Blaw 371 ch 19 - Consumer Protection

fair credit reporting

part of CCPA: Credit-reporting agencies must provide accurate information in consumer reports

equal credit opportunity

part of CCPA: Creditors may not use certain personal characteristics, such as sex or race, in determining a person's creditworthiness

truth in lending act (TILA)

part of CCPA: Creditors must disclose all relevant terms in credit transactions

fair credit billing

part of CCPA: Procedures for correcting inaccurate and disputed bills and charges must be provided

advertising substantiation program

requires advertisers and advertising agencies to have a reasonable basis before they make claims

Regulation Z

written by the FED to implement the Truth-in-Lending Act, specifies items that must be listed if part of the finance charge: 1. Service, activity, carrying, and transaction charges 2. Loan fees and points (charges for making the loan) 3. Charges for credit life and credit accident and health insurance 4. In non-real-estate transactions, the fees for credit reports and appraisals.

advertising

"the act.... of attracting public notice and attention. It includes all forms of public announcement that are intended to aid... in the furtherance... of directing attention to business, commodity, service or entertainment."

Section 5 of FTC Act

"unfair and deceptive acts or practices in or affecting commerce are hereby declared unlawful:

FTC policy on advertising

-Advertising must be truthful and nondeceptive -Advertisers must have evidence to back up their claims -Advertisements cannot be unfair

Fair Debt Collection Practices Act (FDCPA)

-helps reduce unfair, deceptive, and abusive collection techniques used by some debt collectors -regulates debt collection agencies

Fair Credit Billing Act (FCBA)

-included in TILA -addresses the following problems: 1. In case of a billing error, a consumer must notify the creditor in writing within 60 days of the billing of a disputed charge. Ther creditor must answer the complaint within 30 days of receipt and has 90 days to resolve the problem and notify the consumer 2. It prohibits the mailing of unsolicited credit cards 3. It establishes procedures to report lost or stolen credit cars. Liability for unauthorized charges in $50

Fair Credit Reporting Act (FCRA)

-regulates credit bureaus (consumer reporting agencies.) It focuses on confidentiality and accuracy in consumer credit reports.

Fair and Accurate Credit Transactions Act (FACT Act)

-requires the major credit reporting services (Experian, TransUnion, and Equifax) to allow consumers to see their credit reports annually for free. -primary concern of the FACT Act was to help deal with identity theft, which affects millions of people annually.

reasonable basis (advertising)

-the kind of product -the type of claim -the consequences of a false claim and the benefits of a truthful claim -the cost of developing substantiation for the claim -the amount of substantiation that experts believe is reasonable

Consumer Leasing Act

-under TILA -This act does for consumer leases, such as automobiles, what TILA does for consumer credit; that is, it provides standard terms for leases

Food Safety Modernization Act (FSMA)

Strengthens FDA food safety control powers. FDA has issued new standards, but full implementation, which includes more frequent inspection of food facilities, domestic and foreign, is still a work in progress. Focuses on prevention rather than reaction to problems.

Consumer Credit Protection Act (CCPA) 1968

This is an umbrella law containing several credit-related laws. The laws provide rights for consumers and put requirements on creditors

deception policy statement

Three-part test for deciding whether a particular act or practice is deceptive. There is deception if the following are true: 1. There is a misrepresentation or omission of information in a communication to consumers 2. The deception is likely to mislead a reasonable consumer 3. The deception is material; that is, it is likely to be misleading to the detriment of consumers

Credit Cost Disclosure

Transactions covered by TILA must disclose the credit costs in dollars (the finance charge) and the interest rate of that finance charge (the annual percentage rate, or APR). These items must be disclosed prominently in the agreement.

Code of Federal Regulations

When a new trade regulation rule is finalized, it becomes part of the "______ __ ________ ___________"

fair debt collection practices

part of CCPA: Abusive debt collection techniques are prohibited

Federal Food, Drug, and Cosmetic Act of 1938

prohibits the sale of any drug until the FDA gives approval.

establishment claim

suggests that a product's effectiveness or superiority has been scientifically established

Federal Trade Commission (FTC)

was established a century ago to help enforce the anti-trust laws, but also devotes resources to its Bureau of Consumer Protection, which handles matters such as deceptive business advertising and marketing practices.

Chuway v. National Action Financial Service (2004)

-a debt collector mailed a debtor a letter that identified a creditor (a credit card statement) and stated that the "balance" on the debt was $367.52 -Debtor sued the debt collector for violating the FDCPA because the communication that they received was not proper under the act. -District court granted summary judgment for debt collector because the letter stated "the amount of the debt" and so did not violate the statute. -the debtor appealed -judgment was reversed and remanded

standards for health care claims

-fresh=raw food that has not been processed, frozen, or preserved. -low fat=three or fewer grams of fat per serving and per 100 grams of food -low calorie=fewer than 40 calories per serving and per 100 grams of food -light or lite=must have one-third fewer calories than comparable products -organic=must meet FDA and USDA specifications

Federal Register

As with most regulations, a proposed rule must be published in the "_______ _______" so interest parties may comment on it before it is finalized.

