Business Law Chapter 8

5 elements show proof of false advertising

A false claim is made about a product The claim deceives or is likely to deceive a buyer The deception will affect the buying decision The advertising involves interstate commerce The falsehood has or can produce economic injury

Express Warranty (in the sale of goods)

A merchant's promise or guarantee upon which a buyer may reasonably rely when purchasing a product

Credit report

A person's report of financial and credit info

Bait and Switch

A product is advertised with the design to encourage the buyer to purchase another, usually higher priced, product

Implied warranty of mechantability

A promise that the goods sold conform to ordinary standards and that they are of the same average grade, quality, and value as similar goods sold under similar circumstances. Seller is motivated to inspect products and not sell defective products Seller is protected from claims of product failures for uses never intended for the product

Implied warranty of fitness for a particular purpose

A seller promise that the goods will work for the purpose the buyer intends when the buyer relies on the seller's judgement and skill

Disclaimer

A sellers statement denying the offer of a warranty on a product Required to be conspicuous and include phrases that clarify a lack or warranty

Cease and Desist Order

Advertiser is enjoined - stopped - from making false claims

Flawed and Insignificant Research Advertisement

Advertising claims unsupported by valid research or testing methods

Limited warranty

Any promise short of the full warranty and must be conspicuously stated

Powers of the FDA

Approve new drugs by showing them to be safe and effective to relieve or remedy a medical conditions (FDA relies on manufacturers to show evidence that a drug is safe and effective; test data is reviewed by the FDA for approval or rejection. ) Eliminate adulterated food from entering or continuing in the marketplace (FDA inspects food manufacruting; allows certain levels of contaminants)

Credit Reporting Agencies

CRAS must provide a consumer with a copy of the financial and credit info it has on file in a credit report Must take steps to determine the accuracy of info when a consumer disputes that info If the consumer info is found to be inaccurate, the CRA must be removed from the credit report

Consequences of Deceptive Advertising

Cease and Disist Order Corrective Advertising Money Damages

Fair Debt Collection Practices Act

Congress enacted the FDCPA because creditors were using "abusive, deceptive, and unfair debt collection practices" against consumers Consumers have certain rights: Consumers may demand accurate info about debt validity and payoff amounts Consumers may also defer all collection communications to an attorney

National Environmental Policy Act

Established in 1969, NEPA pursues the following: Declare national policy which will encourage productive and enjoyable harmony between man and his environment Promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man Enrich the understanding of the ecological systems and natural resources important to the Nation

Food, Drug, and Cosmetic Act

FDCA created the Food and Drug Administration which is: responsible for protecting and promoting public health through the regulation and supervision of: Labeling Diet supplements Radiation devices Vaccines Cosmetics Food Safety Prescriptions Biopharma-ceuticals vet products OTC drugs Blood transfusions Tobacco Medical devices

Forms of Deceptive Advertising

Failure to disclose Flawed and Insignificant research ads Disparagement Bait and Switch Reproduction, counterfeit, or imitation of the trade or service mark of another firm in a way which is likely to confuse a targeted consumer

Corrective Advertising Order

False or misleading or incomplete claims will be corrected with affirmative advertising to make amends

Disparagement

False statements about a competitor's product or service

types of Implied warranites

Good title Implied warranty of title Implied warranty of merchantability Implied warranty of fitness for a particular purpose

The Magnuson-Moss Act of 1975

Governs express warranties for consumer products Makes product warranties easier for consumers to understand (requires plain, understandable language) Gives the Federal Trade Commission power to enforce warranties

Electronic Injury Surveilance System

Hosted by the CPSC where it gathers injury data from hospital emergency rooms around the nation

Environmental Impact Statements

How NEPA assesses potential and existing environmental risks for major federal action EIS requires project proponets to do the following: Analyze the environment which is considered for impact List what resources will be used ID/explain the negative effects to the environment from the proposed action Consider less adverse alternative Conduct a cost-benefits analysis on the project and alternatives in env terms

