance
document is to provide the public and
regulated entities with greater
transparency with respect to DOT’s
Office of Aviation Consumer Protection
(OACP)’s interpretation of the terms that
are found in section 41712 and defined
in the Department’s regulations at 14
CFR 399.79. This guidance document
does not have the force and effect of
law, is not legally binding in its own
right, and will not be relied on by the
Department as a separate basis for
enforcement or other administrative
penalty beyond the underlying
authorities in statute and regulation.
11 14
CFR 399.79(c).
FR 78710.
13 14 CFR 399.75(a)(rulemaking);
399.75(b)(enforcement).
14 14 CFR 399.75(a).
15 14 CFR 399.79(d).
16 https://www.whitehouse.gov/briefing-room/
presidential-actions/2021/07/09/executive-orderon-promoting-competition-in-the-americaneconomy/.
17 ‘‘Procedures in Regulating Unfair or Deceptive
Practices,’’ 87 FR 5655 (Feb. 2, 2022).
12 85
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Elements of Unfairness
In the Department’s final rule titled
‘‘Defining Unfair or Deceptive
Practices’’ (‘‘UDP Final Rule’’), DOT
defined a practice as ‘‘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.’’ 18 We will address each
element in turn.
1. ‘‘Causes or Is Likely To Cause’’
In keeping with FTC precedent, DOT
is of the view that a practice may
‘‘cause’’ harm even if it is not the only
cause of the harm, and even if it is not
the most proximate cause of the harm.19
Moreover, the Department is not
required to wait for substantial injury to
take place before taking action against
an unfair practice. The Department may
take action against practices which are
‘‘likely to cause’’ substantial injury as
well.20 When making such
determinations, DOT examines not only
the probability of the harm occurring,
but also the magnitude of the injury if
it does occur. As FTC has observed, ‘‘a
practice may be unfair if the magnitude
of the potential injury is large, even if
the likelihood of the injury occurring is
low.’’ 21
2. ‘‘Substantial’’ Injury
The UDP Final Rule uses the terms
‘‘harm’’ and ‘‘injury’’ interchangeably.22
The Department did not define
‘‘substantial injury’’ in the UDP Final
Rule, other than observing that the term
‘‘would necessarily exclude trivial or
speculative’’ harm.23
Substantial injury would be
determined by the totality of the
circumstances. As FTC has written, ‘‘it
is well established that substantial
injury may be demonstrated by a
showing of a small amount of harm to
a large number of people, as well as a
large amount of harm to a small number
of people.’’ 24 Substantial harm is
typically of an economic nature. For
example, the Department has found that
delay in providing refunds to consumers
constitutes substantial harm to
consumers who did not receive the
service they paid for and did not have
18 14
CFR 399.79(b).
of the Commission, In the Matter of
LabMD, Inc. (July 19, 2016) at 10, available at
https://www.ftc.gov/system/files/documents/cases/
160729labmd-opinion.pdf (‘‘LabMD’’).
20 FTC has similar authority to declare a practice
unfair if it is likely to cause substantial injury. See
15 U.S.C. 45(n).
21 LabMD at 10.
22 14 CFR 399.79(b).
23 85 FR 78710 n. 25.
24 LabMD at 9.
19 Opinion
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access to their money for a significant
time.25 However, it is well established
that harm need not be financial in order
to be substantial. For example, the
Department found that delaying
passengers on the tarmac for a
substantial length of time without the
opportunity to deplane or without
adequate food, water, lavatory facilities,
and medical attention imposes
substantial harm.26 Substantial harm
may also be found in intangible injury,
such as to an individual’s privacy or
reputation.27 Extended delays in
obtaining relief, and the time and
expense of pursuing a claim, can also
constitute substantial harm.28
3. Not Reasonably Avoidable
For a practice to be unfair, the harm
must not have been reasonably
avoidable by the consumer.29 For
example, a lengthy tarmac delay
imposes unavoidable harm because the
passenger lacks the opportunity to
deplane. It has also been the
longstanding view of OACP that it
would be an unfair practice for a carrier
to fail to provide a refund, on request,
for flights to or from the United States
that were canceled or significantly
changed by the carrier, in part because
the harm was not reasonably avoidable
by the traveler. We came to this
conclusion even if the passenger
purchased a ‘‘non-refundable’’ ticket.
We concluded that a consumer acting
reasonably would believe that he or she
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25 See
Order and Settlement Agreement, Nov. 23,
2021 (available at https://www.transportation.gov/
sites/dot.gov/files/2021-11/Air%20Canada%20%20Order%20And%20Settlement%20
Agreement.pdf) (‘‘Air Canada Order’’) at 5.
26 See ‘‘Enhancing Airline Passenger Protections,’’
74 FR 68983 (Dec. 30, 2009); available at https://
www.federalregister.gov/documents/2009/12/30/E930615/enhancing-airline-passenger-protections
(also noting that the rule was also premised on an
airline’s statutory duty to provide ‘‘safe and
adequate’’ interstate air transportation).
27 Mishandling the private information of
consumers may be considered an unfair or
deceptive practice within the meaning of section
41712. See https://www.transportation.gov/
individuals/aviation-consumer-protection/privacy;
see also LabMD at 19 (‘‘the privacy harm resulting
from the unauthorized disclosure of sensitive health
or medical information is in and of itself a
substantial injury under section 5(n),’’ even without
further evidence that the information was used to
cause further harm); Spokeo, Inc. v. Robbins, 578
U.S. 330 (2016) ‘‘intangible injuries may
nevertheless be concrete’’ for purposes of satisfying
the case or controversy requirement of standing in
Article III courts).
28 Air Canada Order at 5; see also DOT Order
2009–9–8 (2009) at 5.
29 See FTC Policy Statement on Unfairness,
available at https://www.ftc.gov/public-statements/
1980/12/ftc-policy-statement-unfairness (FTC
generally does not intend to second-guess the
wisdom of consumer decisions, but it does intend
to halt seller behavior that ‘‘unreasonably creates or
takes advantage of an obstacle to the free exercise
of consumer decisionmaking.’’)
