ATTENTION MICHIGAN:
Your Consumer Legal Rights Just Got Stronger

Michigan’s Supreme Court just removed a major shield for businesses accused of deceptive practices.

Imagine you hire a licensed Michigan contractor to renovate your home. The contractor lies about the work, bills you for materials that were never installed, and leaves you with thousands of dollars in damage. You discover that Michigan has a law designed specifically to protect consumers from unfair and deceptive business practices — the Michigan Consumer Protection Act (MCPA). But when you try to use it, the contractor raises a surprising defense: “I’m licensed. Home construction is regulated by the State of Michigan. The Consumer Protection Act doesn’t apply.”

For years, that argument could actually work. On July 31, 2026, the Michigan Supreme Court changed the rules.

How Did We Get Here?

Michigan enacted the MCPA in 1976 to prohibit unfair, unconscionable, and deceptive practices in consumer transactions, and at first the Michigan Supreme Court read one important exception to that law narrowly. In Attorney General v. Diamond Mortgage Co. (1982), a licensed real-estate broker argued that its license exempted it from the MCPA. The Supreme Court disagreed: a license might authorize someone to operate a business, the Court explained, but that doesn’t mean it authorizes everything the business does. The distinction makes intuitive sense — permission to operate a business is not permission to deceive your customers.

The law took a major turn in 1999, when Smith v. Globe Life Insurance Co. adopted a much broader reading of the exemption. Then, in Liss v. Lewiston-Richards, Inc. (2007), the Court extended that rule to licensed residential builders, framing the test this way:

“whether the general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited.”

In plain English: don’t focus on what the business allegedly did wrong — first ask whether the general type of business transaction was authorized. That distinction between the “general transaction” and the specific conduct had enormous consequences. In Liss, for instance, the homeowners alleged that their builder missed deadlines and did defective work, but because residential construction itself was an authorized, regulated activity, that alone was enough to trigger the MCPA exemption. Over the following years, courts applied that same reasoning to claims against numerous other regulated businesses and professions.

Then Came Eli Lilly

The case that changed things began with insulin. Michigan’s Attorney General sought to investigate whether Eli Lilly’s insulin pricing practices violated the MCPA. Lilly responded that manufacturing and selling insulin is extensively regulated and legally authorized, and that under Smith and Liss, the MCPA therefore didn’t apply. The dispute eventually reached the Michigan Supreme Court, and on July 31 the Court expressly overruled both cases.

One part of the new opinion captures the problem well. Recall the old Liss rule — “whether the general transaction is specifically authorized by law…” The new Court pointed out something remarkably simple: “the word ‘general’ does not appear anywhere in the text” of the statute. That single word had quietly reshaped the law for two decades, transforming what the Legislature wrote as a narrow exemption into one so broad it effectively shielded large swaths of regulated commerce from Michigan’s consumer-protection law.

What Does This Actually Mean for You?

This doesn’t mean every dispute with a licensed or regulated business now violates the MCPA, and the Supreme Court didn’t rule that Eli Lilly actually violated the Act. What changed is the shield: a business can no longer point simply to the fact that its general business activity is licensed or regulated and treat that as the end of the MCPA inquiry.

Consider what that could mean in everyday life. A builder may be specifically authorized to build your house, but that doesn’t mean the builder is specifically authorized to misrepresent the work performed or engage in some other deceptive practice. Selling vehicles is likewise a regulated business, and under the old interpretation that regulation alone could provide a powerful MCPA defense — courts applying Smith and Liss had extended the exemption to regulated vehicle sellers. After Eli Lilly, the analysis has to focus much more closely on the actual transaction or conduct being challenged. The same goes for lenders: banks and mortgage transactions are heavily regulated, but the fact that a lender is authorized to make loans doesn’t automatically answer whether the specific conduct complained of is “specifically authorized” by law.

The potential reach goes well beyond these examples. Before the decision, the Michigan Chamber warned that overturning Smith and Liss could affect more than 80 regulated industries and professions — which is exactly why a lawsuit about the price of insulin became such an important case for ordinary Michigan consumers.

The Bigger Picture

There are legitimate arguments on both sides of this change. Michigan business groups warned the Supreme Court that overturning decades of precedent could invite more lawsuits, more class actions, overlapping regulation, and significant new costs for businesses that had relied on the old rule. But the Supreme Court ultimately returned to the words the Legislature actually used: the MCPA doesn’t say a business is exempt simply because it’s regulated — it exempts a transaction or conduct that is “specifically authorized” by law.

That may sound like a small distinction. For Michigan consumers, it could be a very big one. Your consumer legal rights just got stronger.

For more information, contact attorney Jonathon Homa at JKH Law Firm to discuss your legal rights. (616) 226-3762.