BLAW Chapter 44- Test 2

deceptive advertising

§Federal Trade Commission Act created the Federal Trade Commission to prevent unfair & deceptive trade practices, including deceptive advertising. •If reasonable consumer would be misled by advertising claim. •Vague generalities & obvious exaggerations are permissible (Puffery).

Truth-in-Lending Act (TILA)

•Disclosure law that requires sellers & lenders to disclose credit terms & loan terms so that individuals can shop around for best financing arrangements. •Applies only to those who, in ordinary course of business, lends funds, sell on credit or arrange for extension of credit. (Sales or loans between consumers not covered.) •Protects debtors who are natural persons (not corporations.)

automobile fuel economy labels

•Energy Policy & Conservation Act (EPCA) requires automakers to attach an information label to every new car. •Label must include the EPA's fuel economy estimate for vehicle.

Telephone SolicitationTelephone Consumer Protection Act

•Enforced by Federal Communications Commission. •Prohibits telephone solicitation using automatic telephone dialing system or prerecorded voice. •Illegal to transmit ads via fax without first obtaining recipient's permission.

Fraudulent TelemarketingTelemarketing & Consumer Fraud & Abuse Prevention Act

•Enforced by Federal Trade Commission (FTC) •Must identify seller's name, describe product being sold. •Disclose all material facts related to sale (e.g. cost). •Must remove consumer's name from list upon request. •Do Not Call Registry.

sales

•Require disclosure of certain terms in sales transactions & provide rules governing unsolicited merchandise. •FTC & other federal agencies have regulatory authority.

online deceptive advertising FTC Guidelines

1.Ads must be truthful & not misleading. 2.Claims made in ad must be substantiated-evidence to back up claims. 3.Ads cannot be unfair-likely to cause substantial consumer injury that consumers could not reasonably avoid & that is not outweighed by benefit to consumers or competition. 4.Ads must disclose relevant limitations & qualifying info concerning claims making. 5.Required disclosures must be "clear & conspicuous."

consumer product safety commission (CPSC) authority

1.Set safety standards for consumer products. 2.Ban manufacture & sale of any product that commission believes poses an "unreasonable risk" to consumers. 3.Remove from market any products it believes to be imminently hazardous. 4.Require manufacturers to report on any products already sold or intended for sale if products proved to be hazardous. 5.Administer other product-safety legislation.

credit protection

Consumer Financial Protection Bureau (CFPB) is agency that oversees the credit practices of banks, mortgage lenders & credit card companies.

drugs and medical devices

FDA ensures that drugs are safe & effective before marketed to public.

food labeling

Fair Packaging & Labeling Act requires food product labels to identify: 1.The product. 2.The net quantity of contents (# & size of servings). 3.The manufacturer. The packager or distributor.

claims based on half truths

Half-Truths-Presented information is true but incomplete & may lead consumers to false conclusions.

Advertising, Marketing, and Sales

Numerous federal laws define the duties of sellers & rights of consumers. •Advertising •Labels & Packaging •Sales •Food & Drugs •Product Safety Credit Protection

food safety modernization act

•Act provides greater governmental control over US food safety system. Gives FDA authority to directly recall any food products that it suspects is tainted.

bait and switch advertising

•Advertise merchandise at low prices to get customer into store, then tell customer that advertised merchandise is not in stock. Encourage customer to buy more expensive items instead. •Low price is the "bait" to lure customer into store & then, salesperson "switches" consumer to different item that is more expensive. 1.Refuses to show the advertised item. 2.Fails to have reasonable quantity of item in stock. 3.Fails to promise to deliver advertised item within reasonable time. 4.Discourages employees from selling advertised item.

claims that appear to be based on fact

•Advertising that appears to be based on factual evidence but, in fact, is not reasonably supported by evidence will be deemed defective.

Fair Debt Collection Practices Act

•Attempt to curb perceived abuses by credit agencies. •Applies only to specialized debt-collection agencies & attorneys who regularly attempt to collect debts on behalf of someone else.

consumer product safety act

•Established Consumer Product Safety Commission (CPSC). •Conducts research on safety of individual consumer products & maintains clearinghouse on risks associated with various products.

federal food, drug and cosmetic act

•Food & Drug Administration •Protects consumers against adulterated (contaminated) & misbranded foods & drugs. •Establishes food standards, specifies safe levels of potentially hazardous food additives & provides classifications of food & food advertising.

nutritional content of food products

•Labels detailing nutritional content, including # of Calories & amounts of various nutrients that food contains. •FDA & USDA regulate.

labeling and packaging laws

•Labels must be accurate. •Must use words easily understood by ordinary consumer. •Must specify raw materials used in product, if applicable. •Warnings, if appropriate.

Fair & Accurate Credit Transactions Act

•Passed to combat identity theft. •National fraud alert system. •Consumers who suspect that suspect that victim of identity theft can place alert on credit files. When establish that victim, credit reporting agency must stop reporting allegedly fraudulent account information.

cooling off laws

•Permit buyers of goods sold door to door, trade show sales Ks, Ks for home equity loans & internet purchase Ks to cancel Ks within 3 business days. •FTC requires that consumers be notified in Spanish of this right if oral negotiations for sale were in that language.

Fair Credit Reporting Act (FCRA)

•Protects consumers against inaccurate credit reporting. •Requires lenders & other creditors to report correct, relevant & up-to-date information.

caloric content of restaurant foods

•Restaurant chains with more than 20 locations are required to post caloric content of foods on menus. •Foods offered through vending machines must be labeled so consumer can see caloric content. •Restaurants must post guidelines on # of calories that average person requires daily.

marketing

•Telephone Solicitation •Fraudulent Telemarketing