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was entitled to a refund under U.S. law
if the carrier cancelled or significantly
changed the flight, regardless of the
reason for the cancellation or significant
change. We further concluded that a
reasonable consumer would not believe
that it is necessary to purchase a more
expensive refundable ticket in order to
be able to recoup the ticket price when
the airline fails to provide the service
paid for through no action or fault of the
consumer, because reasonable
consumers understand that
‘‘refundable’’ tickets are valuable
because they ensure a refund if the
passenger cancels the flight.30 The
Department has issued a notice of
proposed rulemaking that would
propose to codify OACP’s interpretation
that section 41712 requires airlines to
provide prompt refunds when a carrier
cancels or makes a significant change
and the passenger does not take an
alternative flight offered by the airline,
including when the original ticket
purchased is non-refundable.31
The Department looks at this element
from the perspective of an ordinary
consumer acting reasonably under the
totality of the circumstances. For
example, we have found that a
passenger who triggered an airline’s
fraud-detection system and lost frequent
flyer miles could have reasonably
avoided that harm by not repeatedly
entering fictitious information into the
airline’s reservation system.32
4. Harm Not Outweighed by Benefits to
Consumers or Competition
Finally, the harm must not be
outweighed by benefits to consumers or
to competition. Like FTC, the
Department recognizes that some
practices may be harmful to consumers
in some respects, but beneficial to
consumers in other respects. For
example, offsetting benefits may include
lower prices or a wider availability of
products and services resulting from
competition. The Department seeks to
regulate practices that are harmful to
consumers in their net effects.33
30 Air
Canada Order at 5.
31 87 FR 51550 (August 22, 2022), available at
https://www.federalregister.gov/documents/2022/
08/22/2022-16853/airline-ticket-refunds-andconsumer-protections.
32 DOT Order 2016–12–11, at 3.
33 Air Canada Order at 5; see also the
Department’s oversales rule, 14 CFR part 250,
which also reflects this balance. The rule is
carefully crafted to allow airlines to oversell flights
in order to fill seats that would have otherwise gone
empty due to ‘‘no-shows.’’ In exchange for this
ability to overbook flights (which would otherwise
be unfair or deceptive), the Department requires
airlines to compensate and provide protections to
passengers who were involuntarily denied boarding
in accordance with the rule. See DOT Order 2020–
6–5.
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52679
Importantly, the Department does not
compare the harm to the consumer
against the benefits that the airline or
ticket agent may obtain from the
practice.34 The Department’s
determination to regulate an unfair and
deceptive practice would also be
informed by a regulatory impact
analysis.
5. Public Policy Considerations
As we noted in the UDP Final Rule,
DOT has a broad statutory responsibility
to consider a wide variety of public
policies enumerated by Congress.35 In
fact, Congress has directed the
Department in carrying out its aviation
economic programs such as regulations
under section 41712 to consider certain
enumerated factors as being in the
public interest. These factors include
‘‘the availability of a variety of adequate,
economic, efficient, and low-priced
services without unreasonable
discrimination or unfair or deceptive
practices’’ and ‘‘preventing unfair,
deceptive, predatory, or anticompetitive
practices in air transportation.’’ 36 DOT
considers public policy as established
by both the Executive branch (e.g.,
regulation, Executive Order 37) and the
Legislative branch (e.g., statute, sense of
Congress) of the Federal Government as
appropriate, when determining whether
a practice is unfair.
As a public policy matter, the
Department has found that
discriminatory conduct in and of itself
constitutes an unfair practice. In this
regard, orders of the Department and its
predecessor Civil Aeronautics Board
(CAB) support the position that
violations of statutes that prohibit
discrimination constitute unfair and
deceptive practices. For example, the
CAB determined that unlawful disparate
treatment of consumers by a carrier in
its ticket-by-mail procedures based on
the consumer’s ZIP code, which had the
effect of discriminating against AfricanAmericans in New York City, is an
34 See Air Canada Order at 6 (finding that the
practice of retaining passenger funds for canceled
flights beyond the time frames allowed by law
conveyed no benefit to consumers, even if the
practice may have benefited the airline).
35 85 FR 78710.
36 49 U.S.C. 40101(a).
37 E.g., Executive Order on Catalyzing Clean
Energy Industries and Jobs Through Federal
Sustainability, https://www.whitehouse.gov/
briefing-room/presidential-actions/2021/12/08/
executive-order-on-catalyzing-clean-energyindustries-and-jobs-through-federal-sustainability/;
Biden Administration Advances the Future of
Sustainable Fuels in American Aviation, https://
www.whitehouse.gov/briefing-room/statementsreleases/2021/09/09/fact-sheet-bidenadministration-advances-the-future-of-sustainablefuels-in-american-aviation/.
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unfair practice.38 The Department has
also consistently found that violation of
the Air Carrier Access Act, which
prohibits U.S. and foreign air carriers
from discriminating against passengers
with disabilities, is an unfair practice.39
Similarly, the Department has found
that discrimination against individuals
based on their race, color, national
origin, religion, ancestry or sex is an
unfair practice.40
Elements of Deception
In the UDP Final Rule, DOT defined
a practice as ‘‘deceptive’’ if it ‘‘is likely
to mislead a consumer, acting
reasonably under the circumstances,
with respect to a material matter. A
matter is material if it is likely to have
affected the consumer’s conduct or
decision with respect to a product or
service.’’ 41 We will address these
elements in turn.
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1. Likely To Mislead a Consumer
First, the practice must be likely to
mislead the consumer. As FTC has
explained, express misrepresentations,
implied representations, and omissions
are all potentially actionable.42 A failure
to provide services as promised
(whether by contract or otherwise) can
also be deceptive.43
The Department’s full-fare advertising
rule is based on its authority to prohibit
deceptive practices.44 Put simply, this
rule requires advertised prices for air
transportation to be the entire price to
be paid by the customer to the carrier,
or agent, for such air transportation. The
Department based its rule on evidence
that consumers believed that they were
going to pay a particular advertised
price for air transportation, only to find
that the price was substantially higher
due to additional taxes and fees.45 The
rule also requires any charges that are
listed as components of the entire price
(e.g., taxes) not to be false or misleading.
We have also found that advertising a
fare that is no longer available, or failing
to have a reasonable number of seats
38 Miscellaneous Economic Orders, 78 C.A.B. 860
(1978): Docket 33219, Enforcement re Ticket-byMail, order 78–8–101, available via HeinOnline.
