Transcript C 9.01 SALES-CONSUMER PROTECTION PPT

Sales and Consumer Issues
Objective 09.01
Interpret sales contracts and
warranties within the rights and law
of consumers
CONSUMER PROTECTION
ISSUES
Consumer Protection Laws
• Purpose:
– To assist consumers in judging the quality of a
product and its advantages or disadvantages,
and
– To create an equal field with the sellers in an
affluent and technology oriented marketplace.
Why have consumer protection
laws?
• To ensure consumers get adequate decisionmaking information to compare products
• to ensure fairness and competition in the
marketplace
• to protect consumers against unfair and
deceptive practices or the sale of substandard or
dangerous goods
• to require licenses and inspections to ensure
compliance with the law and
• to provide remedies for injured parties
Consumer Protection Laws
• Legislation passed at local, state and
federal levels.
• Federal Trade Act is a broad consumer
law enforced by the Federal Trade
Commission (FTC).
• Unfair and Deceptive Trade Practices is
any practice that misleads (or has the
potential to mislead) a consumer.
Unfair and Deceptive Trade
Practices
Includes:
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Price fixing on goods
Deceptive prices on service contracts
Door-to-Door Sales
Fraudulent Misrepresentation
Telemarketing Fraud
Work at home schemes
Illegal Lotteries and Scams
Gambling
Door-to-Door Sales
• The cooling-off rule was adopted by the
FTC to give consumers three business
days to cancel most contracts made with
door to door salespersons. The rule
relates to sales of $25 or more made
outside the salesperson’s regular place of
business.
Telemarketing Fraud
• Buyer Beware…
– When an unsolicited caller contacts you.
– When the caller asks for personal information; social
security #, credit card #, bank account #s, etc.
– Telemarketing scams often charge for their services
through 1-900 phone numbers.
When the deals seems to good to be true … it
probably is not true!
– Good web resource: FBI and US Postal Service fraud
website www.LooksTooGoodToBeTrue.com
Work at Home Schemes
• An advertisement to make big money
easily at home by calling a number or
buying a book or video.
• Frequently the scam includes payment up
front for “lists”, other undisclosed charges,
limited or non-existent training.
• If it appears you can “GET RICH QUICK”,
it is probably a scam. Be careful!!
Lottery Scams
• A con artist contacts you by mail stating you have won a lottery
drawing and to contact him immediately to claim your prize.
• Upon contact the con states once you pay your “clearance fee” a
certified check will come in the mail.
• You pay the fee and your check never comes. “Gotcha”.
• ?? How can you win a lottery you did not enter??
False Advertising
• Bait and Switch is advertising a nonexistent bargain to lure customers so they
can be sold a more expensive item.
• Cease and desist orders are a legally
binding order issued by the court to stop a
practice of using advertising that would
mislead the public.
Shopping by Mail
• When ordered, should ship within 30 days,
or
• If order delayed, seller must provide notice
of back order or out of stock.
• Any unsolicited merchandise received is
considered a gift or free sample and
receiver has no obligation to pay.
Internet Shopping
• Use reputable business sites.
• When the buyer clicks “I accept” and
online cyber contract is created and the
parties are bound to the contract.
• Protect private information when shopping
online.
• Do not respond to pop up emails when
online.
Internet Scams
• A potential buyer contacts you on a website where you
are selling an item.
• Payment is made by cashier’s check but buyer overpays
the agreed upon price.
• The buyer asks you to mail or wire the refund amount
back to him. You comply.
• A few weeks later the cashier’s check is returned
“counterfeit”.
• Good web resource: www.fraudaid.com
International Law - Internet
Sales
• Check out the company before doing
business with internet company.
– Company may be international and the laws
of the US do not always apply. A consumer
has little or no recourse for defective products
or illegal schemes.
– International fraud, identity theft, privacy, and
sale of personal information are much harder
to prosecute in the global legal environment.
Spam
• Spamming is sending mass, unsolicited
advertisements over the internet.
• Spammers apply First Amendment freedom of
speech rights to their right to send emails.
• Spam grabs user’s attention and time.
• Comparable to junk mail processed by United
States Postal Service
• Some states have laws pending or passed to
regulate spamming.
• New technology is constantly changing laws.
