Business Law Chapter 39: Consumer and Environmental Law

The Consumer Product Safety Commission's Authority

The CPSC conducts research on the safety of individual products and maintains a clearinghouse on the risks associated with various products. The Consumer Product Safety Act authorizes the CPSC to do the following: 1. Set safety standards for consumer products. 2. Ban the manufacture and sale of any product that the commission believes poses an "unreasonable risk" to consumers. 3. Remove from the market any products it believes to be imminently hazardous. 4. Require manufacturers to report any products already sold or intended for sale that have proved to be hazardous. 5. Administer other product-safety legislation.

The Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau oversees the credit practices of banks, mortgage lenders, and credit card companies.

The Consumer Product Safety Act

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

Counteradvertising

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

What are the primary agencies that issue regulations on food labeling.

The U.S. FDA and the U.S. Department of Agriculture (USDA)

State Laws and False Advertising

State consumer-fraud statutes also prohibit false, misleading, and deceptive advertising. Recovery under a state law typically requires proof of the following elements: 1. The defendant committed a deceptive or unfair act. 2. The act was committed in the course of trade or commerce. 3. The defendant intended that others rely on the deception. 4. The plaintiff suffered actual damages proximately caused by the deception.

The Fair Credit Reporting Act

The Fair Credit Reporting Act protects consumers against inaccurate credit reporting and requires that lenders and other creditors report correct, relevant, and up-to-date information. The act provides that consumer credit reporting agencies may issue credit reports to users only for specified purposes. Anytime a consumer is denied credit or insurance on the basis of a credit report, the consumer must be notified of that fact.

Lanham Act and False Advertising Claims

The Lanham Act covers false advertising claims. To state a successful claim for false advertising under this act, a business must establish each of the following elements: 1. An injury to a commercial interest in reputation or sales. 2. Direct causation of the injury by false or deceptive advertising by a competing company. 3. A loss of business from buyers who were deceived by the advertising.

Who is responsible for enforcing the Fair Debt Collection Practices Act

The Federal Trade Commissions.

Amendments to TILA's credit card rules added the following protections:

1. A company may not retroactively increase the interest rates on existing card balances unless the account is sixty days delinquent. 2. A company must provide 45 day's notice to consumers before changing its credit card terms. 3. Monthly bills must be sent to cardholders 21 days before the due date. 4. The interest rate charged on a customer's credit card balance may not be increased except in specific situations. 5. A company may not charge fees for being over the credit card's limit except in specified situations. 6. When the 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. 7. A company may not compute finance charges based on the previous billing cycle.

What can Debt Collection Agencies Not Do

1. Contact the debtor at the debtor's place of employment. 2. Contact the debtor at inconvenient or unusual times. 3. Contact third parties other than the debtor's family or financial adviser. 4. Harass or intimidate the debtor. 5. Communicate with the debtor at any time after receiving notice that the debtor is refusing to pay the debt. A collection agency must provide a validation notice whenever it initially contacts a debtor for payment of a debt or within 5 days of that initial contact.

TRACED

Congress passed the TRACED Act, an amendment to the TCPA that broadens the definition of prohibited robocalls and requires telephone providers to offer consumers more effective robocall-blocking options. This amendment also gives the FCC the ability to impose substantial fines on individuals or business entities.

Formal Complaint

If the FTC concludes that a given advertisement is unfair or deceptive, it sends a formal complaint to the alleged offender. The company may agree to settle the complaint without further proceedings. If not, the FTC can conduct a hearing before an administrative law judge in which the company can present its defense.

The Comprehensive Environmental Response, Compensation, and Liability Act

Is also known as Superfund. It regulates the clean-up of disposal sites in which hazardous waste is leaking into the environment.

The FDA

Is responsible for ensuring that drugs are safe and effective before they are marketed to the public. The FDA also has the authority to regulate medical devices.

The Fair Debt Collection Practices Act

It attempts to curb abuses by collection agencies. This act applies only to specialized debt-collection agencies and attorneys who regularly attempt to collect debts on behalf of someone else, usually for a percentage of the amount owed.

Current guidelines set by the FTC regarding online advertising

1. All advertisements - both online and offline - must be truthful and not misleading. 2. The claims made in an ad must be substantiated. 3. Ads cannot be unfair. 4. Ads must disclose relevant limitations. 5. Required disclosures must be "clear and conspicuous."

The Fair Packaging and Label Act requires that food product labels identify

1. The Product 2. The net quantity of the contents 3. The manufacturer 4. The packager or distributor.

Toxic Torts

A civil wrong arising from exposure to a toxic substance, such as asbestos radiation, or hazardous waste.

Nuisance

A common law doctrine under which persons may be held liable for using their property in a manner that unreasonably interferes with others' rights to use or enjoy their own property.

