Book Notes for Final Chapter 24 Consumer Law Advertising o Deceptive Advertising Reasonable consumer would be misled by the advertising claim Puffery Vague generalities and obvious exaggerations are permissible and not considered deceptive Bait and Switch Advertising of a product at an attractively low price to lure customers in to buy more expensive items Ex Mink coat Limited Supply Online Deceptive Advertising FTC monitors websites for deceptive claims involving everything from medical treatments to exercise equipment All ads online and offline must be truthful and not misleading Claims made in an ad must be substantiated o Advertisers must have evidence to back up Ads cannot be unfair o Likely to cause substantial consumer inquiry Examples General Mills Cereal helps kid s immunity Cars 35 miles gallon o EPA information in best conditions Greatest invention since sliced bread FTC is charged with enforcing federal laws against deceptive o Puffery o Use of Celebrity Must use product if enforcing Infomercials o FTC Actions Against Deceptive Advertising advertising Issue Complaint Orders Issue Cease and Desist Orders Counter advertising Multiple product o Telemarketing and Electronic Advertising Telephone Consumer Protection Act Prohibits telephone solicitations using automated dialing systems or a pre recorded voice or unsolicited faxes Telemarketing and Consumer Fraud and Abuse Prevention Act 1994 Requires telemarketers to identify themselves and not misrepresent facts Does not include political charities or do not call Labeling and Packaging o Labeling must be accurate Must use words that are easily understood by the ordinary consumer o Federal Statutes Product labeling and packaging are regulated by See PPT Flammable Fabrics Act of 1953 Fair Packaging and Labeling Act of 1966 Nutrition and Education Act of 1990 Smokeless Tobacco Health Education Act of 1986 o Food Labeling Fair Packaging and Labeling Act requires food and product labels identify Product Net quantity of the contents and in the number of servings is stated o Laws SEE PPT Must be accurate and use easy to understand words giant Describe raw materials or contains warnings Allergies Nuts Sales o Door to door FTC and many states require that consumers have a post sale cooling off period during with they can cancel their purchase without obligation o Telephone and Mail Order FTC requires merchants to ship orders within 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 Postal Reorganization Act 1970 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 o Online Credit Protection FTC and other federal agencies have brought a number of enforcement against deceptive online sales See PPT o Truth in Lending Act Disclosure law Only applies to people who in the ordinary course of business lend funds sell on credit or arrange an extension of credit Disclosure requirements Equal Credit Opportunity Requires credit be extended without regard to race sex color national origin age or marital status Credit card rules Limits consumer liability for credit card debt in cases of stolen cards to 50 Additional Credit Card Protections 2010 Company may not retroactively increase interest rates on existing card balances unless the account is 60 days delinquent Company must provide 45 advance notice before changing terms Monthly bills must be sent to cardholders 21 days before due Interest rate charged may not increase except in specific situations Company may not charge over limit fees except in specified situations If customer has balances at different interest rates payments in excess of the minimum amount due must be applied first to the balance with the highest rate Company may not compute finance double charges o Fair Credit Reporting Act Protects consumers against inaccurate credit reporting and requires lenders and creditors to correct errors Consumer notification and inaccurate information o If denied consumer has right to source of information o Remedies for Violations o Fair and Accurate Credit Transactions Act Purpose is to combat identity theft Allows consumers can place an alert on national fraud alert Requires major credit companies provide free credit report Allows consumers victimized by identity theft to rebuild their system credit o Fair Debt Collection Practices Act Prohibited Debt Collection Tactics Contact the debtor at the debtor s place of employment if the debtor s employer objects Contact the debtor during inconvenient or unusual times or at any time the debtor is being represented by an attorney Contact third parties other than debtor s parents spouse or financial adviser about payment of a debt unless a court authorizes such action Harass or intimidate the debtor or make false or misleading statements Communicate with the debtor at any time after receiving notice that the debtor is refusing to pay the debt except to advise the debtor of further action to be taken by the collection agency Notification and Bona Fide Errors FDCPA requires collection agency to include a validation notice to debtor Bona fide errors is a defense against violations Cell phone numbers can now be found o Garnishment of Wages Procedure by which a creditor may collect on a debt by directly attaching or seizing a portion of debtor s assets or paycheck Some states prohibit garnishment except for child support and court approved spousal maintenance Consumer Health and Safety o Federal Food Drug and Cosmetic Act Statute protects consumers against adulterated and misbranded foods and drugs Also charges FDA ensuring drugs are safe o Consumer Product Safety Act Created the Consumer Product Safety Commission which has broad regulatory authority over the safety of consumer products including Setting SEE PPT Ban manufacture and sale of any product that the commission believes poses an unreasonable risk to consumers Remove from market any products it belies to be imminently hazardous and issue recalls Require manufacturers to report on any products already sold or intended for sale if the products have proved to be hazardous Administer other product safety legislation Child Protection and Toy Safety Act o Notification Requirements Immediately if manufacturers received information about a defective product