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.”