Under California's Unfair Practices Act (CIC Section 790 et seq.), which of the following statements is correct regarding enforcement?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The Unfair Practices Act is enforced solely by the Insurance Commissioner, who may examine insurers' practices and, upon finding unfair methods of competition or deceptive acts, issue cease and desist orders and impose penalties. The Act's enforcement scheme gives the Commissioner exclusive authority, and private individuals do not have a direct private right of action for damages under the Act. This is why complaints about alleged unfair claims practices are directed to the Department of Insurance, which investigates under the Act and its implementing regulations.
Why the other options are wrong
- B) The Act does not create a private right of action for individual policyholders; enforcement is vested in the Commissioner.
- C) Criminal prosecution is not the Act's enforcement mechanism; the Commissioner acts through administrative cease and desist proceedings.
- D) Local district attorneys have no authority to issue cease and desist orders under the Unfair Practices Act.
Memory hook
One referee on the unfair-practices field: the Commissioner. Consumers complain, the Commissioner enforces.