The Mail Order Rule

If a company sells merchandise by mail, it must ship goods in the time stated in its ads

learned intermediary doctrine

If a physician ignores the instructions and changes the recommended dosage, or gives a drug in a situation that is not proper, and an injury results, the drug manufacturer is often shielded from liability by this...

The Food and Drug Administration (FDA) 1927

is charged with monitoring food and drug safety

Wyeth v. Levine (2009)

-Diane had Phenergan administered by IV-Push into a vein to treat nausea. Because the needle penetrated an artery, she developed gangrene, a known problem from the IV-push injection. As a result, her forearm and hand were amputated. Diane sued company in state court in tort for failure to warn. Contended that the label on the drug was defective because it did not instruct that IV-drip method should be used instead of IV-Push. -Trial court found for Diane -company appealed, contending that the FDA approval of the drug use label under the Food, Drug, and Cosmetic Act (FDCA) should prevent the claim under state law -Can state tort law impose warning-label standards on FDA-approved drugs that vary from those required by the FDA? -Question is whether the FDA's drug labeling judgments "preempt state law product liability claims premised on the theory that different labeling judgments were necessary to make drugs reasonably safe for use...." -state law offers an additional and important, layer of consumer protection that complements FDA regulation... -The judgment of Vermont SC is affirmed, manufacturer needs to update info and has more tools to see developments and risks and is ultimately responsible for lack of labeling.

Schuchmann v. Air Services Heating and Air Conditioning (2006)

-Guy bought a heating and air condition unit for his house with a "lifetime warranty" from a company in 1998. Up to 2003, the company maintained the system when needed but then refused to honor the warranty, saying it was too costly. -The guy sued the company arguing that the company's action violed the Missouri Merchandising Practices Act (MMPA). -The court awarded the guy $1,047 plus costs. -Company appealed -Affirmed

Federal Trade Commission v. Wyndham Worldwide Corp. (2015)

-Hotel Chain is connected to a management system to process consumer credit information through its data center. The FTC alleged that they engaged in cybersecurity practices that allowed personal data to be stolen. -FTC sued, contending that the company engaged in unfair and deceptive trade practices by failing to maintain reasonable and appropriate data security for its consumers. -Company moved to dismiss the case contending that it was the victim of hacking, not the party that caused the problems. -trial court refused to dismiss -Company appealed -Circuit Judge affrimed the District Court's decision because the company should have had a more sound security system in place to protect consumers

Pom Wonderful, LLC v. Federal Trade Commission (2015)

-POM ran ads claiming that its product did all these wonderful things like curing ailments -FTC found there to be false and unsubstantiated misrepresentations. -Ordered POM to cease and desist from making misleading claims about the health benefits of POM and from running ads asserting the products treat or prevent disease unless in possession of at least two randomized, controlled, human clinical trials demonstrating statistically significant results. -POM petitioned for review -found that POM's ads are entitled to no First Amendment protection because they are "deceptive and misleading"

Drug Effectiveness Testing

A new compound averages three to six years in the making before the preclinical development stage. Only about 1 in 5,000 new compounds gets that far. The potential drug then goes to Phase I tests on 100 or fewer patients to determine the maximum tolerated dosage and likely side effects. If the drug still shows promise, in Phase II, several hundred patients are tested to identify stages of the disease affected by the therapy. If approved, it goes to Phase III for testing on several thousand patients so comparisons can be made to existing drugs and placebos. Phase I-III takes and average of 8-9 years. 90% dont make it to market

Lanham Act

Allows a private party to bring a civil suit against a false advertiser. Firms may request an injunction against misleading advertising. Firms may also threaten a competitor with a "______ ___" suit to get them to change advertising before suit is filed. Helps resolve disputes without litigation at times.

Class II medical devices

Devices are subject to special controls. In addition to assurances about manufacturing quality and proper labeling, there are performance standards and surveillance of the devices once in use. The devices are generally nonivasive, including X-Rays machines, wheelchairs, and surgical materials.

Class III medical devices

Devices are the most controlled. The FDA must give approval prior to marketing, and the agency tracks the devices once on the market to watch for problems that may require recalls. Examples include heart valves and bone implants.

Class I medical device

Devices present minimal potential for harm to the user and are usually simple, such as bandages or gloves. The makers are registered with the FDA. Must be properly manufactured and labeled, but they are not subject to extensive controls.

