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  • Examples of misleading or deceptive statements: Seller states, “This equipment is new.” Seller knows the equipment has been refurbished . Dialogue: Buyer states, “Has this car ever been in a crash?” Seller replies, “The lady that owned this car was so sweet; she only drove it to and from the grocery store. Do you see any marks?” Dialogue: Buyer states, “Has this car ever been in a crash?” Seller replies, “I’ll check on that.” Seller never checks and never responds to Buyer. Examples of sale puffery or opinion: “ This car is the best you’ll ever drive.” “ Better ingredients. Better pizza.”
  • “ Better ingredients, better pizza.” is the claim that Papa John’s Pizza makes. Pizza Hut filed a federal false-advertising lawsuit against Papa John's in Dallas in 1998, claiming that scientific evidence showed Papa John's methods and ingredients made no difference in the pizza's taste. After a rather strange trial, a jury ruled that Papa John's claims of better sauce and dough were false or misleading. The judge barred the pizza chain from using the "Better ingredients. Better pizza" slogan and awarded Pizza Hut $467,619 in damages. However, the 5th U.S. Circuit Court of Appeals reversed the trial court because the jurors were asked whether the ads were likely to deceive consumers, but they were never asked whether consumers actually relied on the claims in deciding what pizza to buy. The U.S. Supreme Court in March 2001 refused to hear Pizza Hut's false-advertising claim against rival Papa John's. The court's ruling left in place the 5th Circuit decision that allowed Papa John's to keep its $300 million advertising campaign. PIzza Hut Inc. v Papa John's International Inc., 121 S.Ct. 1355 (2001). S.C. Johnson v. The Clorox Co. , 241 F.3d 232 (2nd Cir. 2001): manufacturer of Ziploc Slideloc bags brought suit against Clorox, the manufacturer of GLAD-LOCK resealable storage bags, challenging the truthfulness of Clorox television commercials and print advertisements. The court concluded that the television advertisements were literally false and awarded permanent injunctive relief to S.C. Johnson until Clorox was able to portray in a "truthful and fair way" the differences between its product and the Slideloc product.
  • Individually wrapped slices of cheese and cheeselike products come in two major types: process cheese food slices (must contain at least 51 percent natural cheese per federal regulation) and imitation slices (little or no natural cheese). Kraft, Inc.’s “Kraft Singles” are process cheese food slices. In the early 1980s, Kraft began losing market share to other firms’ less expensive imitation slices. Kraft responded with advertisements designed to inform consumers that Kraft Singles cost more because each slice is made from 5 ounces of milk. These advertisements, which ran nationally in print and broadcast media between 1985 and 1987, also stressed the calcium content of Kraft Singles. One version of the commercials showed milk being poured into a glass that bore the label “5 oz. milk slice.” The glass was then transformed into part of the label on a package of Singles. In March 1987, Kraft added, as a subscript in the television commercial and as a footnote in the print media version, the disclosure that “one ¾ ounce slice has 70% of the calcium of five ounces of milk.” The Federal Trade Commission instituted a deceptive advertising proceeding against Kraft under § 5 of the FTC Act. According to the FTC’s complaint, the advertisements made the false implied claim that a Singles slice contains the same amount of calcium as 5 ounces of milk (the milk equivalency claim). The FTC regarded the milk equivalency claim as false even though Kraft actually uses 5 ounces of milk in making each Singles slice because roughly 30 percent of the calcium contained in the milk is lost during processing. The administrative law judge (ALJ) concluded that the advertisements made the milk equivalency claim, which was false and material. He concluded that Kraft’s subscript and footnote disclosures of the calcium loss were inconspicuous and insufficient to dispel the misleading impression created by the advertisements. The ALJ ordered Kraft to cease and desist making the milk equivalency claim regarding any of its individually wrapped process cheese food slices or imitation slices.
  • Kraft appealed to the FTC commissioners (referred to here as “the Commission”). The Commission affirmed the ALJ’s decision but modified it. According to the Commission, the advertisements made the false and material milk equivalency claim. The Commission modified the ALJ’s orders by extending their coverage from Kraft’s individually wrapped slices to “any product that is a cheese, related cheese product, imitation cheese, or substitute cheese.”
