Chapter 5

FTC's Mail and Telephone Order Merchandise Regulations

• The buyer should receive any ordered merchandise when the seller promises to deliver it • When no date is mention, the seller must ship the merchandise no later than 30 days after receiving the order • If the consumer does not receive the ordered merchandise by the 30 day deadline, the order can be canceled and the consumer can get their money back • At least one part of the transaction must take place through the US mail in order for the rule to apply • The seller must communicate to the consumer the new shipping date through and option notice • The consumer then has the option to cancel the order and obtain a refund or agree to a new shipping day • For delays over 30 days, money must be refunded to consumers who have no given their consent to such a delay • Prepaid orders must be refunded within seven days o Exceptions to the Rules: • Mail-order photo finishing • Magazine subscriptions • Serial deliveries, except for the initial shipment • Mail order seeds and plants • COD orders • Credit orders that are not charged until the goods are ships o Regulations do not cover orders placed by telephone, fax, as well as online o Refunds for order paid by check, money order, or cash must arrive at the consumer's mailing address within 7 business days of the merchant's receipt of the cancellation o For credit cards, account must be credited within one billing cycle

Fair Credit and Charge Card Disclosure Act

o Enables consumers to comparison shop for credit cards

Odometer Fraud Law

o Odometer fraud occurs when an odometer is rolled back or disconnected and when incorrect information is given about the accuracy of the odometer reading o The odometer reading be entered on the vehicles title in all states

Fair Housing Act

o Prohibits discrimination on the basis of race, color, sex, religion, disability, familial status, or national origin in the financing, sale or rental of housing o Directly prohibits discrimination in mortgage lending

Fair Credit Billing Act (FCBA)

o Protect against billing errors and the receipt of unsatisfactory goods and services when one uses open-end credit o Provides safeguards against unsatisfactory purchases and uncooperative merchants o Protects a consumer's credit rating while the consumer is settling a dispute o Consumers may not be responsible for a charge on their account if it • Is in error • Was not made by a person authorized to use the account • Is for goods and services that were not provided or delivered according to agreement, or they were "unsatisfactory"

Identity Theft Law (under FACTA)

o You may put a 90 day one call fraud alert on your credit file by telephoning one of the three national credit reporting agencies

Negative Option Mail-order Rule of the FTC

o a consumer decision-making situation in which the consumer must notify the company that a particular selection is not desired in order to not receive it o Sellers must give certain information • How many selections you must buy, if any • How and when you can cancel your membership • How to notify the seller when you do not want the selection • When to return the negative option form to cancel shipment of a selection • Companies must give consumers at least 10 days to reject the monthly or periodic selection

Used vehicle Lemon Branding Laws

only 38 states require sellers to label lemons

Reason #1 to Challenge a Credit Bill

Consumers are not liable for the errors of others

"Do Not Call" Registry

FTC established. can stop almost all telemarketing calls o The FTC does not have regulatory authority over banks, telephone companies, airlines, insurance companies, credit unions, charities, political campaigns, and political fundraisers bans unauthorized billing

Reason #2 to Challenge a Credit Bill

It appears to be an unauthorized Charge

Informal Dispute Procedures are Encouraged

o Allows impartial people to review the arguments and evidence of the complaining consumer and the seller in an attempt to resolve the conflict about warranty service o When a warrantor has established an informal dispute procedure, the consumer must use it before taking any legal action o Consumer disputes be settled within a 40 day time period

Magnusson-Moss Warranty Act

o Authorized the federal trade commission to write regulations that interpret and implement the law, primarily through an effort to require disclosure of warranty terms o Attempts to restore a sense of fair play in the market place by giving consumers a warranty more equal to that of the sellers o Warranties often sold as promotional device o Warranty as something that limits the firm's liability o Express warranty • Written guarantee setting out specific assurances by the manufacturer or seller

Secret warranty disclosure laws for vehicles

o Automobile manufacturers have offered secret vehicle warranties to relatively few consumers that provide free repairs or reimbursement of incurred expenses when persistent problems develop beyond the traditional warranty time period o Only owners who complain the loudest get the free repairs • Policy adjustments or good will service

Home Equity Loan Consumer Protection Act

o A home equity loan • An open ended credit plan secured by the borrower's principal residence o Attempt to curb some of the abuses in the growing home equity loan market by providing borrowers with more info about eh costs such as loans o Advertisements promoting initially low "teaser" rates must display the current long term interest rate with equal prominence

Privacy Complaints

o Banking • The Office of the Comptroller of the Currency • Department of Health and Human Services • Federal Deposit Insurance Corporation

Renter's Security Deposits

o A landlord cannot collect more than one or two month's rent as a security deposit o May only deduct for unpaid rent and for "damages beyond reasonable wear and tear" o Security deposits must be returned, noting deductions, within 30 days after the tenancy ends; otherwise the renter may be entitled to double or triple damages