Licensing
• For the protection of consumers,
government agencies require licensing of
suppliers of consumer services.
– Examples:
• Health services- doctors, nurses, pharmacists
• Other professionals- teachers, realtors, insurance
agents, lawyers, accountants, beauticians, and
others
Product Liability
• Consumer Product Safety Act of 1972
– Created the Consumer Product Safety Commission
(CPSC)
– Sets product standards for hazardous products
– Requires manufacturer or seller to test quality and
reliability before marketing product
– Can require recall, repair, replacement or refunding of
the purchase price, of unsafe products
– Examples:
• Children’s toys with dangerous parts
• Defective vehicle tires that cause accidents
Food, Drug and Cosmetic Act
• Created the Food and Drug Administration
(FDA)
• Passed in 1903 after President Teddy Roosevelt
read “The Jungle” by Upton Sinclair
• Prohibits adulteration or mislabeling of foods,
drugs or cosmetics
• Creates standards for packaged foods, drugs
and cosmetics
• Approves new pharmaceuticals (prescription
drugs)
Food and Drug Administration
• FDA regulates packaged Food, Drugs,
Cosmetics including:
– Inspecting production facilities for cleanliness
– Setting standards of purity and quality
– Approving ingredient lists as to fitness for human
consumption or use
– Requiring labeling with manufacturer, packager,
distributor, weight & nutritional information to assist
consumer in informed decision making
Food and Drug Administration
• New drugs cannot be marketed in the US
without FDA approval.
• FDA is sometimes criticized for being too
cautious in granting new drug approvals.
• Some Americans go to other countries to
get drugs the FDA has not approved that
they feel may be life-saving.
• FDA recalls drugs from the market when
dangerous side effects are identified.
What kinds of problems does FDA regulate?
• Adulterated products
• A product that contains any substance that will
reduce its quality or strength below the minimum
standard
• Misbranded products
• A product with false or misleading labeling or
packaging
• Injurious products
• A product that could injure consumers
Labeling and Packaging
– Marketers may use puffery, but not fraud.
• “new and improved”
– Marketers may use facts.
• package contains “x” % more free
– Can you name other legal label information used by
marketers?
– Can you name promotional information that seems
misleading?
United States Department of
Agriculture (USDA)
• Regulates preparation and sale of fresh
produce, meats and dairy products
• Inspects canners, packers and processors
and distributors for sanitary conditions and
handling
• Inspects products to ensure freedom from
disease and fit for human consumption
Delaney Amendment
• 1958 Amendment to FDA
– Removes products from the market which are
carcinogenic (Cancer Causing)
– Examples:
• Saccharin – sugar substitute from 1960s
• Red dye #3
– Can you name other items?
Food and Drug Administration
• FDA discourages the sale of harmful
products through:
– Imposing high taxes.
– Issuing label or package warning.
– Prohibiting the sale of the product.
• Examples: tobacco, alcohol, saccharin
– Can you name other examples?
Weights and Measures Division of the
National Institute of Standards
• Promotes uniformity in weights and
measures laws, regulations, and
standards
• Allows consumers to make comparison
shopping decisions such as unit pricing
What if I have a complaint?
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First, contact company customer service department to
give notice of the problem and allow time to resolve
conflict with involved parties.
Frequently, companies will resolve the problem with a
consumer at this stage by replacement, repair, or
restitution for the item.
The company desires to keep the customer satisfied to
ensure future business and positive goodwill.
If complaint is unresolved, proceed to next contact.
Better Business Bureau (BBB)
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A private, non-government agency available
at local and state levels
Logs complaints from consumers
Passes complaint information to businesses
that are members, frequently resolving issue
Makes complaints available for public
viewing
Tries to steer consumers to reliable
businesses that conduct business ethically
Consumer Contacts
• If you do not get resolution, then
• Contact the government regulatory agency
related to your complaint.
• Examples:
– Consumer Product Safety Commission
– Federal Communication Commission
– Federal Trade Commission
– US Postal Service
Consumer Contacts
• Try the state of federal attorney general’s
office for assistance.
• Last option, if all else fails to resolve the
conflict:
– Go to small claims court or
– Seek legal counsel to:
• File individual litigation or
• Join a class action lawsuit.