  • Kraft appealed to the U.S. Court of Appeals for the Seventh Circuit. Court: “[A]n advertisement is deceptive under [§ 5 of the FTC Act] if it is likely to mislead consumers, acting reasonably under the circumstances, in a material respect….Commission relies on two sources of information: its own viewing of the ad and extrinsic evidence…most convincing extrinsic evidence is a [consumer] survey…The Commissioners, Kraft argues, are simply incapable of determining what implicit messages consumers are likely to perceive…We hold that the Commission may rely on its own reasoned analysis to determine what claims, including implied ones, are conveyed in a challenged advertisement, so long as those claims are reasonably clear from the face of the advertisement….[Kraft relies on] the faulty premise that implied claims are inescapably subjective and unpredictable…. The implied claims Kraft made are reasonably clear from the face of the advertisements, and hence the Commission was not required to utilize consumer surveys in reaching its decision…. Kraft asserts that the literal truth of the . . . ads— [Kraft Singles] are made from five ounces of milk and they do have a high concentration of calcium—makes it illogical to render a finding of consumer deception. The difficulty with this argument is that even literally true statements can have misleading implications…. The Commission’s cease and desist order prohibits Kraft from running the Skimp and Class Picture ads, as well as from advertising any calcium or nutritional claims not supported by reliable scientific evidence. This order extends not only to the product contained in the deceptive advertisements (Kraft Singles), but to all Kraft cheeses and cheese-related products. First Amendment infirmities arise, according to Kraft, from the sweep of the order: by banning commercial speech that is only potentially misleading, the order chills some non-deceptive advertising deserving of constitutional protection…. We reject Kraft’s argument…. The FTC has discretion to issue multi-product orders, so-called “fencing-in” orders, that extend beyond violations of the Act to prevent violators from engaging in similar deceptive practices in the future…. the Commission [reasonably] found that Kraft’s conduct was deliberate because it persisted in running the challenged ad copy despite repeated warnings from outside sources that the copy might be implicitly misleading…. Commission’s order upheld and enforced.
  • Link is to the Federal Register pdf reflecting the Telemarketing Sales Rule. NOTE: Why can’t we stop telemarketing? According to companies using telemarketing, such a broad prohibition would violate the right to Free Speech guaranteed by the Constitution. So far, telemarketers have won on this claim. The Do-Not-Call Registry was implemented to curb telemarketers as a “compromise.”
  • Link is to the National Do-Not-Call Registry.
  • On October 4, 2004, the Supreme Court refused to hear an appeal of the Tenth Circuit opinion that held that the Do-Not-Call Registry is constitutional. See the Do-Not-Call Registry Timeline at the Electronic Privacy Information Center http://www.epic.org/privacy/telemarketing/dnc/
  • Investigative consumer report includes information about a p erson’s character, reputation, personal traits, or mode of living, and is based on interviews with neighbors, friends, and associates.
  • Individual who is not satisfied with the agency’s investigation may file a brief statement setting forth the nature of her dispute with the agency. If so, any subsequent credit report containing the disputed information must note that it is disputed and must provide either the individual’s statement or a clear and accurate summary of it.
  • Owners of house listed it for rental with Gatewood Realty, Inc. Ira Simonoff, a Gatewood broker, showed house to brothers Jonathan and Robert Scott, who offered to rent the house at a lesser monthly rate than owners had specified. Simonoff asked Scotts for certain background information. Jonathan Scott responded to Simonoff’s request for his Social Security number by telling Simonoff that Simonoff was not authorized to make a credit check. Robert Scott added that he did not want his credit checked. During the discovery phase of the litigation described below, Jonathan Scott testified that Simonoff assured him no credit check would be run. Both brothers testified that they understood Simonoff would not check their credit. Simonoff, however, testified that he informed the brothers of the owners’ requirement of a credit check and that one brother simply asked Simonoff not to have a credit check done “if at all possible.” When Simonoff relayed Scotts’ offer to owners, they insisted that credit checks be conducted. Simonoff therefore asked Peter Visconti, who was affiliated with Real Estate Finance Group (REFG), to check the Scotts’ credit. According to testimony by Visconti, Simonoff represented that he had written authorizations from the Scotts. Scotts denied such authorizations. Visconti obtained credit reports on the Scotts by falsely representing to computerized credit reporting service that he needed the reports to evaluate a mortgage application. He supplied the credit reports to Simonoff. When a real estate broker working on behalf of the Scotts learned that Simonoff had obtained their credit reports, she informed the Scotts. The Scotts filed suit against REFG, Gatewood, and Simonoff for alleged violations of the Fair Credit Reporting Act (FCRA). After discovery, the Scotts moved for partial summary judgment against all defendants on the theory that they had obtained the Scotts’ credit reports by means of false pretenses, in violation of the FCRA. Gatewood and Simonoff moved for summary judgment in their favor. The district court granted the Scotts’ summary judgment motion as to REFG but not as to Gatewood and Simonoff. Instead, court granted summary judgment in favor of Gatewood Realty and Simonoff and ordered dismissal of the Scotts’ FRCA claim against them. REFG and Scotts later reached a settlement. Scotts appealed the dismissal of their FCRA claim against Gatewood ad Simonoff. Court: “We agree with the district court that a requester does not violate § 1681q by giving a false reason for its request if it has n independent legitimate basis for requesting the report. ….However, we believe that the district court overlooked issues of fact on the legitimacy of Simonoff ’s business need for the report at the time he requested it. ….Because a fact finder must determine whether Simonoff had a legitimate need for the report when he requested it—and, if not, whether his noncompliance with the statute was willful—we reverse and remand.
