Consumer Protection

History
Consumer protection and product safety include the efforts made by government, nonprofit organizations, businesses, and individuals to create, protect, and enforce the rights of consumers who buy products or services. While the idea of consumer protection is not new--there have been laws regarding uniform weights and measures since the fledging days of the United States--interest inconsumer rights legislation has flourished in tandem with society's technological and economical advances. For instance, the mass commercialization of products during the industrial revolution spawned laws in the late 1890s and early 1900s regarding food purity. And the rise in consumer credit as well as product safety awareness, spurred much consumer protection legislation duringthe 1960s and 1970s.
The passage of the pure food and drug legislation, in 1906, came in responseto efforts led by crusaders who were concerned about unsanitary conditions and high prices. One such crusader was Upton Sinclair, author of the novel The Jungle. Sinclair was considered a muckraker because his book depictedthe harsh and filthy environment inside the Chicago stockyards. Public reaction to Sinclair's exposition led to an investigation by the federal governmentand subsequent meat-inspection legislation.
In 1938 Congress added to the 1906 legislation by enacting the Food, Drug andCosmetic Act, which required manufacturers to prove the safety of new drugsbefore being allowed to put them on the market. The Food and Drug Adminsitration (FDA) of the Department of Health and Human Services is responsible for administering the pure food and drugs acts. These acts were created to ensurethat food, drugs, vaccines, devices, and cosmetics are safe, properly labelled, and pure. Over the years, the acts have been strengthened with additionalamendments, such as a 1962 requirement that manufacturers prove the effectiveness, as well as the safety, of drugs before they are marketed to consumers.
In a 1962 message to the Congress, President John F. Kennedy outlined the basic tenents of consumer rights, which he described as: the right to safety, the right to be informed, the right to choose, and the right to be heard. Theseprinciples form the foundation for the consumer-rights movement. President Lyndon B. Johnson advanced consumer rights in 1964 by creating the post of Special Assistant for Consumer Affairs, and in 1967 formed the Consumer Federation of America, which served as the national organization of consumer, cooperative, and labor groups.
At the forefront of the consumer-rights movement since the 1960s has been Ralph Nader, a lawyer and consumer advocate. Nader's 1965 muckraking book, Unsafe at Any Speed, exposed questionable manufacturing and design practices of automobile manufacturers. The book spurred the passage of the National Traffic and Motor Vehicle Safety Act of 1966. Nader has organized a network ofyoung people, called Nader's Raiders, who conduct researching, writing, andlobbying efforts in a variety of areas related to consumer protection.
Consumer Protection Laws
Consumers enter into transactions to purchase goods or services every day. These transactions are considered legally binding contracts because consideration (motive to enter into a contract) is being given on both sides; the merchant is providing the product and the consumer is agreeing to pay, whether thepayment be in the form of cash or credit.
The Uniform Commercial Code
The Uniform Commercial Code (UCC), which has been adopted in most states, isa comprehensive body of laws governing uniformity and fair dealing with transactions. It provides remedies and rights for both the buyer and seller. The UCC includes provisions for the sale of goods, commercial paper, bank depositsand collections, bulk transfers, investments securities, and secured transactions.
Additionally, the UCC contains provisions for several types of warranties. Warranties are the assurances, or promises, made by the seller, to the buyer, concerning the quality or condition of the merchandise. If there is a breach of the warranty, a consumer may cancel a contract or sue for damages. Warranties can either be express or implied. Express warranties are clear promises made, either orally or in writing, by the seller to the buyer, and often are included in a written contract. These promises must be factual, not subjective,such as, "this car drives like a dream." This statement is an example of sales hyperbole that is not to be taken literally. However, if a catalog has a picture of a pin and states that the pin is 22-karat gold, then the pin must be 22-karat gold. Implied warranties, however, are created by law and exist without the seller having actually made them.
The UCC covers two such implied warranties. The warranty of merchantability covers transactions over $500. Under this warranty, the seller is extending aguarantee to the buyer that the merchandise is fit for the purpose for whichit was designed. The warranty of fitness for a particular purpose states thatif a seller knows that merchandise is to be used for a special purpose and if the buyer is relying on the seller's judgment when purchasing the product for that purpose, then the seller has warranted that the merchandise will be acceptable for the buyer's intended use. Sellers can disclaim either of thesetwo implied warranties, by putting into writing, at the time of the sale, statements such as, "merchandise sold as is" or "merchandise sold with faults."
