Transcript Consumer Protection - School District of Haverford Township

Consumer
Protection
Chapter 14
Consumers
Individuals who acquire goods that
are intended primarily for personal
use
►
Caveat Emptor - “let the buyer beware”
Caveat Venditor – “let the seller beware”
Class Actions
(Class Action Suits)
allows one or several
persons to sue not only on
behalf of themselves, but
also on behalf of many
others similarly wronged
►
Governmental Procedure
Cease-and-desist order – order requiring
the company to stop specific conduct
Consent order – voluntary, courtenforceable agreement to stop an
illegal or questionable practice
Restitution – return of money wrongfully
obtained from a customer
Licensing
Certain businesses and institutions
must acquire proper licensing
before providing products or
services
►
 ie. Doctors, nurses, teachers,
lawyers, realtors, beauticians
►May
also be required to pass
inspections
Unsafe Products
1972 – Consumer Product
Safety Act
►
►CPSC
(Consumer Product
Safety Commission) was
created to issue and enforce
safety standards/regulations
Also regulates…
►Construction
►Accessibility
►Occupancy rates
►Parking
►Fire escapes
►Sanitary facilities
►Etc.
Consumers who think the CPSC is not
taking proper action may bring suit in
federal district court for enforcement
Adulterated Food, Drugs & Cosmetics
Food and Drug Administration (FDA)
►Requires
that the production facilities
for cosmetics, food and drugs be clean
►Requires
labels on regulated products
►Regulates
new drugs entering the
market (and whether they are
prescription or OTC)
Food and Drug Administration
Products that do not meet
FDA standards are deemed
adulterated and may be
confiscated or seized by the
government
►
The U.S. Department of Agriculture
inspects canners, packers, and
processors of poultry and meat
entering the market
►
Helps ensure that products are
free of disease and are processed
under sanitary conditions
Improper Weights and Measures
The U.S. Constitution gives
Congress the power to set
standards for weights and
measures
►
 Gallon of gasoline
 Pound of bananas
 Foot of rope
Unfair Trade Practice
any method of business
that is dishonest or
fraudulent or that illegally
limits free competition
►
ACTIVITY BREAK!
FORM 6 GROUPS
►Each
group will receive one type of
unfair trade practice
►As
a group, make a poster that
portrays your unfair trade practice
 Make sure the class can understand
that what your portraying is wrong!
1. Agreements to Fix Prices
►No
company/companies
may work together to
eliminate competition and
set (fix) prices
2. False and Misleading Advertising
Intentionally deceives,
makes untrue claims, or
fails to reveal critical facts
►
►Bait
and Switch – using an
understocked, low-priced
“hook” to lure consumers into
a store
Advertised item is out of stock
and customers are redirected
to a more expensive product
Advertisement is not considered
deceptive if it states “limited
quantity” or specifies # of items
available
►
FTC (Federal Trade Commission)
regulates false and misleading
advertising
►
Corrective advertising
requires the advertiser
to publicly admit
wrongdoing and state
the truth in a prescribed
number of future ads
3. Illegal Lotteries
►To
be an illegal lottery, a gambling
scheme or game must have 3
elements
Required payment of money or
something of value to participate
Winner to be determined by
chance, not skill
Prize to be won
►Holding
or participating in illegal
lotteries are subject to fines and
imprisonment
►Some
statues exempt religious and
charity groups from lottery
prohibition – to produce revenue
for non-profit organizations
►Confidence
Games
 The victim is persuaded to trust
the swindler with the victim’s
money in hopes of a quick gain
Ex. Pyramid schemes
4. Unfair Pricing and Service
►
Misrepresenting…
 Goods being sold at a considerable
discount
 Good being sold at wholesale price
 Goods as being free when
purchased with another at an
inflated price
5. Mislabeled Goods
►Size
and shape of container may
not be misleading
►Certain products must carry
warning labels
►Selling used articles as new or in
better condition than they actually
are
Other Unfair Trade Practices
►Using
a brand name/trademark so
similar to a competitor’s that it
confuses the public
►Sending
unordered merchandise
and demanding payment or return
 Recipient is under no legal obligation
to return or pay!
Protection Through
Action by the
Consumer
Chapter 14 – section 2
Product Liability
The responsibility to
compensate buyers, users
and even bystanders for
injuries caused by a
defective product
Product Liability
May be based on
(1)
(2)
(3)
(4)
fraud
negligence
breach of warranty or
strict liability
Strict Liability is a
liability that exists even if
the defendant is not
negligent
Warranty
An assurance that the seller
makes about the product’s
quality or performance
1.
Express Warranty – An assurance
of quality or promise of
performance explicitly made
(plainly stated) by the seller
2.
Implied Warranty – An obligation
imposed by law on all sellers
(assumed by the buyer at time of
sale)
Requirements for
Express Warranties
There are 9 requirements of
information to be included for
express warranties to be valid
►
See pgs 254 and 255 in text
Full vs. Limited Warranties
►Full
Warranty – an express warranty
that obligates the seller to repair or
replace without cost within a
reasonable amount of time
►Limited
Warranty – any warranty that
provides less protection than full (ie.
Customer pays for labor)
Puffing – enthusiastic
overstatements made by sellers
(exaggerated sales talk)
 Such words are not grounds for
warranties or statements of fact
 CAVEAT EMPTOR!!!
Warranty against Encumbrances
►Implied
Warranty
►Seller’s warranty that the goods
are free of all encumbrances
(claims of third parties, such as
unpaid balances)
Warranty of Merchantability
►Requires
that the goods be
fit for the ordinary purposes
for which such goods are
used
Disclaimer
►A
notice of exclusion
►Items sold “as is”
►Seller is free of all obligation
Lemon Laws
►Typically
protects consumers
of chronically defective
vehicles
►May extend to other consumer
products
Lemon Laws
 Consumer returns vehicle for
repair of major defect
 Dealership fails to repair after
several attempts (usually 3 or
more)
 Consumer requests refund – can
sue if request not met