COD (Cash On Delivery) Rule of the Postal Service

o COD charges with a check made out to the seller instead of the Postal Service. This option enables consumers who are dissatisfied with mail-order merchandise to stop payment on a check before it is cashed

slamming

The illegal practice of switching consumers' long-distance telephone company without their permission

Fair Debt Collection Practices Act

o Aimed at eliminating abusive, deceptive, and unfair debt collection practices o Collection agencies are prohibited • From harassing debtors • Telephoning before 8 or after 9 • Misrepresenting themselves • Using profane language • Making threats • May not contact consumers at work if they are told that one's employer disapproves o Have right to request a cease of communication • Attorneys are the only ones who can make contact

Federal Anti Spam Law

Under the law, consumers are provided with a choice not to receive any further solicited messages from a sender • When sender don't honor, they are subject to civil penalties o Some states have these, but consumers are no longer allowed to sue spammers under state law

Reason #3 to Challenge a Credit Bill

Unsatisfactory Goods

Home Ownership and Equity Protection Act (HOEPA

o Aims to eliminate the unscrupulous practice of making predatory loans in the second mortgage market o Aka subprime market o Predatory lending • Is a lender action to steer cash-strapped homeowner borrowers into taking out home-equity loans and mortgages at excessive costs without regard to the homeowner's ability to repay o Discourages legitimate lenders from making such loans or buying credit contracts from the original holders of the notes o Provides remedies for victims of such unethical practices o When violations occur, victims get 3 years to cancel the transaction

Checking Accounts

o "substitute check" (special paper check image) must be accepted as proof of payment

Fair Credit Reporting Act (Now FACTA)

o A creditor comes under the FACTA only when credit information from one firm is forwarded to another and a credit decision is based on that info o Prohibits access to credit report without legitimate business purpose o FACTA gives consumers two years to sue if an error by a credit reporting agency results in identity theft and subsequent fraud

Deliveries and Installation Laws

o Some states protect consumers from having to wait at home for hour after hour for deliveries and installations that never happen or occur quite late

Rules telemarketers must follow:

o Calling times are restricted to the hours between 8 am and 9 pm o Recorded sales pitches to consumers' homes are prohibited unless the consumer gives permission, or has a business relationship with the company o Before they make their sales pitch, telemarketeres must "promptly" tell you that it is a sales call, provide the name of the seller, and tell what they are selling o If the pitch is for a sweepstakes or prize promotion, they must tell you how to enter the contest, that no purchse or payment is necessary to enter to win, and the odds of winning. • Tell you any restrictions or conditions of receiving the prize • It is illegal to misrepresent the value of a prize o It is illegal to lie or misrepresent any info o Before you pay, they must tell you the total cost o Before taking money from your bank account, they must tell you their plans to access the account

Automatic Billing Disputes

o Consumers have 15 days to tell their bank that the charge was unauthorized

"900 Number" FCC Regulations

o Consumers who do not want calls made from the telephones to 900 numbers must be given a block on their telephone o All pay per call services costing more than $2, either on a flat fee or cost per minute basis, are required to begin with a preamble • A message disclosing the price and the identity of the company providing the service • 3 seconds o Callers must be permitted to hang up early and not be charged. • Services aimed at 12 and under children are prohibited • 12-18 must state parental permission needed • Must provide a local number or toll free line to call with billing questions o Billing complains must be acknowledged in writing within 40 days and resolved within 90 days o Local telephone companies are required by law to do the billing for the other firms that provide services to their customers. • "Contested charges by consumers will be charged back to the original service provider"

Opt Out of Mail, Telephone, and E-mail

o Direct marketing association (DMA) offers voluntary preference services from many national companies

Privacy Laws

o Each law typically covers the collection, use and disclosure, quality, and security of personal information o Gives consumers the right to access and correct personal info about themselves o Consumers have the right to make a complaint in they think their personal info has been mishandled

Consumers have the right to know the contents of their credit file, including medical information

o Every consumer is entitled to know the contents of their record maintained by the Medical Information bureau and has the right to correct any inaccurate or incomplete info in the record

Unordered Merchandise Regulations of Postal Service

o Federal Regulations of the US postal service state that if you receive merchandise in the mail that you did not order, you may consider it a gift • You do not have to pay for unordered merchandise and that it is illegal for the company to bull you for it or send persistent bill collection communications for unordered merchandise o If you are sure the merchandise was never ordered, write the sender that you are keeping it as a free gift • Send letter by certified mail and keep the return receipt and a copy of the letter • Send copy of your letter to the Office of Consumer Affairs o By writing "Refuse to Accept" on a package and giving it back to the post office, it is returned to the sender at no cost to the consumer. o If you are not sure that you have ordered good that have arrived by US mail, • Ask for proof of order o If you get unordered merchandise by a private delivery services, such as UPS or Federal Express, do not accept the shipment • Unordered merchandise rules offer you no protections o If already accepted, demand proof of order. • If no valid proof, tell the sender that unless the merchandise is picked up within 30 days, you will dispose of it

