1. Consumer Protection

Consumer Protection

Playlist: 25 Videos: 79 Minutes


Topics: Learning Material

 

Introduction to Consumer Protection Law
Consumer protection law concerns the body of statutes and regulations protecting consumers against deceptive practices by merchants or service providers. This chapter introduces the concept of consumer protection and its purpose. It then introduces the numerous federal statutes that protect consumers in specific situations. While these are the primary federal consumer protection laws, states often pass consumer protection laws that are more specific and more stringent than the federal protections. For further written and video explanation, discussion and practice questions, see Consumer Protection Law (Intro)

What is “Consumer Protection Law”?
Consumer protection laws are state and federal laws that serve to protect individual consumers from deception or fraud in the marketplace. A consumer is someone who buys something for personal, family, or household use. These laws promote the accurate disclosure of information, facilitate market competition, and deter fraudulent practices. These laws specifically identify practices that are unfair or deceptive and mandate certain practices with regard to consumer disclosure. They protect vulnerable members of society and provide consumers with greater confidence in entering into commercial transactions. For further written and video explanation, discussion and practice questions, see What is "consumer protection law"?

Major Federal Consumer Protection Laws

Consumer protection laws exist at both the federal, state, and local levels. Also, there are numerous private organizations that seek to promote fairness in consumer and commercial transactions. The following are the major federal consumer protection laws: Federal Trade Commission Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending Act, Fair Debt Collection Practices Act, Consumer Financial Protection Act, Fair Credit Billing Act, Electronic Funds Transfer Act, Consumer Product Safety Act, Manguson-Moss Warranty Act, Federal Food, Drug, and Cosmetic Act, Various Labeling Laws, Privacy Act of 1974, Electronic Communication Privacy Act, Children’s Online Privacy Protection Act. For further written and video explanation, discussion and practice questions, see What major federal laws protect consumers?

Overview of Regulatory Agencies
Individuals affected by a merchant’s conduct may bring a civil action against the merchant. Further, numerous regulations exist that allow injured consumers to report violations of consumer protection laws. In an effort to stop or punish violations of the law, the government may then pursue administrative, civil, or criminal actions against the merchant. In this section, we discuss the administrative agencies charged with a consumer protection mission and the procedures used to carry out that mission. Regulatory Agencies - Overview

The Federal Trade Commission (FTC)
The Federal Trade Commission (FTC) is the primary federal agency with the mission of protecting consumers. Authorized under the Fair Trade Commission Act, the FTC is an “independent” regulatory agency charged with keeping competition free and fair and with protecting consumers. The President appoints commissioners to the FTC and Congress approves the agency budget. A special bureau called the Bureau of Consumer Protection (BCP) promotes the consumer protection mission of the FTC. It promotes competition under the antitrust laws as well as protects consumers through the FTC Act’s prohibition on “unfair or deceptive acts or practices in commerce.” In summary, the overall objective of the FTC is to ensure fair competition by preventing those who deceive consumers from diverting sales or trade from those who compete honestly. For further written and video explanation, discussion and practice questions, see What is the "Federal Trade Commission"?

Enforcement Procedures for the FTC
Within the FTC, attorneys working in the bureau of consumer protection enforce the federal laws related to consumer affairs and rules promulgated by the FTC. The FTC enforces these rules and laws through the following methods: Advisory Opinions & Industry Guides - If a business is uncertain as to the legality of a particular course of conduct, it can request an advisory opinion from the FTC. Upon request, the FTC will advise businesses as to whether a proposed practice is unfair or deceptive. These advisory opinions are not legally binding, but they provide guidance as to how the FTC would view the legality of a certain practice. Investigation - The BCP is the internal group charged with handling the investigation and potential prosecution of FTC violations. The FTC generally initiates investigations pursuant to reports from consumers and businesses, pre-merger notification filings, congressional inquiries, or reports in the media. Consent Orders - The FTC may enter into agreements with alleged violators to refrain from the continued violation of consumer protection law, known as “consent orders”. This is where the alleged violating party consents to an administrative order to modify or correct the challenged practices. Administrative Complaint - The FTC will bring an action before an administration court. The court may order that the business cease the practice in question. If the findings of the administrative judge are challenged, the case is reviewed de novo by the full FTC Commission. If the defendant wishes to appeal the decision of the FTC commission, she can initiate a challenge with the US Court of Appeals. Civil Actions - The FTC may initial civil actions for violation of administrative statutes or regulations. Criminal Charges - The FTC is charged with authority to prosecute businesses for committing unfair or deceptive trade practices. Often, however, the FTC supports the prosecution efforts of the US Department of Justice. Criminal charges against a business generally allege violation of Section 5 of the FTC Acts by: committing “unfair or deceptive acts or practices”, or violating “trade regulation rule”. None of the above-mentioned methods are exclusive. For further written and video explanation, discussion and practice questions, see What are the enforcement procedures of the FTC?

