Transcript 9-01 SALES-CONSUMER PROTECTION - SHS

Sales and Consumer Issues
CONSUMER PROTECTION ISSUES
Objective 09.01
Interpret sales contracts and warranties
within the rights and law of consumers
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
decision-making 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 nonexistent training.
 If it appears you can “GET RICH
QUICK”, it is probably a scam. Be
careful!!
Lottery Scams
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A con artist contacts you by mail stating you have won a
lottery drawing and to contact him immediately to claim
your prize.
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Upon contact the con states once you pay your “clearance
fee” a certified check will come in the mail.
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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
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:
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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.