Book Opener

CHAPTERASSESSMENTSection 15.1 Consumer Protection● Federal consumer protection law applies totransactions between businesses and consumers.Consumers are people who buy or lease goods,real estate, or services for personal, family, orhousehold purposes. Federal consumer protectionlaw applies only to interstate commerce, whichis business activity that touches more than onestate. State consumer law protects consumerswho conduct local transactions.● A false statement about the construction,durability, reliability, safety, strength, condition,or life expectancy of a product is a fraudulentmisrepresentation. It is also deceptive to purposelyavoid disclosing any fact that would causea buyer to avoid entering into a contract. Anotherexample of an unfair and deceptive practice isfalse advertising, which is advertising that misleadsthe public. Some ads that advertise lucrativework-at-home opportunities are examples offalse advertising. Sending unordered merchandiseto consumers is another unfair and deceptivepractice employed by some unscrupulous businesses.Individuals who receive items in the mailthat they did not order are not required to pay forsuch goods.● When a store advertises bargains that don’t reallyexist to lure customers to buy more expensivegoods, it is engaging in bait and switch advertising.The following sales practices may besigns of a bait and switch: (1) refusing to show,demonstrate, or sell the advertised product;(2) attempting to discourage customers bycriticizing the advertised product; (3) claimingthat the advertised products are out of stock;(4) refusing to promise delivery of the advertisedproducts within a reasonable period of time;and (5) demonstrating products that are moreexpensive than the advertised items.●Some rules designed to protect customers arethe negative option rule, the cooling-off rule,the Telemarketing Sales Rule, and the 900-Telephone-Number Rules. The negative optionrule applies to plans that send products regularly,such as magazine subscriptions. The cooling-offrule gives you three days to cancel contracts forpurchases made away from the seller’s usualplace of business. The Telemarketing SalesRule protects you from abusive or unethicaltelemarketers. The 900-Telephone NumberRules protect you from scams associated withcalling 900 numbers.Section 15.2 Product Liability● Manufacturers and sellers have product liabilitywhen they place defective, unhealthy, or unsafeitems on the market. Manufacturers and sellersare strictly liable, without regard to fault, whenthey sell unreasonably dangerous products tothe public.● The Consumer Product Safety Act was developedto protect consumers from unsafe goods. Underthe Consumer Product Safety Act, products mustbe tested for safety. Manufacturers and sellersmust prove the quality and fitness of theirproducts. In the event there is a problem, manufacturersare required to take action, sometimeseven recalling unsafe products.● The Food, Drug, and Cosmetic Act prohibits themanufacture and shipment of faulty products ininterstate commerce. A food or drug is said to beinjurious if it contains any substance that may beharmful to health.● Consumer protection can be obtained from stateand local consumer protection agencies, such asthe Consumer Product Safety Commission andthe Better Business Bureau.332 Unit 3: Understanding Consumer Law