Environmental Impact Statement (EIS)

A formal analysis required for any major federal action that will significantly affect the quality of the environment to determine the action's impact and explore alternatives. An EIS must analyze the following: 1. The impact that the action will have on the environment. 2. Any adverse effects on the environment and alternative actions that might be taken. 3. Irreversible effects the action might generate.

Potentially Responsible Party (PRP)

A party liable for the costs of cleaning up a hazardous waste disposal site under the Comprehensive Environmental Response, Compensation, and Liability Act.

Regulation Z

A set of rules issued by the Federal Reserve Board of Governors to implement the provisions of the Truth in Lending Act.

Bait and 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.

Consumer Law

All statutes, agency rules, and common law judicial decisions that attempt to protect the interests of consumers are classified as consumer law.

Cease and Desist Order

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

Do Not Call Registry

An amendment to the TSR established the national Do Not Call Registry. Telemarketers must refrain from calling consumers who have placed their names on the list.

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.

Deceptive Advertising and Cease and Desist Order

If the FTC succeeds in proving that an advertisement is unfair or deceptive, it usually issues a cease and desist order requiring the company to stop the challenged advertising.

The Equal Credit Opportunity Act (ECOA)

It amended the Truth in Lending Act. The ECOA prohibits the denial of credit solely on the basis of race, religion, national origin, color, gender, marital status, or age. This act also prohibits credit discrimination on the basis of whether an individual receives certain forms of income, such as public-assistance benefits.

The FTC's Telemarketing Sales Rule (TSR)

It requires a telemarketer to identify the seller's name, describe the product being sold, and disclose all material facts related to the sale (such as the total cost of the goods being sold).

"Cooling-Off" Laws

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

The FTC's Mail, Internet, or Telephone Merchandise Rule

Merchants must ship orders within the time promised in their advertisements and must notify consumers when orders cannot be shipped on time.

The Federal Trade Commission Act

One of the most important federal consumer protection laws is the Federal Trade Commission Act. The Act created the Federal Trade Commission (FTC) to carry out the broadly stated goal of preventing unfair and deceptive trade practices, including deceptive advertising.

Truth in Lending Act provisions

One provision limits the liability of a cardholder to $50 per card for unauthorized charges made before the creditor was notified that the card was lost. Another provision requires credit card companies to disclose the balance computation method that is used to determine the outstanding balance and to state when finance charges being to accrue.

The Food Safety Modernization Act (FMSA)

Provides Congress with greater control over the U.S. food safety system in regard to the salmonella or e. coli bacteria food outbreak. The goal of the modernization act was to shift the focus of federal regulators from responding to incidents of contamination to preventing them. The act also gives the FDA authority to directly recall any food products that it suspects are tainted, rather than relying on the producers to recall items.

What protects trademarks?

The Lanham Act.

Telephone Consumer Protection Act (TCPA)

The Telephone Consumer Protection Act (TCPA) prohibits telephone solicitation using an automatic telephone dialing system or a prerecorded voice. It is enforced by the Federal Communications Commission. Additionally, most states have statutes regulating telephone solicitation.

Truth in Lending Act

The Truth in Lending Act is the name commonly given to Title 1 of the Consumer Credit Protection Act (CCPA). It is basically a disclosure law. It is administered by the Federal Reserve Board and 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.

The Federal Food, Drug, and Cosmetic Act.

The act protects consumers against adulterated (contaminated) and misbranded foods and drugs. It established food standards, specified safe levels of potentially hazardous food additives, and provided guidelines for advertising and labeling food products.

Caloric Content of Restaurant Foods

The health care reform bill enacted in 2010 (the Affordable Care Act) included provisions aimed at combating the problem of obesity in the U.S. All restaurant chains with 20 or more locations are now required to post the caloric content of the foods on their menus so that customers will know how many calories the foods contain.

Health Care Reforms

The health care reforms (Obamacare) enacted in 2010 gave Americans new rights and benefits with regard to health care. 1.) Expanded Coverage for Children and Seniors - allows young adults (under age 26) to remain covered by their parent's health-insurance policies. 2.) Controlling Costs of Health Insurance -In an attempt to control the rising costs of health insurance, the laws placed restrictions on insurance companies. -Insurance companies must spend at least 85% of all premium dollars collected from large employers (80% of premiums collected from individuals and small employers) on benefits and quality improvement.

Fair and Accurate Credit Transactions

Try to combat identify theft. The act established a national fraud alert system so that consumers who suspect that they have been or may be victimized by identify theft can place an alert in their credit files.

The Resource Conservation and Recovery Act

Was passed in reaction to concern over the effects of hazardous waste materials on the environment.

Damages when Consumers are Injured

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

The Toxic Substances Control Act

regulates chemicals and chemical compounds that are known to be toxic, such as asbestos and polychlorinated buphenyls.

The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)

regulates the use of pesticides and herbicides.