The Consumer Financial Protection Bureau

Dodd Frank Act

Medical Devices

FDA is also responsible for the oversight of these. A "________ _______" is an instrument, machine, implant, or other article used in the diagnosis or treatment of a disease in humans or animals.

Consumer Credit Card Act (Credit Card Accountability Responsibility and Disclosure Act of 2009)

Issuers may not raise ir on an existing balance and a promotional rate must last at least 6 months. -When companies raise rates they must give cardholders 45 days' notice -payments made on a card must be applied to the highest ir portion of the debt first --more. Page 471

R-Value Rule

Standardizes the insulation capacity of insulating materials... the FTC helped consumers compare different products offered by different companies

Red Flag Rule

The FACT Act required the FTC to come up with the regulation that requires all creditors-which means any business that collects payments, including physicians and other service providers- to have proactive protections in place. Must be procedures to catch "____ _____" that tip one off about possible info threats Red flags fall into five categories: -Alerts, notifications, or warnings from a conumer reporting agency -Suspicious documents related to credit accounts -Dubious identifying information, such as a peculiar address -Unusual use of- or activity related to - a particular account -Notices from customers, victims of identity theft, law enforcement authorities, or other businesses about possible identity thefts related to accounts

Heintz v. Jenkins

The Supreme Court held that the FDCPA "applies to attorneys who regularly engage in consumer-debt-collection activity."

Federal Food, Drug, and Cosmetic Act of 1938

The act greatly expanded the regulatory power of the FDA by providing the agency with the power not only to extend the standards for foods byond certian goods but also to prohibit false advertising of drugs, classify unsafe food, add new enforcement powers, form inspection systems, and set safe levels of additives in foods.

Disclosure Requirements

The consumer leasing act specifies information that must be given: -number, amount, and period of the payments and the payment total -express warranties offered by the leasing party or the manufacturer of the leased property -identification of the party responsible for maintaining the leased property whether the consumer has an option to buy the leased property and, if so, the terms of that option -what happens if the consumer terminates the lease before it expires

unfairness

consumer injury standard: 1. It causes substantial harm to consumers 2. The injury is harmful in its net effects 3. Consumers cannot reasonably avoid injury

consent decree

contains the terms of a settlement, which frequently include prohibition of certain practices, redress for consumers, and payment of civil penalties.

prescription drugs

drugs that could be obtained only with the permission of a physician

orphan drugs

drugs that may be developed without quite as lengthy a review process as is normally required. these drugs address uncommon diseases and medical problems.

truth in lending act (TILA)

first law to come under the CCPA, requires creditors in consumer transactions to disclose basic information about the cost and terms of credit to the consumer-borrower. Only covers people, not businesses. Does not apply to consumer credit transactions for more than $25,000, except real estate purchases.

Kids' Online Privacy Rule (COPPA)

focuses on websites, online services, and apps directed at children under age 13. Requires site and service operators to obtain parental consent before collecting personal information about a child.

US Department of Agriculture (USDA)

has primary responsibility for sanitation of meat, poultry, and eggs. Works closely with the FDA, Centers for Disease Control (CDC), and the Environmental Protection Agency (EPA) on food safety issues.

Electronic Fund Transfer Act-regulation E

provides that the consumer's liability is no more than $50 if the financial institution is notified within two days after the consumer learns of the theft. The consumers liability becomes $500 as long as the financial institution is notified within 60 days. If the consumer does not report within 60 days after receiving the first statement containing unauthorized transers, the consumer is liable for all amounts after that.

Kefauver Amendment of 1962

requires the FDA to approve drugs based on their proven effectiveness- not just on their safety.

Food Quality Protection Act

states that the FDA is to ensure a "reasonable certainty of no harm" (no more than a one-in-a-million lifetime chance of cancer) from any source that affects foods, raw or processed, whether added directly, such as food coloring, or indirectly, such as pesticide residues. Also expanded FDA jurisdiction to thousands of pesticides used in food control.

efficacy claim

suggests that a product successfully performs the advertised function or yields the advertised benefit, but includes no suggestion of scientific proof of the product's effectiveness.

Section 18 of the FTC Act

the Commission may issue trade regulation rules that set boundaries for practices when problems are common.

nutrition labeling

the FDA regulated "_____ _____". The "_____ ______" and Education Act requires the FDA to issue nutrition labels for hundreds of thousands of products.

Equal Credit Opportunity Act (ECOA)

was added to the CCPA to prohibit credit discrimination on the basis of race, sex, color, religion, national origin, marital status, receipt of public benefits, the good-faith exercise of the applicant's rights under any part of the CCPA, or age (provided the applicant is old enough to sign a contract). Creditors are prohibited from using such criteria, known as prohibited bases, in determining creditworthiness.