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Chapter 22 Consumer Protection Law Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. False Advertising • FTC regulations several specific examples of prohibited deceptive advertising such as making expressly false statements in advertisement about: – product quality, – ingredients, or – effectiveness. 22-2 Telemarketing Telephone Consumer Protection Act Telemarketing/Consumer Fraud Prevention Act: 1) allows consumers to opt out of unwanted calls from telemarketers, 2) bans the use of unsolicited recorded calls and faxes, 3) regulates 900 number calls, 4) prohibits telemarketers from making false claims, 5) requires disclosure of all the material terms of offers. 22-3 Odometers The Federal Odometer Act makes it a crime to change vehicle odometers and requires that faulty odometers be disclosed in writing to potential buyers. 22-4 Warranties • Consumers have statutory protections related to the quality and functionality of products sold by merchants. • These protections are derived primarily from commercial law statutes, which provide for warranty protection. • Product liability statutes often operate in tandem with tort laws related to negligence. 22-5 Express Warranty • In many cases a seller expressly represents that the goods have certain qualities or a certain level of efficiency. • If the goods turn out not to have these qualities, the buyer may sue for a breach of the express warranty. 22-6 Implied Warranties Even in cases where the seller makes no express promise about the goods, the UCC imposes several implied warranties. 22-7 Merchantability • Applies to every sale of a product from a merchant to a buyer (note that the buyer may or may not be a merchant) • Requires the seller to warrant that the product is fit for its ordinary use 22-8 Fitness for a Particular Purpose • In order for this warranty to be created, the buyer must prove: – seller knew of the buyer’s desire to use the product in a specified way (not necessarily in its ordinary way), and – buyer relied on the seller’s advice and recommendation. 22-9 Warranty Disclaimers • The UCC allows a seller to disclaim both implied and express warranties under certain conditions. • Seller must do so in a conspicuous writing such as capital letters, bold print, or a larger font that stands out. 22-10 Food and Drug Safety • The Food, Drug and Cosmetic Act (FDCA) created the U.S. Food and Drug Administration (FDA). • Regulates testing, manufacturing, and distribution of foods, medications, medical devices, and cosmetics 22-11 Consumer Credit Regulation • Consumer Credit Protection Act (CCPA) regulates the following: – disclosure of credit terms, – credit reporting, – antidiscrimination, and – collection of debts from consumers. 22-12 Credit Cards • The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) • Increases the power and oversight authority of the Federal Trade Commission over credit card issuers. • CARD Act protects consumers from surprises when interest rates increases or credit card fees are imposed, and to restrict marketing and card-issuing practices targeted to younger (18 to 21 years of age) consumers. 22-13 Identity Theft • The Fair and Accurate Credit Transactions Act (FACT Act). • Requires that credit bureaus stop reporting any fraudulent account information once a consumer alleges identity theft and during an investigation period. 22-14 Consumer Leases • Consumer Leasing Act (CLA) • Covers lessors engaged in leasing or those arranging leases for consumers • CLA provisions mirror the protections for consumer debtors in a loan transactions such as APR disclosure requirements and standardizing information. 22-15 Credit Reports • Fair Credit Reporting Act (FCRA) • Sets privacy rights for consumer credit reports, and • Requires that the credit bureaus give individual consumers complete and timely access to their own credit reports. 22-16