39 See, e.g., DOT Order 2018–11–8.
40 See, e.g., DOT Order 2012–5–2.
41 14 CFR 399.79(b)(2).
42 FTC 1983 Policy Statement on Deception,
available at https://www.ftc.gov/public-statements/
1983/10/ftc-policy-statement-deception.
43 Id.; see also DOT Order 2013–3–12 (airline
acted deceptively when it stated on its website that
certain conditions of carriage, including EUmandated compensation for cancelled flights,
would apply to international travel to and from the
U.S., but then refused to abide by those conditions).
44 14 CFR 399.84(a).
45 https://www.federalregister.gov/documents/
2011/04/25/2011-9736/enhancing-airlinepassenger-protections.
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available at the advertised fare, is
deceptive.46 The Department has also
found that an airline’s failure to comply
with its publicly posted Customer
Service Plan is deceptive, because the
carrier failed to abide by its
commitment to provide services as
promised.47
2. Acting Reasonably Under the
Circumstances
Like FTC, the Department views
deception from the perspective of an
ordinary consumer acting reasonably in
the circumstances.48 FTC has noted that
entities are not responsible for the
unreasonable interpretations of a
handful of individuals, or for broad
statements of feeling or opinion.49
Likewise, in the preamble to the UDP
Final Rule, we noted that willful,
intentional, or reckless consumer
behavior that leads to self-imposed
harm would likely not be covered.50
However, if a representation may be
interpreted in two different but
reasonable ways, one of which is false,
the entity may be liable for the
misleading interpretation. Like FTC, the
Department will look to all of the factors
surrounding the statement to determine
reasonableness, including how clear,
conspicuous, and significant the
representation is, the familiarity of the
public with the product, and the
availability of alternate sources for the
information.51
46 DOT Order 2022–2–6. While this practice is
deceptive even in the absence of a specific
regulation, we have also found that this practice
violates the full-fare advertising rule, 14 CFR
399.84(a).
47 DOT Order 2018–5–27; DOT Order 2016–8–33.
48 On occasion, the Department receives
complaints from sophisticated consumers who were
not personally deceived by a practice because they
are unusually knowledgeable. We have rejected
airlines’ claims that such complaints must be
dismissed because the individual complainants
themselves were not deceived. We reasoned that we
must view the practice from the perspective of the
ordinary consumer who may be unaware of the
deception and are therefore less likely to file
complaints. See, e.g., DOT Order 2016–12–12.
49 See DOT Order 92–5–60 (1992) (finding that
the terms of an airline’s frequent flyer programs
were not deceptive simply because consumers may
have assumed that airlines could not make such
changes to the program, or were surprised that
miles could not be sold, when the terms of the plan
themselves were clear); DOT Order 2012–12–11
(airline did not commit a deceptive practice by
failing to warn a passenger that his actions would
trigger its fraud-detection system when the
passenger acted unreasonably in accessing the
airline’s reservation system).
50 We have issued specific guidance regarding
cases where passengers intentionally purchase fares
that they know or should have reason to know are
mistaken. See https://www.transportation.gov/
airconsumer/mistaken-fare-policy-statement050815. Mistaken fares are also governed by the
rule relating to post-purchase price increases, 14
CFR 399.88.
51 FTC Policy Statement on Deception, section 3.
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Fmt 4700
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3. Material Matter
The Department has adopted FTC’s
standard that the deception must regard
a ‘‘material’’ matter, which is a matter
that is likely to have affected the
consumer’s conduct or decision with
regard to a product or service. In such
a case, ‘‘consumer injury is likely,
because consumers are likely to have
chosen differently but for the
deception.’’ 52
For example, the Department has
found that the practice of
mischaracterizing a carrier-imposed fee
as a ‘‘tax’’ is deceptive.53 We concluded
that a reasonable consumer may choose
to pay a ‘‘tax’’ under the reasonable
belief that a tax is unavoidable, but that
same consumer may choose to shop
elsewhere in order to avoid a carrierimposed fee. We have also found that an
airline acted deceptively when it
promised a universally available
discount for prepaid baggage fees, when
that discount was not available if the
customer purchased the ticket through a
third-party website.54 In contrast, we
have found that errors that appear only
in post-purchase receipts are
misleading, but not deceptive for
purposes of section 41712, because
there was no evidence in that case that
an error in a post-purchase receipt
influenced the consumer’s pre-purchase
decision.55
It is important to note that the
‘‘product or service’’ is not limited to
the initial purchase, however. For
example, we have found that an airline
acted deceptively when it responded to
consumer complaints about denied
boarding compensation by stating that it
complied with ‘‘DOT and FAA
regulations,’’ when no such regulations
existed. We found that such
misrepresentations could have
dissuaded consumers from pursuing
valid complaints with the Department.56
We have also found that
misrepresentations relating to
cancellation fees were deceptive within
the meaning of section 41712.57
Practice
FTC has the statutory authority to
prohibit unfair or deceptive ‘‘acts or
practices’’ in or affecting commerce.58
52 FTC
Policy Statement on Deception, section 4.
Order 2018–5–32.
54 DOT Order 2013–7–11.
55 DOT Order 2018–5–32.
56 DOT Order 2009–9–8.
57 DOT Order 2022–2–6.
58 15 U.S.C. 45(a)(1). The FTC Act prohibits FTC
from exercising jurisdiction over ‘‘air carriers and
foreign air carriers subject to part A of subtitle VII
of title 49.’’ 15 U.S.C. 45(a)(2). That authority lies
exclusively with the Department. As noted above,
FTC and DOT both have authority over the unfair
53 DOT
E:\FR\FM\29AUR1.SGM
29AUR1
Federal Register / Vol. 87, No. 166 / Monday, August 29, 2022 / Rules and Regulations
Section 41712, however, refers only to
‘‘practices.’’ 59 In the UDP Final Rule,
we explained that our aviation
consumer protection regulations are
always directed to practices of an airline
or ticket agent, rather than isolated acts
of individual employees. We also
explained that our enforcement efforts
include a determination that the
conduct in question reflects a practice
or policy affecting multiple consumers,
rather than an isolated incident.60 We
concluded that ‘‘in general, the
Department is of the view that proof of
a practice in the aviation consumer
protection context requires more than a
single isolated incident. On the other
hand, even a single incident may be
indicative of a practice if it reflects
company policy, practice, training, or
lack of training.’’ 61
Effective Date
This guidance is effective August 29,
2022.
