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Consumer Protection. Chapter 15. Business and Society. POST, LAWRENCE, WEBER. The consumer bill of rights. 1) The right to safety: To be protected against the marketing of goods that are hazardous to health or life. 2) The right to be informed

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Business and society

Consumer

Protection

Chapter

15

Business

and

Society

POST, LAWRENCE, WEBER


Business and society

The consumer bill of rights

  • 1) The right to safety:

    • To be protected against the marketing of goods that are

    • hazardous to health or life.

  • 2) The right to be informed

    • To be protected against fraudulent, deceitful, or grossly

    • misleading information, advertising, labeling, or other

    • practices, and to be given the facts to make an informed choice.

  • 3) The right to choose

    • To be assured, wherever possible, access to a variety of products and

    • services at competitive prices and in those industries in which

    • competition is not workable and government regulation is substituted,

    • to be assured satisfactory quality and service at fair prices.

  • 4) The right to be heard

    • To be assured that consumer interests will receive full and sympathetic

    • consideration in the formulation of government policy, and fair and

    • expeditious treatment in its administrative tribunals.


Business and society

Figure 15-1a

Major consumer protections specified

by consumer laws

Information protections

  • Hazardous home appliances must carry a warning label.

  • Home products must carry a label detailing contents.

  • Autos must carry a label showing detailed breakdown of price and

  • all related costs.

  • Tobacco advertisements and products must carry a health warning label.

  • Alcoholic beverages must carry a health warning label.

  • All costs related to real estate transactions must be disclosed.

  • Warranties must specify the terms of the guarantee and the buyer’s rights.

  • False and deceptive advertising can be prohibited.

  • Food and beverage labels must show complete information.

  • Food advertising must not make false claims about nutrition.


Business and society

Figure 15-1b

Major consumer protections specified

by consumer laws

  • Direct hazard protections

  • Hazardous toys and games for children are banned from sale.

  • Safety standards for motor vehicles are required.

  • National and state speed limits are specified.

  • Hazardous, defective, and ineffective products can be recalled

  • under pressure from EPA, CPSC, NHTSA, and FDA

  • Pesticide residue in food is allowed only if it poses a negligible risk.

  • Pricing protections

  • Unfair pricing, monopolistic practices, and noncompetitive acts are

  • regulated by FTC and Justice Department and by states.

  • Liability protections

  • When injured by a product, consumers can seek legal redress.

  • Other protections

  • No discrimination in the extension of credit.


Business and society

Goals of consumer laws

  • To provide customers with better information

  • when making purchases.

  • 2) To protect consumers against possible hazards from

  • products they may purchase.

  • 3) To promote competitive pricing and consumer choice.

  • 4) To protect privacy.


Business and society

Figure 15-2a

Major federal consumer protection agencies

and their main responsibilities

  • Consumer Product

  • Safety Commission

  • Safety standards for

  • consumer products

  • Flammable fabrics,

  • hazardous substances,

  • poison prevention

  • packaging

  • Federal Trade

  • Commission

  • Competitive pricing

  • Deceptive trade

  • practices

  • Packaging

  • and labeling

  • Consumer credit

  • disclosure and

  • reporting

  • Online privacy

  • Food and Drug

  • Administration

  • Safety, effectiveness,

  • and labeling of drugs,

  • foods, food activities,

  • cosmetics, and

  • medical devices

  • Standards for

  • radiation exposure

  • Toxic chemicals

  • research


Business and society

Figure 15-2b

Major federal consumer protection agencies

and their main responsibilities

  • Department of

  • Justice

  • Fair competition

  • Consumer civil

  • rights

  • National Highway

  • Traffic Safety

  • Administration

  • Motor vehicle safety

  • standards

  • Automobile fuel

  • economy standards

  • National uniform

  • speed limit

  • Consumer safeguards

  • for altered odometers

  • National

  • Transportation

  • Safety Board

  • Airline safety


Business and society

Protecting consumer privacy

Consumer self-help

Internet users should use technologies that enable them to protect their own privacy.

Industry self-regulation

Businesses should adopt voluntary policies and technical standards that protect the privacy of their customers.

Privacy legislation

The government should pass laws that establish minimum privacy standards for collecting information online.


Business and society

Product liability reform proposals

1) Set up uniform federal standards for determining liability.

2) Shift the burden of proving liability to consumers.

3) Eliminate some bases for liability claims.

4) Require the loser to pay the legal costs of the winner.

5) Limit punitive damages.


Business and society

Business responses to consumerism

Total quality management

This approach emphasizes achieving high quality and customer satisfaction

through teamwork and continuous

improvement of a company’s product or service.

Voluntary industry codes of conduct

In some cases, businesses in an industry have banded together to agree

on voluntary codes of conduct, spelling out how they

will treat their customers.

Consumer affairs departments

These centralized departments normally handle consumer inquiries and

complaints about a company’s products and services.

Product recalls

Occurs when a company, either voluntarily or under an agreement with a

government agency, takes back all items found to be dangerously defective.


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