Penalties for Violating FTC Regulations
The FTC, through the negotiation of consent orders, has broad powers to fashion appropriate remedies to protect consumers in trade regulation cases, including: rescission of contracts (each party must return what has been obtained from the other); refund of money or return of property; payment of damages to consumers, and public notification of trade practice violations. In an administrative action by the FTC, the administrative court may issue civil fines. The fines must be enforced by filing a subsequent action in the Federal District Court. The basic penalty for trade practice violation under the FTC Act is a civil fine of not more than $16,000 per violation. Fines may be assessed in three distinct situations: for violation of a consent or cease and desist order, for a violation of trade regulation rule, and for a knowing violation of prior FTC orders against others. Each separate violation of an order or rule shall be a separate offense. For further written and video explanation, discussion and practice questions, see What penalties exist for violating FTC regulations?

Prohibited Commercial Practices

The FTC prohibits commercial practices that are deceptive to customers. This generally concerns the practices of merchants who market or otherwise represent the quality or characteristics of goods or services to customers. In determining what is “deceptive”, the FTC will look at various characteristics about the information disclosed to the public. How would a “reasonable consumer” understand the information in the context of the message? Are there any express and implied claims about the product or service? Would leaving out information from the advertisement give consumers a misimpression? Is the claim of deception “material”? If the representations to customers are deemed to be deceptive, the customer or FTC may bring a civil action against the violator. For further written and video explanation, discussion and practice questions, see What commercial practices does the FTC prohibit?

Consumer Financial Protection Act
The Consumer Financial Protection Act was passed in 2010 as part of the Dodd-Frank Act with the purpose of establishing the Consumer Financial Protection Bureau (CFPB).The CFPB and FTC overlap in authority to administer consumer laws. The CFPB has broad authority to regulate federal financial consumer laws including offer and sale of consumer financial products. It seeks to promote market transparency and competitiveness by making certain that consumer financial protection regulations are applied consistently. It has rulemaking and enforcement authority. The CFPB is divided into four offices: Office of Fair Lending and Equal Opportunity - This office is charged with oversight and enforcement of federal laws intended to ensure access to credit; Office of Financial Education - This office is charged with educating consumers on financial decisions; Office of Service Member Affairs - This office is charged with developing and implementing initiatives for military service members and their families; and Office of Financial Protection for Older Americans - This office is charged with facilitating the financial literacy of individuals 62 years old and older. Authority & Procedure - The CFPB has exclusive administrative rulemaking authority for most matters affecting consumer protection. The bureau also conducts investigations into allegations of consumer fraud. Based upon the results of investigation, it may bring administrative or civil actions against covered persons for violating consumer protection laws. A “covered person” is any person or business offering or providing consumer financial products or services. Certain entities are exempt from CFPB authority, including: insurance companies, Internet service providers, real estate agents, lawyers, car dealers, and persons regulated by the SEC. The CFPB has exclusive authority to enforce consumer protection laws against non-depository institutions and insured depository institutions with $10 billion or more in assets. State Regulatory Authority - Pursuant to Title X of the CFPA, states may also regulate consumer protection, as long as state regulation does not conflict with federal laws. States may also bring actions to enforce federal consumer protection laws. Title X allows the application of state law to national banks. Federal law does preempt a state’s ability to enforce consumer protection law against national banks and other federal financial institutions if: the application of the state law would have a discriminatory effect on the national bank or thrift; the state law prevents or significantly interferes with the exercise of the national bank or thrift’s powers; or the state consumer law is preempted by another federal law. For further written and video explanation, discussion and practice questions, see What is the "Consumer Financial Protection Act"?