The Magnuson-Moss Act is a federal law covering consumer products that cost more than $15. Under Magnuson-Moss, if a seller or manufacturer provides a written contract, the contract must be clearly visible and the terms and conditions must be expressed in clear language. The Magnuson-Moss Act requires thata written warranty contain certain information including the effective date of the warranty and who is entitled to protection under the warranty.
Both federal and state regulations provide relief to consumers who may have made a hasty purchase. Generally, consumers have a 72-hour cooling-off periodin which they may cancel any contract they have made from a door-to-door solicitation. The reason for these laws is that presumably sellers will make high-pressured sales presentations in the buyer's home. If the cancellation is made within the three-day period, buyers do not have to give a reason but theymay lose their downpayment or have to pay a cancellation fee.
Federal regulations also assist consumers who have problems with their credit. The Fair Credit Reporting Act allows consumers to view and correct erroneous information that is being reported on their credit history. The Fair CreditBilling Act of 1975 has procedures for billing dispute settlements and makescredit card companies liable for the quality of the merchandise that consumers pay for with their credit cards.
There are several organizations to help buyers who believe they have purchased a defective product. Consumers may contact their local Better Business Bureau (BBB). The BBB keeps track of such complaints against businesses and makethis information available to the public. Small claim courts, for cases involving amounts less than several thousand dollars, are another possible venue to resolve a buyer-purchaser dispute.
Many states have also enacted "lemon laws," which provide protection to automobile owners who experience repeated problems with their vehicles. These lawswere created because automobiles are expensive and are quite often a necessity for most consumers. Additionally, a defective automobile may be a safety hazard. If a consumer can prove that a car is defective and a manufacturer cannot correct the problem, the automobile maker may be liable for furnishing the consumer with a new vehicle or refunding the purchase price.
Product Safety
The Consumer Product Safety Commission (CPSC) was created in 1973 and is theU.S. federal government agency responsible for guaranteeing that more than 10,000 consumer products are safe for use. The CPSC creates safety standards and can ban or recall items from the marketplace that are hazardous. The commission enforces regulations such as the Flammable Fabrics Act of 1953, which governs the fire-resistance requirements for fabrics. Other acts that the CPSCregulates include the Hazardous Substances Act of 1960 (with later amendments), which requires that product labels contain warning and safety information.
The FDA regulates processed foods, drugs, medical devices, and cosmetics. Theagency ensures that these items are safe and that their labels are correct.The FDA also makes certain that food is wholesome and that drugs are effective. If products are unsafe, the FDA has the authority to take the merchandiseoff store shelves. Radition-emitting products, including microwave ovens, also fall under the charge of the FDA.
The National Highway Traffic Safety Administration (NHTSA) oversees motor-vehicle safety. The NHTSA has the power to recall defective automobiles. The agency sets safety standards for the nation's highways and investigates automobile defects that impact the vehicle's safety.
Truthful Advertising
In order to make informed purchases, consumers need to have accurate information regarding the product or service they are considering buying. Several federal laws require manufacturers to disclose information that potential buyersneed to make purchasing decisions. For example, the Fair Packaging and Labeling Act of 1966 is responsible for ensuring that labels carry information such as the product's quantity and ingredients. The Truth in Lending Act of 1968mandates that applicants for credit loans be given accurate and clear information regarding the cost and terms of the loan they have applied for. Individual states have enacted consumer packaging laws as well. For instance, in order for consumers to compare the costs of products, many states have regulations that require supermarkets to show item cost based on unit measurements, such as weight or count.
The Federal Trade Commission (FTC) is the federal agency responsible for ensuring that advertising is not false or misleading. In addition, the FTC regulates interstate business and enforces consumer protection laws. The FTC has the authority to make companies withdraw any false advertising and may requirethe company to correct the misleading ads.
Private organization also provide services to aid consumers in making sound purchasing decisions. One of the most well known of these organizations is thenonprofit Consumers Union of United States, Inc. Consumers Union was established in 1936 and conducts impartial private tests on a wide range of goods and services. It then disseminates the test results in a variety of formats, including the periodical Consumers Reports. On a worldwide basis, the International Organization of Consumers Union (IOCU) is a network of over 125 organizations in more than 50 countries that provides an international platform for consumer protection and product testing.