Transcript Chapter 24: Consumer Protection

Chapter 24:
Consumer Protection
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Introduction
• All statutes, agency rules and common laws
that protect the interests of consumers are
classified as consumer law.
• Today, federal and state laws govern
consumer law.
• This chapter will focus on federal law.
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§1: Deceptive Advertising
• Advertising is deceptive if a consumer would
be misled by the advertising claims.
• Puffing: Vague generalities and obvious
exaggerations are permissible and not
considered deceptive.
• Bait and Switch: The advertising of a product
at an attractively low price to lure customers
in to buy more expensive items.
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FTC Actions
Against Deceptive Advertising
• The FTC, charged with enforcing federal
laws against deceptive advertising, can, in
appropriate circumstances:
– Issue cease and desist orders.
» With respect to a particular product or advertisement
» With regard to multiple product orders.
– Impose counteradvertising.
• Case 24.1: FTC v. Pantron I Corp. (1994).
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Telemarketing
• Telemarketing and Electronic Advertising:
The Telephone Consumer Protection Act
(TCPA) prohibits automated solicitation
using automatic telephone dialing system or
a prerecorded voice.
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§2: Labeling and Packaging Laws
• Labeling must be accurate, and must use words that
are easily understood by the ordinary consumer.
• Product labeling and packaging are regulated by:
– Wool Products Labeling Act of 1939.
– Fur Products Labeling Act of 1951.
– Flammable Fabrics Act of 1953.
– Fair Packaging and Labeling Act of 1966.
– Smokeless Tobacco Health Education Act of 1986.
– Nutrition Labeling and Education Act of of 1990.
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§3: Sales
• Forms of Sales:
–
–
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Door-to-Door Sales.
Mail Order Sales.
Telephone and Mail-Order Sales.
Unsolicited Receipt of Merchandise.
• Emerging Trends: Protection against
Internet Fraud.
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Door-to-Door Sales
• Most states requires that, for door-to-door
sales, consumers have a post-sale “coolingoff” period during which they can cancel
their purchase without obligation.
• Consumers are given the most favorable
benefits of the FTC rule and their own state
statutes.
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Telephone and Mail-Order Sales
• Telephone and mail order sellers can be subject to federal
mail and wire fraud statutes.
• FTC requires mail and telephone merchants to ship orders
within the time promised in their catalogues and
advertisements, to notify consumers when orders cannot be
shipped on time, and to issue timely refunds when orders
cannot be shipped.
• The Postal Reorganization Act of 1970 provides that
unsolicited merchandise sent by U.S. mail may be retained,
used, discarded, or disposed of in any manner deemed
appropriate, without the recipient’s incurring any
obligation to the sender.
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Real Estate Sales
• Federal and state laws designed to prevent
fraud in real estate transactions:
– Interstate Land Sales Full Disclosure Act. Only
applies if the land sale can be deemed to be
interstate commerce.
– Real Estate Settlement Procedures Act requires
lenders to furnish information to home buyers.
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§4: Credit Protections
• Consumer Credit is protected by:
– Truth in Lending Act.
» Case 24.2: Purtle v. Eldridge Auto Sales (1996).
» Protects credit card holders.
– Equal Credit Opportunity Act.
» Case 24.3: FDIC v. Medmark, Inc. (1995).
– Fair Credit Reporting Act.
» Case 24.4: Guimond v. Trans Union Credit
Information (1995).
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Credit Protections [2]
• Fair Debt Collection Practices Act. Curb
abuses by collection agencies. Creditors
cannot:
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Contact debtors at work.
Contact debtors at odd hours.
Harass or intimidate debtor.
Contact the debtor after debtor informs the
creditor the debtor is refusing to pay the debt.
• Case 24.5: Snow v. Jesse L. Riddle, P.C. (1998).
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Garnishment of Wages
• Legal procedure by which a creditor may collect
on a debt by directly attaching, or seizing, a
portion of the debtor’s assets (such as wages that
are in the possession of a third party.
• Debtor is entitled to notice and an opportunity to
be heard in a process of garnishment.
• Wages cannot be garnished beyond 25% of the
debtor’s after-tax earnings up to a maximum
amount designed to leave the debtor a specified
minimum income.
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§5: Consumer Health and Safety
• Federal Food, Drug, and Cosmetic Act.
– This statute protects consumers against
adulterated and misbranded foods and drugs.
• Consumer Product Safety Act.
– This act created the Consumer Product Safety
Commission which has broad regulatory
authority over the safety of consumer products.
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§6: State Consumer
Protection Laws
• UCC provides some protection.
• Magnuson-Moss Warranty Act.
• Uniform Consumer Credit Code (not
adopted in many states).
• State “deceptive trade practice” acts.
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Law on the Web
• Alexander Law Firm’s consumer law page.
• Arent Fox Law Firm’s consumer law page.
• Legal Research Exercises on the Web
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Emerging Trends
• FTC’s campaign against internet fraud.
• Securities Exchange Commission fighting
fraudulent offerings and stocks.
• National Consumers League.
• Consumer Product Safety Commission.
• New Hampshire Consumer Protection site.
Return
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