Deceptive Trade Practices Act Violation

Residents of Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, and other cities, beware. There are businesses out there that will cheat you.
Think about this for a second. There is a saying that says there are only two things in this world a person can be sure of; death and taxes. A person can be a little light hearted and joke by saying they are getting screwed by both of them.
But here is a different twist. According to a Houston Chronicle news story that was published on July 19, 2010, the tax man, or in this case “TaxMasters” is screwing you over also. The author of the article, Mike Tolson, titled the article, “TaxMasters target of state AG, customers.” The article tells how the tax assistance company, TaxMasters, appears to be in violation of the Texas Deceptive Trade Practices Act and the Texas Debt Collection Act.
Most of us in Texas have seen or heard the TaxMasters advertisements with its founder, Patrick Cox, urging people with IRS problems to give him a call. Well, it appears that a lot of people did call him and it also appears that a lot of people are very unhappy with the way their cases were handled. You can be sure that things have gotten out of hand when you learn that this past May, Texas Attorney General, Greg Abbott, has filed suit against TaxMasters. Adding to their woes is a class-action lawsuit filed on behalf of former clients earlier this month in Pennsylvania that echoes many of the complaints of the AG’s lawsuit. The Pennsylvania lawsuit also alleges violations of federal and Pennsylvania laws.
As reported by the article, both the class-action lawsuit and the AG lawsuit include allegations from TaxMasters customers that the company would do no work on any IRS issue until it was paid in full, even if that meant crucial IRS deadlines were passed, and that their attempts to cancel the agreements not only failed to net a refund, but also demands from TaxMasters to be paid in full, even if it did no work and did not have a signed contract.
One example cited in the article is that of Karen Sanchez, a 65 year old resident of suburban Atlanta. Sanchez swore in an affidavit that she paid TaxMasters $4,083 of an agreed $6,250 in 2009 but that it did nothing on her behalf to settle an IRS debt. She claims TaxMasters employees told her the company would take steps to protect her home, then learned from the IRS that nothing had been done and that her right to appeal had expired.
When she finally reached a TaxMasters supervisor, Sanchez claims she was told nothing would be done further until the company received her final installment in April. Until then, Sanchez alleges, she was told that she would have to handle the matter herself. Sanchez claims she was never told upfront that no actions would be taken to help her until the fee was paid in total or that the fee would not be refunded even if TaxMasters ended up doing no work.
Neither Patrick Cox nor his attorney are returning calls for comment. However, the company issued a statement through its public relations firm that said:
“While faced with these charges raised by the attorney general of Texas, TaxMasters and CEO Patrick Cox are working diligently with the attorney general’s office to provide all information necessary to negate any wrongful charges and continue serving its clients as the nation’s largest tax representation company.”
Essentially is appears that TaxMasters and its CEO are taking the position that they are targets of their competitiors because they have been so successful. It is reported that a steady stream of advertising combined with a nationwide economic downturn translated into explosive growth for TaxMasters, which saw its revenue grow from $6.5 million in 2007, its first year, to more than $36 million last year.
Under the Texas Deceptive Trade Practices Act, there are many potential violations. Here are some that may or may not apply to what TaxMasters did in this situation. They are found in the Texas Business & Commerce Code, Section 17.46:
17.46(b)(5) representing that services have characteristic, uses, benefits, which they do not have,
(7) representing that services are of a particular standard or quality when they are of another,
(9) advertising services with intent not to sell them as advertised,
(12) representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve,
(24) failing to disclose information concerning services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed.
If the allegations against TaxMasters are found to be true, then the consumer would be entitled to the relief found in Section 17.50.
Additionally, the AG lawsuit could result in a restraining order being issued pursuant to Section 17.47.