Consumer protection

When consumers purchase goods and services, they enter into an agreement with the seller. But purchases do not always go as planned. Consumers might not receive items as promised, or sellers might not be truthful about a product. The United States has federal and state laws in place to protect consumers and hold sellers accountable. These laws protect the consumer in case an item does not work or perform as promised, the consumer was overcharged, or the consumer was wrongly charged for an item. Consumer protection laws also protect people from being responsible for errors on their credit report and against unfair practices by debt collectors and credit card companies. These laws also provide resources for victims of identity theft.

Overview

The Federal Trade Commission (FTC) is the federal agency in the United States in charge of consumer protection; it was established in 1914. Its Bureau of Consumer Protection is responsible for investigating consumer complaints, suing sellers who break consumer protection laws, maintaining fair rules for consumers and sellers, and educating both consumers and sellers about their responsibilities.

Consumers have several basic rights when they agree to purchase goods or services. One of these is safety. People or businesses should not knowingly sell products that are defective or dangerous. However, this is not always the case. Each day consumers unknowingly purchase defective toys, vehicles, and other goods sold to them by sellers who may or may not have known that these items were dangerous. In these cases, the seller is held liable for selling unsafe products.

Consumers have the right to be informed about a product or service before purchase. This means sellers must provide truthful statements about a product and cannot label or advertise a product in a way that could be misleading (commonly referred to as false advertizing).

Another right is the right to choose. Consumers must be offered a variety of competing goods and services that can range in price, quality, and service. This gives the consumer choices. Antitrust and unfair competition laws exist to ensure that no one company or business has total monopoly over goods and services.

Consumers have the right to be heard. They can voice their concerns, needs, and wants, and the government must listen to these concerns—as long as they are valid and legitimate. As gas prices rose in past years, consumers voiced their desire for vehicles that use alternate forms of energy and put pressure on the government. As a result, the government passed laws that required automakers to develop energy-efficient vehicles that use natural gas and electricity instead of gasoline.

Consumer Protection Laws: Federal

The federal government has created several laws to help protect consumers from fraud and unfair business practices. These laws impose strict rules on sellers and companies and can result in fines if not followed. These laws protect consumers from an array of violations such as high interest rates, penalties, and fees on credit cards and loans. They also protect consumers from "bait-and-switch" tactics that happen when a business advertises a product to lure customers and then does not have the specific product and offers a less favorable or high-priced item instead.

Some of the federal consumer protection laws include the following:

• Credit Card Accountability, Responsibility and Disclosure Act (CARD Act): This act limits the fees and penalties a credit card company can charge a consumer. It also places restrictions on the companies and mandates when they can increase interest rates and how much they can increase them.
• Fair Credit Billing Act: This law helps consumers fix errors on credit card accounts and protects them from being held responsible for fraudulent charges.
• Fair Credit Reporting Act: This provides information about how people can correct mistakes on their credit reports; it was passed in 1970.
• Fair Debt Collection Practices Act (FDCPA): This law prohibits debt collectors from using unlawful ways to collect debts, such as calling a debtor all hours of the day and night or calling a debtor's friends, family, or place of employment. These practices can be considered harassment and result in suits and fines against the debt collection agency.
• Identity Theft and Assumption Deterrence Act of 1998 (ITADA): This law provides information about identity theft and how to file complaints if one's identity is compromised or stolen.
• Magnuson-Moss Warranty Act: This act requires sellers to explain warranty information, including coverage, exclusions, and terms, to consumers who purchase items covered under warranties.
• Truth in Lending Act (TILA): This law states that credit card companies cannot bill more than a certain amount for unauthorized charges to a credit card.

State

Each individual state has consumer protection laws in place known as common laws. These laws vary from state to state. Common laws protect consumers from fraudulent selling practices, but consumers must be able to prove that sellers knowingly committed fraud. They must prove that a seller knowingly made a false statement, and the consumers believed the statement as truth and purchased an item. For example, suppose a merchant trying to sell an appliance to a person tells this person that the appliance is in good working order, even though the merchant knows that the appliance does not work. The consumer believes the merchant and purchases the item. The consumer later discovers that the appliance does not work. Because the seller told the consumer that the item worked and knew that it did not, the seller broke common law and can be held legally responsible.

In addition, private agencies such as the Better Business Bureau (BBB) exist to protect consumers. These organizations investigate complaints and educate consumers and businesses about the importance of consumer protection laws.

If consumers believe their rights have been violated or if a law has been broken, they have the right to obtain an attorney and file suit against the person or business that broke the law or violated their rights. Sometimes groups of people file joint consumer protection lawsuits known as class action suits.

Bibliography

"About the Bureau of Consumer Protection." Federal Trade Commission. Federal Trade Commission. Web. 3 Nov. 2014. http://www.ftc.gov/about-ftc/bureaus-offices/bureau-consumer-protection/about-bureau-consumer-protection

"Consumer Protection Laws." Lawyers.com. Martindale-Hubbell. Web. 3 Nov. 2014. http://consumer-law.lawyers.com/consumer-fraud/consumer-protection-laws.html

"Consumer Rights - Consumer Protection Law." HG.org. HGExperts.com. Web. 3 Nov. 2014. http://www.hg.org/consume.html

"What Are Consumer Rights?" HG.org. HGExperts.com. Web. 3 Nov. 2014.

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