Charitable Solicitations Regulations

o Fraudulent charities are allowed to stay in business because the US Supreme Court has upheld such solicitations as protected under the guarantee of free speech o The FTC's Telemarketing Sales Rule applies to those that use interstate telephone calls to solicit charitable contributions • Requires telemarketers to promptly disclose the name of the organization making the request and that the purpose of the call is to ask for a contribution

Opt Out of Offers for Credit Cards and Other Financial Products

o Gramm-Leach-Bliley Act • Financial company can provide your personal financial info to non-affiliated service providers, including joint marketers • Your financial company must tell you about the info-sharing practices and give you the opportunity to opt out • They can still share info among affiliated businesses

Limited Liability on Credit Cards

o If a card is lost or stolen the consumer has a maximum liability of $50 per card o Occurs only if you receive notification of your potential liability

Late Possession of the Rental Property

o If landlord can not let you move in by assigned move in date, than you may be compensated

standards for companies that offer warranties

o Law demands that a warranty should mean what is says and that the details should be spelled out in easy to understand language o Simple language and telling the following • The name and address of the warrantor • Whether the warranty is given only to the original purchaser • Description of exactly what is warranted and for how long • An indication that a registration card must be returned if that is the warrantor's procedure • The procedure for placing the claim • What company will do in case of problems • Step by step procedure to follow to settle a dispute between the buyer and the seller o Magnusson-Moss Law requires that consumers be able to examine warranty converage before they make a purchase • $15 or more is covered under the law o Magnusson-Moss Law prohibits warrantors from disclaiming implied warranties unless the product is clearly labeled 'as is" when sold

Motor Vehicle "Buyer's Orders" Laws

o Law designed to help consumers from getting yo-yo ripped off o If anything specified in the contract is changed, the consumer can cancel the contract

Rights exist if a poor credit report results in an adverse actions

o Law requires disclosure to you of the name, address, and toll free telephone number of any credit reporting agency that supplied information about you o Cost free credit report must be requested within 60 days of denial

Airline travel rights

o Most major airlines will credit the difference between the fare you paid and the newer, lower fare o Airline gone bankrupt • Department of transportation regulations require that competing airlines that have a seat available on the same dates of travel must accept your re-booking • Can not charge you more than $25 fee on a one way ticket o Airline has right to cancel your reservation for being late and give you a refund

Moving Companies

o Moving companies generally have to provide written estimates in a contract that cover the entire costs of a move and customers must sign the documents before loading the vehicles o Mover's cannot hold customer's belongings while trying to get paid for increased or unexpected costs

Habitability of Rental Unit

o Must meet some legally prescribed minimum standard o In many states, if tenants can make minor repairs themselves, they may legally deduct those costs from their next rent payment

Bumping

o Overbooked about 20% • Must seek volunteers willing to relinquish their seats in return for compensation offered by the airline • Last one on is usually the first to get bumped o Involuntary bumping • Not entitled to reimbursement if airline can get you on another flight within one hour of your scheduled arrival • Between 1-2 hours late, the airline must pay you an amount equal to your one way fare, up to $200 • More than 2 hrs late, must pay the value of the ticket up to $400 o Many airlines provide up to $25 in cash or vouchers for food and miscellaneous expenses, if you ask for them- for those who are involuntarily or voluntarily bumped

Lemon Laws for New Vehicles

o Passenger vehicle that has been unsuccessfully repaired four or more times for the same problem, or if the vehicle has been in the shop for a cumulative total of 30 days in the first year o Revocation of acceptance • Returning the vehicle to the dealer and writing a letter to the dealership specifying why this action is being taken o Lemon laws do not require lawsuits o After being notified by complaining consumer, manufacturer has two choices • Refund the purchase price, including all collateral expenses plus money for loss of use of the original car • Replace the vehicle with a comparable model acceptable to the consumer o Consumers exercising their lemon rights must first exhaust remedies under a manufacturer's informal dispute settlement procedure before going to court

Electronic Funds Transfer Act (EFTA)

o Permits you to stop a preauthorized payment by calling or writing the financial institution, so that your new order is received at least three days before the payment date o The EFTS applies to electronic transfers, ATM Debit Cards, and Credit Cards Used as Debit Cards o You have only 60 days from the date of the statement or receipt error to notify the financial institution o Lost or Stolen EFT Cards • Cardholders are liable for only the first $50 of unauthorized use if they notify the issuing company within two business days after the loss or theft of their card or code

