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Business Law and the Regulation of Business Chapter 45: Consumer Protection

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A. State and Federal Consumer Protection Agencies. B. Consumer Purchases ... Federal Warranty Protection. Applies to sellers of consumer goods who give written ... – PowerPoint PPT presentation

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Title: Business Law and the Regulation of Business Chapter 45: Consumer Protection


1
Business Law and the Regulation of Business
Chapter 45 Consumer Protection
  • By
  • Richard A. Mann
  • Barry S. Roberts

2
Topics Covered in this Chapter
  • A. State and Federal Consumer Protection Agencies
  • B. Consumer Purchases
  • C. Consumer Credit Transactions
  • D. Creditors' Remedies

3
Federal Trade Commission
  • Purpose - to prevent unfair methods of
    competition and unfair or deceptive acts or
    practices.

4
Standards
  • Unfairness - requires injury to be
    (1)substantial, (2)not outweighed by any
    countervailing benefit, and (3)unavoidable by
    reasonable consumer action.
  • Deception - misrepresentation, omission, or
    practice that is likely to mislead the consumer
    acting reasonably in the circumstances.
  • Ad Substantiation - requires advertisers to have
    a reasonable basis for their claims.

5
Remedies
  • Cease and Desist Order - command to stop doing
    the act in question.
  • Affirmative Disclosure - requires an advertiser
    to include certain information in its ad so that
    the ad is not deceptive.
  • Corrective Advertising - requires an advertiser
    to disclose that previous ads were deceptive.
  • Multiple Product Order - requires an advertiser
    to cease and desist from deceptive statements
    regarding all products it sells.

6
Consumer Product Safety Act
  • Federal statute enacted to
  • Protect public against unsafe products
  • Assist consumers in evaluating products
  • Develop uniform safety standards
  • Promote safety research

7
Federal Warranty Protection
  • Applies to sellers of consumer goods who give
    written warranties.
  • Presale Disclosure - requires terms of warranty
    to be simple and readily understood and to be
    made available before the sale.
  • Labeling Requirement - requires warrantor to
    inform consumers of their legal rights under a
    warranty (full or limited).
  • Disclaimer Limitation - prohibits a written
    warranty from disclaiming any implied warranty.

8
The Magnuson-Moss Act
Consumer Product?
No
Implied Warranties May Be Disclaimed
Yes
No
Written Warranty?
Yes
Implied Warranties May NOT Be Disclaimed
9
State Lemon Laws
  • State laws that attempt to provide new car
    purchasers with rights similar to full warranties
    under the Magnuson-Moss Warranty Act.

10
Consumer Right of Rescission
  • In certain instances a consumer is granted a
    brief period of time during which she may rescind
    (cancel) an otherwise binding obligation.

11
Consumer Rescission Rights
12
Consumer Credit Transactions
  • Definition - any credit transaction involving
    goods, services, or land for personal, household,
    or family purposes.
  • Access to the Market - discrimination in
    extending credit on the basis of gender, marital
    status, race, color, religion, national origin,
    or age is prohibited.
  • Truth-in-Lending Act - requires creditor to
    provide certain information about contract terms,
    including annual percentage rate (APR), to
    consumer before he incurs the obligation.

13
Consumer Credit Transactions
  • Contract Terms - statutory and judicial
    limitations have been imposed on consumer
    obligations.
  • Consumer Credit Card Fraud Act - prohibits
    certain fraudulent practices and limits a card
    holder's liability for unauthorized use of a
    credit card to 50.
  • Fair Credit Reporting - consumer credit reports
    are prohibited from containing inaccurate or
    obsolete information.

14
Creditors' Remedies
  • Wage Assignments and Garnishment - most States
    limit the amount that may be deducted from an
    individual's wages through either assignment or
    garnishment.
  • Security Interest - seller may retain a security
    interest in goods sold or other collateral of the
    buyer, although some restrictions are imposed.
  • Debt Collection Practices unfair, abusive, and
    deceptive practices by debt collectors in
    collecting consumer debts are prohibited by the
    Fair Debt Collection Practices Act.
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