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