Equal Credit Opportunity Act
The Equal Credit Opportunity Act (ECOA) protects individuals from discrimination in lending money or the extension of credit. It covers financial institutions, retail establishments, credit-card issuers, and other credit-granting firms. The ECOA extended the protections from discrimination under Title VII beyond the work environment. It prohibits a lender from discriminating in the extension of credit based upon race, color, religion, national origin, sex, marital status, or age. The ECOA went further to protect against discrimination based upon receipt of public assistance (welfare). Examples of discrimination might include: refusing to extend credit; discouraging someone from pursuing credit based on a protected characteristics; charging a higher rate of interest; asking about marital status for a single-borrower loan; and asking about children or plans to have children. Business Compliance - The Act imposes special responsibilities on businesses extending credit, as follows: issuers must calculate income from all regular sources, such as alimony, maintenance, and part-time jobs; issuers must use the credit history for all partners; issuers must inform the candidate about the credit decision (granted or denied) within 30 days; and consumers must be given a specific reason for denial of credit. The business must notify the applicant of the reason for a denial of a request to extend credit. Further, the protections extend to any negative action taken pursuant to extending credit. Remedies for Violation - The ECOA provides several remedies and penalties for violation of the Act, as follows: Private Administrative or Civil Actions - Individuals may bring private causes of action or pursue enforcement through the FTC or CFPB. Remedies - Individuals bringing a private cause of action may recover actual damages, punitive damages (up to $10,000), attorneys fees, and legal costs. FTC Administrative and Civil Actions - The FTC may also bring an administrative or civil action against the issuer seeking equitable remedies, including injunction against further violations. For further written and video explanation, discussion and practice questions, see What is the "Equal Credit Opportunity Act"?

Fair Credit Reporting Act
The Fair Credit Reporting Act protects consumers (not businesses) by regulating the accuracy, fairness, and privacy of consumer information reported to or held by consumer reporting agencies. It protects consumers from the negative consequences associated with inaccurate information in their personal credit reports. The FCRA regulates each stage of the credit reporting process, including collection of information, reporting of that information to credit agencies, dissemination of credit information, and use of a consumers credit information (such as in extending new credit). The Act applies to anyone who prepares or uses a credit report in connection with extending credit, selling insurance, or hiring or firing an employee. For further written and video explanation, discussion and practice questions, see What is the "Fair Credit Reporting Act"?

Users of Information - FCRA
Requirements on Users of Credit Reports - A “credit report” is a collection of a consumer’s credit history. It includes such information as: past payment history, current credit accountings, late payments, credit limits, any debt or bill collection activity, liens, judgments, bankruptcies, etc. A “user” of a credit report is anyone who employs a report in the decision of whether to extend any form of credit. Extending credit may include financing a sale, establishing a recurring account, hiring, or loaning money. The FCRA places the following requirements on businesses that use credit reports to make decisions affecting the consumer: Notice of Rejection - The FCRA allows a user of a credit report to request the report for a permissible reason. It requires that businesses inform consumers who seek credit for personal, family, or household purposes if their request is denied because of an adverse credit report. The notice must include the source of the credit report and notification of the right to make a request within 60 days to the reporting agency regarding the nature of the information received. Investigative Consumer Reports - “Investigative consumer reports” are investigations carried out through personal interviews in the consumer’s community to uncover personal details, such as her character, lifestyle, community reputation, etc. A business seeking to acquire such information may only seek such a report after giving 3-days notice to the consumer. The consumer may request information on the scope and nature of the investigation. Employer Background Checks - Employers using consumer reports to screen job applicants or perspective employees must follow specific procedures, including: obtaining written permission; explaining how the credit report will be used; avoiding any inappropriate or non-disclosed uses of the report; providing a copy of the credit report (if the employee is not hired); and allowing the applicant to dispute any information contained in the report before making a final decision. The above-referenced list of common users of a credit report is not exhaustive. There may be any number of situations in which an individual uses a credit report in decisions affecting an individual. For further written and video explanation, discussion and practice questions, see Users of Information?

