When the game doesn’t go your way, change the game. That certainly seems to be the Colorado Attorney General’s attitude. We recently secured an appellate win for the Castle Law Group, following a years-long probe by the state AG into claims that the firm had charged improper fees for foreclosure work it had performed during the 2008 financial crisis. Castle Law Group was vindicated legally by the Court of Appeals, which recognized that the Colorado Consumer Protection Act (“CCPA”) applies more narrowly than the AG alleged, especially with regard to the CCPA’s “public impact” requirement.

Now, the state legislature is considering legislation that would significantly broaden the scope of the CCPA. Here’s how:

• The proposed legislation would expand the law’s knowledge-only requirements to instead read, “knowingly or recklessly.” This means that unlawful conduct may also include instances in which a person did not have actual knowledge that his or her actions were wrong.
• Classifying any “unfair, unconscionable, abusive or deceptive act or practice,” as well as conduct “that creates a likelihood of confusion or misunderstanding,” as a deceptive trade practice.
• Nullifying the existing requirement that a claim under the CCPA must show that deceptive trade practices have a “significant public impact.” This point is significant, as our recent win from the Colorado Court of Appeals determined this requirement also covered enforcement actions filed by the state. Removing this provision would pave the way for frivolous lawsuits arising from private disputes that do not impact the public; should such cases be brought by the Colorado Attorney General, they will be funded by the taxpayers.
• Increasing financial penalties for violations under the CCPA. The current per violation amount of $2,000 would be increased to $20,000 ($50,000 where violations are committed against elderly persons)and removes the cap of $500,000 for related violations.

What all of this means is that the law would give the Colorado Attorney General – not to mention district and even private attorneys – the opportunity to bring a slew of new litigation that the law in its current form prohibits. What concerns us most is the possibility of frivolous lawsuits being brought by the state government, which has proven unfriendly to local businesses, as illustrated by the lawsuit against our client. Of course, the legislation has not yet passed into law. The House Judiciary Committee recently passed it on a 6-5 vote. But we’ll be keeping a close eye on the situation as it develops.