erroneously collecting sales tax isn’t an unfair act or practice in trade or commerce

Ranalli v. Etsy.com, 2021 WL 5166568, No. 21-88 (W.D. Pa.
Nov. 5, 2021)

Ranalli brought this putative class action for violations of
the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL)
and the Pennsylvania Fair Credit Extension Uniformity Act (PFCEU), and unjust
enrichment, fraud, and misappropriation/conversion based on Etsy’s collection
of amounts equal to and purporting to be Pennsylvania sales tax on the sale of
protective face masks, when they were not subject to Pennsylvania sales tax due
to a governor’s order early in the pandemic.

But the UTPCPL applies to “unfair or deceptive acts or
practices in the conduct of any trade or commerce,” and collecting sales tax
isn’t conducting trade or commerce because tax collection is “divorced from private
profit” and “[r]etailers…collect sales tax on behalf of the Commonwealth’s
Department of Revenue” only “because state law requires them to do so.” Similar
cases in Massachusetts and Connecticut based on similar statutory language have
concluded the same thing. The court also endorsed previous holdings that “the
conduct of defendants could not be considered fraudulent, unfair, or deceptive
because they disclosed all relevant information relating to the mask purchase
in an effort to comply with their understanding of the law at the time of the
purchase,” and that there was no justifiable reliance on any misrepresentation,
nor was there injury because a refund was available from the state.

The same analysis applied to the Pennsylvania Fair Credit
Extension Uniformity Act

(PFCEUA), which prohibits “unfair methods of competition and
unfair or deceptive acts or practices with regard to the collection of debts.”

Nor was fraud plausibly alleged, nor
misappropriation/conversion, which requires appropriation of property by the
offending party for his own use; it was for Pennsylvania, which designates Etsy
to collect tax as an agent of the Department of Revenue, and it was “highly
implausible” that Etsy kept the mask money for its own use when it was required
to remit that money to the state. [Hmm…. If I were the Department of Revenue, I’d
just check with Etsy on that one.

So too with unjust enrichment. “It is clear that collection
of the sales taxes was not for profit or revenue but rather for basic
compliance with the law.”

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