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Chapter 7. Part 2. Consumer Protection Laws. A Consumer is someone who buys or leases goods, real estate, or services for personal, family, or household purposes Consumer protections laws apply to transactions between consumers and business. i nterstate Commerce .

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Chapter 7

Chapter 7

Part 2

Consumer protection laws
Consumer Protection Laws

  • A Consumer is someone who buys or leases goods, real estate, or services for personal, family, or household purposes

  • Consumer protections laws apply to transactions between consumers and business

I nterstate commerce
interstate Commerce

  • n. commercial trade, business, movement of goods or money, or transportation from one state to another, regulated by the federal government according to powers spelled out in Article I of the Constitution.

Ftc federal trade commission
FTC Federal Trade Commission

  • Governmental agency that promotes free trade and fair competition.

Protection laws
Protection Laws

  • Consumer Product Safety Act

    • Protects you from unreasonable risk of injury while using consumer products sold in interstate commerce

  • Consumer Leasing Act

    • Requires leasing agreements to include certain terms of the lease, including the required number of lease payments and the dollar amount

      • Leases must also include any penalties for not paying on time and whether there is a lump-sum due at the end of the lease

Unfair and deceptive practices
Unfair and Deceptive Practices

  • An Unfair and Deceptive practice is an act that misleads consumers.

    • Most states enacted the uniform Deceptive Trade Practice Act or similar laws

Fraudulent misrepresentation
Fraudulent Misrepresentation

  • Any statement that deceives a buyer.

    • Occurs when a seller misstates or fails to disclose the facts about something that is important to the consumer

Bait and switch advertising
Bait and Switch Advertising

  • Store advertise bargains that do not really exist to lure customers in hopes that they will buy something more expensive.

    • Illegal because the advertiser is trying to sell a different product than the one advertised

Ftc regulation rules
FTC Regulation Rules

  • Negative Option Rule

    • Products that are sent on a regular bases such as a book club, magazine

      • The business sends a description of its current selection

      • If you don’t want it you must tell the seller you don’t want it, if not it will still be sent

      • The seller must tell you how many you must buy, how to notify them if you don’t want the subscription, when you get credit for return, how often you will receive announcements and forms, and how to cancel

Telemarketing sales rule
Telemarketing Sales Rule

  • Protects you from abusive people who try to sell you products by phone

  • The Do Not call Registry helps reduce the number of unwanted calls.

    • It is illegal for telemarketers to call you if you have asked not to be called

    • Calling times are restricted between 8 am 9 pm

    • Must inform you that they are making a sales call and identify the company they represent

    • Must tell you the total cost of the product or services and restriction

    • Must not make false statements about their goods or services

The cooling off rule
The cooling-off Rule

  • Gives you three business days to cancel a transaction made away from a sellers regular place of business, such as a hotel, restaurant, or your home

    • purchases of $35 or more.

    • inform you of your right to cancel at the time the sale takes place

    • Must give you a cancelation form and a copy of your contract or receipt.

    • Must cancel and return all items and pickup any unused product within 10 days.

Shopping by mail phone fax or internet
Shopping by Mail, Phone, Fax, or Internet

  • Sellers must ship goods within the time they promise in their catalogs or advertisements.

    • within 30 days after receiving an order

    • cancel orders and get your money back

    • You must be notified of any delay of shipment and a free means to respond to the delay

    • cancel or agree to a new shipping date


  • A guarantee, usually by a seller to a buyer, that a product will perform as promised

Express warranties
Express Warranties

  • Express Warranties

    • Is an oral or written statement, promise or other representation about the quality of a product

      • Statement of Fact or Promise about the goods to the buyer

      • Any description or sample of goods that is part of a transaction

      • Advertising stating that a product is warranted must tell you how to get a copy of the warranty

Magnuson moss warranty act
Magnuson-Moss Warranty Act

  • A written warranty on goods in interstate commerce costing more than $10 must disclose whether it is full or limited

    • A full warranty is an assurance that a defective product will be repaired or replaced without charge within a reasonable time

    • A limited warranty is any written warranty that does not meet the requirements of a full warranty.

Implied warranties
Implied Warranties

  • A guarantee of quality imposed by law, it comes automatically.

  • types

    • Merchantability– fit for the ordinary purpose for which the goods are sold

    • Fitness for a Particular Purpose- fit for a specific use

Warranty of title
Warranty of Title

  • Sellers warrant that the title being given to the buyer is good and that the transfer is lawful

  • Exclusion of Warranties

    • To exclude the warranty of merchantability, the word merchantability must be mentioned specifically.

    • Implied warranties can also be excluded or modified by the words as is and with all faults

Responsibilities of consumers
Responsibilities of Consumers

  • Use product safely and as it is intended to be used

  • Read the information

  • Notify the seller within a reasonable time after you discover the defect

Better business bureau
Better Business Bureau

  • A private agency that hears consumer complaints at the local and state levels

    • Mission is to promote highly ethical relationships between businesses and the public through voluntary self-regulation, consumer and business education and service excellence.