Reporting Agencies - FCRA
A credit reporting agency is any business that collects information about consumers for the purpose of disseminating that information in connection with credit applications, employment, or other evaluations of the individual’s credit. The largest personal credit reporting agencies in the United States are Transunion, Experian, and Equifax. The FCRA requires that credit reporting agencies follow the following guidelines: Procedures - Put in place procedures to ensure the accuracy of information in a consumer report; Verify Information - Provide a consumer with notice of the information collected and seek to verify any disputed information; Dispute Negative Information - Provide a manner for disputing negative information on a credit report. Notification of Negative Information - If negative information is removed from the reporting agency’s file, give a consumer 5 days notice before reinserting that information; Removal of Negative Information - The reporting agency must remove any negative information from the report within seven years of the date of the reported delinquency. For further written and video explanation, discussion and practice questions, see Reporting Agencies?

Furnishers of Information - FCRA
The FCRA places obligations upon creditors who furnish a consumers credit information to a reporting agency. This may include lenders, retailers, collection agencies, etc., that deal with customer credit and report that information to a reporting agency. The FCRA requires that these creditors: provide complete and accurate information to the credit reporting agencies; investigate consumer disputes received from credit reporting agencies; correct, delete, or verify information within 30 days of receipt of a dispute; and inform consumers within one month about negative information that is in the process of or has already been placed on a consumers credit report. For further written and video explanation, discussion and practice questions, see Furnishers of Information?

Enforcement - FCRA
The FTC and CFBP enforce the provisions of the FCRA. Further, individuals may bring a cause of action against creditor reporting agencies or credit providers. In a civil action, a creditor may recover actual damages, attorney’s fees, court costs, and punitive damages (if the conduct is intentional). For further written and video explanation, discussion and practice questions, see Enforcement?

Truth in Lending Act (TILA)
The Truth in Lending Act (TILA) was passed with the purpose of protecting individuals from entering into deceptive or confusing credit relationships. The group of regulations implementing the provisions of TILA is known as “Regulation Z”. These regulations contain the bulk of the requirements for businesses to comply with TILA. The CFPB, along with the Federal Reserve Board, has rule-making authority under Regulation Z. The FTC has enforcement authority for TILA. Applicability - TILA places requirements on businesses that extend credit to consumers to make certain disclosures regarding the terms of the credit. Most notably, it requires a uniform manner of disclosure of the borrowing costs and payment associated with a particular loan. This allows consumers to more readily compare credit terms across lenders. TILA applies to consumer transactions with the following characteristics: the lender is in the business of extending credit for loan of money, sale of property, or furnishing a service; the debtor is a person; a finance charge may be imposed; and the credit obtained is primarily for personal, family, household, or agricultural purposes. Other provisions of TILA protect consumers entering into consumer transactions requiring them to post their personal residence as collateral. Disclosure Requirements - Disclosures are required when the buyer pays in four installments of more. TILA requires the following specific disclosures: Finance Charge - The sum of all charges payable directly or indirectly by the debtor or someone else to the creditor as a condition of the extension of credit. Annual Percentage Rate - The lender must disclose the finance charge, express it as an annual percentage rate, and specify the methods for making the computation. Financing Statement - Before extending credit, the lender must provide a detailed financial statement to the borrower before extending credit. Enforcement - TILA allows for various penalties and remedies. Civil remedies for violation of TILA include an amount twice the amount of finance charges, plus attorney’s fees. Creditors may avoid liability for an error if they notify and correct the error within 60 days of discovery. The borrower may generally rescind the transaction within 3 days of the transaction or upon receipt of notice of right to rescind. The right to rescind is heightened if there is a failure to adequately disclose on a mortgage loan. For further written and video explanation, discussion and practice questions, see What is the "Truth in Lending Act"?

