Consumer Law (Chapter 44) Professor Charles H. Smith Spring 2011.
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Consumer Law (Chapter 44) Professor Charles H. Smith Spring 2011
Introduction to Consumer Law Traditional view – parties to contract bound by it and not entitled to any protection outside the contract. Current view – consumers protected under federal and state law against wide variety of unfair trade practices, unsafe products, etc. “Consumer” – customer of business or merchant; not a business or merchant. Textbook concentrates on federal consumer protection law but we will discuss some California law as well.
Deceptive Advertising Federal Trade Commission Act of 1914 – early example of consumer protection statute; created FTC to enforce goal of preventing unfair and deceptive trade practices. Deceptive advertising occurs if reasonable consumer would be misled by advertising claim.
Deceptive Advertising cont. Examples of what is – and is not – deceptive advertising include Puffery – apparent generalities and exaggerations OK. Half-truths – true but incomplete ad not OK if reasonable consumer led to false conclusion. Bait and switch – not OK to advertise low-priced item and then Refuse to show item to consumer, Fail to have reasonable quantity of item in stock, Fail to promise to deliver item within reasonable time, or Discourage employees from selling item. Online ads must have “clear and conspicuous” disclosure of any qualifying or limiting information based on assumption that reasonable consumer will not read entire website; must be near claim to be qualified or limited with hyperlinks OK only if lengthy disclosure. Telemarketing – see pages 908-09.
Deceptive Advertising cont. FTC investigates complaints from consumers, competitors, etc. If FTC determines that ad is deceptive, it drafts and sends formal complaint to alleged offender who can then settle or fight in administrative hearing. If FTC wins, remedies include Cease and desist order. Counteradvertising. Multiple product order. Case study – FTC v. Verity International, Ltd. (pages 907-08) – restitution remedy.
Sales Regulation of sales include Door to door sales – problems with high pressure sales tactics have led to special protections 3-day “cooling off” period provided to consumer to cancel contract. Notice of “cooling off” period must be given in Spanish if oral negotiations for contract in Spanish; what about other languages or if negotiations in English and Spanish? Receipt of unsolicited item in mail - both federal (39 U.S.C. § 3009) and California (Civil Code § 1584.5) permit consumer who receives unsolicited item in mail to keep it with no obligation; § 1584.5 uses the phrase “unconditional gift.”
Credit Protection Truth-in-Lending Act (15 U.S.C. § 1601-1693r) Disclosure required by lenders/sellers to disclose loan/credit terms clearly and conspicuously; these disclosure requirements apply only to persons who, in ordinary course of business, lend funds, sell on credit or arrange for extension of credit. Debtor must be natural person, not business organization such as partnership or corporation. Failure to comply with disclosure requirements entitles consumer to rescind contract (unconscionability?). Credit cannot be denied on basis of race, religion, color, gender, marital status or age; otherwise qualified applicant cannot be required to provide spouse’s signature (unless spouse is co- applicant).
Credit Protection Fair Credit Reporting Act (15 U.S.C. § 1681-81t) Case study – Saunders v. Equifax Information Services, L.L.C. (pages 912-13). Fair Debt Collection Practices Act (15 U.S.C. § 1692) See pages 913-14 for limits on collection agencies (regularly attempt to collect debts for others, though can include creditor who causes debtor to believe it is collection agency).
Consumer Health and Safety Case study – Abigail Alliance for Better Access to Developmental Drugs v. von Eschenbach (pages 915-16). Discuss legal and ethical arguments that could be made for and against the proposition advanced by the plaintiff in this case; i.e., that the U.S. Constitution provides terminally ill patients with a fundamental right of access to experimental drugs.
Miscellaneous Case Studies Reviewing Consumer Law (page 917). Case Problems 44-1, 44-2, 44-4, 44-5, 44-6, 44-8 and 44-9.