Issued on or about this 15th day of August,
2022, in Washington, DC.
John E. Putnam,
General Counsel, U.S. Department of
Transportation.
[FR Doc. 2022–18170 Filed 8–26–22; 8:45 am]
BILLING CODE 4910–9X–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 573
[Docket No. FDA–2021–F–0564]
Food Additives Permitted in Feed and
Drinking Water of Animals; Fumonisin
Esterase
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Final rule.
The Food and Drug
Administration (FDA, we, or the
Agency) is amending the regulations for
food additives permitted in feed and
drinking water of animals to provide for
the safe use of fumonisin esterase to
degrade fumonisins present in poultry
khammond on DSKJM1Z7X2PROD with RULES
SUMMARY:
and deceptive practices of ticket agents selling air
transportation.
59 49 U.S.C. 41712(a) (‘‘the Secretary may
investigate and decide whether an air carrier,
foreign air carrier, or ticket agent has been or is
engaged in an unfair or deceptive practice or an
unfair method of competition in air transportation
or the sale of air transportation.’’)
60 See, e.g., DOT Order 2018–2–7 (finding that an
airline’s failure to respond timely to a single
complaint did not warrant enforcement action in
the absence of evidence of a pattern or practice).
61 85 FR 78711.
VerDate Sep<11>2014
16:03 Aug 26, 2022
Jkt 256001
feed. This action is in response to a food
additive petition filed by Biomin
Holding GmbH.
DATES: This rule is effective August 29,
2022. See section V of this document for
further information on the filing of
objections. Either electronic or written
objections and requests for a hearing on
the final rule must be submitted by
September 28, 2022.
ADDRESSES: You may submit objections
and requests for a hearing as follows.
Please note that late, untimely filed
objections will not be considered. The
https://www.regulations.gov electronic
filing system will accept comments
until 11:59 p.m. Eastern Time at the end
of September 28, 2022. Objections
received by mail/hand delivery/courier
(for written/paper submissions) will be
considered timely if they are received
on or before that date.
Electronic Submissions
Submit electronic objections in the
following way:
• Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
instructions for submitting objections.
Objections submitted electronically,
including attachments, to https://
www.regulations.gov will be posted to
the docket unchanged. Because your
objection will be made public, you are
solely responsible for ensuring that your
objection does not include any
confidential information that you or a
third party may not wish to be posted,
such as medical information, your or
anyone else’s Social Security number, or
confidential business information, such
as a manufacturing process. Please note
that if you include your name, contact
information, or other information that
identifies you in the body of your
objection, that information will be
posted on https://www.regulations.gov.
• If you want to submit an objection
with confidential information that you
do not wish to be made available to the
public, submit the objection as a
written/paper submission and in the
manner detailed (see ‘‘Written/Paper
Submissions’’ and ‘‘Instructions’’).
Written/Paper Submissions
Submit written/paper submissions as
follows:
• Mail/Hand Delivery/Courier (for
written/paper submissions): Dockets
Management Staff (HFA–305), Food and
Drug Administration, 5630 Fishers
Lane, Rm. 1061, Rockville, MD 20852.
• For written/paper objections
submitted to the Dockets Management
Staff, FDA will post your objection, as
well as any attachments, except for
information submitted, marked and
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
52681
identified, as confidential, if submitted
as detailed in ‘‘Instructions.’’
Instructions: All submissions received
must include the Docket No. FDA–
2021–F–0564 for ‘‘Food Additives
Permitted in Feed and Drinking Water
of Animals; Fumonisin Esterase.’’
Received objections, those filed in a
timely manner (see ADDRESSES), will be
placed in the docket and, except for
those submitted as ‘‘Confidential
Submissions,’’ publicly viewable at
https://www.regulations.gov or at the
Dockets Management Staff between 9
a.m. and 4 p.m., Monday through
Friday, 240–402–7500.
• Confidential Submissions—To
submit an objection with confidential
information that you do not wish to be
made publicly available, submit your
objections only as a written/paper
submission. You should submit two
copies in total. One copy will include
the information you claim to be
confidential with a heading or cover
note that states ‘‘THIS DOCUMENT
CONTAINS CONFIDENTIAL
INFORMATION.’’ The Agency will
review this copy, including the claimed
confidential information, in its
consideration of objections. The second
copy, which will have the claimed
confidential information redacted/
blacked out, will be available for public
viewing and posted on https://
www.regulations.gov. Submit both
copies to the Dockets Management Staff.
If you do not wish your name and
contact information to be made publicly
available, you can provide this
information on the cover sheet and not
in the body of your objections and you
must identify this information as
‘‘confidential.’’ Any information marked
as ‘‘confidential’’ will not be disclosed
except in accordance with 21 CFR 10.20
and other applicable disclosure law. For
more information about FDA’s posting
of comments to public dockets, see 80
FR 56469, September 18, 2015, or access
the information at: https://
www.govinfo.gov/content/pkg/FR-201509-18/pdf/2015-23389.pdf.
Docket: For access to the docket to
read background documents or the
electronic and written/paper objections
received, go to https://
www.regulations.gov and insert the
docket number, found in brackets in the
heading of this document, into the
‘‘Search’’ box and follow the prompts
and/or go to the Dockets Management
Staff, 5630 Fishers Lane, Rm. 1061,
Rockville, MD 20852, 240–402–7500.
FOR FURTHER INFORMATION CONTACT:
Wasima Wahid, Center for Veterinary
Medicine, Food and Drug
Administration, 7519 Standish Pl.
E:\FR\FM\29AUR1.SGM
29AUR1
]]>Agencies
[Federal Register Volume 87, Number 166 (Monday, August 29, 2022)]
[Rules and Regulations]
[Pages 52677-52681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18170]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 399
[Docket No. DOT-OST-2019-0182]
RIN 2105-ZA18
Guidance Regarding Interpretation of Unfair and Deceptive
Practices
AGENCY: Office of the Secretary (OST), U.S. Department of
Transportation (DOT).
ACTION: Guidance regarding interpretation of unfair and deceptive
practices.
