Business L & E chapter 22

Bait & Switch Advertising

Advertising a product at an attractive price and then telling consumers that the advertised product is not available or is of poor quality and encouraging them to purchase a more expensive item.

Deceptive Advertising

Advertising that misleads consumers, either by making unjustified claims about a product or by omitting a material fact concerning the product.

Cease & Desist Order

An administrative or judicial order prohibiting a person or business firm from conducting activities that an agency or court has deemed illegal.

What elements are needed to state a successful claim for false advertising under the lanham act

An injury to a commercial interest in reputation or sales. Direct causation of the injury by false or deceptive advertising by a competing company. A loss of business from buyers who were deceived by the advertising.

Multiple Product Order

An order requiring a firm that has engaged in deceptive advertising to cease and desist from false advertising in regard to all the firm's products.

Counteradvertising

New advertising that is undertaken to correct earlier false claims that were made about a product.

The Consumer Product Safety Act authorizes the CPSC to do the following:

Set safety standards for consumer products. Ban the manufacture and sale of any product that the commission believes poses an "unreasonable risk" to consumers. (Products banned by the CPSC have included various types of fireworks, cribs, and toys, as well as many products containing asbestos or vinyl chloride.) Remove from the market any products it believes to be imminently hazardous. The CPSC frequently works with manufacturers to voluntarily recall defective products from stores.

Federal Food, Drug, and Cosmetic Act (FDCA).

The act protects consumers against adulterated (contaminated) and misbranded foods and drugs.

Recovery under a state law typically requires proof of the following elements:

The defendant committed a deceptive or unfair act. The act was committed in the course of trade or commerce. The defendant intended that others rely on the deception. The plaintiff suffered actual damages proximately caused by the deception.

The Fair Debt Collection Practices Act (FDCPA)

Under the FDCPA, a collection agency may not do any of the following: Contact the debtor at the debtor's place of employment if the debtor's employer objects. Contact the debtor at inconvenient or unusual times (such as three o'clock in the morning), or at any time if the debtor is being represented by an attorney. Contact third parties other than the debtor's parents, spouse, or financial adviser about payment of a debt unless a court authorizes such action. Harass or intimidate the debtor (by using abusive language or threatening violence, for instance) or make false or misleading statements (such as posing as a police officer). 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.

Damages When Consumers Are Injured.

When a company's deceptive ad involves wrongful charges to consumers, the FTC may seek other remedies, including restitution. Case Example 22.4

Laws that allow buyers of goods sold in certain transactions to cancel their contracts within three business days.

cooling off law

The Consumer Product Safety Act

created a comprehensive regulatory scheme over consumer safety matters and established the Consumer Product Safety Commission (CPSC).

The Telephone Consumer Protection Act (TCPA)

prohibits telephone solicitation using an automatic telephone dialing system or a prerecorded voice.

The Fair Credit Reporting Act (FCRA)

protects consumers against inaccurate credit reporting and requires that lenders and other creditors report correct, relevant, and up-to-date information.

The Lanham Act

protects trademarks and covers false advertising claims

Food Safety Modernization Act (FSMA)

provides greater government control over the U.S. food safety system.

Regulation Z,

requirements of Regulation Z apply to any transaction involving an installment sales contract that calls for payment to be made in more than four installments.

The Energy Policy and Conservation Act (EPCA)

requires automakers to attach an information label to every new car. This label must include the Environmental Protection Agency's fuel economy estimate for the vehicle. Spotlight Case Example 22.6

Truth in Lending Act (TILA)

requires sellers and lenders to disclose credit terms or loan terms (such as the annual percentage rate, or APR, and any finance charges) so that individuals can shop around for the best financing arrangements.

Product labeling and packaging

◦Identity of Product ◦Net quantity ◦Product ingredients ◦Manufacturer information ◦Distributor information ◦Nutritional information ◦Adequate warnings