Chapter 44 Consumer Law
§ 1: Deceptive Advertising • Areas of Consumer Law Regulated by Statutes: • Deceptive Advertising. • Labeling and Packaging. • Sales. • Credit Protections. • Consumer Health and Safety. • State Consumer Protection.
Puffing • Vague generalities and obvious exaggerations are permissible and not considered deceptive.
Bait and Switch • The advertising of a product at an attractively low price to lure customers in to buy more expensive items. • Telemarketing and Electronic Advertising. • The Telephone Consumer Protection Act (TCPA) prohibits automated solicitation using automatic telephone dialing system or a prerecorded voice.
FTC Actions Against Deceptive Advertising • The Federal Trade Commission, charged with enforcing federal laws against deceptive advertising, can, in appropriate circumstances: • Issue cease and desist orders. • With respect to a particular product or advertisement. • With regard to multiple product orders. • Impose counter-advertising.
Telemarketing and Electronic Advertising • Telephone Consumer Protection Act 1991. • Prohibits: telephone solicitations using automated dialing systems or a pre-recorded voice or unsolicited faxes. Creates private cause of action, either actual or $500 damages. • Telemarketing and Consumer Fraud and Abuse Prevention Act 1994. • Requires telemarketers to identify themselves and not misrepresent facts. Requires name to be removed from list. • Case 44.1:FTC v. Growth Plus International Inc. (2001).
§ 2: Labeling and Packaging Laws • Labeling must be accurate, and must use words that are easily understood by the ordinary consumer. • Product labeling and packaging are regulated by: • Wool Products Labeling Act of 1939. • Fur Products Labeling Act of 1951. • Flammable Fabrics Act of 1953. • Fair Packaging and Labeling Act of 1966. • Smokeless Tobacco Health Education Act of 1986. • Nutrition Labeling and Education Act of of 1990.
§ 3: Sales • Forms of Sales : • Door-to-Door Sales. • Mail-Order Sales. • Telephone and Mail-Order Sales. • Unsolicited Receipt of Merchandise.
Door-to-Door Sales • 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. • Consumers are given the most favorable benefits of the FTC rule and their own state statutes.
Telephone and Mail-Order Sales • Telephone and mail-order sellers can be subject to federal mail and wire fraud statutes. • FTC Rules require 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. • 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.
§ 4: Credit Protection • Consumer Credit is protected by: • Truth-in-Lending Act. • Fair Credit Reporting Act. • Fair Debt Collection Practices Act. • Wage Garnishment.
Truth in Lending Act • Requires all consumer lenders to compute the cost of a loan the same way and to advertise it as an Annual Percentage Rate (APR) • Through the Equal Credit Opportunity Act, requires that credit be extended without regard to race, sex, color, national origin, age, or marital status • Limits consumer liability for credit card debt in cases of stolen cards • Through the consumer Leasing Act of 1988, requires that leasors of consumer items valued at less than $25,000 make certain disclosures
Fair Credit Reporting Act • Limits the activities of credit reporting agencies. • Consumers have the right to access information contained about them in a credit reporting agency’s files and to require credit reporting agencies to delete unverifiable information in a consumer’s credit record.
Fair Debt Collection Practices Act • Prohibits Collection Agencies from the following: • Type, times, and places that debt collectors can contact debtors. • Contacting third parties about payments. • Using harassment or intimidation or employing false misleading information. • Contacting debtor after notice of payment refusal. • Requires that collectors provide validation notice to the debtor, at the time of first contact. • Case 44.2: Snow v. Jesse L. Riddle, P.C. (1998).
Garnishment of Wages • 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. • Debtor is entitled to notice and an opportunity to be heard in a process of garnishment. • 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.”
§ 5: Consumer Health and Safety • Federal Food, Drug, and Cosmetic Act. • This statute protects consumers against adulterated and misbranded foods and drugs. • Consumer Product Safety Act. • This act created the Consumer Product Safety Commission which has broad regulatory authority over the safety of consumer products. • Case 44.3:U.S. v. Mirama Enterprises, Inc. (2002).
Law on the Web • Consumer.gov • Federal Trade Commission. • Legal Research Exercises on the Web.