-----------------------------------------------------------------------
SUMMARY: The U.S. Department of Transportation (DOT or the Department)
is issuing a guidance document to inform the public and regulated
entities about DOT's interpretation of the terms unfair, deceptive, and
practices as it relates to its statutory authority to prohibit unfair
or deceptive practices. The Department is taking this action to better
define the terms unfair and deceptive in response to an Executive order
issued by President Biden on July 9, 2021, on promoting competition in
the American economy.
DATES: This final guidance document is effective August 29, 2022.
ADDRESSES: This guidance will appear on the Department's aviation
consumer protection website at https://www.transportation.gov/airconsumer/guidance-aviation-rules-and-statutes. The Department's
final rule regarding unfair and deceptive practices and related
documents are available on the docket at https://www.regulations.gov;
follow the online instructions for accessing DOT-OST-2019-0182.
FOR FURTHER INFORMATION CONTACT: Robert Gorman, Kimberly Graber, or
Blane Workie, Office of Aviation Consumer Protection, U.S. Department
of Transportation, 1200 New Jersey Ave. SE, Washington, DC 20590, 202-
366-9342, 202-366-7152 (fax); [email protected];
[email protected]; or [email protected] (email).
SUPPLEMENTARY INFORMATION:
Background
The Department's authority to regulate unfair and deceptive
practices in air transportation or the sale of air transportation is
found at 49 U.S.C. 41712 (``section 41712'').\1\ Section 41712(a) gives
the Department the authority to investigate and decide whether an air
carrier, foreign air carrier, or ticket agent is engaged in an unfair
or deceptive practice in air transportation or the sale of air
transportation. In addition to this general provision, Congress has
also defined two specific practices as being unfair or deceptive.\2\
---------------------------------------------------------------------------
\1\ In addition to section 41712, the Department's authority to
regulate unfair and deceptive practices is based in the Department's
rulemaking authority under 49 U.S.C. 40113, which states that the
Department may take action that it considers necessary to carry out
this part, including prescribing regulations.
\2\ See 49 U.S.C. 41712(b) (failing to notify the purchaser of
such an electronic ticket of its expiration date, if any, is unfair
or deceptive within the meaning of section 41712(a)); 49 U.S.C.
41712(c) (failing to disclose the name of the air carrier providing
the air transportation, as required by statute, is unfair or
deceptive within the meaning of section 41712(a)).
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[[Page 52678]]
The Department also has general authority to issue regulations
necessary to carry out section 41712. Many of the Department's existing
aviation consumer protection rules were issued under the authority of
section 41712, including but not limited to the tarmac delay rule,\3\
the full-fare advertising rule,\4\ the prohibition on post-purchase
price increases,\5\ and the rules on oversales and denied boarding
compensation.\6\
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\3\ 14 CFR 259.4.
\4\ 14 CFR 399.84(a).
\5\ 14 CFR 399.88(a).
\6\ 14 CFR part 250.
---------------------------------------------------------------------------
Section 41712 does not define ``unfair,'' ``deceptive,'' or
``practice.'' On December 7, 2020, the Department issued a final rule
titled ``Defining Unfair or Deceptive Practices'' (``UDP Final
Rule'').\7\ In this rule, the Department noted that section 41712 was
modeled on section 5 of the Federal Trade Commission (FTC) Act.\8\ The
Department explained that while section 5 vests FTC with broad
authority to prohibit unfair or deceptive practices in most industries,
Congress granted the Department the exclusive authority to prohibit
unfair or deceptive practices of air carriers and foreign air carriers.
The Department noted that DOT and FTC share the authority to prohibit
unfair or deceptive practices by ticket agents in the sale of air
transportation.
---------------------------------------------------------------------------
\7\ 85 FR 78707 (December 7, 2020); available at https://www.federalregister.gov/documents/2020/12/07/2020-26416/defining-unfair-or-deceptive-practices.
\8\ 15 U.S.C. 45.
---------------------------------------------------------------------------
Accordingly, DOT determined that it was appropriate to define the
terms ``unfair'' and ``deceptive'' in ways that reflect both FTC
precedent and DOT's own long-standing interpretation of those terms.
Specifically, DOT defined a practice as being unfair to consumers 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.'' \9\ DOT defined a practice as being
deceptive to consumers ``if it is likely to mislead a consumer, acting
reasonably under the circumstances, with respect to a material matter.
A matter is material if it is likely to have affected the consumer's
conduct or decision with respect to a product or service.'' \10\ Like
FTC, the Department stated that proof of intent is not necessary to
establish either unfairness or deception.\11\ The Department found it
unnecessary to define ``practice.'' \12\
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\9\ 14 CFR 399.79(b)(1).
\10\ 14 CFR 399.79(b)(2).
\11\ 14 CFR 399.79(c).
\12\ 85 FR 78710.
---------------------------------------------------------------------------
Among its major provisions, the UDP Final Rule requires DOT to
employ its definitions of ``unfair'' and ``deceptive'' when issuing
future rulemakings or taking future enforcement action.\13\ The rule
provided, however, that if Congress directs DOT by statute to issue
regulations specifically declaring a practice to be unfair or
deceptive, then DOT may do so without reference to the general
definitions.\14\ The rule also clarified that if a specific regulation
already applies to the conduct at issue, then the Department may rely
on the terms of that regulation.\15\
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\13\ 14 CFR 399.75(a)(rulemaking); 399.75(b)(enforcement).
\14\ 14 CFR 399.75(a).
\15\ 14 CFR 399.79(d).
---------------------------------------------------------------------------
On July 9, 2021, the President issued Executive Order 14036,
``Promoting Competition in the American Economy.'' \16\ That Order
directed the Department to take a number of actions to protect aviation
consumers, including that the Department start development of proposed
amendments to its definitions of the terms ``unfair'' and ``deceptive''
in section 41712. Pursuant to the Executive Order, DOT stated that it
would fulfill the requirements of the Executive Order by issuing an
interpretive rule (i.e., this guidance document) that would clearly
apprise the public of the Department's interpretation of the
definitions of the terms ``unfair'' and ``deceptive.'' \17\
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\16\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
\17\ ``Procedures in Regulating Unfair or Deceptive Practices,''
87 FR 5655 (Feb. 2, 2022).
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Guidance Regarding Interpretation of Unfair and Deceptive Practices
The purpose of this guidance document is to provide the public and
regulated entities with greater transparency with respect to DOT's
Office of Aviation Consumer Protection (OACP)'s interpretation of the
terms that are found in section 41712 and defined in the Department's
regulations at 14 CFR 399.79. This guidance document does not have the
force and effect of law, is not legally binding in its own right, and
will not be relied on by the Department as a separate basis for
enforcement or other administrative penalty beyond the underlying
authorities in statute and regulation.
