Can this contract waive or cut down the customer's Illinois Consumer Fraud Act rights?
No. 815 ILCS 505/10c provides that any waiver or modification of the rights, provisions, or remedies of the Consumer Fraud and Deceptive Business Practices Act is void and unenforceable, and Illinois appellate courts have applied it to terms that cut down the Act's remedies: a punitive-damages disclaimer in a car dealer's arbitration clause is void and unenforceable as 'an attempt to categorically exclude a form of relief authorized by the Consumer Fraud Act' (Tortoriello), and an arbitration agreement banning attorney's fees as well as punitive damages is unenforceable because 'Illinois law precludes limiting remedies available under the ... Consumer Fraud Act' (Bain). What § 10c protects is set out two sections earlier: any person who suffers actual damage from a violation may sue, and the court in its discretion may award actual economic damages or any other relief it deems proper, except that punitive damages may not be assessed against a new or used vehicle dealer, or the holder of a motor-vehicle retail installment contract, unless the conduct was willful or intentional and done with evil motive or reckless indifference to the rights of others, and against those same defendants proof of a public injury, a pattern or an effect on consumers and the public interest generally is required to state a cause of action (§ 10a(a)); it may grant injunctive relief and award reasonable attorney's fees and costs to the PREVAILING PARTY, but only "Except as provided in subsections (f), (g), and (h) of this Section" (§ 10a(c)), and those three subsections are a settlement regime that can take the fees away in exactly the vehicle cases subsection (a) singles out: under § 10a(f) a dealer or installment-contract holder may serve an offer of judgment more than 30 days before trial, and a claimant who does not accept it and then fails to obtain a judgment for more than the offer "shall forfeit" fees and costs incurred after the offer, which the court "may not award"; under § 10a(h) a claimant must serve a written notice of the alleged violation and demand for relief on such a defendant at least 30 days before filing, must certify service and the substance of any response, and if it rejects a written offer of settlement in writing and then recovers less than the offer "the court shall deny any award of attorney's fees and costs" incurred after the rejection; § 10a(g) runs the other way, giving the claimant statutory interest on its own unaccepted offer where it equals or beats it; the action is barred unless commenced within three years after accrual, tolled during and for a year after an Attorney General or State's Attorney action on the same matter (§ 10a(e)). The Act's "consumer" is any person who purchases merchandise not for resale in the ordinary course of his trade or business but for his own or a household member's use (§ 1(e)), and § 10b lists what the Act does not reach, beginning with actions or transactions specifically authorized by laws administered by a State or federal regulatory body, though item (1) adds that notwithstanding any such action or approval, the manufacture, distribution or sale of a product or service that causes or contributes to cause bodily injury, death or property damage is NOT 'specifically authorized' within the meaning of that item.
The trap
The section voids MODIFICATION as well as waiver. Read on its words, that reaches clauses that usually survive consumer-protection anti-waiver statutes (a shortened limitation period, a damages cap, an exclusive-remedy or fee-shifting term aimed at the Act), to the extent they cut down the Act's rights or remedies. That is no longer only a reading of the text: Tortoriello voided a punitive-damages disclaimer in an arbitration clause under § 10c, and Bain held a ban on attorney's fees and punitive damages unenforceable. What the void term COSTS the drafter, though, turns on severance, and the two cases split on it: in Tortoriello the disclaimer was severable, the rest of the arbitration clause stood, and the appellate court reversed the order that had refused to compel arbitration; in Bain the unconscionable provisions could not be severed, so the order compelling arbitration was reversed, "Ms. Bain's complaint is reinstated", and the case was remanded. Both are Appellate Court decisions, and both are published opinions rather than non-precedential Rule 23 orders. No Illinois Supreme Court decision applies § 10c: of the five Illinois opinions that name 815 ILCS 505/10c, every one is an Appellate Court decision (Turner v. Concord Nursing & Rehabilitation Center, 2023; Bain, 2022; RBS Citizens v. RTG-Oak Lawn, 2011; and Tortoriello, published in two copies), and the first and third of those have not been read. No negotiated-waiver or sophisticated-party safe harbour appears in the section's published text. Two consequences of the text a drafter should weigh: § 10a(c)'s fee award runs to the prevailing party, so a contractual one-way fee clause in the seller's favour is not the only route to fees a defendant has; and because § 10a(e)'s three-year period is itself a 'remedy' of the Act on § 10c's reading, a shorter contractual limitation for CFA claims is the modification the section voids.
16 authorities
- statute815 ILCS 505/10cenactment date not established
The words that state the rule
Any waiver or modification of the rights, provisions, or remedies of this Act shall be void and unenforceable.
- statute815 ILCS 505/10aenactment date not established
The words that state the rule
(a) Any person who suffers actual damage as a result of a violation of this Act committed by any other person may bring an action against such person. The court, in its discretion may award actual economic damages or any other relief which the court deems proper; provided, however, that no award of punitive damages may be assessed under this Section against a party defendant who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code or who is the holder of a retail installment contract within the meaning of Section 2.12 of the Motor Vehicle Retail Installment Sales Act, unless the conduct engaged in was willful or intentional and done with evil motive or reckless indifference to the rights of others.
- statute815 ILCS 505/10aenactment date not established
The words that state the rule
Proof of a public injury, a pattern, or an effect on consumers and the public interest generally shall be required in order to state a cause of action under this Section against a party defendant who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code or who is the holder of a retail installment contract within the meaning of Section 2.12 of the Motor Vehicle Retail Installment Sales Act. Proof of such public injury may be shown by any one of the following factors: (1) Violation of a statute that has a public interest impact. (2) Repeated acts prior to the act involving the plaintiff. (3) Potential for repetition.
