6Consumer Protection

1. Ethics of Consumer Protection

2. Questions for Thought
• How far must manufacturers go to make their products and
services completely safe?
• WHAT Is the relationship between a business and its
customers? a contract, or is there more to it than that?
• How does the fact that companies usually know more about
their products than their customers impact their duty to
protect customers from injury or harm?
• What responsibility do businesses have for customer
injuries no one could practically have predict or prevented?

3. Ethical Criticisms of Marketing
• High prices.
• Misleading practices.
• High-pressure selling.
• Harmful, or unsafe products.
• Poor service to disadvantaged
consumers.

4. 1. Not buy a product offered for sale.
2. Expect the product to be safe.
3. Expect the product to perform as claimed.
4. Be well informed about important aspects of the
product.
5. Be protected against questionable products and
marketing practices.
6. Influence products and marketing practices in ways
that will improve their “quality of life.”
Buyers’ Rights

5. Ethics of Consumer Protection
Four Approaches

6. 4 Approaches
• Market Approach
• Contract Approach
• Due Care Approach
• Social View Approach

7. Ethics of Consumer Protection
Four Approaches

8. a. The Market Approach
In a free market system, buyers and
sellers are free to interact. Sellers are
free to produce the goods and services
that buyers need and want. On the other
hand, buyers are free to choose from the
products offered by various sellers.

9. • Safety is a commodity that
should not be mandated by
the government but instead,
be provided through the
market.

10. Criticisms in Market Approach
• Assumes markets are perfectly competitive,
but they are not because:
– Buyers do not have adequate
information
– Buyers are often not rational about
product risk or probabilities
– Many consumer markets are monopolies
or oligopolies

11. b. The Contract Approach
• 1.1 Moral Duties to Consumers Under
Contractual Theory
1. (Duty to comply) Complying with the
terms of the sales contract and implied
claims of:
– Reliability.
– Service life.
– Maintainability.
– Safety.

12. 2. Disclosing the nature of the
product (Duty of Disclosure).
3. Avoiding misrepresentation
(Duty Not to Misrepresent).
4. Avoiding the use of force and
unwanted influence (Duty not
to Coerce).

13. • 1. Duty To Comply:
• is the duty to provide consumers with a
product that respect the claims that the
firms expressly made about the product
which led the customers to enter the
contract freely. The claims of :
• (a) Reliability
– The probability that the product will
function as the consumer is led to
expect that it will function.

14. • (b) Service Life
– The period of time during which the
product will function as effectively as the
consumer is lead to expect it to function.
• (c) Maintainability:
– The ease with which the product can be
repaired and kept in operating condition;
• Eg. Warranty
• (d) Product Safety:
– The degree of risk associated with using a
product.

15. b. Contract View Approach
• 2. The “duty to disclose”
pertains to the seller’s moral
obligation to reveal facts
about the products and the
terms and conditions of the
sale.

16. 3. The “duty not to
misrepresent” pertains to the
seller’s deliberate attempt to
deceive and mislead the buyer
just to sell the product.
b. Contract View Approach

17. 4. The “duty not to coerce”
• When a seller takes advantage of
a buyer’s fear or emotional stress
to get authority to an agreement
that the buyer would not make if
the buyer was thinking rationally,
the seller is using pressure or
unwanted influence to coerce.
b. Contract View Approach

18. Criticisms of Contract Approach
• Sellers can remove all their
duties to buyers by getting them
to agree to disclaimers of
responsibility.
• Assumes consumer and seller
meet as equals, but seller has
more knowledge so consumer
must rely on the seller.

19. C. The Due Care Approach
The view that because manufacturers
are in a more advantaged position and
consumers must rely on them, they have a
duty to take special care to ensure that
consumers’ interests are not harmed by the
products that they offer them.

20. Criticisms of the Due Care Theory
• Does not indicate who should pay
for product injuries that cannot
be foreseen.
• There is no way to determine
when one has exercised enough
due care. Every product involves
some small risk.

21. D. The Social Costs Approach
The strict products liability or the
“doctrine that the seller of a product has
legal responsibilities to compensate the user
of that product for injuries suffered because
of a defective aspect of the product, even
when the seller has not been negligent in
permitting that defect to occur.”

22. Criticisms of Social Cost Approach
• Unjust to manufacturers since
compensatory justice says one
should compensate (pay)
injured parties only if the
injury was foreseeable and
preventable.

23. • Falsely assumes that the social cost
view prevents accidents.
– Instead, it encourages consumer
carelessness by relieving them of
responsibility for their injuries.
• The social cost has increased the
number of successful consumer lawsuits
(claims), which impose heavy losses on
insurance companies and makes
insurance too expensive for small firms.