Elements of Unfairness
In the Department's final rule titled ``Defining Unfair or
Deceptive Practices'' (``UDP Final Rule''), DOT defined a practice as
``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.'' \18\ We will address each
element in turn.
---------------------------------------------------------------------------
\18\ 14 CFR 399.79(b).
---------------------------------------------------------------------------
1. ``Causes or Is Likely To Cause''
In keeping with FTC precedent, DOT is of the view that a practice
may ``cause'' harm even if it is not the only cause of the harm, and
even if it is not the most proximate cause of the harm.\19\ Moreover,
the Department is not required to wait for substantial injury to take
place before taking action against an unfair practice. The Department
may take action against practices which are ``likely to cause''
substantial injury as well.\20\ When making such determinations, DOT
examines not only the probability of the harm occurring, but also the
magnitude of the injury if it does occur. As FTC has observed, ``a
practice may be unfair if the magnitude of the potential injury is
large, even if the likelihood of the injury occurring is low.'' \21\
---------------------------------------------------------------------------
\19\ Opinion of the Commission, In the Matter of LabMD, Inc.
(July 19, 2016) at 10, available at https://www.ftc.gov/system/files/documents/cases/160729labmd-opinion.pdf (``LabMD'').
\20\ FTC has similar authority to declare a practice unfair if
it is likely to cause substantial injury. See 15 U.S.C. 45(n).
\21\ LabMD at 10.
---------------------------------------------------------------------------
2. ``Substantial'' Injury
The UDP Final Rule uses the terms ``harm'' and ``injury''
interchangeably.\22\ The Department did not define ``substantial
injury'' in the UDP Final Rule, other than observing that the term
``would necessarily exclude trivial or speculative'' harm.\23\
---------------------------------------------------------------------------
\22\ 14 CFR 399.79(b).
\23\ 85 FR 78710 n. 25.
---------------------------------------------------------------------------
Substantial injury would be determined by the totality of the
circumstances. As FTC has written, ``it is well established that
substantial injury may be demonstrated by a showing of a small amount
of harm to a large number of people, as well as a large amount of harm
to a small number of people.'' \24\ Substantial harm is typically of an
economic nature. For example, the Department has found that delay in
providing refunds to consumers constitutes substantial harm to
consumers who did not receive the service they paid for and did not
have
[[Page 52679]]
access to their money for a significant time.\25\ However, it is well
established that harm need not be financial in order to be substantial.
For example, the Department found that delaying passengers on the
tarmac for a substantial length of time without the opportunity to
deplane or without adequate food, water, lavatory facilities, and
medical attention imposes substantial harm.\26\ Substantial harm may
also be found in intangible injury, such as to an individual's privacy
or reputation.\27\ Extended delays in obtaining relief, and the time
and expense of pursuing a claim, can also constitute substantial
harm.\28\
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\24\ LabMD at 9.
\25\ See Order and Settlement Agreement, Nov. 23, 2021
(available at https://www.transportation.gov/sites/dot.gov/files/2021-11/Air%20Canada%20-%20Order%20And%20Settlement%20Agreement.pdf)
(``Air Canada Order'') at 5.
\26\ See ``Enhancing Airline Passenger Protections,'' 74 FR
68983 (Dec. 30, 2009); available at https://www.federalregister.gov/documents/2009/12/30/E9-30615/enhancing-airline-passenger-protections (also noting that the rule was also premised on an
airline's statutory duty to provide ``safe and adequate'' interstate
air transportation).
\27\ Mishandling the private information of consumers may be
considered an unfair or deceptive practice within the meaning of
section 41712. See https://www.transportation.gov/individuals/aviation-consumer-protection/privacy; see also LabMD at 19 (``the
privacy harm resulting from the unauthorized disclosure of sensitive
health or medical information is in and of itself a substantial
injury under section 5(n),'' even without further evidence that the
information was used to cause further harm); Spokeo, Inc. v.
Robbins, 578 U.S. 330 (2016) ``intangible injuries may nevertheless
be concrete'' for purposes of satisfying the case or controversy
requirement of standing in Article III courts).
\28\ Air Canada Order at 5; see also DOT Order 2009-9-8 (2009)
at 5.
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3. Not Reasonably Avoidable
For a practice to be unfair, the harm must not have been reasonably
avoidable by the consumer.\29\ For example, a lengthy tarmac delay
imposes unavoidable harm because the passenger lacks the opportunity to
deplane. It has also been the longstanding view of OACP that it would
be an unfair practice for a carrier to fail to provide a refund, on
request, for flights to or from the United States that were canceled or
significantly changed by the carrier, in part because the harm was not
reasonably avoidable by the traveler. We came to this conclusion even
if the passenger purchased a ``non-refundable'' ticket. We concluded
that a consumer acting reasonably would believe that he or she was
entitled to a refund under U.S. law if the carrier cancelled or
significantly changed the flight, regardless of the reason for the
cancellation or significant change. We further concluded that a
reasonable consumer would not believe that it is necessary to purchase
a more expensive refundable ticket in order to be able to recoup the
ticket price when the airline fails to provide the service paid for
through no action or fault of the consumer, because reasonable
consumers understand that ``refundable'' tickets are valuable because
they ensure a refund if the passenger cancels the flight.\30\ The
Department has issued a notice of proposed rulemaking that would
propose to codify OACP's interpretation that section 41712 requires
airlines to provide prompt refunds when a carrier cancels or makes a
significant change and the passenger does not take an alternative
flight offered by the airline, including when the original ticket
purchased is non-refundable.\31\
---------------------------------------------------------------------------
\29\ See FTC Policy Statement on Unfairness, available at
https://www.ftc.gov/public-statements/1980/12/ftc-policy-statement-unfairness (FTC generally does not intend to second-guess the wisdom
of consumer decisions, but it does intend to halt seller behavior
that ``unreasonably creates or takes advantage of an obstacle to the
free exercise of consumer decisionmaking.'')