Fair Debt Collection Practices Act (FDCPA)
The Fair Debt Collection Practices Act (FDCPA) was passed to protect consumers from abusive practices by debt collectors. It establishes limitations on debt collection practices, provides a method for disputing uncertain debts, and prescribes remedies for violation of the Act. The FDCPA applies only to consumer debts collected by debt collectors — business debts are not covered. A “consumer debt” is a debt established for personal, family, or household purposes. A debt collector is defined as "any person who uses any instrumentality of interstate commerce or the mail in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." In other words, the FDCPA applies to businesses whose primary business is the collection of third-party, consumer debt. Information from Debt Collector - A debt collector must provide the debtor with the following information: Identification - Any communication from to the debtor must identify the collector and provide notice that any information obtained will be used for the purpose of collecting a debt. Amount - The communication must contain the amount of the debt. Creditor Information - The communication must contain the name of the creditor to whom debt is owned. Notice of Dispute - Within 5 days of making initial contact, the collector must provide notice that the debtor has 30 days to dispute the validity of the debt. Verification of Debt - If a debtor disputes the validity of the debt, the collector must provide information verifying that the debt is valid and, if requested, the name of the original creditor. If the original debt was reported to a credit reporting agencies for inclusion on the debtor’s credit profile, notice of any dispute must also be reported to the credit reporting agencies. Prohibited Conduct - The FDCPA places the following limits on debt collection practices: Collection Hours - Collectors may only telephone consumers within the hours of 8:00 a.m. to 9:00 p.m. Workplace Restrictions - A debt collector may not contact the debtor at her place of employment or contact the employer once made aware that it is unwelcome by the employee or employer. Abusive Collection Practices - A collector cannot employ abusive practices to collect the debt. Deceptive Practices - The debt collector is prohibited from using deceptive practices or misrepresentations in order to collect the debt. Publicly Communicating Debt - The debt collector is prohibited from disclosing and discussing the debt with those other than the debtor, the debtor’s spouse, or representative. Further, the collector may not publish the debt publicly or list the debtor on a debt collection list. This prohibition extends to communication methods that are used to identify and embarrass debtors. Collection Amount - Debt collectors may only seek to collect an amount representing by the original debt and in accordance with state law. Request to Cease Communication - Consumers may provide collectors with written notice that the debtor refuses to pay (disputes) the asserted debt and request the collector cease any further contact. Once the collector receives this written notice, she cannot contact the consumer except to notify the debtor that collection efforts are halted or that the debtor intends to pursue legal action. Legal Representative - If a debtor provides notice to the collector that she is represented by legal counsel, the debt collector may not contact the debtor and may only communicate with a legal representative about the debt. Verification of Debt - If the debtor requests verification of the debt, the collector may not pursue collection efforts until the debt is verified. Enforcement of the FDCPA - The CFPB is charged with enforcing the FDCPA. The CFPB may initiate investigations and pursue civil or criminal actions against violators. Consumers may also file a civil action against debt collectors violating the FDCPA. A plaintiff may recover actual damages, statutory damages, attorneys fees, and court costs from debt collectors. A debt collector may avoid liability by demonstrating that violations are unintentional and the result of a good faith error. Likewise, a consumer can be responsible for attorney’s fees if the court determines that the consumer filed the action in bad faith. For further written and video explanation, discussion and practice questions, see What is the "Fair Debt Collection Practices Act"?

Fair Credit Billing Act (FCBA)
The Fair Credit Billing Act (FCBA) was passed as an amendment to TILA with the purpose of protecting consumers against unfair billing practices. The FCBA is administered by FTC and applies within the consumer’s home state or 100 miles of home. These provisions are enforced against banks and other financial institutions insured by the Federal Deposit Insurance Corporation (FDIC). The primary protections of the FCBA limit liability on lost, stolen, or misused credit cards to $50. It also establishes a method for consumers to address billing errors in open-end accounts, such as credit cards and lines of credit. Further, it allows the credit card holder to assert a defense against paying a merchant for shoddy or defective merchandise. Methods of Disputing a Debt - Consumers have authority under the FCBA to dispute errors in open-end accounts. To dispute a bill on the account, the consumer must send written notice to the creditor within 60 days of receipt of the account statement containing the error. There are provisions in place to make certain notice is sent to the correct department. The creditor must acknowledge receipt of the dispute within 30 days. The creditor must then investigate the dispute. This generally means undertaking simple substantiation measures with the individual paid by the account, such as a vendor or service provider. The creditor must either correct the disputed debt or explain to the debtor why it believes the debt is valid. The consumer may request all information collected to substantiate the debt. Enforcement - Enforcement of the FCBA is done through private action. That is, failure of a financial institution to adhere to these provisions gives a consumer the ability to bring a private action against the creditor. The FCBA allows for actual damages, statutory damages of twice the finance charges, court costs, and attorney’s fees. For further written and video explanation, discussion and practice questions, see What is the "Fair Credit Billing Act"?