  • The link is to the text of the Fair Credit Reporting Act. See the summary of the consumer rights at: http://www.ftc.gov/bcp/conline/pubs/credit/fcrasummary.pdf
  • Link is to the FTC webpage summarizing the Equal Credit Opportunity Act.
  • Link is to the FTC Fair Credit Billing Act summary webpage.
  • Link is to the FTC Fair Debt Collection Act summary webpage.
  • Link is to the Consumer Product Safety Commission home page.
  • False. FTC enforcement devices include issuing trade regulation rules, facilitating voluntary compliance, and adjudicative proceedings. False. FTC gathers may gather evidence about possible violations from private parties as well as government entities and FTC investigations. True.
  • True False. According to companies using telemarketing, such a broad prohibition would violate the right to Free Speech guaranteed by the Constitution. However, FTC issued 1995 Telemarketing Sales Rule (TSR) prohibiting deceptive and abusive telemarketing acts or practices. True. Details include p ersons protected; products, parts, characteristics covered; what warrantor will do in case of product defect; warranty duration; and procedures consumer must follow in event of defect or failure
  • The correct answer is (c). To be deceptive under FTC Policy Statement on Deception, an activity must: (1) involve a material misrepresentation, omission, or practice; (2) that is likely to mislead a consumer; (3) who acts reasonably under the circumstances
  • The correct answer is (c). To be deceptive under FTC Policy Statement on Deception, an activity must: (1) involve a material misrepresentation, omission, or practice; (2) that is likely to mislead a consumer; (3) who acts reasonably under the circumstances
  • The correct answer is (e).
  • Opportunity to the nexus between consumer practices and privacy issues. See Federal Trade Commission – Identity Theft Survey Report (Sept. 2003) (available at http://www.ftc.gov/os/2003/09/synovatereport.pdf
  • Transcript

    • 1.  
