1. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 Chapter 33: Consumer and Environmental Law

2. 2 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Objectives When will advertising be deceptive? What are the major federal statutes providing for consumer protection in credit transactions? Under what common law theories can polluters be held liable? What is contained in an environmental impact statement, and who must file one? What does the Environmental Protection Agency do? What major federal statutes regulate air and water pollution? What is Superfund? To what categories of persons does liability under Superfund extend?

3. 3 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Objectives Under what common law theories can polluters be held liable? What is an environmental impact statement, and who must file one? What does the Environmental Protection Agency do? What major federal statutes regulate air and water pollution? What is Superfund? To what categories of persons does liability under Superfund extend?

4. 4 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Consumer Law

5. 5 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Consumer Law Areas of Consumer Law Regulated by Statutes: –Deceptive Advertising. –Labeling and Packaging. –Sales. –Credit Protections. –Consumer Health and Safety. –State Consumer Protection.

6. 6 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Puffery. –Vague generalities and obvious exaggerations are permissible and not considered deceptive. Bait and Switch Ads. –The advertising of a product at an attractively low price to lure customers in to buy more expensive items. Deceptive Advertising Case 33.1 Federal Trade Commission v. QT, Inc. Claims of the Ionized Bracelet were deceptive and QT was ordered to create a $16 million fund for customer refunds.

7. 7 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Deceptive Advertising Online Deceptive Advertising. –Same rules apply. –To satisfy the “clear and conspicuous” requirement, disclosures must be close (only hyperlink if lengthy).

8. 8 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. FTC Actions Against Deceptive Advertising The FTC, charged with enforcing federal laws against deceptive advertising, can, in appropriate circumstances: –Issue cease and desist orders. With respect to a particular product or advertisement. With regard to multiple product orders. –Impose counter-advertising.

9. 9 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Telemarketing and Fax Advertising The Telephone Consumer Protection Act (TCPA) prohibits automated solicitation using automatic telephone dialing system or a prerecorded voice. Consumers have a private civil cause of action and can recover $500 for each violation of actual damages. Court can treble damages if willful violation. Telemarketer must remove a consumer’s name from its list of potential contacts if requested.

10. 10 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Labeling and Packaging Labeling must be accurate, and must use words that are easily understood by the ordinary consumer. Product labeling and packaging are regulated by: –Wool Products Labeling Act of 1939. –Fur Products Labeling Act of 1951. –Flammable Fabrics Act of 1953. –Fair Packaging and Labeling Act of 1966. –Smokeless Tobacco Health Education Act of 1986. –Nutrition Labeling and Education Act of 1990.

11. 11 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Forms of Sales : –Door-to-Door Sales.  –Mail Order Sales.  –Telephone and Mail-Order Sales.  –Unsolicited Receipt of Merchandise.  Sales

12. 12 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Most states requires that, for door-to- door sales, consumers have a post-sale “cooling-off” period during which they can cancel their purchase without obligation. Consumers are given the most favorable benefits of the FTC rule and their own state statutes. Door-to-Door Sales

13. 13 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Sellers can be subject to federal mail and wire fraud statutes. FTC Rules require: –shipment orders within the time promised in their catalogues and advertisements, –to notify consumers when orders cannot be shipped on time, and –to issue timely refunds when orders cannot be shipped. The Postal Reorganization Act of 1970 provides that unsolicited merchandise sent by U.S. mail may be retained, used, discarded, or disposed of in any manner deemed appropriate, without the recipient’s incurring any obligation to the sender. Telephone and Mail Order Sales

14. 14 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Protection of Health and Safety Pure Food and Drugs Act (1906), then Federal Food, Drug and Cosmetic Act (1938). Enforced by Food and Drug Administration. Consumer Product Safety. –Consumer Product Safety Act 1972. –Consumer Product Safety Commission. –Notification by distributors.

15. 15 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Credit Protection Consumer Credit is protected by: –Truth in Lending Act. –Fair Credit Reporting Act. –Fair Debt Collection Practices Act. –Wage Garnishment.

