Business Law Ch. 32- Consumer Protection

Who is liable under consumer protection statutes?

- those who are liable for violations of consumer protection situations are persons or enterprises that regularly enter into the transaction in which the injured consumer was involved. - people/companies who interact with consumers are subject to the laws.

punitive damages

additional damages beyond compensatory damages and maybe a % of the company's net worth.

limitations on credit- subprime predatory lending

subprime lending market- credit market makes loans to consumers who have bankruptcies, no credit history, low-to-morderate incomes, or a poor credit history - lower loan amounts, higher interest rates, hard to read contacts - predatory lending- regulated by both the states and the federal gov. enables the loan company to be able to take your property away.

When is there liability under consumer protection statutes?

- Consumer protection laws list the types of conduct that are prohibited as well as failures to act properly that are harmful to consumers. - ex- deceptive advertising is prohibited - Consumer protection statutes do not require proof of intent. Sellers can't mislead consumers. - Consumers have a lot of protection when there are omissions of material information, or they are mislead, but this does not protect consumers from their NEGLIGENCE.

Protection of credit standing and reputation

- FCRA applies to consumer credit- credit for personal/family use - Fair credit reporting act

Government agency action

- administrative agencies that are responsible to enforce the laws and regulations have the power to help consumers. ex- FTC can file for false advertising and make them refund consumers.

action by consumer

- consumer can recover by pulling a lawsuit against the company. - The consumer product safety act of 1972 authorizes any interested person to bring a civil action to enforce a consumer product safety rule and certain orders of the consumer product safety commission.

improper debt collection methods

- fault of agent or employee: creditor is liable to the debtor for damages for unlawful conduct by the collector - Fair debt collection practices act- FDCPA- prevents improper practices in the collection by 3rd parties of debts incurred for personal, family, or household purposes - collection letters

What remedies do consumers have?

- often it isn't worth calling for a consumer protection lawsuit because the price of litigation and then burden of proof are high. - class action suits provide groups of consumers options for pursuing remedies that they might not be able to pursue (due to the costs) if they were acting alone. The group could get a % of money from the company that violated their rights. - Consumer statutes provide steps for consumers to try to resolve their problems with businesses involved.

What are the civil and criminal penalties under consumer protection statutes?

- only certain government agencies and attorney generals can seek criminal and civil penalties against those who violate consumer protection laws. - people can recover damages, or agency/attorney general can use the penalties to pay consumers

home-solicited sales ?

- sale of $25 or more can be canceled within 3 business days of the contract - this protects consumers when salespeople come to their homes - right of recession can be exercised

replacement or refund

- some consumer protection laws require a replacement or refund or repair

credit disclosures

APR- annual percentage rate disclosed - more than 4 installment payments, it's subject to TILA (truth in lending act) - Dodd Frank wall street reform and consumer protection act-- created the consumer financial protection bureau. - deals with roles of the FED and FTC and other agencies--consumer credit laws, regulation, issues

Form of contract

Consumer protection laws regulate form of the contract. must be readable and clear.

selling methods

Consumer protection regulates methods used to sell goods and services

corrective advertising

FTC may require new advertising to replace the old and to correct the statements so consumers know the truth. - FTC can halt ads that it finds to be deceptive. - is this breaking the 1st amendment- free speech?

labeling

FTC prohibits labeling or marking products with terms like jumbo, giant, and full which exaggerate and mislead

unauthorized use

a cardholder is not liable for more than $50 for the unauthorized use of a credit card - user isn't liable for more than $50 - may be a late payment fee

Areas of Consumer protection

advertising, deception, corrective advertising, labeling, selling methods, home-solicited sales, telemarketing fraud

consumer protection- EXPANSION

began with the goal of protecting persons of limited means and limited knowledge. - protecting the little guy - has expanded a lot over the past 20 years - consumer protection statutes provide faster remedies for consumers. Consumers don't need to establish that a tort has been committed or establish actual damage.

unconscionabilility

can't sell goods at unconscionably excessive price

compensatory damages

compensate the consumer for the loss (some consumer protection laws authorize the recovery of these) - put the customer back in the good position they once were

The Consumer contract

consumer contracts are regulated in different ways

preservation of consumer defenses

consumer protection laws prohibit a consumer from waiving or giving up any defense provided by law. - the consumer is not required to pay for the goods or services or is required to pay a reduced amount when it's defective.

consumer

courts have held that a person, company buying stuff, and a city buying stuff are all consumers under the law.

payments

credit card payments are tightly regulated

equal credit opportunity act

credit discrimination- unlawful to discriminate against an applicant for credit based on race, sex, etc. - you can refuse them with a written explanation; criminal record is permitted

deception

deception, not fraud - deception statutes represent a shift in the law and public policy. - Is the buyer going to be misled by an ad? - protects consumers - FTC requires records of statements made in ads and data

real estate sales-

development statement- nearly anyone trying to sell real estate needs this - property report- condensed version of the development statement filed with the secretary of HUD

gift cards

expiration dates, must be 5 years at least to use

correction of credit errors

file dispute online

credit cards

have extensive federal regulations of use and rights of consumers with credit cards - can't issue unsolicited credit cards - credit cards for people under 21 - need parent signature

protection from false information

hearsay evidence- an out-of-court statement introduced to prove the truth of matter asserted therein - untrustworthy

telemarketing fraud

high-pressure selling by phone - Telephone consumer protection act (TPCA) - restricts marketing calls without the ok of the person, and in emergency lines - national do not call registry

product safety

laws protect the health and safety of consumers - manufacturing laws and safety standards for products

Automobile lemon laws

protect car buyers for personal, family, or household use. - lemon = car that can't be in warranted condition within a period of time or after a number of repair attempts - lemon laws help consumers get bargaining power/lower prices, and reduce the power of manufacturers to escape customer complaints.

Other consumer protections

protect purchasers of real estate, buyers of services, and prospective franchises

franchises

protect the franchisees from franchisors.

consumer service contract

same as sale of goods contract if 1) payment is made in credit or installments 2) count financed does not exceed 25 k

Attorney general can take action

state attorney generals can bring actions on behalf of consumers who are victims of fraud or bad conduct. - this is a civil suit, not a criminal suit. - attorney general like the agency can impose a penalty for a violation.

advertising

statutes prohibit fraudulent advertising. - FTC stops false ads

who is a consumer?

statutory definition of a consumer must be satisfied. - Some consumer protection statutes do not apply when a buyer is purchasing goods for resale.