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  1. 1. Chapter 24: Consumer Protection
  2. 2. Introduction <ul><li>All statutes, agency rules and common laws that protect the interests of consumers are classified as consumer law. </li></ul><ul><li>Today, federal and state laws govern consumer law. </li></ul><ul><li>This chapter will focus on federal law. </li></ul>
  3. 3. §1: Deceptive Advertising <ul><li>Advertising is deceptive if a consumer would be misled by the advertising claims. </li></ul><ul><li>Puffing: Vague generalities and obvious exaggerations are permissible and not considered deceptive. </li></ul><ul><li>Bait and Switch: The advertising of a product at an attractively low price to lure customers in to buy more expensive items. </li></ul>
  4. 4. FTC Actions Against Deceptive Advertising <ul><li>The FTC, charged with enforcing federal laws against deceptive advertising, can, in appropriate circumstances: </li></ul><ul><ul><li>Issue cease and desist orders . </li></ul></ul><ul><ul><ul><li>With respect to a particular product or advertisement </li></ul></ul></ul><ul><ul><ul><li>With regard to multiple product orders. </li></ul></ul></ul><ul><ul><li>Impose counteradvertising . </li></ul></ul><ul><li>Case 24.1: FTC v. Pantron I Corp. (1994). </li></ul>
  5. 5. Telemarketing <ul><li>Telemarketing and Electronic Advertising: The Telephone Consumer Protection Act (TCPA) prohibits automated solicitation using automatic telephone dialing system or a prerecorded voice. </li></ul>
  6. 6. §2: Labeling and Packaging Laws <ul><li>Labeling must be accurate, and must use words that are easily understood by the ordinary consumer. </li></ul><ul><li>Product labeling and packaging are regulated by: </li></ul><ul><ul><li>Wool Products Labeling Act of 1939. </li></ul></ul><ul><ul><li>Fur Products Labeling Act of 1951. </li></ul></ul><ul><ul><li>Flammable Fabrics Act of 1953. </li></ul></ul><ul><ul><li>Fair Packaging and Labeling Act of 1966. </li></ul></ul><ul><ul><li>Smokeless Tobacco Health Education Act of 1986. </li></ul></ul><ul><ul><li>Nutrition Labeling and Education Act of of 1990. </li></ul></ul>
  7. 7. §3: Sales <ul><li>Forms of Sales: </li></ul><ul><ul><li>Door-to-Door Sales. </li></ul></ul><ul><ul><li>Mail Order Sales. </li></ul></ul><ul><ul><li>Telephone and Mail-Order Sales. </li></ul></ul><ul><ul><li>Unsolicited Receipt of Merchandise. </li></ul></ul><ul><li>Emerging Trends: Protection against Internet Fraud . </li></ul>
  8. 8. Door-to-Door Sales <ul><li>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. </li></ul><ul><li>Consumers are given the most favorable benefits of the FTC rule and their own state statutes. </li></ul>
  9. 9. Telephone and Mail-Order Sales <ul><li>Telephone and mail order sellers can be subject to federal mail and wire fraud statutes. </li></ul><ul><li>FTC requires mail and telephone merchants to ship 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. </li></ul><ul><li>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. </li></ul>
  10. 10. Real Estate Sales <ul><li>Federal and state laws designed to prevent fraud in real estate transactions: </li></ul><ul><ul><li>Interstate Land Sales Full Disclosure Act. Only applies if the land sale can be deemed to be interstate commerce. </li></ul></ul><ul><ul><li>Real Estate Settlement Procedures Act requires lenders to furnish information to home buyers. </li></ul></ul>
  11. 11. §4: Credit Protections <ul><li>Consumer Credit is protected by: </li></ul><ul><ul><li>Truth in Lending Act. </li></ul></ul><ul><ul><ul><li>Case 24.2: Purtle v. Eldridge Auto Sales (1996). </li></ul></ul></ul><ul><ul><ul><li>Protects credit card holders. </li></ul></ul></ul><ul><ul><li>Equal Credit Opportunity Act. </li></ul></ul><ul><ul><ul><li>Case 24.3: FDIC v. Medmark, Inc. (1995). </li></ul></ul></ul><ul><ul><li>Fair Credit Reporting Act. </li></ul></ul><ul><ul><ul><li>Case 24.4: Guimond v. Trans Union Credit Information (1995). </li></ul></ul></ul>
  12. 12. Credit Protections [2] <ul><li>Fair Debt Collection Practices Act. Curb abuses by collection agencies. Creditors cannot: </li></ul><ul><ul><li>Contact debtors at work. </li></ul></ul><ul><ul><li>Contact debtors at odd hours. </li></ul></ul><ul><ul><li>Harass or intimidate debtor. </li></ul></ul><ul><ul><li>Contact the debtor after debtor informs the creditor the debtor is refusing to pay the debt. </li></ul></ul><ul><li>Case 24.5: Snow v. Jesse L. Riddle, P.C. (1998). </li></ul>
  13. 13. Garnishment of Wages <ul><li>Legal procedure by which a creditor may collect on a debt by directly attaching, or seizing, a portion of the debtor’s assets (such as wages that are in the possession of a third party. </li></ul><ul><li>Debtor is entitled to notice and an opportunity to be heard in a process of garnishment. </li></ul><ul><li>Wages cannot be garnished beyond 25% of the debtor’s after-tax earnings up to a maximum amount designed to leave the debtor a specified minimum income. </li></ul>
  14. 14. §5: Consumer Health and Safety <ul><li>Federal Food, Drug, and Cosmetic Act. </li></ul><ul><ul><li>This statute protects consumers against adulterated and misbranded foods and drugs. </li></ul></ul><ul><li>Consumer Product Safety Act. </li></ul><ul><ul><li>This act created the Consumer Product Safety Commission which has broad regulatory authority over the safety of consumer products. </li></ul></ul>
  15. 15. §6: State Consumer Protection Laws <ul><li>UCC provides some protection. </li></ul><ul><li>Magnuson-Moss Warranty Act. </li></ul><ul><li>Uniform Consumer Credit Code (not adopted in many states). </li></ul><ul><li>State “deceptive trade practice” acts. </li></ul>
  16. 16. Law on the Web <ul><li>Alexander Law Firm’s consumer law page. </li></ul><ul><li>Arent Fox Law Firm’s consumer law page. </li></ul><ul><li>Legal Research Exercises on the Web </li></ul>
  17. 17. Emerging Trends <ul><li>FTC’s campaign against internet fraud. </li></ul><ul><li>Securities Exchange Commission fighting fraudulent offerings and stocks. </li></ul><ul><li>National Consumers League . </li></ul><ul><li>Consumer Product Safety Commission . </li></ul><ul><li>New Hampshire Consumer Protection site . </li></ul>Return