    • 2. Regulation of Business Administrative Agencies The Federal Trade Commission Act and Consumer Protection Laws Antitrust: The Sherman Act 11 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
    • 3. Regulation of Business The Clayton Act, The Robinson-Patman Act, and Antitrust Exemptions and Immunities Employment Law Environmental Regulation 11 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
    • 4. THE FEDERAL TRADE COMMISSION ACT AND CONSUMER PROTECTION LAWS P A E T R H C 48 “ The most exciting thing happening in business is the rise of vigilante consumers.” Anita Roddick, The Body Shop founder, Marketing Week (Feb. 24, 2000)
    • 5. Learning Objectives <ul><li>The Federal Trade Commission </li></ul><ul><li>Anticompetitive behavior and deceptive practices </li></ul><ul><li>Consumer protection laws </li></ul>48 -
    • 6. <ul><li>Before 1914, the rule was caveat emptor – let the buyer beware </li></ul>Overview 48 - <ul><li>In some ways, that rule remains, but consumers now demand a certain level of protection from unscrupulous businesses </li></ul>
    • 7. <ul><li>Federal Trade Commission Act of 1914 enabled the creation of the Federal Trade Commission (FTC) as independent agency </li></ul><ul><li>FTC’s principal missions are to keep the U.S. economy both free and fair </li></ul><ul><li>FTC enforcement devices : issuing trade regulation rules, facilitating voluntary compliance, and adjudicative proceedings </li></ul>The FTC 48 -
    • 8. <ul><li>FTC trade regulation rules have the force of law and FTC can proceed directly against those who engage in prohibited practices: </li></ul><ul><ul><li>Adjudicative proceeding </li></ul></ul><ul><ul><li>Civil penalty up to $10,000 for each knowing violation of a rule </li></ul></ul><ul><ul><li>Court proceedings to obtain consumer remedies, such as damages, refund of money, return of property, or the reformation or rescission of contracts </li></ul></ul>FTC Trade Regulation Rules 48 -
    • 9. <ul><li>FTC promotes voluntary compliance with best practices and regulations by issuing advisory opinions and industry guides </li></ul><ul><ul><li>Advisory opinion : commission’s response to a private party’s inquiry about the legality of a proposed business action </li></ul></ul><ul><ul><li>Industry guides : FTC interpretations of the laws it administers </li></ul></ul>FTC Voluntary Compliance 48 -
    • 10. <ul><li>FTC may take internal administrative action against those who violate regulations </li></ul><ul><li>FTC gathers evidence about possible violations from private parties, government entities, and FTC investigations </li></ul>FTC Adjudicative Proceedings 48 -
    • 11. <ul><li>If FTC proceeds against alleged offender (respondent), it files a formal complaint and the case is heard in a public administrative hearing called an adjudicative proceeding </li></ul><ul><ul><li>FTC administrative law judge presides </li></ul></ul><ul><li>Judge’s decision may be appealed: first to FTC’s five commissioners, then to federal courts of appeals and U.S. Supreme Court </li></ul>FTC Adjudicative Proceedings 48 -
    • 12. <ul><li>Most common penalty resulting from a final decision against the respondent is an FTC cease-and-desist order </li></ul><ul><ul><li>Civil penalty for noncompliance with cease-and-desist order is &lt; $10,000 per violation (per day) </li></ul></ul><ul><li>A consent order is an order approving a negotiated settlement in which respondent promises to cease certain activities and/or pay certain fees </li></ul>Adjudicative Orders 48 -
    • 13. <ul><li>FTC Act Sec. 5 authorizes commission to prevent unfair methods of competition </li></ul><ul><li>Thus FTC may regulate anticompetitive practices made illegal by the Sherman Act, Clayton Act, and Robinson-Patman Act, as well as anticompetitive behavior not covered by other antitrust statutes and potential or incipient antitrust violations </li></ul>FTC Act Section 5 48 -
    • 14. <ul><li>FTC Act Sec. 5 prohibits unfair or deceptive acts or practices in commercial settings </li></ul><ul><li>Commission must prove the activity is deceptive or unfair </li></ul><ul><li>To be deceptive under FTC Policy Statement on Deception, an activity must: (1) involve a material misrepresentation, omission, or practice; (2) that is likely to mislead a consumer; (3) who acts reasonably under the circumstances </li></ul>Deceptive Acts or Practices 48 -
