In this presentation we will discuss consumer protection. At the end of this presentation we will be able to:
Describe social engineering
Explain the concept of public interest
Describe the conditions for negligence
Explain a consumer protection Safety Act
Discussed the Federal Trade Commission Act
Lists unfair business practices and
Explain the Truth in Lending Act
One large component of consumer law has to do with product liability and under product liability if there are unsafe conditions that harm a person that individual could recover damages from the manufacturer, the seller, or supplier of that product that had that condition which was unsafe.
When considering the application of product liability law we have to consider what the reason for the law will be and in order to do so we want to consider the concepts of public interest and public policy. Public interest is going to be the concept that there is some goal that we would like to have within the public which would be better for the public. We have some ideal goal that would be in the public interest.
Implementing a policy that would then enforce a social goal would be policy. For example, if there's some consensus that it would be beneficial for the public in general to reduce something like pollution we may implement some type of regulations, some type of laws, to regulate the emissions, such as car emissions. We might have some carpool laws put in place, and those laws would be the public policy that would be put in place in order to achieve the specific goal that would be the public interest.
We can term this idea of structuring the public policy as a form of social engineering. We're putting systems in place in order to achieve social goals for the majority of individuals, hopefully the majority of individuals agreeing upon the public interest of those social goals, social engineering then being a process for us to get to those public interests and social goals.
The Federal Trade Commission helps to regulate and shape laws with relation to commerce and trade and this will be an example of social engineering. The ability for the Federal Trade Commission to be able to regulate and shape the laws of regulations with relation to commerce gives them a lot of power within this capacity. The power to basically create laws and to judge the laws in this particular domain of commerce.
When considering the type of social engineering goals applied to consumer goods we of course want a public goals including having a healthy public and avoiding illness and injury and that would lead us to want to set up laws that would safeguard individuals and consumers from buying products, especially unwilling or unknowingly, that would be harmful or could injure individuals.
How could we achieve these social goals through social engineering? We can find some way to hold the sellers and the manufacturers of these goods responsible for any damages or injuries resulting from them.
One concept applicable to product liability is the concept of negligence. To prove negligence an injured party would have to prove that the manufacturer or seller had some type of duty to the victim, that the manufacturer or seller violated that duty by not following the appropriate kind of care that should be given, and therefore is in some way negligible of the duty that should have been cared for. The victim would have to prove that they suffered some kind of loss due to the lack of care
The concept of negligence can be contrasted to the concept of strict liability with regard to the product liability. Under strict liability the manufacturer is going to be hold responsible for an unsafe product regardless of whether there's fault or negligence. The focus here is not on the conduct of the manufacturer but on the safety of the product. we're focusing here not on the duty that was neglected in terms of the manufacturing necessarily. We're focusing more on the product itself and whether or not it in itself is a safe product. In many ways this comes down to the design of the product. We have a duty of design within the product to make sure that the product is designed in such a way that it is safe or meets some type of standards for public good, for public interest. We also want to see that we have some type of instructions so that the users could have the information necessary in order to use the product in a safe way as well as warnings if there are any problems with the product that need to be particularly aware of. Warning should be something that the consumer would be readily and easily aware of.
In order for a victim to win a strict liability case for product liability they would have to prove a few different things including that the seller or manufacturer sold the product in a defective condition. In other word, at the point of sale there was a defective condition within the product at that time. The seller or manufacturer engaged in the business of selling the product. We have to prove that there was a sales transaction happening for the product. The product was unsafe to an unreasonable degree to the user. The consumer or the user has the ability to prove that it was unsafe to some type of degree. The defective condition was the proximate cause for the injury or damage. We're got to prove that this problem with the product is the reason for the injury to the to the injured party. The defective condition must have existed at the time it left the manufacturer. We can't say that there's some type of condition that happened after that point in time. We typically have to say well this is how it was at the point of sale and that condition that was there the point-of-sale is what led to the eventual problem. The consumers sustained physical harm or property damage. We have to actually improve or show what the harm was resulting from this situation from the defective product.
A Consumer Product Safety Commission the CPSC was created by the Consumer Product Safety Act to protect consumers from unreasonable risk or injury from hazardous products. The Consumer Product Safety Commission has the power to force a recall of products that are considered to be unsafe or dangerous.
Consumer protection laws are laws that are applicable between a business or business person and a consumer. When we have a law that a consumer purchased something from a business then that would be applicable under the Consumer Protection Law. This includes consumers who lease or buy real estate goods or services for the personal family or household. The end use is the personal consumption for the personal household, the purchase being from some type of company or business.
The Federal Trade Commission Act or FTC Act helps to regulate unfair or deceptive practices between states. Interstate commerce is thought to need added regulation to be able to regulate practices from state to state. If there are business practices that are taking place that go into different state or across state lines then the FTC Act could be applicable to them. If we're talking about practices on the other hand that are all within a particular state, interstate commerce, then the FTC Act may not be applicable.
The Federal Trade Commission Act has the ability or has given the authority to the Federal Trade Commission that, including the ability to look into antitrust violations. That those are going to be antitrust violations that have to do with monopolies and typically the behaviors that anomaly monopolies may take which would be a non-competitive or unfair type of business practices. They also have the ability to investigate practices of businesses that fall into their jurisdiction, typically businesses that have commerce, interstate commerce across state lines. They can publish the results of their investigations for the businesses and they can also make recommendations to Congress about some new legislation based on the information that they have gathered through these powers that they have.
