Download CHAPTER 45: CONSUMER LAW

Chapter 44
Consumer and
Environmental Law
§ 1: Consumer Law
Areas of Consumer Law Regulated by
Statutes:
Deceptive Advertising.
Labeling and Packaging.
Sales.
Credit Protections.
Consumer Health and Safety.
State Consumer Protection.
Deceptive Advertising
Puffing.
Vague generalities and obvious exaggerations are
permissible and not considered deceptive.
Bait and Switch.
The advertising of a product at an attractively low price
to lure customers in to buy more expensive items.
Telemarketing and Electronic Advertising.
The Telephone Consumer Protection Act (TCPA)
prohibits automated solicitation using automatic
telephone dialing system or a prerecorded voice.
FTC Actions
Against Deceptive Advertising
The Federal Trade Commission, charged
with enforcing federal laws against
deceptive advertising, can, in appropriate
circumstances:
Issue cease and desist orders.
• With respect to a particular product or
advertisement.
• With regard to multiple product orders.
Impose counter-advertising.
Labeling and Packaging
Labeling must be accurate, and must use words
that are easily understood by the ordinary
consumer.
Product labeling and packaging are regulated
by:
Wool Products Labeling Act of 1939.
Fur Products Labeling Act of 1951.
Flammable Fabrics Act of 1953.
Fair Packaging and Labeling Act of 1966.
Smokeless Tobacco Health Education Act of 1986.
Nutrition Labeling and Education Act of of 1990.
Sales
Forms of Sales :
Door-to-Door Sales.
Mail Order Sales.
Telephone and Mail-Order Sales.
Unsolicited Receipt of Merchandise.
Door-to-Door Sales
Most states requires that, for door-todoor sales, consumers have a post-sale
“cooling-off” period during which they
can cancel their purchase without
obligation.
Consumers are given the most favorable
benefits of the FTC rule and their own
state statutes.
Telephone and Mail-Order Sales
Telephone and mail order sellers can be subject to
federal mail and wire fraud statutes.
FTC Rules require mail and telephone merchants to
ship orders within the time promised in their
catalogues and advertisements, to notify consumers
when orders cannot be shipped on time, and to issue
timely refunds when orders cannot be shipped.
The Postal Reorganization Act of 1970 provides that
unsolicited merchandise sent by U.S. mail may be
retained, used, discarded, or disposed of in any manner
deemed appropriate, without the recipient’s incurring
any obligation to the sender.
Credit Protections
Consumer Credit is protected by:
Truth in Lending Act.
Fair Credit Reporting Act.
Fair Debt Collection Practices Act.
Wage Garnishment.
Truth in Lending Act
Requires all consumer lenders to compute the cost of a
loan the same way and to advertise it as an Annual
Percentage Rate (APR)
Through the Equal Credit Opportunity Act, requires
that credit be extended without regard to race, sex,
color, national origin, age, or marital status
Limits consumer liability for credit card debt in cases
of stolen cards
Through the consumer Leasing Act of 1988, requires
that leasors of consumer items valued at less than
$25,000 make certain disclosures
Fair Credit Reporting Act
Limits the activities of credit reporting
agencies.
Consumers have the right to access
information contained about them in a
credit reporting agency’s files and to
require credit reporting agencies to delete
unverifiable information in a consumer’s
credit record.
Fair Debt Collection Practices Act
Prohibits Collection Agencies from the
following:
Type, times, and places that debt collectors can contact
debtors.
Contacting third parties about payments.
Using harassment or intimidation or employing false
misleading information.
Contact debtor after notice of payment refusal.
Requires that collectors provide validation
notice to the debtor, at the time of first contact.
Garnishment of Wages
Legal procedure by which a creditor may
collect on a debt by directly attaching, or
seizing, a portion of the debtor’s assets (such as
wages that are in the possession of a third
party.
Debtor is entitled to notice and an opportunity
to be heard in a process of garnishment.
Wages cannot be garnished beyond 25% of the
debtor’s after-tax earnings up to a maximum
amount designed to leave the debtor a specified
minimum income.
Consumer Health and Safety
Federal Food, Drug, and Cosmetic Act.
This statute protects consumers against
adulterated and misbranded foods and drugs.
Consumer Product Safety Act.
This act created the Consumer Product Safety
Commission which has broad regulatory
authority over the safety of consumer products.
§ 2: Environmental Law
The principal sources of environmental
law are:
Common Law Actions.
State and Local Regulation.
Federal Regulation.
Common Law Actions
Nuisance.
Person liable if they use their property in a
manner that unreasonably interferes with
others’ rights to use or enjoy their own
property.
Negligence and Strict Liability.
Business or person alleged failure to use
reasonable care toward a party whose injury
was foreseeable and, or course, caused by the
lack of reasonable care.
State and Local Regulation
States regulate the degree to which the
environment may be polluted.
City, county, and other local governments
control some aspects of the environment.
Local zoning laws.
Methods of waste and garbage removal.
