Consumer Protection

Development of Consumer Protection Laws Caveat Emptor – “let the buyer beware” Cabeat Venditor – “let the seller beware”

Federal and State Consumer Protection Laws Consumer – someone who buys or leases goods, real estate, or services for personal, family or household purposes State Consumer Protection Laws Federal Consumer Protection Law – Federal Trade Commission - the agency of the US Government that promotes free and fair trade competition – Bureau of Consumer Protection – safeguards consumers against unfair, deceptive, or fraudulent practices

Unfair and Deceptive Practices Unfair and Deceptive Practice – an act that misleads consumers Texas Deceptive Trade Practices Act (DTPA)

Fraudulent Misrepresentation Any statement that deceives the buyer Deceptive practices – making false statements about the construction, durability, reliability, safety, strength, condition, or life expectancy of a product

Work at Home Schemes Be cautious of work at home ads Classified Advertising Fraud

Unordered Merchandise Under federal and state law, unordered merchandise may be considered a gift. Two kinds of products can be sent legally without consumer consent: 1.Manufacturers Free Samples 2.Merchandise Mailed by Charities

False Advertising Cease and desist orders – legally binding orders to stop a practice that would mislead the public

Bait and Switch Advertising Bait and Switch Advertising - a store advertises bargains that do not really exist to lure customers in hopes that they will buy more expensive merchandise

Bait and Switch Advertising 5 Signs of a Bait and Switch: 1.Refusing to show, demonstrate or sell the advertised product. 2.Attempting to discourage customers by criticizing the advertised product 3.Claiming the advertised products are out of stock 4.Refusing to promise delivery of the advertised products within a reasonable period of time 5.Demonstrating products that are more expensive than the advertised items

Negative Option Rule 7 things the seller must tell you: 1.How many selections, if any, you will buy 2.How and when you can cancel your membership 3.How to notify the seller when you do not want the selection 4.When to return the “negative option” form to cancel the shipment of a selection. 5.When you can get credit for the return of a selection 6.How postage and handling costs are changed 7.How often you will receive announcements and forms

Cooling Off Rule You have 3 business days to cancel contracts for purchases of $25 or more that were made way from the seller’s place of business. – The sales person must inform you of your right to cancel at any time the sale takes place – You must receive two copies of the cancellation form

Cooling Off Rule – The Seller must: Cancel and return any papers you signed Refund your money Tell you whether any product left with you will be picked up Return any trade in

Telemarketing Sales Rule Protects you from abusive telemarketers by giving consumers the power to stop telemarketing calls and state law enforcement officials the authority to prosecute fraudulent telemarketers

Telemarketing Sales Rule It’s illegal for telemarketers to call you if you’ve asked not to be called Calling times are restricted to between 8am and 9pm Telemarketers must inform you that it’s a sales call and the company they represent It’s illegal for telemarketers to make false statements about their goods or services

Telemarketing Sales Rule They must tell you the total cost of the products or services offered and any restrictions that may apply. It’s illegal for a telemarketer to withdraw money from your checking account without your permission. You don’t have to pay for credit repair, recovery of lost money or advance-fee loans.

900-Telephone-Number Rules You must be warned of the cost of the call You must be given a chance to hang up before being charged Phone companies must block service to 900 numbers at your request

900-Telephone-Number Rules Customers must be sent pay-per-call disclosure statements annually Any prefix other than 900 is prohibited for use as a pay-per-call service Phone companies can’t disconnect your phone service if you refuse to pay for 900 number calls

Shopping by Mail, Telephone, Fax or Internet Sellers must ship goods within the advertised time frame You have the right to cancel orders and get your money back if time limits aren’t met Sellers must notify you of any delay in shipment

Escola v. Coca Cola Bottling Co, Inc.

Product Liability Someone who is injured from a product’s unsafe or defective condition may recover damages – Manufacturers, sellers and suppliers of goods can all be held responsible

Strict Liability Manufacturers or suppliers are responsible for selling goods that are reasonably dangerous

Strict Liability The manufacturer or seller was engaged in the business of selling the product The product was unreasonably dangerous to the user or consumer The defective condition was the cause of the injury or damage

Strict Liability The defective condition existed when the product left the and of the manufacturer or seller The consumer suffered physical harm or property damage as a result of using the product

Consumer Product Safety Act Protects you from unreasonable risk of injury while using consumer products that are sold in interstate commerce – Manufacturing Defects – Poor Design – Inadequate Instructions and warnings

Food, Drug and Cosmetic Act

Prohibits the manufacture and shipment of faulty products in interstate commerce The federal government has the right to remove any food or additive shown to cause cancer in humans or animals.

Food, Drug and Cosmetic Act Methods used to discourage the sale of goods considered harmful to the public health: – Unusually High Taxes – Labeling and Packaging – Outright Prohibition

State and Local Laws Most states and local governments have their own food and health laws to protect the public that regulate meat, milk, and the processing of canned food.

Consumer Protection Assistance Consumer Product Safety Commission – establishes safety standards for consumer products Has the power to recall unsafe products and to impose fines on violators

Better Business Bureau A non-government agency that hears consumer complaints at the local and state levels whose mission is to promote highly ethical relationships between businesses and the public.

Better Business Bureau Provides information