Chapter 7: Consumer Law & Contracts Section 2: Consumer Protection Business Law Mrs. Sisk pp

Consumer Protection Laws apply to transactions between consumers and businesses Consumer –Someone who buys or leases goods, real estate, or services for personal, family or household purposes

Federal Consumer Protection Law –Federal Trade Commission (FTC) Government agency that promotes free trade and fair competition Bureau of Consumer Protection – protects consumers against unfair/deceptive practices –Consumer Product Safety Act Protects from unreasonable risk of injury while using consumer products sold in interstate commerce (across state borders) Product must be tested before it is shipped Must prove testing and safety Consumer Protection

Federal Consumer Protection Law –Consumer Leasing Act Requires lease agreements to include certain terms of the lease –Required number of lease payments –Lease payment dollar amounts –Penalties for not paying on time –Lump sum due at end of lease (if applicable) Consumer Protection

State and Local Laws –Federal gov’t – no control over intrastate commerce (manufacturing and selling goods within a state) –States have their own: Liability laws Department of Consumer Affairs Consumer Protection

Unfair and Deceptive Practices –Act that misleads consumers –Most states enacted the Uniform Trade Practices Act or their own similar laws Consumer Protection

Unfair and Deceptive Practices –Fraudulent Misrepresentation: Any statement that deceives a buyer Occurs when a seller misstates/fails to disclose the facts about something that is important to the consumer Example: Used car dealer does not inform the consumer the car was damaged in a flood Consumer Protection

Unfair and Deceptive Practices –Bait and Switch Advertising: Store advertises bargains that do not really exist Lures the customer in hoping they will buy something more expensive Why is this illegal? –Advertiser is trying to sell a different product than the one advertised Consumer Protection

FTC Trade Regulation Rules –Negative Option Rule: Subscribe to magazine, book club, CD club, etc. Receive description of current selection Don’t want it – must tell seller not to send it No response – seller sends it automatically Consumer Protection

FTC Trade Regulation Rules –Negative Option – Seller must tell you: How many selections you must buy How to notify seller when you do not want the selection When you get credit for return of selection How often you will receive announcements How/when you can cancel your membership Consumer Protection

Joining DVD, CD, Book Clubs, etc. might sound like a great idea, but it is important to understand the terms of what such an agreement entails. Columbia House says, “There is not a more convenient way to buy DVD’s” but is that really accurate? In the next few slides, you will be taking a look at one of the most well known DVD Clubs, Columbia House, to learn more about how the DVD Club works and what your membership requirements are. MINI WEBQUEST – DVD CLUB

1.Go to the website: Scroll all the way down to the bottom of the screen and click on “How it Works” MINI WEBQUEST – DVD CLUB

Answer the following questions: a)What do you get if you “Join the Columbia House DVD Club now”? a)3 DVD’s for $1 each with free shipping b)How do you get started? a)Select introductory DVD’s and sign up in two easy steps online MINI WEBQUEST – DVD CLUB

c)What benefits does the club provide? Unbeatable deals – great discounts Preorder new releases Save up to 60% of regular club prices Thousands of titles to choose from d)How do you become a member? Online – respond to Director’s Selection MINI WEBQUEST – DVD CLUB

e)If you are not satisfied with your DVD’s/membership, what can you do? Return introductory package w/in 10 days At expense of Columbia House Membership will be cancelled, you will owe nothing Payment will be credited/refunded MINI WEBQUEST – DVD CLUB

Click the “Membership Agreement” link and answer the following questions: a)When you sign up, when will you be charged? Once membership is approved b)How many DVD’s do you have to buy in the next year? 3 at regular club prices MINI WEBQUEST – DVD CLUB

c)What are “regular club prices?” $19.95 plus shipping and processing d)When can you cancel your membership? Anytime after you purchase the 3 additional movies and pay the $19.95 plus shipping and processing MINI WEBQUEST – DVD CLUB

e)What is the “Advance Bonus Offer!” and what does it provide? 4 th movie now for $ tax No shipping charges Less to buy later 2 more DVD’s at regular prices in the next year 5 th movie now for $ tax – no shipping f)How often will a member receive club mailings? Every 3 weeks – 21 days MINI WEBQUEST – DVD CLUB