\30\ Air Canada Order at 5.
\31\ 87 FR 51550 (August 22, 2022), available at https://www.federalregister.gov/documents/2022/08/22/2022-16853/airline-ticket-refunds-and-consumer-protections.
---------------------------------------------------------------------------
The Department looks at this element from the perspective of an
ordinary consumer acting reasonably under the totality of the
circumstances. For example, we have found that a passenger who
triggered an airline's fraud-detection system and lost frequent flyer
miles could have reasonably avoided that harm by not repeatedly
entering fictitious information into the airline's reservation
system.\32\
---------------------------------------------------------------------------
\32\ DOT Order 2016-12-11, at 3.
---------------------------------------------------------------------------
4. Harm Not Outweighed by Benefits to Consumers or Competition
Finally, the harm must not be outweighed by benefits to consumers
or to competition. Like FTC, the Department recognizes that some
practices may be harmful to consumers in some respects, but beneficial
to consumers in other respects. For example, offsetting benefits may
include lower prices or a wider availability of products and services
resulting from competition. The Department seeks to regulate practices
that are harmful to consumers in their net effects.\33\ Importantly,
the Department does not compare the harm to the consumer against the
benefits that the airline or ticket agent may obtain from the
practice.\34\ The Department's determination to regulate an unfair and
deceptive practice would also be informed by a regulatory impact
analysis.
---------------------------------------------------------------------------
\33\ Air Canada Order at 5; see also the Department's oversales
rule, 14 CFR part 250, which also reflects this balance. The rule is
carefully crafted to allow airlines to oversell flights in order to
fill seats that would have otherwise gone empty due to ``no-shows.''
In exchange for this ability to overbook flights (which would
otherwise be unfair or deceptive), the Department requires airlines
to compensate and provide protections to passengers who were
involuntarily denied boarding in accordance with the rule. See DOT
Order 2020-6-5.
\34\ See Air Canada Order at 6 (finding that the practice of
retaining passenger funds for canceled flights beyond the time
frames allowed by law conveyed no benefit to consumers, even if the
practice may have benefited the airline).
---------------------------------------------------------------------------
5. Public Policy Considerations
As we noted in the UDP Final Rule, DOT has a broad statutory
responsibility to consider a wide variety of public policies enumerated
by Congress.\35\ In fact, Congress has directed the Department in
carrying out its aviation economic programs such as regulations under
section 41712 to consider certain enumerated factors as being in the
public interest. These factors include ``the availability of a variety
of adequate, economic, efficient, and low-priced services without
unreasonable discrimination or unfair or deceptive practices'' and
``preventing unfair, deceptive, predatory, or anticompetitive practices
in air transportation.'' \36\ DOT considers public policy as
established by both the Executive branch (e.g., regulation, Executive
Order \37\) and the Legislative branch (e.g., statute, sense of
Congress) of the Federal Government as appropriate, when determining
whether a practice is unfair.
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\35\ 85 FR 78710.
\36\ 49 U.S.C. 40101(a).
\37\ E.g., Executive Order on Catalyzing Clean Energy Industries
and Jobs Through Federal Sustainability, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federal-sustainability/; Biden Administration Advances the Future of
Sustainable Fuels in American Aviation, https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/09/fact-sheet-biden-administration-advances-the-future-of-sustainable-fuels-in-american-aviation/.
---------------------------------------------------------------------------
As a public policy matter, the Department has found that
discriminatory conduct in and of itself constitutes an unfair practice.
In this regard, orders of the Department and its predecessor Civil
Aeronautics Board (CAB) support the position that violations of
statutes that prohibit discrimination constitute unfair and deceptive
practices. For example, the CAB determined that unlawful disparate
treatment of consumers by a carrier in its ticket-by-mail procedures
based on the consumer's ZIP code, which had the effect of
discriminating against African-Americans in New York City, is an
[[Page 52680]]
unfair practice.\38\ The Department has also consistently found that
violation of the Air Carrier Access Act, which prohibits U.S. and
foreign air carriers from discriminating against passengers with
disabilities, is an unfair practice.\39\ Similarly, the Department has
found that discrimination against individuals based on their race,
color, national origin, religion, ancestry or sex is an unfair
practice.\40\
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\38\ Miscellaneous Economic Orders, 78 C.A.B. 860 (1978): Docket
33219, Enforcement re Ticket-by-Mail, order 78-8-101, available via
HeinOnline.
\39\ See, e.g., DOT Order 2018-11-8.
\40\ See, e.g., DOT Order 2012-5-2.
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Elements of Deception
In the UDP Final Rule, DOT defined a practice as ``deceptive'' if
it ``is likely to mislead a consumer, acting reasonably under the
circumstances, with respect to a material matter. A matter is material
if it is likely to have affected the consumer's conduct or decision
with respect to a product or service.'' \41\ We will address these
elements in turn.
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\41\ 14 CFR 399.79(b)(2).
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1. Likely To Mislead a Consumer
First, the practice must be likely to mislead the consumer. As FTC
has explained, express misrepresentations, implied representations, and
omissions are all potentially actionable.\42\ A failure to provide
services as promised (whether by contract or otherwise) can also be
deceptive.\43\
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\42\ FTC 1983 Policy Statement on Deception, available at
https://www.ftc.gov/public-statements/1983/10/ftc-policy-statement-deception.
\43\ Id.; see also DOT Order 2013-3-12 (airline acted
deceptively when it stated on its website that certain conditions of
carriage, including EU-mandated compensation for cancelled flights,
would apply to international travel to and from the U.S., but then
refused to abide by those conditions).
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The Department's full-fare advertising rule is based on its
authority to prohibit deceptive practices.\44\ Put simply, this rule
requires advertised prices for air transportation to be the entire
price to be paid by the customer to the carrier, or agent, for such air
transportation. The Department based its rule on evidence that
consumers believed that they were going to pay a particular advertised
price for air transportation, only to find that the price was
substantially higher due to additional taxes and fees.\45\ The rule
also requires any charges that are listed as components of the entire
price (e.g., taxes) not to be false or misleading.
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\44\ 14 CFR 399.84(a).
\45\ https://www.federalregister.gov/documents/2011/04/25/2011-9736/enhancing-airline-passenger-protections.
