5.2 Auction Misrepresentations and Laundry-List Violations
Key Takeaways
- Section 17.46(b)(5) covers false characteristics, uses, benefits, or quantities; (b)(7) covers false standard, quality, grade, style, or model.
- Representing used or reconditioned goods as new is addressed by (b)(6), while false price-reduction claims are addressed by (b)(11).
- Advertising with intent not to sell as advertised under (b)(9) and knowing, intentional nondisclosure under (b)(24) have express mental-state elements.
- Undisclosed seller bidding separately triggers § 2.328 remedies and can also support a DTPA theory when the required DTPA elements are proved.
- An “as is” term does not authorize false provenance, concealed defects, phantom bids, or a misleading absolute-auction claim.
5.2 Auction Misrepresentations and Laundry-List Violations
Match the subsection: Similar-looking deceptions can have different elements. Read whether the statute itself says knowingly or with intent.
Characteristics, Quality, and Newness
Section 17.46(b)(5) prohibits representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities they do not have.
Section (b)(7) addresses representations that goods or services have a particular standard, quality, grade, style, or model when they are another. Section (b)(6) specifically addresses representing goods as original or new when they are deteriorated, reconditioned, reclaimed, used, or secondhand.
Auction examples include:
- calling a reproduction an original;
- describing plated metal as solid gold;
- stating unverified engine hours as actual;
- advertising a salvage title as clean; or
- selling refurbished equipment as unused factory stock.
These provisions generally do not require common-law intent to deceive, but the consumer must still prove detrimental reliance, producing cause, and loss in a private action.
Source, Sponsorship, and Affiliation
Sections (b)(2) and (b)(3) address confusion about source, sponsorship, approval, certification, affiliation, connection, or association. A fake “U.S. Marshal seizure,” nonexistent charitable affiliation, or invented artist certification can fit.
Using “estate” for ordinary wholesale inventory can also be material if it falsely implies provenance, scarcity, or source. State the actual seller category without revealing confidential personal information unnecessarily.
Advertising Intent
Section (b)(9) prohibits advertising goods or services with intent not to sell them as advertised. Section (b)(10) addresses intent not to supply reasonably expectable public demand unless the advertisement discloses a quantity limit.
These provisions contain intent. A corrected typographical error is not the same as a planned bait-and-switch, although failure to correct a known error can create other liability.
Section (b)(11) prohibits false or misleading factual statements about the reason for, existence of, or amount of a price reduction. Do not invent a “retail value,” fake prior price, or fictional liquidation discount.
Failure to Disclose
Section (b)(24) applies when the defendant:
- knew the information at the time of the transaction;
- failed to disclose it;
- intended to induce the consumer into a transaction; and
- the consumer would not have entered if the information had been disclosed.
A hidden cracked frame, known title brand, or known counterfeit report can fit when those elements are established. The provision is not a general negligence rule for information the auctioneer merely should have discovered.
Seller Bidding and Phantom Bids
Section 2.328 provides a specific remedy when the auctioneer knowingly receives an undisclosed bid on the seller's behalf or the seller makes or procures it: the buyer may avoid the sale or take the goods at the last good-faith bid, subject to the statute.
Phantom bidding—pretending an imaginary bidder exists—also misstates the competitive process. It can support DTPA and licensing consequences, but analyze the DTPA elements rather than claiming § 2.328 automatically awards treble damages.
A disclosed, lawful seller-bidding reservation is different from an invented bidder. An advertised absolute auction should not retain a hidden minimum or seller-bidding right inconsistent with that label.
Catalog Corrections
When an error is discovered:
- stop or delay the lot;
- correct the web and printed record when possible;
- announce the change clearly;
- allow bidders to reconsider;
- record the correction; and
- do not rely on generic “errors and omissions” text to hide it.
An express factual correction before reliance can prevent damage. A quiet edit after the sale can look like concealment.
Scenario
A catalog calls a modern MDF cabinet an “1880 French walnut estate credenza.” The auctioneer knows it came from new wholesale inventory. A buyer relies and pays $12,500 for an item worth $950. The source, age, material, and provenance statements can implicate (b)(5), (6), and (7), and the knowing marketing supports enhanced-damage analysis. “As is” does not make those statements true.
Exam Method
Underline the representation, then choose the subsection: source; characteristics; newness; quality; advertising intent; price reduction; or known nondisclosure.
Fact Versus Opinion Review
Before approving a description, separate verifiable facts from opinion. Maker, material, age, mileage, title brand, certification, repair history, and source can be checked and can drive a bidder’s decision. General praise is less likely to be actionable, but calling a concrete defect “mere opinion” does not change its character. Record the source for each important fact and remove unsupported superlatives that imply a test or certification.
Which provision most directly addresses representing reconditioned goods as new?
What mental-state feature distinguishes § 17.46(b)(24)?
What does § 2.328 allow after undisclosed seller bidding?