Electronic Funds Transfer Act (EFTA)
The Electronic Funds Transfer Act (EFTA) was passed with the purpose of regulating the practice of transferring funds electronically. More specifically, the EFTA applies to electronic transfers of money between two separate institutions. It does not apply to automatic account transfers within the same financial institution. The EFTA is administered by the Federal Reserve Board. Consumer Protections - The EFTA protects a consumer for lost, stolen, or misused debit cards. These protections are similar to the protection afforded under the FCBA. Responsibility for loss in such situations is allocated between the transferring financial institution and the consumer. A consumer’s liability in such a case is limited to $50 if the consumer follows the appropriate procedure. The consumer must report the misuse of a debit card within 2 days of learning of the misuse. If the consumer fails to report a misuse within 2 days of learning of it, her potential liability moves up to $500. If she fails to report a misuse for more than 60 days, the EFTA does not place any limits on the consumer’s responsibility for losses. The EFTA prohibits creditors from requiring that a consumer repay a debt via electronic funds transfer. Lastly, any state law or contract that subjects a customer to greater liability than that mention above is preempted by the EFTA. Responsibility of Financial Institution - If a consumer’s card is lost or stolen, the financial institution must provide her with notice of her potential liability. It must also provide a method for reporting the lost or stolen card and provide instructions on resolving the issue. If a consumer reports an erroneous fund transfer, the financial institution must investigate the error and resolve it within 45 days (or 90 days in limited circumstances). If the financial institution takes more than 10 days (20 days for new accounts) to complete the investigation into the transfer error, it must re-credit the customer’s account for the amount in question. In any event, the financial institution must notify the customer of the results of investigation. If there is a confirmed error, the financial institution must correct it or make re-credit to the consumer’s account final. If there is no error, the financial institution must explain in writing the reason or justification for the transfer. It must also notify the customer that any temporary re-credit to the customer’s account will be deducted from the account. For further written and video explanation, discussion and practice questions, see What is the "Electronic Funds Transfer Act"?

Consumer Product Safety Act (CPSA)
The Consumer Product Safety Act (CPSA) was passed for the purpose of protecting consumers against dangerous products. The CPSA encompasses several consumer protection acts, such as the Poison Prevention Packaging Act (PPPA) and the Consumer Product Safety Improvement Act (CPSIA). The CPSA established the Consumer Product Safety Commission (CPSC), which is charged with administering the provisions of the CPSA along with its regulatory provisions. The CPSC has authority over most consumer products, except those that are expressly relegated to a separate federal agency. The CPSC has authority to establish product safety standards, seek the recall of, and potentially ban, products that are unreasonably dangerous or present a significant risk to consumers. For further written and video explanation, discussion and practice questions, see What is the "Consumer Product Safety Act"?

Product Labeling Laws
Labeling laws are administered by a combination of federal and state agencies. Federal agencies heavily involved in product labeling laws include the CPSC, FTC, and FDA. Collectively, federal and state laws require manufacturers to place informative labels and warnings on various types of products based upon product category, materials or substance, and applicable safety standards.The Federal Trade Commission (FTC); Food and Drug Administration; Consumer Product Safety Commission; US Customs and Border Protection Service (CBP). The Fair Packaging and Labeling Act - The Fair Packing and Labeling Act (FPLA) is the primary labeling law in the United States. It was passed in 1967 to require labeling of “consumer commodities”. The provisions of the FPLA are enforced by the Food and Drug Administration and Federal Trade Commission. The primary provisions require that labels disclose the following information: type of commodity enclosed, amount of contents, and the manufacturer or distributor’s name and location. It also allows for regulations that protect consumers against deception with regard to ingredients, contents of packaging, pricing, and packaging size. The Act integrates the standards established by the Office of Weights and Measures of the National Institute of Standards and Technology, US Department of Commerce. Other Notable Labeling Laws - These include: Federal Hazardous Substance Act (FHSA), Toxic Substance Control Act (TSCA); Poison Prevention Packaging Act (PPPA); Labeling of Hazardous Art Material Act (LHAMA); Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA); Flammable Fabrics Act (FFA); Textile, Wool and Fur Acts; OSHA Hazard Communication Standard. For further written and video explanation, discussion and practice questions, see What "labeling laws" apply to consumer products?