Clearly the FTC has a lot of authority in order to influence businesses in interstate commerce and need to be careful then in how they're going to apply this authority and how they're going to be able to enforce the authority. One tool the FTC is that they can try to have the company be in compliance voluntarily with the decisions of the FTC. They could request a consent order and the consent order would basically say that the business would agree voluntarily to stop the business practice that is in question without having to say or admit that any violation of law was put in place prior to that. That's going to be kind of a softer way that the FTC can then go in and influence the system without causing to too much trouble and be able to put pressure on companies in order to make changes without going through the long drawn-out legal battle which has how a lot of repercussions on both the business itself and everybody involved in terms of commerce as well.
If a consent order does not remedy the situation then the FTC may issue a complaint and the complaint would have a more formal process with an administrative law judge and if the violation has then found it could issue a cease-and-desist order to the company to stop the practice.
Consumers may also put together class-action lawsuits against the business for violating the rules of the FTC and the class-action lawsuits are going to be a type of tool that can be applicable to put pressure on businesses as well because the liability that could be caused oftentimes to an individual may be small enough that they would not want to go through the legal process and because the cost would be higher than the benefits they may get from it. However, if we pool all the harmed parties together and represent them as a whole and the type of class-action lawsuit that's a way that pressure can be put on companies that are not in compliance with what we would think would be a social justice type of case.
One deceptive practice that is prohibited by the FTC is the practice of fraudulent representation. Fraud is going to be some type of deception in order to have a personal gain, basically some type of lie or misrepresentation or possibly even not presenting some relevant fact could possibly be a component. If we're talking about the selling of goods we're typically talking about the misrepresentation of the goods that we're selling like saying it's of a higher quality or saying it meets some type of standards when it in actuality does not.
Some other common forms of unfair or deceptive practices would be something like an unordered merchandise. If we were to actually ship merchandise to individuals that did not order them and bill them for that unordered merchandise that would be something that would be a fraudulent act.
A common form of fraud or a common form of deception is a bait and switch type of act in which we give a very strong or very nice incentive for a particular product in order to draw someone in to discussion with us or possibly into a store where we have no actual intention, this being where the fraud comes in, the lie is in essence we have no intention of actually selling the good that was advertised, but rather get someone into a sales position so that we can then sell them on some other item.
Two cyber laws are the FTC's Children's Online Privacy Protection Rule and the Identity Theft and Reclaim Your Name Proposal. These are both going to be dealing with the idea of identity. When we are online and we're doing business transactions online one of the major problems has to do with identity.
The Revised the Children's Online Privacy Protection Rule has to do with businesses who have online customers who are children, particularly under the age of 12, who would be giving data, personal data, to back to the company which of course is a common practice when we have the social interaction. Therefore, in order to have more protection there's going to be a requirement that if a business knows that the target audience is children under 12, they need to have the parent’s consent to to retrieve any personal data.
The Reclaim Your Name Program is an attempt to try to restrict the ability to steal a personal identity. Obviously one of the biggest problems of transactions is the attempt of criminals to steal personal identities and then use it for whatever purpose there may be. The Reclaim Your Name Program is going to be an attempt to help consumers to be able to identify and monitor the use of their personal data which is online, the goal being the ability to empower individuals over their personal data and therefore be able to regulate the information that is out.
Because of the ease of financial transactions and the use of things like credit cards lending becomes very important for most individuals as well. We use often credit cards in particular in daily transactions and we do compare credit card service. However, it's possible for that to be a bit unclear for the average user, considering the fact that the use of credit cards has become part of the of the daily practice. We may not be able to put as much time into looking into these things as we should in order to get our best results from them. To deal with it The Federal Truth in Lending Act is in place, the goal bing to try to give information to the consumers so they can make appropriate comparisons. To make good comparisons the banks need to be giving the appropriate informaion and disclosing what the finance charges are as well as the percentage rates or the APR rate, so that businesses and consumers can then make an easy comparison when they're considering these lending practices.
The Equal Credit Opportunity Act makes it illegal for banks and businesses to discriminate against credit applicants because of their sex, race, marital status, national origin, religion, or age, or because they get public assistance income.
The Truth-In-Lending Act also makes it so that the credit card owner is not responsible for any charges made after the card issuer has notified the loss or theft or possible unauthorized use of the card to the issuer of the card.
The Fair Credit Reporting Act allows for some more transparency for the consumer to know what is in the credit reporting. The consumer basically has the right to know all the information that is in his or her file. The consumer also has the right to know the source of the information that is in the file. There's going to be some transparency so that the consumer knows what is in the credit reporting and then can basically follow up on that and know who is responsible for the source of the information in the credit reports.
Under the Fair Debt Collection Practices Act there's going to be specific rules that must be followed by companies that are in the business of collecting debts from others. These aren't going to include things like if we're going to try to collect the debts from an individual and we are trying to located the individual we can't tell other individuals that that person owes money to them as part of our research process. Also, if someone is being represented by an attorney, we know they have an agent, then we need to go to that agent in order to go through our collection process. We generally need to be respectful of the time constraints of when we go through the collection process in terms of the time of day and the appropriate times and places in the week. The debt collection action should not take place at the consumers place of employment. The debt collector should not be talking to another individual about the debt collection, should only be discussing the issue of debt collection with the individual who is there trying to collect debt from.
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