Presentation on theme: "CONSUMER PROTECTION ISSUES"— Presentation transcript:
1 CONSUMER PROTECTION ISSUES Sales and Consumer Issues Objective Interpret sales contracts and warranties within the rights and law of consumersCONSUMER PROTECTION ISSUES
2 Consumer Protection Laws Purpose:To assist consumers in judging the quality of a product and its advantages or disadvantages, andTo create an equal field with the sellers in an affluent and technology oriented marketplace.
3 Why have consumer protection laws? To ensure consumers get adequate decision-making information to compare productsto ensure fairness and competition in the marketplaceto protect consumers against unfair and deceptive practices or the sale of substandard or dangerous goodsto require licenses and inspections to ensure compliance with the law andto provide remedies for injured parties
4 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.
5 Unfair and Deceptive Trade Practices Includes:Price fixing on goodsDeceptive prices on service contractsDoor-to-Door SalesFraudulent MisrepresentationTelemarketing FraudWork at home schemesIllegal Lotteries and ScamsGambling
6 Door-to-Door SalesThe 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.
7 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 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
8 Work at Home SchemesAn 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!!
9 Lottery Scams ?? How can you win a lottery you did not enter?? 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??
10 False AdvertisingBait and Switch is advertising a non-existent 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.
11 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.
12 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 s when online.
13 Internet Scams Good web resource: www.fraudaid.com 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:
14 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.
15 SpamSpamming is sending mass, unsolicited advertisements over the internet.Spammers apply First Amendment freedom of speech rights to their right to send s.Spam grabs user’s attention and time.Comparable to junk mail processed by United States Postal ServiceSome states have laws pending or passed to regulate spamming.New technology is constantly changing laws.
16 LicensingFor the protection of consumers, government agencies require licensing of suppliers of consumer services.Examples:Health services- doctors, nurses, pharmacistsOther professionals- teachers, realtors, insurance agents, lawyers, accountants, beauticians, and others
17 Product Liability Consumer Product Safety Act of 1972 Created the Consumer Product Safety Commission (CPSC)Sets product standards for hazardous productsRequires manufacturer or seller to test quality and reliability before marketing productCan require recall, repair, replacement or refunding of the purchase price, of unsafe productsExamples:Children’s toys with dangerous partsDefective vehicle tires that cause accidents
18 Food, Drug and Cosmetic Act Created the Food and Drug Administration (FDA)Passed in 1903 after President Teddy Roosevelt read “The Jungle” by Upton SinclairProhibits adulteration or mislabeling of foods, drugs or cosmeticsCreates standards for packaged foods, drugs and cosmeticsApproves new pharmaceuticals (prescription drugs)
19 Food and Drug Administration FDA regulates packaged Food, Drugs, Cosmetics including:Inspecting production facilities for cleanlinessSetting standards of purity and qualityApproving ingredient lists as to fitness for human consumption or useRequiring labeling with manufacturer, packager, distributor, weight & nutritional information to assist consumer in informed decision making
20 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.
21 What kinds of problems does FDA regulate? Adulterated productsA product that contains any substance that will reduce its quality or strength below the minimum standardMisbranded productsA product with false or misleading labeling or packagingInjurious productsA product that could injure consumers
22 Labeling and Packaging Marketers may use puffery, but not fraud.“new and improved”Marketers may use facts.package contains “x” % more freeCan you name other legal label information used by marketers?Can you name promotional information that seems misleading?
23 United States Department of Agriculture (USDA) Regulates preparation and sale of fresh produce, meats and dairy productsInspects canners, packers and processors and distributors for sanitary conditions and handlingInspects products to ensure freedom from disease and fit for human consumption
24 Delaney Amendment 1958 Amendment to FDA Removes products from the market which are carcinogenic (Cancer Causing)Examples:Saccharin – sugar substitute from 1960sRed dye #3Can you name other items?
25 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, saccharinCan you name other examples?
26 Weights and Measures Division of the National Institute of Standards Promotes uniformity in weights and measures laws, regulations, and standardsAllows consumers to make comparison shopping decisions such as unit pricing
27 What if I have a complaint? 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.
28 Better Business Bureau (BBB) A private, non-government agency available at local and state levelsLogs complaints from consumersPasses complaint information to businesses that are members, frequently resolving issueMakes complaints available for public viewingTries to steer consumers to reliable businesses that conduct business ethically
29 Consumer Contacts If you do not get resolution, then Contact the government regulatory agency related to your complaint.Examples:Consumer Product Safety CommissionFederal Communication CommissionFederal Trade CommissionUS Postal Service
30 Consumer ContactsTry 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 orSeek legal counsel to:File individual litigation orJoin a class action lawsuit.