Michigan Supreme Court Expands Consumer Protection Act Coverage – What Every Licensed and Regulated Business Needs to Know

The Michigan Supreme Court issued a landmark decision on July 31, 2026, AG v. Eli Lilly & Co., (“Lilly”), that significantly expands when the Michigan Consumer Protection Act (MCPA) applies to licensed and regulated businesses in Michigan, including businesses operating under state professional licensing, occupational regulation, financial services regulation, healthcare licensing, manufacturing permits, and any other form of state regulatory authorization. That ruling overturned more than two decades of precedent that had broadly protected licensed and regulated businesses from MCPA liability, now potentially exposing those businesses to significantly increased risks of heightened liability and damages.

This newsletter recaps the Court’s decision, its impact on protections on which regulated Michigan businesses had relied, provides key takeaways from the decision, and offers a recommended course of action for businesses now facing the potential of significantly greater risks of liability.

1. Brief Case Summary: Background Facts and What the Court Decided

In Lilly, Michigan’s Attorney General alleged that pharmaceutical giant Eli Lilly & Co. charged grossly excessive insulin prices in Michigan compared to other locations. The defendant, citing (among other cases) Smith v. Globe Life Ins. Co., 460 Mich. 446 (1999), and Liss v. Lewiston-Richards, Inc., 478 Mich. 203 (2007), argued that since it was authorized by state licensing law, it was exempt from the MCPA, even if the specific conduct complained of was deceptive or unfair.

The MCPA – Generally

The MCPA protects consumers by prohibiting unfair, unconscionable, or deceptive methods, acts, and practices in the conduct of “trade or commerce,” defined as conducting a business that provides goods, property, or services primarily for personal, family, or household purposes. The Act provides a broad regulatory and private enforcement framework to safeguard consumers from deceptive business practices. In particular, the Act outlaws a wide range of deceptive practices, such as causing a probability of confusion or misunderstanding regarding legal rights, obligations, or remedies; failing to reveal material facts that tend to mislead or deceive; representing that a transaction will be provided within a specified or reasonable time when the merchant knows it will not; and charging a price grossly in excess of the price of similar goods or services. Additionally, a breach of an implied warranty of merchantability constitutes a failure to provide promised benefits and is actionable under the Act.

A person who suffers a loss from an MCPA violation may bring a civil action to recover actual damages or $250.00, whichever is greater, and may recover reasonable attorney fees.

The Old Rule (No Longer Valid)

The Michigan Supreme Court rejected the rule established in Smith and Liss. Under those cases, courts asked: “Is the general transaction authorized by law?” If so – for example, if the defendant business held a valid professional license, occupational permit, or regulatory authorization under the Michigan Occupational Code or other state regulatory framework – it was exempt from MCPA claims, regardless of whether its specific conduct violated consumer protection standards.

This meant that licensed professionals, regulated financial institutions, healthcare providers, insurance companies, residential contractors, casinos, personnel agencies, and countless other state-regulated businesses were broadly shielded from MCPA lawsuits because their general business activities were specifically authorized by Michigan or federal regulatory authorities.

The New Rule (Effective Now)

Michigan’s Supreme Court reversed course: courts must now determine “whether the specific transaction or conduct at issue is authorized by law.” Simply holding a professional license, occupational permit, or regulatory authorization is no longer enough to avoid MCPA claims. The question is whether the particular act or practice the consumer complains about – such as misrepresenting fees, charging undisclosed costs, failing to deliver promised services, engaging in bait-and-switch tactics, or making false claims about product quality or performance – is specifically authorized by statute or regulation.

Because deceptive, unfair, or unconscionable practices are never specifically authorized by law, the MCPA exemption will rarely apply going forward.

2. Key Takeaways For Licensed And Regulated Businesses

The Lilly decision significantly changes Michigan law, impacting every regulated business which until now had been shielded from liability under the MCPA. Those businesses now need to understand:

• Your license or regulatory authorization no longer protects you from MCPA claims. The mere fact that you are licensed under the Michigan Occupational Code, regulated by a state agency, or authorized under federal law does not exempt you from consumer protection lawsuits.
• The focus is on the conduct, not the license. Consumers can now bring MCPA claims against you if they allege unfair, unconscionable, or deceptive methods, acts, or practices in connection with your goods, property, or services.
• MCPA damages are significant. A consumer who proves an MCPA violation can recover the greater of actual damages or $250, plus reasonable attorney fees. In cases involving certain violations, damages can reach $5,000 or more, plus attorney fees.
• Class actions are possible. The MCPA expressly permits class action lawsuits by consumers residing or injured in Michigan. A pattern of similar conduct affecting multiple customers could expose you to aggregated claims.
• This decision affects pending and future claims. While the Court’s decision came down on July 31, 2026, it overrules prior case law and changes how courts interpret the MCPA exemption. Pending cases and future disputes will be analyzed under the new standard.

3. Who Is Affected?

This decision impacts any business licensed, permitted, or regulated by the State of Michigan or subject to federal regulatory oversight, including but not limited to the following businesses (subject to limited exceptions):

Professional and Occupational Licensees

• Residential and commercial contractors, builders, and alteration contractors
• Real estate brokers, salespersons, and appraisers
• Architects, professional engineers, and surveyors
• Plumbers, electricians, HVAC technicians, and other skilled trades
• Cosmetologists, barbers, and salon operators
• Immigration clerical assistants and notaries public

Interestingly, lawyers (while exempt from MCPA liability for conduct constituting the actual “learned practice” of law) remain subject to liability under the act for unfair, unconscionable, or deceptive practices occurring within the entrepreneurial, commercial, or business operations of their legal practice.