    • 15. <ul><li>A seller violates Section 5 of the FTC Act if a statement, omission, or practice is likely to mislead reasonable consumers under the circumstances (reasonable consumer test) </li></ul><ul><ul><li>Actual deception is not required </li></ul></ul>Reasonable Consumer Test 48 - Statements of opinion, sales talk, or sales puffery are not deceptive
    • 16. <ul><li>Companies may sue another alleging the other is making false claims: </li></ul><ul><ul><li>Pizza Hut sued Papa John’s alleging that the “Better Pizza. Better Ingredients” claim was false and misleading </li></ul></ul><ul><ul><li>Storage bag manufacturer S.C. Johnson sued The Clorox Co. alleging that Clorox claims that Clorox-manufactured storage bags would not leak like other storage bags </li></ul></ul>False Claims as Anticompetitive Behavior 48 -
    • 17. Kraft, Inc. v. Federal Trade Commission <ul><li>Facts : </li></ul><ul><ul><li>Kraft, Inc. advertised that Kraft Singles (process cheese food slices with at least 51% natural cheese) contained 5 oz. milk in each slice </li></ul></ul><ul><ul><ul><li>True statement </li></ul></ul></ul><ul><ul><li>FTC brought Sec. 5 suit for deceptive advertising against Kraft alleging that the milk equivalency claim was false and misleading because 30% of calcium in milk is lost through processing </li></ul></ul><ul><ul><li>ALJ found in favor of FTC and ordered Kraft to cease and desist the milk equivalency claim for individually wrapped process cheese food slices </li></ul></ul>48 -
    • 18. Kraft, Inc. v. Federal Trade Commission <ul><li>Procedural History : </li></ul><ul><li>Kraft appealed to FTC commissioners, which affirmed and extended coverage from the individually wrapped slices to “any product that is a cheese, related cheese product, imitation cheese, or substitute cheese” </li></ul>48 -
    • 19. Kraft, Inc. v. Federal Trade Commission <ul><li>Legal Analysis and Holding : </li></ul><ul><ul><li>Kraft appealed to Court of Appeals </li></ul></ul><ul><ul><li>Implied claims (milk equivalency) reasonably clear from advertisements and Commission may rely on its reasoned analysis to determine what claims are conveyed in challenged advertisement </li></ul></ul><ul><ul><li>Even literally true statements can be misleading </li></ul></ul><ul><ul><li>FTC has discretion to issue “fencing-in” multi-product orders, thus Commission’s order upheld </li></ul></ul>48 -
    • 20. <ul><li>Section 5 prohibits unfair acts or practices </li></ul><ul><li>FTC focuses on harm to consumers, which must be: substantial, not outweighed by any offsetting consumer or competitive benefits produced by the challenged practice, and a harm that consumers could not reasonably have avoided </li></ul><ul><ul><li>See FTC Consumer Information webpage </li></ul></ul>Unfair Acts or Practices 48 -
    • 21. <ul><li>FTC issued 1995 Telemarketing Sales Rule (TSR) prohibiting deceptive and abusive telemarketing acts or practices </li></ul><ul><ul><li>Telemarketing: plan, program, or campaign conducted to induce purchase of goods or services by using one or more telephones and more than one interstate telephone call </li></ul></ul>Telemarketing and Consumer Fraud and Abuse Prevention Act 48 -
    • 22. <ul><li>A telemarketer or seller engages in a deceptive practice if it fails to disclose certain information to customers before he pays for telemarketed goods or services </li></ul><ul><ul><li>Information covers total cost, conditions on use or purchase, refund or exchange policy </li></ul></ul><ul><li>Abusive practice : telemarketer threatens or intimidates a customer, or calls repeatedly </li></ul>Telemarketing and Consumer Fraud and Abuse Prevention Act 48 -
    • 23. <ul><li>Other restrictions apply to telemarketers </li></ul><ul><li>FTC and state attorneys general may enforce the Telemarketing Act and the TSR against violators with civil penalties </li></ul>Telemarketing and Consumer Fraud and Abuse Prevention Act 48 -
    • 24. <ul><li>FTC and FCC (Federal Communications Commission) created national Do-Not-Call Registry which prohibits telemarketers from placing calls to listed numbers </li></ul><ul><li>Registry became so popular that commercial telemarketers initiated litigation questioning legal validity: Mainstream Marketing Services, Inc. v. Federal Trade Commission </li></ul>Do-Not-Call Registry 48 -
    • 25. <ul><li>In Mainstream Marketing Services, Inc. v. Federal Trade Commission , the federal court of appeals upheld the do-not-call registry against challenges based on lack-of-statutory authority and the First Amendment </li></ul>Do-Not-Call Registry 48 -
