Consumer Protection

The Uniform Commercial Code (UCC), which has been adopted in most states, is a 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 deposits and 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 a guarantee to the buyer that the merchandise is fit for the purpose for which it was designed. The warranty of fitness for a particular purpose states that if 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 these two 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 that a 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 period in 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 they may 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 Credit Billing Act of 1975 has procedures for billing dispute settlements and makes credit 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 make this 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 laws were 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.