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 n Purpose - to prevent unfair methods of competition and unfair or deceptive acts or practices.

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

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

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

8. The Magnuson-Moss Act Implied Warranties May Be Disclaimed No Consumer Product? Written Warranty? Implied Warranties May NOT Be Disclaimed Yes

9. State “Lemon Laws” n 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 n 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 n Definition - any credit transaction involving goods, services, or land for personal, household, or family purposes. n Access to the Market - discrimination in extending credit on the basis of gender, marital status, race, color, religion, national origin, or age is prohibited. n 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 n Contract Terms - statutory and judicial limitations have been imposed on consumer obligations. n 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. n Fair Credit Reporting - consumer credit reports are prohibited from containing inaccurate or obsolete information.

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