Federal Food, Drug, Cosmetic Act
The Federal Food Drug and Cosmetic Act (FFDCA) was passed for the purpose of ensuring the safety of food, drugs (some medical devices), and cosmetics. The act gave authority to the Food and Drug Administration (FDA) to administer the provisions of the Act. It is a broad Act including provisions for electronic radiation control, provisions for effective testing and marketing of drugs, and bioterrorism preparation. The FFDCA contains both civil and criminal penalties for violation of its provisions. Repeated, intentional, and fraudulent violations of the Act are generally subject to criminal action. For further written and video explanation, discussion and practice questions, see What is the "Federal Food, Drug, and Cosmetic Act"?

Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act (MMWA) was passed to protect consumers by regulating the use of warranty and disclaimer provisions by merchants. Generally, warranties are the subject of state contract law. The MMWA is a federal law administered by FTC; but it does not limit a consumer’s rights under any other state or federal consumer protection law. The provisions of the MMWA regulate how warranties are presented to purchasers of consumer products. It seeks to ascertain that warranties are presented in a manner that is “readily understood” by the consumer. It applies to full and limited warranties of goods, but warranties on services for repairs are not covered. While merchants are not required to provide a warranty on products, if a warranty is provided it must comply with the MMWA provisions. Requirements of the Act - The FTC requires that a merchant warranting a consumer product disclose, fully and conspicuously, in simple and readily understood language, the terms and conditions of the warranty. The disclosure provisions are most important when a merchant provides a limited warranty, as the consumer must understand all of the limitations associated with the warranty. When a merchant fully warrants a product against defect, the warrantor must comply with the following provisions: Repair or Replace - The merchant must fix or replace the product without charge, within a reasonable time. If, after reasonable effort is made to repair the item, the product or a component part still has a defect, the consumer can either receive a refund or free replacement of the item. Limitations on Implied Warranties - The merchant may not limit the time period for any implied warranties; Limitations on Damages - A merchant may only limit its liability for consequential damages arising from a breach of any written or implied warranties if that disclaimer is conspicuously written on the face of the warranty document. Branded Components - A merchant cannot tie the enforceability of warranty provisions to the use of branded parts or materials for repair. Exercise Warranty Rights - A merchant may not require that a consumer undertake any steps (other than notification of a defect or nonconformity and return to a place of repair) in order to enforce her warranty rights.The above standards are not required if a merchant can demonstrate that the cause of a defect or malfunction is due to damage, failure to maintain, or misuse of the product while in the consumer’s possession. Remedies - The MMWA allows for civil actions by the FTC or by private parties. A civil action by private parties may seek damages in state or federal court. A federal court action must have an amount of damages in controversy of $50,000 or more or have 100 plaintiffs in a class. A successful plaintiff may recover actual damages, court costs, and attorney’s fees. An action by the FTC generally seeks injunction against a merchant barring the subject practice. For further written and video explanation, discussion and practice questions, see What is the "Magnuson-Moss Warranty Act"?

