Ch17-SG - Chapter 17 ConsumerProtection ,unsafeproducts,...

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Chapter 17: Consumer Protection W HAT   THIS  C HAPTER  I S  A BOUT Federal and state laws protect consumers from unfair trade practices, unsafe products, discriminatory or unreasonable  credit requirements, and other problems related to consumer transactions. This chapter focuses on  federal  consumer law. C HAPTER  O UTLINE I. ADVERTISING The Federal Trade Commission Act of 1914 created the Federal Trade Commission (FTC) to prevent unfair and  deceptive trade practices. A. D ECEPTIVE  A DVERTISING This is advertising that would mislead a consumer—such as scientifically untrue claims and misleading half-truths.  Puffing (vague generalities, obvious exaggeration) does not qualify. B. B AIT - AND -S WITCH  A DVERTISING This occurs when a seller refuses to show an advertised item, fails to have adequate quantities on hand, fails to  promise to deliver within a reasonable time, or discourages employees from selling the item. The FTC has issued  rules to prevent this practice. C. O NLINE  D ECEPTIVE  A DVERTISING The same laws that apply to other forms of advertising apply to online ads, under FTC guidelines. D. FTC A CTIONS   AGAINST  D ECEPTIVE  A DVERTISING If the FTC believes that an ad is unfair or deceptive, it sends a complaint to the advertiser, who may settle. If not,  the FTC can, after a hearing, issue a cease-and-desist order or require counteradvertising. E. T ELEMARKETING   AND  E LECTRONIC  A DVERTISING 1. Telephone Consumer Protection Act (TCPA) of 1991 The TCPA prohibits (1) phone solicitation using an automatic dialing system or a prerecorded voice and (2)  transmission of ads via fax without the recipient’s permission. For each violation, consumers can recover  actual losses or $500, whichever is greater. If a defendant willfully or knowingly violated the act, a court can  award treble damages. 2. Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 This act authorized FTC to set rules for telemarketing and bring actions against fraudulent telemarketers. The  FTC’s Telemarketing Sales Rule of 1995 makes it illegal to misrepresent information and requires disclosure.  In 2003, the FTC set up a “National Do Not Call Registry,” which prohibits telemarketers from calling  consumers whose names are listed. 137
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138 UNIT 5: THE REGULATORY ENVIRONMENT F. S TATE  L AWS Most states also have laws regulating phone solicitation. II.
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Ch17-SG - Chapter 17 ConsumerProtection ,unsafeproducts,...

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