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

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

Governmental agency that promotes free trade and fair competition.

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

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

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

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

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

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

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

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

Warranties

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

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

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

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

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

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

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.