California Unfair Competition Law: A 5-Minute Legal Guide

California has an unfair competition law that prohibits unfair, deceptive, or fraudulent business practices or misleading advertising. If such actions harm consumers or businesses, they can bring lawsuits to seek compensation or to stop the unfair practices.

Common examples of acts of unfair competition in California include:

• Selling products or services at different prices in different geographic locations within California (“locality discrimination”); 1
• Selling a product or service below cost in order to destroy competition; 2
• Offering secret rebates to some customers but not others; 3 or
• “Bait-and-switch” advertising and solicitation. 4

To help you better understand unfair competition law (UCL), our California personal injury lawyers discuss:

• 1. What is “unfair competition”?
• 2. Who can sue for unfair competition?
• 3. What are the remedies?
• 4. What is the statute of limitations?

Consumers who have been hurt by unfair business practices may also wish to read our article on California’s “Consumers Legal Remedies Act” (“CLRA”).

Many unfair competition cases involve misrepresentations to consumers.

1. What is “unfair competition”?

California Business and Professions Code 17200 defines “unfair competition” as:

• Any unlawful, unfair or fraudulent business act or practice, or
• False, deceptive or misleading advertising. 5

A business practice violates the “unlawful, unfair or fraudulent” prong if it is forbidden by law or is against public policy. Almost any violation of the law can serve as the basis for an unfair competition claim if, as a result of the unfair competition:

• It harms consumers, or
• It gives a business an unfair advantage over its competitors.

Examples of deceptive business practices include (but are not limited to):

• “Robocalling” or “spoofing” a phone number in violation of FCC regulations;
• Pretending to be affiliated with or endorsed by a better-known brand; or
• Luring consumers into a store by advertising a cheap price and then having only higher-priced options available (“bait-and-switch”).

2. Who can sue for unfair competition?

To meet the standing requirement to bring a UCL claim in California, a member or members of the public must actually have lost money or property as the result of false advertising or unlawful conduct. Consumer watchdog groups and governmental organizations and lack standing to sue for this cause of action under state law. 6

In the case of unlawful practices, the plaintiff must usually also be able to establish that the defendant intended to destroy competition. 7 Note that it is not necessary to prove this in cases of false or deceptive advertising.

Consumers damaged by unlawful practices who cannot prove intent to destroy competition may, nevertheless, be able to sue under California’s “Consumers Legal Remedies Act” (“CLRA”). 8

Note that federal law can defeat a state law-based UCL claim if the federal preemption requirements are met.

An experienced California business torts litigator can advise you of your options.

3. What are the remedies?

Remedies for unfair competition in California can include:

• Recovery of the plaintiff’s actual economic damages; and/or
• Court orders for injunctive relief or equitable relief to prohibit unfair practices. 9

Note that punitive damages are not available in unfair competition cases, even if the defendant’s conduct was malicious. As a result, many unfair competition cases are brought as California class actions.

Additionally, a District Attorney or other government official acting on behalf of the public may be able to bring an action against the person responsible for the wrongful practices for:

• A civil penalty of up to $2,500 for each individual violation; 10 and
• Criminal prosecution for violating California’s criminal false advertising laws. 11

It may also be possible to recover attorney fees as business litigation is very expensive.

4. What is the statute of limitations?

UCL actions in California must be commenced within four years. The limitations period begins to run on the earlier of:

• Discovery of the unfair act, or
• When, in the exercise of reasonable diligence, the wrongful act should have been discovered. 12

Helpful Resources:

• California Attorney General – Antitrust Enforcement
• California Code of Civil Procedure
• California Supreme Court
• Proposition 64 (2004)
• California Legislature
• California Superior Courts
• California Appellate Courts (Court of Appeals)
• Federal Trade Commission (FTC) | Bureau of Consumer Protection
• 15 United States Code 45 (statutory federal law for unfair competition)
• Trade Secrets – U.S. Patent and Trademark Office

Legal references:

1. California Civil Jury Instructions (CACI) 3300. Locality Discrimination.
2. CACI 3301. Below Cost Sales.
3. CACI 3320. Secret Rebates.
4. California Business and Professions Code 17500 (different than common law).
5. Same. See also Makreas v. First National Bank of N. Cal. (N.D. Cal. 2012) 856 F. Supp. 2d 1097. See also Bank of the West v. Superior Court, (1992) 2 Cal.4th 1254. See also Unfair and Deceptive Acts and Practices in Real Estate Transactions: The Duty to Disclose Off-site Environmental Hazards, 97 Dick. L. Rev. 153 (1992-1993). See also Hudgins v. Neiman Marcus Group, Inc. (1995) 34 Cal.App.4th 1109; Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163.
6. They may, however, have standing to sue under another law, such as false designation of origin under the Lanham Act.
7. See, e.g., CACI 3300, endnote 1.
8. California Civil Code sections 1750-1784 et seq.
9. Business and Professions Code 17203.
10. Business and Professions Code section 17206.
11. Business and Professions Code 17500, endnote 4.
12. Business and Prof. Code 17208.