2. Chapter 22-Consumer Protection

3. Fraud is a theory consumers can use if a seller’s representations Are false and can provide for punitive damages. In most jurisdictions, to recover a plaintiff must prove the following: A material misrepresentation of fact with a knowledge that the representation is false Intent to Deceive Justifiable reliance by the injured party Damages resulting from the reliance Mere “puffing” is not actionable- Mere opinions do not amount to Fraud Silence--not always “Golden”-- It may be Fraud

4. Innocent Misrepresentations n We are all humans and make mistakes, therefore, innocent misrepresentation is not fraud in that the falsehood was unintentional. If a mistake takes place a a contract maybe rescinded and it is not fraud.

5. There are times when courts will relieve a party Performing a contract b/c it is so unfair or extremely oppressive or unfair. This is very unusual It is rarely used but if a court feels that this is a travesty of justice to allow a contract to be Enforced. Needed: (1) unequal bargaining power of parties was unequal that the contract was not entered into freely, or (2) the contract is so unfair that it violates societal values. Water after a Hurricane

6. Lemon Laws –Certain laws apply to new car purchases because these goods are large purchases and are dangerous instrumentalities to the public if they are defective. These laws are often called “lemon laws” and they protect consumers from being victimized by defective vehicles. Some state laws cover used vehicles but usually they give a manufacturer multiple attempts to repair the defect and also require the dispute to go to arbitration.

7. Federal Trade Commission n The FTC prevents “unfair methods of competition and unfair acts or practices in and effecting commerce.” The FTC regulates untruthful advertising or business activities and also anti-trust. Violators are brought before an administrative law judge and licenses can be revoked or fines instituted Quasi-legislative Quasi-judicial Bait & Switch

8. Consumer Product Safety Commission n The CPSC promulgates consumer product safety, performance and labeling standards. When the CPSC determines that a product imposes serious risks of imminent danger to the public, it can seek a court order to have the product removed from the market immediately. Often the agency requests voluntary compliance with its mandates from manufactures.

9. FTC Finding of Deception in advertising requires: n A representation, omission, or practice likely to deceive a reasonable person. Not- common law fraud standard Not-proof of actual deception Not-an intent to deceive (all unnecessary requirements for a finding by FTC)

10. FDCPA is designed to prevent unfair practices by debt collection agencies. (The act does not apply to the creditors themselves) It prohibits: The use of obscene language Contact with 3rd parties for purposes other than locating the debtor Threats or use of physical force Contact with the debtor during “inconvenient” hours Repeated phone calls with an intent to harass/deceive You Dirty Rotten %$#@

11. Get the picture?

12. Bankruptcies are on the rise. Recently new laws have been passed to make discharging of debts more difficult. There is an automatic “freeze order” a/k/a “stay” against All creditor attempts to collect against the debtor and a Trustee is appointed over the debtors estate. There are Three main types of bankruptcy proceedings: Chapter 7--Liquidation--Voluntary/Involuntary Chapter 11—Reorganization (for companies) Chapter 13--Adjustment of debts of an individual with regular income (for individuals)

13. JUDGE JUDY READY TO RULE---- Case: Brooks v. World Omni--- Creditor reposes plaintiff’s car and places it in storage. Five days later plaintiff files bankruptcy but b/f car title is transferred back to creditor. Creditor delays in returning car after informed of bankruptcy petition. Plaintiff sues creditor for violating mandatory “stay” in bankruptcy proceedings.…... When I say freeze I mean it! Creditor must return car and pay plaintiff’s attorney fees & costs.

14. Escalation Clause