    • 26. <ul><li>If the seller provides a written warranty for a consumer product costing &gt; $15, Act requires simple, clear, and conspicuous presentation of certain information: </li></ul><ul><ul><li>Persons protected </li></ul></ul><ul><ul><li>Products, parts, characteristics covered </li></ul></ul><ul><ul><li>What warrantor will do in case of product defect </li></ul></ul><ul><ul><li>Warranty duration </li></ul></ul><ul><ul><li>Consumer procedures in event of defect or failure </li></ul></ul>Magnuson-Moss Warranty Act 48 -
    • 27. <ul><li>Act requires disclosure of limitations </li></ul><ul><li>Warranty must be available to consumer to review prior to sale </li></ul>Magnuson-Moss Warranty Act 48 -
    • 28. <ul><li>Applies to creditors who extend credit to consumers for amounts &lt; $25,000 </li></ul>Truth In Lending Act 48 - <ul><li>Consumer credit: enables the purchase of goods, services, or real estate used primarily for personal, family, or household purposes </li></ul>
    • 29. <ul><li>Detailed disclosure provisions apply to three types of credit: </li></ul><ul><ul><li>Open-end credit covers repeated transactions and a finance charge computed on an unpaid balance </li></ul></ul><ul><ul><li>Closed-end credit: covers consumer loans from a finance company for a specific time period </li></ul></ul><ul><ul><li>Credit card applications and solicitations </li></ul></ul><ul><li>Required disclosures include finance charge, billing statement, annual percentage rate, due date, late charge, billing rights, etc. </li></ul>Truth In Lending Act 48 -
    • 30. <ul><li>Provisions deal with consumer credit advertising, such as preventing a creditor from “baiting” customers </li></ul><ul><li>Regulates the home equity loans, including advertisements, terms, and actions a creditor may take against a defaulting consumer </li></ul><ul><li>Provisions cover credit cards </li></ul>Truth In Lending Act 48 -
    • 31. <ul><li>Applies to consumer reporting agencies that regularly compile credit-related information on individuals for the purpose of furnishing consumer credit reports to users </li></ul><ul><li>Agency must adopt procedures to: </li></ul><ul><ul><li>Ensure users of information employ information only for certain limited business purposes </li></ul></ul><ul><ul><li>Avoid including obsolete information in a report </li></ul></ul><ul><ul><li>Ensure maximum possible accuracy </li></ul></ul>Fair Credit Reporting Act 48 -
    • 32. <ul><li>Also imposes disclosure duties on users of credit reports (e.g., lenders, employers) </li></ul><ul><li>If user obtains an investigative consumer report , user must inform person under investigation about report request and the possible sensitive information in the report </li></ul><ul><li>If user rejects credit or insurance application, user must inform applicant of reasons for rejection or higher rates charged </li></ul>Fair Credit Reporting Act 48 -
    • 33. <ul><li>Person disputing accuracy or completeness of credit report’s information may compel a reinvestigation by credit reporting agency </li></ul><ul><li>Credit bureau must delete information from file if information inaccurate or unverifiable </li></ul>Fair Credit Reporting Act 48 -
    • 34. <ul><li>Criminal penalties possible for persons who knowingly and willfully obtain consumer information from credit bureau under false pretenses </li></ul><ul><ul><li>See Scott v. Real Estate Finance Group in which appellate court remanded case to trial because a realtor may have had a legitimate basis for requesting a credit check for a rental contract </li></ul></ul>Fair Credit Reporting Act 48 -
    • 35. <ul><li>FCRA violations also violate FTC Act Sec. 5 </li></ul><ul><li>See Fair Credit Reporting Act </li></ul>Fair Credit Reporting Act 48 -
    • 36. <ul><li>A series of amendments to the Fair Credit Reporting Act, FACT permits victims of identity theft to file theft reports with consumer reporting agencies </li></ul><ul><li>Requires agencies to include “fraud alerts” in credit reports about consumers who believe they are victims of the fraudulent use of their financial information </li></ul><ul><li>See FTC ID Theft webpage </li></ul>Fair and Accurate Credit Transactions Act 48 -
    • 37. <ul><li>Prohibits credit discrimination on the bases of sex, marital status, age, race, color, national origin, religion, and obtaining income from public assistance </li></ul><ul><li>Applies to all entities that regularly arrange, extend, renew, or continue credit </li></ul><ul><li>See FTC Equal Credit Opportunity webpage </li></ul>Equal Credit Opportunity Act 48 -