16. 16 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. TILA is basically a disclosure law. Requires all consumer lenders to compute the cost of a loan the same way and to advertise it as an Annual Percentage Rate (APR). Equal Credit Opportunity: requires that credit be extended without regard to race, sex, color, national origin, age, or marital status. Truth in Lending Act

17. 17 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Credit Card Rules: limits consumer liability to $50 for credit card debt in cases of stolen cards. Consumer Leasing Act: requires that leasors of consumer items valued at less than $25,000 make certain disclosures. Truth in Lending Act

18. 18 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Fair Credit Reporting Limits the activities of credit reporting agencies. Consumers have the right to access information contained about them in a credit reporting agency’s files and to require credit reporting agencies to delete unverifiable information in a consumer’s credit record.

19. 19 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Fair and Accurate Credit Transactions Act To combat identity theft. FACT: –Created the National Fraud Alert system so that consumers can place fraud alert in their credit files. –Requires credit companies to give customers free credit reports each year. –Gives victims of identify theft some assistance.

20. 20 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Fair Debt Collection Practices Act Prohibits Collection Agencies from the following: –Type, times, and places that debt collectors can contact debtors. –Contacting third parties about payments. –Using harassment or intimidation or employing false misleading information. –Contact debtor after notice of payment refusal. Requires that collectors provide validation notice to the debtor, at the time of first contact.

21. 21 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Environmental Law The principal sources of environmental law are: –Common Law Actions.  –State and Local Regulation.  –Federal Regulation. 

22. 22 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Common Law Actions Nuisance. –Person liable if they use their property in a manner that unreasonably interferes with others’ rights to use or enjoy their own property. Negligence and Strict Liability. –Business or person alleged failure to use reasonable care toward a party whose injury was foreseeable and, or course, caused by the lack of reasonable care.

23. 23 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Federal, State, and Local Regulation Federal environmental policy is achieved through federal agencies: –Example: Environmental Protection Agency [http://www.epa.gov] (EPA).http://www.epa.gov –Regulatory agencies must take environmental factors into consideration when making significant decisions.

24. 24 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Federal Regulation National Environmental Policy Act (NEPA). –Does not directly deal with pollution control. –Require preparation of an environmental impact statement (EIS) when major federal action in the environment is to be undertaken. Media Specific Pollution Control Legislation.

25. 25 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Environmental Impact Statement An EIS must analyze: –The impact of the proposed action on the environment. –Any adverse effects of the action and alternatives to the action. –Any irreversible effects the action might generate.

26. 26 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Air Pollution Clean Air Act. –This act provides the basis for issuing regulations to control pollution coming primarily from stationary (factories) and mobile (cars) sources of air pollution. –It prescribes the use of pollution control equipment that represents the maximum achievable control technology.

27. 27 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Water Pollution Clean Water Act goals: –Safe swimming and drinking water. –Protection of fish and wildlife (wetlands). –Elimination of the discharge of pollutants into waterways (navigable waterways). Established national permitting system for regulating discharges from “point sources.” What about comparable economic costs of power plants? Case 33.2 Entergy Corp. v. Riverkeeper, Inc. EPA has the power to do a cost-benefit analysis to determine whether a plant has the “best technology available for minimizing adverse environmental impact.”

28. 28 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Water Pollution Drinking Water. –Safe Drinking Water Act of 1974, amended in 1996. Ocean Dumping. –Marine Protection, Research, and Sanctuaries Act of 1972, amended in 1983. Establishes a permit program of toxic waste. Oil Pollution. –Oil Pollution Act of 1990.

29. 29 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). –Regulates the use of pest control chemicals in the process of food growth to food packaging, to minimize their presence in foods consumed. Toxic Substances Control Act. –Requires anyone planning to use chemicals first determine their effect on human health and the environment. –Require special labeling, limit the use of substance, set production quotas, or prohibit the use of a substance altogether. Toxic Chemicals

30. 30 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Hazardous Waste Disposal Resource Conservation and Recovery Act. –Authorizes the EPA to issue regulations for the monitoring, transporting, storage, treatment, and disposal of hazardous substances.

31. 31 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. CERCLA - Superfund Designed to ensure the clean-up of hazardous waste sites and to assign liability for the costs of the cleanup operations. Joint and Several Liability for cleanup costs can be assigned to any potentially responsible party (PRP).