Chapter%2018 - Chapter 18 Chapter Legal Environment of...

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Chapter 18 Chapter 18 Legal Environment of Business in the Information Age Spring 2003, David Baumer
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Consumer Protection Legislation Consumer Protection Legislation Usually Congress decides to pass legislation protecting consumer when it decides that CL protections are inadequate because : the consequences of being defrauded are so serious there has been a history of abuses in this industry or type of transaction the products being sold are dangerous and complicated States have also passed consumer protection legislation, but the focus is upon federal laws E-Commerce has increased opportunities for consumer fraud and unfair trade practices
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Federal Trade Commission Federal Trade Commission FTC was created in 1914 Has broad authority to declare trade practices unfair or deceptive Half of the FTC is devoted to antitrust enforcement and the other half to consumer protection FTC enforces 46 separate consumer protection statutes passed by Congress
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Unfair Trade Practices Unfair Trade Practices According to the FTC An unfair trade practice is Likely to cause substantial injury to consumers Which is not reasonably avoidable and Is not outweighed by countervailing benefits Examples of unfair trade practices include Advertising highly sugared cereal products to children, racist or pornographic advertising Conditioning an eye examination upon an agreement to buy goods from the eye doctor Breaching of contracts when damages are small, Orkin
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Deceptive Trade Practices Deceptive Trade Practices A deceptive practice is one that is likely to mislead the reasonable consumer and affect decisions Examples include Having celebrities endorse products they do not use Making medical claims about products that are not backed up by scientific proof The FTC levels the playing field in litigation when the def. is a large corp. and the victims are consumers
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Lanham Act Lanham Act Common law torts such as product disparagement can be used If a rival business makes an untrue statement about the products of another rival Section 43(a) also allows for injunctions and damages when a rival makes false statements about products of other firms Section 43(a) also allows a firm to sue another firm if the first firm makes false statements about its own products
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Actions and Powers of the FTC Actions and Powers of the FTC There is no private right of action for unfair or deceptive trade practices within the meaning of the FTC Act The FTC can challenge the trade practices of an individual firm FTC can file cease and desist orders Has the power to issue fines of $25,000 per day for continued violations
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Actions and Powers of the FTC Actions and Powers of the FTC If the FTC finds that an industry is engaging in unfair or deceptive practices it can issue a trade practice rule rather than going after individual firms FTC has issued numerous trade practice rules Regulates everything for wood veneer advertising to bait
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Chapter%2018 - Chapter 18 Chapter Legal Environment of...

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