Figure 16.1a Major consumer protections specified by consumer laws Information protections  Hazardous home appliances must carry a warning label.  Home products must carry a label detailing contents.  Autos must carry a label showing detailed breakdown of price and all related costs.  Tobacco advertisements and products must carry a health warning label.  Alcoholic beverages must carry a health warning label.  All costs related to real estate transactions must be disclosed.  Warranties must specify the terms of the guarantee and the buyer’s rights.  False and deceptive advertising can be prohibited.  Food and beverage labels must show complete information.  Food advertising must not make false claims about nutrition.

Figure 16.1b Major consumer protections specified by consumer laws Direct hazard protections  Hazardous toys and games for children are banned from sale.  Safety standards for motor vehicles required.  National and state speed limits are specified.  Hazardous, defective, and ineffective products can be recalled. under pressure from EPA, CPSC, NHTSA, and FDA.  Pesticide residue in food is allowed only if it poses a negligible risk. Pricing protections  Unfair pricing, monopolistic practices, and noncompetitive acts are regulated by the FTC and Justice Department and by states. Liability protections  When injured by a product, consumers can seek legal redress. Privacy protections  Limited collection of information online and about children is allowed. Other protections  No discrimination in the extension of credit is allowed.

Figure 16.2a Major federal consumer protection agencies and their main responsibilities Federal Trade Commission  Competitive pricing  Deceptive trade practices  Packaging and labeling  Consumer credit disclosure and reporting  Online privacy Food and Drug Administration  Safety, effectiveness, and labeling of drugs, foods, food additives, cosmetics, and medical devices  Standards for radiation exposure  Toxic chemicals research Consumer Product Safety Commission  Safety standards for consumer products  Flammable fabrics, hazardous substances, poison prevention packaging

Major federal consumer protection agencies and their main responsibilities Figure 16.2b National Highway Traffic Safety Administration  Motor vehicle safety standards  Automobile fuel economy standards  National uniform speed limit  Consumer safeguards for altered odometers Department of Justice  Fair competition  Consumer civil rights National Transportation Safety Board  Airline safety

Protecting consumer privacy online Consumer self-help Internet users should use technologies that enable them to protect their own privacy. Industry self-regulation Businesses should adopt voluntary policies and technical standards that protect the privacy of individuals’ information. Privacy legislation The government should pass laws that establish minimum privacy standards for collecting information online.

Product liability reform proposals 1) Set up uniform federal standards for determining liability. 2) Shift the burden of proving liability to consumers. 3) Eliminate some bases for liability claims. 4) Require the loser to pay the legal costs of the winner. 5) Limit punitive damages. See also Business Week Special Report, “How to Fix the Tort System” and“How to Fix the Tort System” “In This Debate, It’s War By Anecdote”

“Young, Carefree and Hooked on Sunlamps” Increasing number of teenagers have dedicated themselves to pursuit of perfect tan 85% of people under 25 surveyed said they look better with a tan, up from 61% in 1996 Blame it on Britney? Therapists who work with teenage girls see tanning as part of a larger trend of growing adolescent obsession with looks “We can never underestimate the importance that girls and women place on their looks and their appearance to the opposite sex” (psychologist who works with teenagers) Many say self-tanners can’t match look

“Young, Carefree and Hooked on Sunlamps” Dermatologists sounding alarm re: spike in skin cancer rates For women 15-29, rate of melanoma, the most deadly form of skin cancer, has increased more than 60% since mid-70s Rates are higher for women than for men New research suggests that ultraviolet rays form sunlamps are just as harmful as sun exposure Nearly one-third of white teenage girls use tanning booths Youths who tan more likely also to drink and smoke Tanning-bed manufacturers have to meet performance guidelines from FDA (however, FDA doesn’t govern tanning-salon operators) NY H.S. Soph who continues to visit tanning salon at least twice a week despite fact that mother has had several operations for skin cancer: “I know it will probably happen to me too. But I feel like I look so bad unless I’m really tan.” 29 states have regulations limiting teenagers’ access to salons – Tanning salon industry often opposes regulations (e.g., requiring written parental consent) Source: New York Times, 5/26/02; Wall Street Journal, 1/26/05

“Despite Big Health Concerns, Food Industry Can’t Shake Salt” Today, despite 20 years of warnings about link between salt and high blood pressure, Americans on average eat ~ 3,400 mg of sodium per day, up from 2,400 mg in 1970s Salt is essential part of packaged and restaurant food, deeply ingrained in mass-production process Americans get only about 1/20 th of their salt from salt-shakers Consumers’ “bliss point” (the “just right” amount) can be lowered if they follow low-sodium diet (but easier to raise person’s desire for salt than to lower it) Center for Science in the Public Interest has filed suit against FDA, alleging gov’t inaction on salt reduction Source: Wall Street Journal, 2/25/05

“FDA Issues Guidelines for Prepared Produce” Concerned about rising outbreaks of illness traced to fresh-cut fruit and vegetables, FDA has issued its first safety guidelines for producers Voluntary recommendations include: Ensuring ees report infectious diseases before starting work Training supervisors to recognize signs of disease and to be alert for cuts and other injuries Sanitizing forklifts and other equipment that may come into contact w/ fresh produce Prepackages vegetables, such as peeled baby carrots, salad mixes, presliced melon, are becoming bigger part of American diet Unlike meat and poultry, raw produce is not cooked, which kills unwelcome organisms Dole recalled 250,000 bags of precut salads in 2005 after Minnesota buyers were infected w/ E. coli bacteria Critics of FDA say that focus should be more on ground and surface water than on ee hygiene Source: Wall Street Journal, 3/2/06