Printable Format16a-6-111. (UCCC) Injunctions against unconscionable agreements and fraudulent or unconscionable conduct. (1) The administrator may bring a civil action to restrain a creditor or a person acting on such creditor's or person's behalf from engaging in a course of:
(a) Making or enforcing unconscionable terms or provisions of consumer credit transactions; or
(b) fraudulent or unconscionable conduct in inducing consumers to enter into consumer credit transactions.
(2) In an action brought pursuant to this section the court may grant relief only if the trier of the fact finds that the:
(a) Respondent has made unconscionable agreements or has engaged or is likely to engage in a course of fraudulent or unconscionable conduct;
(b) agreements or conduct of the respondent has caused or is likely to cause injury to consumers; and
(c) respondent has been able to cause or will be able to cause the injury primarily because the transactions involved are credit transactions.
(3) In applying this section, consideration shall be given to each of the following factors, among others:
(a) Belief by the creditor at the time consumer credit transactions are entered into that there was no reasonable probability of payment in full of the obligation by the consumer;
(b) in the case of consumer credit sales or consumer leases, knowledge by the seller or lessor at the time of the sale or lease of the inability of the buyer or lessee to receive substantial benefits from the property or services sold or leased;
(c) in the case of consumer credit sales or consumer leases, gross disparity between the price of the property or services sold or leased and the value of the property or services measured by the price at which similar property or services are readily obtainable in credit transactions by like buyers or lessees;
(d) the fact that the creditor contracted for or received separate charges for insurance with respect to consumer credit sales or consumer loans with the effect of making the sales or loans, considered as a whole, unconscionable; and
(e) the fact that the respondent has knowingly taken advantage of the inability of the consumer reasonably to protect such consumer's interests by reason of physical or mental infirmities, ignorance, illiteracy, inability to understand the language of the agreement or similar factors.
(4) In an action brought pursuant to this section, a charge or practice expressly permitted by this act is not in itself unconscionable.
History: L. 1973, ch. 85, § 104; L. 2024, ch. 6, § 110; January 1, 2025.
KANSAS COMMENT, 2010
1. This section permits the administrator to bring suit to enjoin a person to whom this part applies from engaging in a course of conduct specified in subsections (1)(a) or (b). Those subsections cover two different areas of unconscionable conduct: (1) unconscionable contract terms, and (2) fraudulent or unconscionable conduct in inducing consumers to enter into consumer credit transactions. The former might be called "substantive unconscionability" and the latter "procedural unconscionability."
2. The purpose of this section is to afford the administrator a means of dealing with new patterns of fraudulent or unconscionable conduct unforeseen and, perhaps, unforeseeable at the writing of the U3C.
3. Subsection (3) lists a number of specific factors to be considered on the issue of unconscionability. The following are illustrative of individual transactions which, if engaged in by or on behalf of a creditor, would entitle the administrator to injunctive relief under this section:
Under subsection (3)(a), a sale of goods to a low income consumer without expectation of payment but with the expectation of repossessing the goods sold and reselling them at a profit;
Under subsection (3)(b), a sale of an English language encyclopedia set to a person who speaks only Spanish, or a sale of two expensive vacuum cleaners to two poor families sharing the same apartment and one carpet;
Under subsection (3)(c), a home solicitation sale of a set of cookware or flatware for $375 in an area where a set of comparable quality is readily available on credit in stores for $125 or less;
Under subsection (3)(e), a sale of goods on terms known by the seller to be disadvantageous to the consumer where the written agreement is in English, the consumer is literate only in Spanish, the transaction was negotiated orally in Spanish by the seller's salesman, and the written agreement was neither translated nor explained to the consumer.
The criteria listed in subsection (3) to a large extent parallel those found in the KCPA (K.S.A. 50-627). Reference should be made to the comment under that provision for additional examples of conduct which could also violate this section. See also the Kansas comment to K.S.A. 16a-5-108.
4. Subsection (4) prohibits a finding that a charge or practice expressly permitted by the U3C is in itself unconscionable. However, even though a practice or charge is authorized by the U3C, the totality of a particular creditor's conduct may show that the practice or charge is part of an unconscionable course of conduct. Therefore, in determining unconscionability, the creditor's total conduct, including that part of the creditor's conduct which is in accordance with the provisions of the U3C, may be considered.
5. For cases illustrating the prior application of the doctrine of unconscionability in private actions, see the Kansas comment to K.S.A. 16a-5-108. The doctrine of unconscionability was applied in an action by a public official in State by Lefkowitz v. ITM, Inc., 52 Misc.2d 39, 275 N.Y.S.2d 303 (Sup. Ct. 1966). See also State v. Avco Financial Service, 70 A.D.2d 859, 418 N.Y.S.2d 52 (1979), rev'd 50 N.Y.S.2d 383, 429 N.Y.S.2d 181, 406 N.E.2d 1075 (1980).
Law Review and Bar Journal References:
"A New Kansas Approach to an Old Fraud," Polly Higdon Wilhardt, 14 W.L.J. 623, 637, 638 (1975).
Attorney General's Opinions:
Limitations on consumer's liability; balloon payments; denial of right to refinance. 82-143.