g)What do the club mailings tell you? Director’s Selection – hottest title and special offers DVD’s to choose from – some at special prices h)If you do not want to receive the current selection, what must you do? Check the appropriate box on the order card and mail it back by the date specified MINI WEBQUEST – DVD CLUB

i)If you “do nothing” what will happen? The Director’s selection will be sent to you j)How long do they give you to decide? Approximately 10 days to decide If given less time and don’t want the Director’s selection, return it at their expense k)How can you “respond” to the mailing” Respond by phone, mail or online MINI WEBQUEST – DVD CLUB

l)Explain their “Risk-Free Offer.” Receive membership agreement with introductory DVD’s Review membership agreement for 10 days Not satisfied – for any reason – return the unopened DVD’s at the company’s expense No further obligation Any payment will be credited/refunded m)How do you think the “Risk-Free Offer” “gets people?” MINI WEBQUEST – DVD CLUB

Think about it: a)What do you think are potential issues with a DVD (CD, Book, etc.) club? b)Would you join a DVD (CD, Book, etc.)? Why or why not? MINI WEBQUEST – DVD CLUB

FTC Trade Regulation Rules –Cooling-Off Rule: 3 business days to cancel a transaction made away from the seller’s regular place of business (ex: hotel, restaurant, fair, home, etc.) Applies to purchases of $25 or more Consumer Protection

FTC Trade Regulation Rules –Cooling-Off Rule: Seller must: –Inform you of your right to cancel –Give you a cancellation form and copy of your contract/receipt If you cancel – w/in 10 days seller must: –Cancel and return any papers you signed –Refund your money –Tell you whether any product left with you will be picked up –Return any trade in Consumer Protection

FTC Trade Regulation Rules –Cooling-Off Rule: Does not apply to contracts for: –Real estate –Insurance –Securities –Emergency home repairs Consumer Protection

FTC Trade Regulation Rules –Telemarketing Sales Rule Protects you from abusive people who try to sell you products by phone Illegal for telemarketers to call you if you have asked them not to Calling times – 8 a.m. to 9 p.m. Consumer Protection

FTC Trade Regulation Rules –Telemarketing Sales Rule Before “pitch” must inform you: – They are making a sales call –The company they represent Must tell you: –Total cost of the products/services offered –Any restrictions that apply –**Illegal for telemarketers to make false statements about their goods/services Consumer Protection

NATIONAL DO NOT CALL REGISTRY “The National Do Not Call Registry gives you a choice about whether to receive telemarketing calls at home.” In the next few slides, you will be taking a look at the National Do Not Call Registry, how it works, what the guidelines are, and how it impacts the consumer (you) and the telemarketer/business. MINI WEBQUEST – DO NOT CALL

1.Go to the website: spx 2.On the main screen, click on the link “Most telemarketers” MINI WEBQUEST – DO NOT CALL

Answer the following questions: a)Once you register your phone number, how many days to telemarketers have to stop calling you? b)Who manages the Do Not Call Registry? MINI WEBQUEST – DO NOT CALL

c)Are you able to take your number off the Do Not Call Registry? d)How do you know your number was actually registered on the Do Not Call Registry? MINI WEBQUEST – DO NOT CALL

e)Who is allowed to register consumers for the Do Not Call Registry? f)What types of phone numbers and how many can I register? MINI WEBQUEST – DO NOT CALL

g)How long will your number stay registered? Does it expire? h)What do you need to register with the Do Not Call Registry online? MINI WEBQUEST – DO NOT CALL

i)When you register with the Do Not Call Registry – all telemarketing calls will not stop. What calls will not stop and why? j)If there are companies you do not mind receiving telemarketing calls from, what do you need to do to give them permission? MINI WEBQUEST – DO NOT CALL

k)Can you still prohibit telemarketers from calling even if you do not register with the Do Not Call Registry? If so, how? l)When are you able to file a do not call complaint? MINI WEBQUEST – DO NOT CALL

m)How do you file a complaint? What do you need to file a complaint? n)Where can you get more information? MINI WEBQUEST – DO NOT CALL

o)If you have a valid address: On the Do Not Call Registry website – click on the link on the left of the page that says “Verify a Registration” and enter your phone number(s) to see if it is registered. Check to see if your phone numbers are registered. o)If you have a valid address: You may register on the Do Not Call Registry. Just click on “Register a Phone Number” and follow the directions. MINI WEBQUEST – DO NOT CALL