Privacy Act of 1974
The Privacy Act restricts the ability of the Federal Government to collect information about individual US citizens. Specifically, it regulates the use, maintenance, and dissemination of collected personally-identifiable information. “Personally-identifiable information” either contains the name or other information that allows the information to be attributed to a specific individual. These regulations are contained in what is known as the Code of Fair Information Practices. This regulatory framework controls all records in the possession and control of the Federal Government. Any agency in possession of such information must employ administrative and physical security measures to protect against the dissemination of the information. All federal agencies, particularly those that collect personally-identifiable information, must provide public notice of their records and systems via the Federal Register. The system must also provide a means by which individuals may seek access to and amend any erroneous material in their records. Consent of an individual is required before the agency may disclose that person’s personal information. There are, however, several exceptions where a federal agency may disclose personally-identifiable information about an individual without notifying the person: For statistical purposes by the Census Bureau or the Bureau of Labor Statistics; For routine uses within a US government agency; For archival purposes "as a record which has sufficient historical or other value to warrant its continued preservation by the United States Government”; For law enforcement purposes; For congressional investigations; and Other administrative purposes. Agencies must also have a Data Integrity Board that reports all complaints about Privacy Act violations to the Office of Management and Budget. The Privacy Act was amended to include provisions regarding the use of Privacy Act information in automated matching programs (such as criminal records programs). For further written and video explanation, discussion and practice questions, see What is the "Privacy Act of 1974" (Privacy Act)?

Right to Financial Privacy Act of 1978
The RFPA places limitations on the ability of the Federal Government to seek financial records about an individual from banks or other financial institutions. The RFPA applies only to the Federal Government. It does not govern requests for financial records made by private businesses or state or local governments. Further, the RFPA only protects the records of individuals and partnerships with 5 or fewer partners. It does not protect the financial information of other business entities. The Federal Government may access such records in the following instances: the customer authorizes access; there is an appropriate administrative subpoena or summons; there is a qualified search warrant; there is an appropriate judicial subpoena; or there is an appropriate written request from an authorized government authority. If the Federal Government seeks to obtain these records, it must notify the individual whose records are requested. The customer then has 10 days from the date of written notice to challenge the disclosure. The RFPA allows for statutory damages of $100 for each violation. For further written and video explanation, discussion and practice questions, see What is the "Right to Financial Privacy Act of 1978" (RFPA)?

Electronic Communication Privacy Act
The ECPA protects individuals against unlawful interception of electronic communications by the Federal Government or individuals. Specifically, it restricts the ability to undertake wire taps, computer transmissions, stored electronic communications, and tracing of telephone communications, etc. It is a federal crime to undertake such activity without first receiving a court order or obtaining consent from a party to the communication. This means that one party to the conversation may record the conversation without another party’s knowledge. The Act protects communications while being made, as well as records of past communications. It is also a crime to use or disclose information obtained through this illegal means. For further written and video explanation, discussion and practice questions, see What is the "Electronic Communication Privacy Act of 1986" (ECPA)?

Children’s Online Privacy Protection Act
COPPA was passed to protect against the online collection of personal information of children under the age of 13 years. Enforcement of COPPA is charged to the FTC, which issues regulations for its enforcement. The rules regulate commercial websites, online services, mobile apps, etc., that collect personal information from operators of the site. More specifically, COPPA applies to any site that collects personal information and is targeted toward children under 13 years old or sites that collect information with knowledge that children under the age of 13 years are using the site. COPPA also applies to individuals or businesses that collect this type of consumer information off of the websites of others. Operators of such sites must comply with the following provisions: Online Privacy Policy - Inform users of their practices of recording user information; Parental Consent - Provide notice to parents of the intent to collect children’s information and obtain parental consent; Limited Disclosure - Prohibit the disclosure of information collected about children, except in limited circumstances; Parental Review - Allow parents to review (and request deletion) of the collected information; Parental Limitations - Allow parents to prevent further use or future collection of the child’s information; Confidentiality - Maintain security in the storage of information; and Limited Retention - Not maintain the information longer than necessary, and delete the information after it has served its intended purpose. For further written and video explanation, discussion and practice questions, see What is the "Childrens Online Privacy Protection Act of 1986" (COPPA)?

State Laws on Consumer Protection
States pass and enforce any number of consumer protection laws. These laws sometimes offer protections in addition to those offered by federal law. State laws protecting consumers are generally known as Unfair and Deceptive Practices (UDAP) statutes. Common areas regulated by UDAP statutes include: extension of credit, insurance, utilities, post-sales acts, and real estate. For further written and video explanation, discussion and practice questions, see What role do states play in Consumer Protection?


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