Equal Credit Opportunity Act

o Prohibits discrimination in granting credit o Requires creditors to provide to the applicant a written statement, if requested, of the reasons for refusing credit

High Cost Mortgage Act

o Protects consumers when they refinance their home or take out a home equity loan with rates or fees that qualify as high cost o Balloon payment plans • Regular monthly payments are followed by an extremely large lump sum final payment of the balance due, are prohibited for loans of fewer than five years o Prepayment Penalties (charges for paying off a loan early) • Are generally prohibited as are negative amortization plans. • Loans that allow the unpaid balance to grow rather than diminish

vehicle repair laws

o Provide that on request, a consumer must be given a written repair estimate from someone who is going to repair his or her vehicle, unless the business is unwilling to do the repair o If repair is above 10% of original cost, must seek owner permission o Illegal to do unnecessary repairs when suggesting they are necessary o Consumer has the right to get back any parts removed by the repair shop

Delayed and Canceled Flights and Missed Connections

o Refund offered only when the delay, cancellation, or diversion is caused by weather or another event outside their control o If flight delayed or canceled because of a problem in the airline, they are legally obligated to place the passenger on its next available flight to that person's destination o Stranded overnight, passenger may get cash for miscellaneous expenses • Usually only assertive, polite consumers who ask get compensation

Home Mortgage Disclosure Act (HMDA)

o Requires certain lending institutions to report annually on their mortgage lending practices, including both originations and purchases of homes and home improvement loans, as well as applications for such loans

Community Reinvestment Act (CRA)

o Requires that banking institutions help meet the credit needs of their communities

Full and Limited Warranties May be Offered

o Standards to be full warranty, warrantor must: • Remedy a defective product within a reasonable time and without charge in the event of a defect, malfunction, or failure to conform to the warranty • After a reasonable number of attempts by the warrantor to remedy defects, the warrantor must give consumer the option of either a refund or replacement without charge • Consumer must not have to do anything unreasonable to get warranty service o Products offering full warranties cannot place limits on the duration of implied warranties • A warrantor offering a full warranty is liable for any incidental and consequential damages o Apply to both original purchaser and subsequent owners during the warranty period o Limited warranty • Any written guarantee that provides less than a full warranty

Pet Lemon Laws

o The "lemon concept • When consumer has purchased product that turns out to be bad, the purchaser is entitled to repair, replacement or refund o Law requires stores to replace animals they sell that are found to have defects or diseases, or to pay for medical treatments o Animals can usually be returned one or two weeks of purchase

Federal Trade Commission Used Car Rule

o The Rule requires all used car dealers to place a large sticker, called a buyer's guide in the window of each used vehicle they offer for sale o If you buy a used car from a private individual, the sale is not covered by the rule • Sold "as is"

State Housing Discrimination Laws

o The typical state law protects against the following acts • Refusal to sell or rent or to deal or negotiate with any person • Presenting variable terms and conditions to different people for buying or renting housing • Advertising that housing is available to certain persons • Denying housing is available for inspection, sale, or rent when it really is • Blockbusting which is persuading owners to sell or rent housing by telling them that minority groups are moving into the neighborhood • Denying or making different conditions or terms for home loans by commercial lenders • Redlining

Delayed and Lost Luggage

o Typically no compensation is offered for the inconvenience and there are no govt regualtions o If you ask, you may receive cash or vouchers for miscellaneous expenses o Department of Transportation regulations specify that the airlines have a maximum liability for lost or damaged baggage of 1250 dollars on domestic flight and 1850 dollars on international flights o Most airlines to do not accept any liability for lost computers, cash, jewelry, antiques, camera equipment, medicine or similar valuables

Bank Insurance Sales

o Under provisions of the Gramm-Leach-Bliley Act, the federal bank regulatory agencies have adopted rules to protect and inform consumers who are considering buying insurance products from federally insured banks and saving institutions • Prohibition against misleading consumers that the product is federally insured • A requirement that insureance sales take place physically apart from where deposits are routinely accepted • Notice to consumers that the institution cannot condition the approval of a loan on the purchase of insurance from that bank or an affiliate

Switching or "Slamming" Telephone Regulations

• Have up to 30 days to avoid paying long distance charges when their service is illegally switched • if that does not occur and bills continue, the consumer does not have to pay the offending seller anything • if consumer has paid the amount in full, they are entitled to a refund or credit of the difference between what they paid and what original carrier would have charged o Obtaining consent for a consumer to switch • A customer letter authorizing the switch • A third-party verifying that the consumer wants to switch • A toll-free number to call to switch companies