- statute815 ILCS 505/10aenactment date not established
The words that state the rule
(c) Except as provided in subsections (f), (g), and (h) of this Section, in any action brought by a person under this Section, the Court may grant injunctive relief where appropriate and may award, in addition to the relief provided in this Section, reasonable attorney's fees and costs to the prevailing party.
- statute815 ILCS 505/10aenactment date not established
The words that state the rule
(e) Any action for damages under this Section shall be forever barred unless commenced within 3 years after the cause of action accrued; provided that, whenever any action is brought by the Attorney General or a State's Attorney for a violation of this Act, the running of the foregoing statute of limitations, with respect to every private right of action for damages which is based in whole or in part on any matter complained of in said action by the Attorney General or State's Attorney, shall be suspended during the pendency thereof, and for one year thereafter.
- statute815 ILCS 505/1enactment date not established
The words that state the rule
(e) The term "consumer" means any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household.
- statute815 ILCS 505/10benactment date not established
The words that state the rule
Sec. 10b. Nothing in this Act shall apply to any of the following: (1) Actions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States; however, notwithstanding any action or approval by a regulatory body or officer acting under statutory authority of this State or the United States, the manufacture, distribution, or sale of a product or service that causes or contributes to cause bodily injury, death, or property damage is not an action or transaction "specifically authorized" within the meaning of this item (1).
- case882 N.E.2d 157Tortoriello v. Gerald Nissan of North Aurora, Inc.Ill. App.decided 2008read it at the source ↗
The words that state the rule
Section 10c of the Consumer Fraud Act (815 ILCS 505/10c (West 2004)) provides: “Any waiver or modification of the rights, provisions, or remedies of this Act shall be void and unenforceable.” As an attempt to categorically exclude a form of relief authorized by the Consumer Fraud Act, the punitive damages disclaimer in the arbitration clause is void and unenforceable.
- case882 N.E.2d 157Tortoriello v. Gerald Nissan of North Aurora, Inc.Ill. App.decided 2008read it at the source ↗
The words that state the rule
The arbitration clause is not, however, void in its entirety, for the punitive damages disclaimer is severable from the remainder of the clause.
- case882 N.E.2d 157Tortoriello v. Gerald Nissan of North Aurora, Inc.Ill. App.decided 2008read it at the source ↗
The words that state the rule
we reverse the judgment of the circuit court of Kane County denying defendants’ motions to stay proceedings and compel arbitration, and we remand this cause for further proceedings consistent with this disposition.
The words that state the rule
As the circuit court appears to have recognized, in striking the agreement’s ban on punitive damages as unconscionable, Illinois law precludes limiting remedies available under the 10 No. 1-21-1001 Consumer Fraud Act.
The words that state the rule
For the same reasons that barring recovery of punitive damages is impermissible, the ban on attorney fees violates Illinois law. And its impact on a consumer’s ability to pursue a claim is even more tangible.
The words that state the rule
the modifications necessary to render the agreement enforceable cannot be considered minor. The arbitration agreement is unenforceable, and its unconscionable provisions cannot be severed.
- statute815 ILCS 505/10aenactment date not established
The words that state the rule
(f) At any time more than 30 days before the commencement of trial, a party, who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code or who is the holder of a retail installment contract within the meaning of Section 2.12 of the Motor Vehicle Retail Installment Sales Act and who is defending a claim under this Act, may serve upon the party seeking relief under this Act an offer to allow judgment to be taken against the defending party to the effect specified in the offer with costs then accrued. If within 10 days after service of the offer, the offeree serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service of the notice; the court shall then enter judgment. An offer not accepted shall be deemed withdrawn and evidence of the offer is not admissible except in a proceeding to determine costs. When a party seeking relief under this Act does not accept an offer filed with the clerk and served upon the attorney for that party more than 30 days before the commencement of trial and when that party fails to obtain a judgment in an amount more than the total offer of settlement, that party shall forfeit and the court may not award any compensation for attorney's fees and costs incurred after the date of the offer.
- statute815 ILCS 505/10aenactment date not established
The words that state the rule
(h) At least 30 days prior to the filing of an action under this Section, a party who is seeking relief shall serve a written notice of the nature of the alleged violation and demand for relief upon the prospective party, who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code or who is the holder of a retail installment contract within the meaning of Section 2.12 of the Motor Vehicle Retail Installment Sales Act, against whom such action will be commenced. Any person receiving such a demand for relief may, within 30 days of service of the demand for relief, submit a written offer of settlement, which offer is to be exclusive of attorney's fees, to the party serving the notice and demand. The party who is seeking relief must certify in any cause of action that the notice and demand was served upon the named defendants and the substance of their response, if any. If the offer of settlement is rejected in writing by the party who is seeking relief, then, in any subsequent action, the court shall deny any award of attorney's fees and costs requested by the party seeking relief under this Act incurred after the rejection of the written offer of settlement, if the judgment is less than the amount contained within the offer of settlement. All written offers of settlement under this subsection shall be presumed to be offered without prejudice in compromise of a disputed matter.
The words that state the rule
For all of the above reasons, the circuit court’s order compelling arbitration is reversed, Ms. Bain’s complaint is reinstated, and this matter is remanded for further proceedings consistent with this opinion. ¶ 57 Reversed and remanded.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.