Sales Talk

Hyperbolic statements about a product - is not an express warranty

Money damages

If the advertiser engages in fraud and consumers were actually deceived and harmed economically

Functions of the Consumer Products Safety Commission

Inspects consumer products Bands dangerous products not yet in the marketplace Issues recalls for those products in the marketplace Hosts the Electronic Injury Surveillance System, which gathers injury data from hospital emergency rooms around the nation Operates a hotline and a website where consumers may report dangerous products Hosts a public database where consuemrs may make complaints about products Enjoins firms from producing and selling products deemed dangerous Seeks civil and criminal penalties against offending merchants and manufacturers

Implied warranty of title

Merchants make a promise that products have no charges or liabilites (liens) or patent, trademark, or copyright claims (infringements).

Express Warranty examples

Oral and written representation of promise Descriptions of goods or servies Representative samples and models Proof of a hisotry of the past quality of the good

Equal Credit Opportunity Act

Prohibits creditors from discriminating in the offer of services to any person on the basis of race, color, religion, national orgin, sex, marital status, or age

Good title

Promsise that he or she is the rightful owner of the goods

Fair Credit Reporting Act

Protects consumers in the collection and reporting of their personal financial credit information provided by creditors to a consumer reporting agency (CRA) Experian , TransUnion, Equifax Limits the time negative info may remain on a consumer's credit report 10 years for bankruptcy info 7 years for other info

The Consumer Product Safety Act (1972)

Protects the public from unreasonaable injury from consumer products Assists consumers in weighing thhe advanctages and disadvantages of some products Develops minimum safety standards Conducts research and investigation on consumer products Carries out its functions through the Consumer Products Safety Commission

Fair Credit and Charge Card Disclosure Act

Provides for disclosure of information in the issurance and regulation of consumer credit cards by banks and other credit companies Credit card consumers must be provided, in a conspicuous way, info about ficed finance charges, the interest rates charged on credit balances, membership fees, transactions charges, and due dates for payment

Consumer Protection Safety Improvement Act

Requires mandatory testing and certification of some products

Examples of Bait and Switch

Salesperson refuses to show a customer an advertised product Management discourages salespersons from selling an advertised product Firm does not have advertised items in stock Firm does not have sufficient quantities of advertised products

Modern Protections Under the Environmental Protection Agency

The EPA has a broad authority to conduct research, enforce federal statutes and regulations, and set minimum standards for environmental pollution Clean Air Act Federal Water Pollution Control Act

Cosmetic Protections

The FDA doesn't have much authority to regluate cosmetic products 89% of the ingredients for cosmetic products have neber been evaluated for safety Only color additives must have a premarket approval Under the FDC Act, manufacturers must label cosmetics truthfully and correctly, and products which have not been tested for safety must be labeled accordingly

When an express warranty exists

The UCC states that an express warrenty is present if the seller promises that the goods conform to an express promise Consumers may rely on package labeling as an express warranty

Failure to Disclose

The omission of a material face in an advertisement

Nuisance

The unlawful use of property in a manner that unreasonably interferes with the use or enjoyment of another person's property Specific harm had to be shown Protection for landowners, but not society at large

Common Law Environmental Protectons

Under common law, nuisance complaints were the only method of enforcing environmental protections

Credit collection firms cannot use certain collection practices

Using false info Harassing debtors Making threats Calling debtors before 8am or after 9pm Inferring that it is associated with a gov agency Contacting a debtor's family, friends, or employer to discuss debts Indicating their debt collection efforts on envelopes Collection agencies must inform debtors that it is a debt collector and outline specific info about debts

The Lanham Act

any advertising or promotion that misrepresents the nature, characteristics, qualities, or geographic orgin of goods, services, or commercial activites. deceptive advertising is illegal

Full warranty

clear written promise by the seller to cover the repair or replacement of the product, or refunt the price paid

A merchant offering a warranty must label the warranty either _______ or ______

full or limited

Implied warranty

unwritten promise by the seller which is inherent in the nature of the sales transaction rather than given through express language, and a seller may not later disclaim it