Location and conditions of parks, streets and
other public areas.
Federal Regulation
Federal environmental policy is achieved
through federal agencies:
Example: Environmental Protection Agency
(EPA).
Regulatory agencies must take environmental
factors into consideration when making
significant decisions.
Federal Regulation
National Environmental Policy Act
(NEPA).
Does not directly deal with pollution control.
Require preparation of an environmental
impact statement (EIS) when major federal
action in the environment is to be undertaken.
Media Specific Pollution Control
Legislation.
Environmental Impact Statement
An EIS must analyze:
The impact of the proposed action on the
environment.
Any adverse effects of the action and
alternatives to the action.
Any irreversible effects the action might
generate.
Air Pollution
Clean Air Act.
This act provides the basis for issuing
regulations to control pollution coming
primarily from mobile sources and stationary
sources.
It prescribes the use of pollution control
equipment that represents the maximum
achievable control technology.
Water Pollution
Clean Water Act goals are:
Safe swimming.
Protection of fish and wildlife.
Elimination of the discharge of pollutants into
waterways.
Pollution control is largely achieved
through the use of the best available
control technology.
Noise Pollution
Noise Control Act.
Establishes noise emissions standards
(maximum noise levels below which no
harmful effects occur from interference with
speech or other activity).
Prohibits distributing products manufactured in
violation of the noise emission standards.
Toxic Chemicals
Federal Insecticide, Fungicide, and
Rodenticide Act (FIFRA).
Regulates the use of pest control chemicals in the
process of food growth to food packaging, to minimize
their presence in foods consumed.
Toxic Substances Control Act.
Requires anyone planning to use chemicals first
determine their effect on human health and the
environment.
Require special labeling, limit the use of substance, set
production quotas, or prohibit the use of a substance
altogether.
Hazardous Wastes
Resource Conservation and Recovery
Act.
Authorizes the EPA to issue regulations for the
monitoring, transporting, storage, treatment, and
disposal of hazardous substances.
CERCLA.
Designed to ensure the clean-up of hazardous waste
sites and to assign liability for the costs of the cleanup
operations.
Liability for cleanup costs can be assigned to any
potentially responsible party (PRP).
Case 44.1: FTC v. Growth Plus
(Deceptive Telemarketing)
FACTS:
Canadian companies marketed Canadian
lottery packages to consumers in the
United States. What they did not tell the
consumers is that the sales were illegal.
They also misrepresented the buyers’
chances of winning and used highpressure sales tactics.
The FTC sued Growth Plus alleging
deceptive advertising and asking for a
preliminary injunction
Case 44.1: FTC v. Growth Plus
(Deceptive Telemarketing)
HELD: MOTION GRANTED.
FTC made a strong case against the
defendants, whose misrepresentations
misled consumers.
“In this case, the balance of equities
weighs heavily in favor of the issuance of
preliminary injunctive relief. There is a
strong public interest in an immediate halt
to illegal sale of lottery tickets
accomplished through the use of
misleading devices.
Case 44.2: Snow v. Jesse Riddle P.C.
(Fair Debt Collection)
FACTS:
Snow paid for merchandise with his personal
check but the check was dishonored. Circle-K
forward the check to its attorney Riddle for
collection.
Riddle’s letter to Snow stated “the check amount,
along with a service fee of $15, must be paid
within seven (7) days of this notice. If it is not
paid, * * * [a] suit [will] be filed.”
Snow paid the check and sued Riddle for
violations of FDCPA because it did not contain a
“validation notice.” Riddle filed a motion to
dismiss.
Case 44.2: Snow v. Jesse Riddle P.C.
(Fair Debt Collection)
HELD: FOR RIDDLE. MOTION GRANTED.
The purpose of the FDCPA was “to eliminate
abusive debt collection practices by debt
collectors.”
A dishonored check constituted a “debt” within the
meaning of the FDCPA.
“Under the ‘plain meaning’ test, it would seem to
us that a ‘debt’ is created where one obtains
goods and gives a dishonored check in return.”
Case 44.3: BFI v. Ter Maat
(SuperFund)
FACTS:
BFI’s predecessor had leased a landfill site at
which it had illegally dumped a large quantity of
particularly toxic wastes.
The site was later leased and operated by M.I.G.
& AAA, both owned by TerMaat.
BFI sued TerMaat to recover the costs of cleanup.
Court allocated 22 percent to BFI and 33 percent
to M.I.G. and AAA. BFI appealed arguing that the
allocation should be based on the volume of
wastes for which each party was responsible.
Case 44.3: BFI v. Ter Maat
(SuperFund)
HELD: AFFIRMED. APPORTIONED
COSTS WERE FAIR.
The court remanded the case for other reasons.
“Browning-Ferris’s pollution was serious enough
. . . to require that the site be cleaned up, but the
other pollution at the site was also enough.
[N]o principle of law, logic, or common sense
required the court to allocate [the] total costs
among the polluters on the basis of the volume of
wastes alone.