Healthcare and Medical Providers

• Physicians, surgeons, and osteopathic physicians
• Nurses, nurse practitioners, and physician assistants
• Dentists, dental hygienists, and oral surgeons
• Pharmacists and pharmacy technicians
• Physical therapists, occupational therapists, and chiropractors
• Psychologists, social workers, and professional counselors
• Nursing homes, assisted living facilities, and adult foster care homes

Presumably, medical professionals engaged in the “learned practice” of medicine would (like lawyers) be exempt from MCPA liability – but if the acts complained of relate not to the practice of medicine but to the way the medical business is run, the exemption would not protect them.

Financial Services and Insurance

• Banks, credit unions, and mortgage lenders – but the MCPA explicitly does not apply to transactions or conduct made unlawful by the Banking Code of 1999, the Savings Bank Act, or the Credit Union Act
• Insurance companies, agents, and brokers – but the MCPA does not apply to transactions or conduct made unlawful by the Insurance Code
• Investment advisors and securities dealers
• Debt collectors and consumer finance companies
• Check-cashing services and money transmitters

Regulated Industries and Special Licensees

• Casinos and gaming operators
• Funeral directors and funeral establishments
• Personnel agencies
• Private security companies and alarm installers
• Auto repair facilities and appliance service dealers
• Vehicle dealers and salvage yards
• Home improvement contractors and pool installers

Food, Beverage, and Retail Licensing

• Restaurants, bars, and food service establishments
• Retail food stores and food processors
• Liquor license holders
• Agricultural product dealers and grain dealers

This list is not exhaustive. If your business engages in “trade or commerce” – that is, if it engages in transactions involving goods, property, or services provided primarily for personal, family, or household purposes – and operates under any form of state or federal licensing, permitting, or regulatory authorization, this decision likely affects you. However, purely commercial or non-household business transactions do not fall within the Act’s protections.

Further, some businesses may still be protected by the MCPA exemption if their specific conduct is affirmatively authorized by statute or regulation. For example, if a regulatory statute expressly permits a specific fee structure, pricing method, or business practice, that conduct may remain exempt. However, such instances will be rare and narrowly construed.

4. Key Takeaways: What Should Your Business Do Now?

Since the Lilly decision is still so new, much of its impact remains to be seen. However, it is clear that courts will scrutinize whether your contracts, invoices, advertisements, and customer communications clearly disclose all material terms, fees, limitations, and conditions. Ambiguities, omissions, or buried terms may be characterized as deceptive practices under the MCPA, and should be addressed as quickly as possible.

5. Compliance Checklist

To reduce your business’ MCPA potential exposure, consider employing the following practices immediately:

• Review all contract templates, forms, and standard terms for clarity, completeness, and conspicuous disclosure of all fees, charges, conditions, timelines, and limitations.
• Audit fee structures and pricing disclosures to ensure all costs are clearly identified before customers commit to transactions.
• Provide itemized cost breakdowns and avoid “surprise” fees, undisclosed mark-ups, or hidden charges.
• Review all advertising, marketing materials, and website content to ensure all claims about quality, performance, timelines, pricing, credentials, and results are accurate and substantiated.
• Establish written communication protocols to document promises, representations, warranties, and commitments made to customers.
• Train employees, agents, and representatives on customer communication standards and the importance of accurate, truthful representations.
• Implement quality control procedures to ensure goods and services meet advertised standards and contractual specifications.
• Develop clear cancellation, refund, and return policies and communicate them conspicuously to customers before transactions are finalized.
• Document customer acknowledgments and consents for all material terms, modifications, and additional charges.
• Review dispute resolution clauses such as mediation or arbitration provisions (ensure they comply with Michigan law regarding consumer contracts and MCPA claims).
• Maintain comprehensive transaction records, including contracts, invoices, correspondence, customer acknowledgments, and documentation of services or goods delivered.
• Consult with legal counsel to update your standard contracts, disclosures, customer-facing documents, and dispute resolution procedures in light of this decision.

Conclusion

The MCPA provides robust protection to consumers through statutory liability for deceptive practices, attorney fee shifts, and class action mechanisms. The Michigan Supreme Court’s Lilly decision significantly elevates liability risks for businesses by threatening the expansive “general transaction” regulatory exemption that previously insulated regulated industries from MCPA claims, potentially opening the door to widespread consumer litigation and state investigations.

Adequate, accurate, and up-to-date documentation – from initial quotes, estimates and purchase order forms through final invoices – are a business owner’s best defense to this potentially increased liability. If you have not done so very recently, you probably will want to contact your attorney to seek assurance that your documentation is adequate to protect your business in light of this new exposure to previously-barred consumer protection claims.

For more information or to have your applicable documents reviewed for MCPA compliance, please contact our Commercial and Business Litigation team.

Disclaimer

This newsletter is provided for informational purposes only and does not constitute legal advice. Every business and dispute is unique. Consult with a qualified Michigan attorney to assess how this decision affects your specific operations, contracts, regulatory obligations, and pending matters.