Under the Texas Deceptive Trade Practices Act (DTPA), what is the definition of an unconscionable action?
An unconscionable action is one that takes advantage of a consumer's lack of knowledge, ability, or experience to a grossly unfair degree.
To prove unconscionability, the consumer does not need to show that the agent intended to deceive, only that the result was a glaring, undeniable disparity in the transaction.
Texas Business & Commerce Code §17.45(5)— DTPA Definitions - Unconscionable
Select Your Answer Choice
Exam Explanation
Unconscionable Actions Under the DTPA
The term “unconscionable” is a core statutory standard under the Texas Deceptive Trade Practices Act. It is designed to hold professionals to a high standard of fair dealing when working with unsophisticated consumers.
Why the Correct Option is Right
Option B is correct because the DTPA specifically defines an “unconscionable action or course of action” as an act that exploits a consumer’s lack of capacity, experience, or knowledge to create a grossly unfair advantage in a transaction.
Why the Other Options are Traps
- Option A is a trap because commission rates are negotiable; charging a premium rate is legal if agreed to in writing.
- Option C is a trap because if an agent is genuinely unaware of a latent defect and has no reason to know, they are not guilty of unconscionable conduct.
- Option D is a trap because recommending quality service providers is a legal and helpful act.
The Exam Trap
Under standard civil law, proving fraud requires showing “intent” (scienter). Under the DTPA, proving an unconscionable action does not require proving that the licensee intended to take advantage of the client — only that the final outcome was grossly unfair and exploited their lack of knowledge.
Worked Texas Example
Scenario: Agent Tom represents an elderly homeowner who speaks no English and has cognitive decline. Tom convinces the owner to sign a listing agreement at a 15% commission rate and sell their home for half of its fair market value to Tom’s business partner. Outcome: Tom’s actions are unconscionable. He took severe, grossly unfair advantage of the owner’s lack of capacity and knowledge, violating the DTPA and TREC rules, exposing himself to treble damages and loss of license.