Business Law 235: Chapter 24 Consumer Protection (10 Questions)

Multiple Product Order

-requires the firm to stop false advertisement for all of its products, not just the product involved in the original action

The Fair Packaging and Labeling Act requires that food products labels identify:

-the product -the net quantity of the contents -the manufacturers -the packager or distributors

"cooling off laws"

-are laws that permit the buyers of goods sold door to door to cancel their contracts within three business days

What are the FTC orders and remedies?

-cease-and-desist order -counteradvertising -multiple product order

Counteradvertising

-is a sanction that requires a company to put out a new advertisement to inform the public about the earlier misinformed or deceptive advertising claims

Cease and Desist

-is an issue done by the FTC that requires a company to stop the challenged advertising completely

What are Labeling and Packaging Laws?

-manufacturers must comply with labeling or packaging requirements for their specific products. -all labels must be accurate (not misleading) and must use words that are easily understood by the ordinary consumer -food products must bear labels detailing the nutritional content (number of calories and amounts of various nutrients that are contained)

What is the FTC Mail or Telephone Order Merchandise Rule?

-protects consumers who purchase goods via mail, internet, or phone, or fax -sellers are required to ship orders within the time promised in their advertisements and to notify consumers when orders are delayed -if sellers don't give an estimated shipping time, must be shipped within 30 days

What is the Federal Food, Drug, and Cosmetic Act?

-this act protects consumers against contaminated and misbranded foods and drugs -establishes food standards, specifics safe levels of potentially hazardous food additives, and provides classifications of foods and food advertising -responsible to ensure that drugs are safe and effective before they are marketed to the public -monitored and enforced by the the Food and Drug Administration (FDA)

What must be stated by a business under the Lanham Act to state a successful statement for false advertisement?

1. An injury to a commercial interest in reputation or sales 2. Direct causation of the injury by false or deceptive advertising 3. A loss of business from buyers who were deceived by the advertising Lanham Act protects trademarks

What are the tasks of the Consumer Product Safety Commission?

1. Set safety standards for consumer products 2. Ban the manufacture and sale of any product that pose an "unreasonable risk to consumers" 3. Remove from the market any products they believe to be hazardous 4. Requires manufacturers to report on any products already sold or intended for sale if the products have proved to be hazardous 5. Administer other product-safety legislation Can ban products Can force recalls Can fine companies

Requirements of the Fair Debt Collection Practices Act

Collection Agency may not: 1. Contact the debtor at their place of employment 2. Contact the debtor at inconvenient or unusually times 3. Contact third parties other than family and spouse 4. Use harassment or intimidation 5. Communicate with the debtor at any time after receiving notice that the debtor is refusing to pay the debt Validation Notice (30 days to dispute) only applies to specialized debt collection agencies

What does the Truth-in-Lending Act provide?

Equal credit opportunity -creditors are prohibited from discriminating on the basis of race, religion, marital status, gender, etc. Credit-card protection -credit-card users may withhold payment for a faulty product sold or an error in billing, until the dispute is resolved -liability of cardholders for unauthorized charges is limited to $50 -consumers are not liable for unauthorized charges made on unsolicited credit cards.

What is the most important federal consumer protection law?

Federal Trades Commission -their goal is to prevent unfair and deceptive trade practices

FTC Guidelines for Bait and Switch

If the seller 1. Refuses to show the advertised item 2. Fails to have a reasonable quantity in stock 3. Fails to deliver the advertised item within a reasonable time 4. Discourages employees from selling the advertised item

What are laws that congress has passed to protect consumers from telemarketing?

Telephone Consumer Protection Act (1991) prohibits: -telephone solicitation using an automatic telephone dialing system or a prerecorded voice -transmissions of advertising materials via fax without recipients permission Telemarketing Sales Rule -requires a telemarketer to identify the sellers name, describe the product being sold, and disclose all materials facts related to the sale

What transactions are included in the Truth-in-Lending Act?

Transactions Subject to Regulation Z: -retail and installment sales and loans -car loans -home improvement loans -real estate loans

Bait and Switch

a company will advertise lower prices to "bait" or lure the consumers into the store with a salesperson being instructed to "switch" the consumer to a different more expensive item

Consumer Protection Law

are all statutes, agency rules, and common law judicial decisions that serve to protect the interests of consumers -most important federal consumer protection

Truth-in-Lending Act

is a statute that regulates the credit and credit-card industry -is a disclosure law that requires sellers and lenders to disclose credit terms or loan terms in certain transactions -administered by the Federal Reserve Board

Deceptive Advertising

is advertising that occurs if a reasonable consumer would be misled by the advertising claim -claims are known as puffery -are claims that appear to be based on fact but are not, will be deemed deceptive

Calorie Content of Chain Restaurants

only applies to Restaurant Chains with 20 or more locations -same name franchises that selling the same restaurant type foods -are required to post the calorie content of the foods on their menus -are required to post guidelines on the # of calories that an average person requires daily

Fair Credit Reporting Act

this act protects consumers against inaccurate credit reporting and requires that lenders and other creditors report correct, relevant, and up to date information provides: -free verification -fixes mistakes -right to rebuttal -free annual credit reports