    • 38. <ul><li>Provisions cover credit card billing disputes </li></ul><ul><ul><li>Cardholder must give issuer written notice of alleged error in billing statement within 60 days of time the statement is sent to cardholder </li></ul></ul><ul><ul><li>Card issuer must either (1) correct cardholder’s account, or (2) send cardholder written statement justifying billing statement’s accuracy </li></ul></ul><ul><li>See FTC Fair Credit Billing webpage </li></ul>Fair Credit Billing Act 48 -
    • 39. <ul><li>Applies to debts that involve money, property, insurance, or services obtained by a consumer for consumer purposes </li></ul><ul><li>Prohibits debt collectors from contacting third parties such as debtor’s employer, relatives, or friends and limits a collector’s contacts with debtor </li></ul><ul><li>See FTC Fair Debt Collection webpage </li></ul>Fair Debt Collection Practices Act 48 -
    • 40. <ul><li>Prohibits certain methods of debt collection: </li></ul><ul><ul><li>Harassment, oppression, or abuse </li></ul></ul><ul><ul><li>False or misleading misrepresentations </li></ul></ul><ul><ul><li>Unfair practices </li></ul></ul>Fair Debt Collection Practices Act 48 -
    • 41. <ul><li>Most important federal product safety law is the Consumer Product Safety Act (CPSA) which established the Consumer Product Safety Commission (CPSC) </li></ul>Product Safety Regulation 48 -
    • 42. <ul><li>CPSC (1) issues consumer product safety standards , (2) issues bans of certain hazardous products; (3) may bring civil suits in federal district court to eliminate dangers presented by imminently hazardous consumer products, and (4) after receiving notice of hazards, may issue orders to private parties to address “substantial product hazards” </li></ul>Product Safety Regulation 48 -
    • 43. Test Your Knowledge <ul><li>True=A, False = B </li></ul><ul><ul><li>The FTC has rulemaking and enforcement powers, but must file a case in a federal court. </li></ul></ul><ul><ul><li>FTC gathers evidence about possible violations solely from government entities and FTC investigations . </li></ul></ul><ul><ul><li>A consent order is an order approving a negotiated settlement in which respondent promises to cease certain activities and/or pay certain fees </li></ul></ul>48 -
    • 44. Test Your Knowledge <ul><li>True=A, False = B </li></ul><ul><ul><li>FTC Act Sec. 5 prohibits unfair or deceptive acts or practices in commercial settings . </li></ul></ul><ul><ul><li>The FTC Telemarketing Act prohibits telemarketing to individual citizens. </li></ul></ul><ul><ul><li>If a seller gives a written warranty for a consumer product costing &gt; $15, the warranty must have simple, clear, and conspicuous presentation of warranty details. </li></ul></ul>48 -
    • 45. Test Your Knowledge <ul><li>Multiple Choice </li></ul><ul><ul><li>Deceptive practices under Sec. 5 must: </li></ul></ul><ul><ul><ul><li>(a) involve a material misrepresentation </li></ul></ul></ul><ul><ul><ul><li>(b) the representation must be likely to mislead a consumer </li></ul></ul></ul><ul><ul><ul><li>(c) the consumer must act reasonable under the circumstances </li></ul></ul></ul><ul><ul><ul><li>(d) all of the above </li></ul></ul></ul><ul><ul><ul><li>(e) all of the above plus result in a sale </li></ul></ul></ul>48 -
    • 46. Test Your Knowledge <ul><li>Multiple Choice </li></ul><ul><ul><li>Jordan is late on paying a store charge card. Jordan received a call claiming that the store would have Jordan arrested for fraud unless payment was made in five days. Which of the following is true? </li></ul></ul><ul><ul><ul><li>(a) Jordan must pay the bill or be arrested </li></ul></ul></ul><ul><ul><ul><li>(b) The store violated the Fair Debt Collection Practices Act </li></ul></ul></ul><ul><ul><ul><li>(c) Jordan must file a lawsuit against the store </li></ul></ul></ul>48 -
    • 47. Test Your Knowledge <ul><li>Multiple Choice </li></ul><ul><ul><li>Which of the following is not a consumer protection law? </li></ul></ul><ul><ul><ul><li>(a) Fair Credit Reporting Act </li></ul></ul></ul><ul><ul><ul><li>(b) Federal Registration Act </li></ul></ul></ul><ul><ul><ul><li>(c) Truth in Lending Act </li></ul></ul></ul><ul><ul><ul><li>(d) Fair Debt Collection Practices Act </li></ul></ul></ul><ul><ul><ul><li>(e) Equal Credit Opportunity Act </li></ul></ul></ul>48 -
    • 48. Thought Questions <ul><li>A 2003 FTC survey showed that over a one-year period nearly 10 million people (4.6 % of adult population) were victims of some form of identity theft. </li></ul><ul><li>Are you concerned about your privacy? </li></ul>48 -

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