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We have also found that advertising a fare that is no longer
available, or failing to have a reasonable number of seats available at
the advertised fare, is deceptive.\46\ The Department has also found
that an airline's failure to comply with its publicly posted Customer
Service Plan is deceptive, because the carrier failed to abide by its
commitment to provide services as promised.\47\
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\46\ DOT Order 2022-2-6. While this practice is deceptive even
in the absence of a specific regulation, we have also found that
this practice violates the full-fare advertising rule, 14 CFR
399.84(a).
\47\ DOT Order 2018-5-27; DOT Order 2016-8-33.
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2. Acting Reasonably Under the Circumstances
Like FTC, the Department views deception from the perspective of an
ordinary consumer acting reasonably in the circumstances.\48\ FTC has
noted that entities are not responsible for the unreasonable
interpretations of a handful of individuals, or for broad statements of
feeling or opinion.\49\ Likewise, in the preamble to the UDP Final
Rule, we noted that willful, intentional, or reckless consumer behavior
that leads to self-imposed harm would likely not be covered.\50\
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\48\ On occasion, the Department receives complaints from
sophisticated consumers who were not personally deceived by a
practice because they are unusually knowledgeable. We have rejected
airlines' claims that such complaints must be dismissed because the
individual complainants themselves were not deceived. We reasoned
that we must view the practice from the perspective of the ordinary
consumer who may be unaware of the deception and are therefore less
likely to file complaints. See, e.g., DOT Order 2016-12-12.
\49\ See DOT Order 92-5-60 (1992) (finding that the terms of an
airline's frequent flyer programs were not deceptive simply because
consumers may have assumed that airlines could not make such changes
to the program, or were surprised that miles could not be sold, when
the terms of the plan themselves were clear); DOT Order 2012-12-11
(airline did not commit a deceptive practice by failing to warn a
passenger that his actions would trigger its fraud-detection system
when the passenger acted unreasonably in accessing the airline's
reservation system).
\50\ We have issued specific guidance regarding cases where
passengers intentionally purchase fares that they know or should
have reason to know are mistaken. See https://www.transportation.gov/airconsumer/mistaken-fare-policy-statement-050815. Mistaken fares are also governed by the rule relating to
post-purchase price increases, 14 CFR 399.88.
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However, if a representation may be interpreted in two different
but reasonable ways, one of which is false, the entity may be liable
for the misleading interpretation. Like FTC, the Department will look
to all of the factors surrounding the statement to determine
reasonableness, including how clear, conspicuous, and significant the
representation is, the familiarity of the public with the product, and
the availability of alternate sources for the information.\51\
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\51\ FTC Policy Statement on Deception, section 3.
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3. Material Matter
The Department has adopted FTC's standard that the deception must
regard a ``material'' matter, which is a matter that is likely to have
affected the consumer's conduct or decision with regard to a product or
service. In such a case, ``consumer injury is likely, because consumers
are likely to have chosen differently but for the deception.'' \52\
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\52\ FTC Policy Statement on Deception, section 4.
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For example, the Department has found that the practice of
mischaracterizing a carrier-imposed fee as a ``tax'' is deceptive.\53\
We concluded that a reasonable consumer may choose to pay a ``tax''
under the reasonable belief that a tax is unavoidable, but that same
consumer may choose to shop elsewhere in order to avoid a carrier-
imposed fee. We have also found that an airline acted deceptively when
it promised a universally available discount for prepaid baggage fees,
when that discount was not available if the customer purchased the
ticket through a third-party website.\54\ In contrast, we have found
that errors that appear only in post-purchase receipts are misleading,
but not deceptive for purposes of section 41712, because there was no
evidence in that case that an error in a post-purchase receipt
influenced the consumer's pre-purchase decision.\55\
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\53\ DOT Order 2018-5-32.
\54\ DOT Order 2013-7-11.
\55\ DOT Order 2018-5-32.
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It is important to note that the ``product or service'' is not
limited to the initial purchase, however. For example, we have found
that an airline acted deceptively when it responded to consumer
complaints about denied boarding compensation by stating that it
complied with ``DOT and FAA regulations,'' when no such regulations
existed. We found that such misrepresentations could have dissuaded
consumers from pursuing valid complaints with the Department.\56\ We
have also found that misrepresentations relating to cancellation fees
were deceptive within the meaning of section 41712.\57\
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\56\ DOT Order 2009-9-8.
\57\ DOT Order 2022-2-6.
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Practice
FTC has the statutory authority to prohibit unfair or deceptive
``acts or practices'' in or affecting commerce.\58\
[[Page 52681]]
Section 41712, however, refers only to ``practices.'' \59\ In the UDP
Final Rule, we explained that our aviation consumer protection
regulations are always directed to practices of an airline or ticket
agent, rather than isolated acts of individual employees. We also
explained that our enforcement efforts include a determination that the
conduct in question reflects a practice or policy affecting multiple
consumers, rather than an isolated incident.\60\ We concluded that ``in
general, the Department is of the view that proof of a practice in the
aviation consumer protection context requires more than a single
isolated incident. On the other hand, even a single incident may be
indicative of a practice if it reflects company policy, practice,
training, or lack of training.'' \61\
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\58\ 15 U.S.C. 45(a)(1). The FTC Act prohibits FTC from
exercising jurisdiction over ``air carriers and foreign air carriers
subject to part A of subtitle VII of title 49.'' 15 U.S.C. 45(a)(2).
That authority lies exclusively with the Department. As noted above,
FTC and DOT both have authority over the unfair and deceptive
practices of ticket agents selling air transportation.
\59\ 49 U.S.C. 41712(a) (``the Secretary may investigate and
decide whether an air carrier, foreign air carrier, or ticket agent
has been or is engaged in an unfair or deceptive practice or an
unfair method of competition in air transportation or the sale of
air transportation.'')
\60\ See, e.g., DOT Order 2018-2-7 (finding that an airline's
failure to respond timely to a single complaint did not warrant
enforcement action in the absence of evidence of a pattern or
practice).
\61\ 85 FR 78711.
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Effective Date
This guidance is effective August 29, 2022.
Issued on or about this 15th day of August, 2022, in Washington,
DC.
John E. Putnam,
General Counsel, U.S. Department of Transportation.
[FR Doc. 2022-18170 Filed 8-26-22; 8:45 am]
BILLING CODE 4910-9X-P
