Consumer Protection

Rights and interests of the consumers are protected on both state and federal levels. There are multiple laws governing various industries to ensure that rights of the consumers, fair trade practices, and competition are duly observed and truthful information is freely disclosed in the marketplace. Federal, state, and local organizations supervise business activities in their respective jurisdictions and review company compliance with the relevant consumer and market protection laws. The applicability of one or the other regulation depends both on the type of business and the nature of its commercial activities. For instance, there are laws pertaining to sales, advertising and marketing, credit issuance and debt collection, privacy and security of consumer information, and many other business interactions. Consumer protection laws regulate almost every industry. 

 

These laws are designed to prevent companies from engaging in fraud or deceptive and unfair practices to gain advantage over prospective clients, customers, and competitors. The justification for protecting not only consumers but also other existing companies is that the observance of fair business practices and healthy competition is beneficial to the development of marketplace and efficient economy; this, in turn, will benefit the final consumers by delivering the quality products and services at reasonable prices.

 

The United States Federal Trade Commission (FTC) and the United States Department of Justice mainly enforce federal consumer protection laws. U.S. Congress has granted wide-reaching power to the FTC. The Commission is empowered, among other things, to:

 

  • Implement different methods and practices directed at prevention of unfair competition and deceptive acts or practices in commerce;
  • Sue companies in the court of competent jurisdiction for monetary damages and other relief for conduct that is injurious to consumers;
  • Issue and enact additional rules and regulations that specify which acts or practices are considered unfair or deceptive and establish requirements and procedures to prevent such acts or practices;
  • Conduct investigations relating to the organization, business, and management of entities engaged in commerce; and
  • Make reports and legislative recommendations to the U.S. Congress.

 

Federal Trade Commission Act (15 U.S.C. §§ 41-58, as amended).

 

The FTC also has an International Division that strives to promote consumer confidence in the international marketplace by negotiating bilateral consumer protection agreements with other countries and assisting in international litigation.

 

At the state level, the majority of states have a Department of Consumer Affairs, with functions similar to those of the FTC. State consumer protection agencies parallel FTC activities to ensure that businesses and consumers are well protected within their territories. Local laws are as important to business owners as federal ones. They can contain more regulations, restrictions, or obligations and provide broad remedies to the consumers for violations, including punitive damages (money used to punish a wrongdoer, as opposed to money used to compensate for harm suffered).

 

As there are various legal acts that regulate different industries and address many aspects of commercial activities, business owners and managerial personnel should be familiar with the laws applicable to their particular industry. The most popular consumer protection statutes are:

 

The Consumer Credit Protection Act (CCPA): Also referred to as the Federal Truth in Lending Act, it regulates the credit industry with respect to consumer rights, including credit card companies and credit reporting agencies, as well as loan sharks and wage garnishment.

 

The Fair Credit Reporting Act (FCRA): The FCRA regulates credit reporting agencies and those who use them.

 

The Fair Debt Collection Practices Act: This statute prohibits abusive collection practices and gives consumers means to dispute inaccurate debt information.

 

The Fair Credit Billing Act: This Act deals with billing practices in credit accounts.

 

The Magnuson-Moss Act of 1973: This Act governs the terms of product warranties for consumer goods, both express and implied.

 

The Identity Theft and Assumption Deterrence Act: This is meant to address the crimes of identity theft and defines civil and criminal penalties for such wrongdoings.

 

The Racketeering Influenced and Corrupt Organizations Act (RICO): The RICO Act is designed to attack criminals who try to use legitimate businesses in their illegitimate activities. RICO provides broad civil and criminal remedies if criminal fraud can be alleged and proven. In the case of RICO violations, the award of damages is tripled, the guilty party may be liable for the winning claimant’s attorney fees, and there are also forfeiture provisions.

 

As a result of numerous federal and state legislation and efforts of governmental agencies, U.S. consumers and businesses are much better protected from unfair, deceptive, or anticompetitive practices than in many other jurisdictions. Consumer rights for complete and accurate information and choice are maintained on every level of business dealings, and legitimate businesses are protected from wrongful activities of third parties.

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