1. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. 1 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. David P. Twomey - Boston College Marianne M. Jennings - Arizona State University © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. David P. Twomey - Boston College Marianne M. Jennings - Arizona State University

2. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 Chapter 33 Consumer Protection Chapter 33 Consumer Protection

3. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 A. General Principles 1. Expansion of Consumer Protection 2. Who is a Consumer? 3. Who is Liable Under Consumer Protection Statutes?

4. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 A. General Principles 4. When is There Liability Under Consumer Protection Statutes? 5. What Remedies Do Consumers Have? 6. What are the Civil and Criminal Penalties Under Consumer Protection Statutes?

5. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 A. General Principles [LO.1] 1. Expansion of Consumer Protection: ‒ Consumer may be defined as any person or entity that uses goods or services. ‒ Statutes provide faster remedies. ‒ Statutory formula for damages. 2. Who is a Consumer? –Consumer claiming violation has the burden of proving the statutory definition of consumer has been met.

6. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 A. General Principles 3.Who is Liable Under CP Statues? –Persons or enterprises that regularly enter into the type of transaction in which the injured consumer was involved. 4.When is There Liability? –Deceptive advertising –Mortgage lending disclosure  Gonzalez v. Wilshire Credit Corp.: A financial relationship with a consumer required CFA protections. Mortgage crisis required more than Legal Aid help.

7. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 A. General Principles 5.What Remedies do Consumers Have? (A)Government Agency Action (B)Action by Attorney General (C)Action by Consumer (D)Replacement or Refund (E)Invalidation of Consumer’s Contract 6.What are the Civil & Criminal Penalties? ‒ Compensatory and punitive damages

8. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8 General Law Contract Tort Administrative Advertising Seals of Approval Labeling Selling Methods The Consumer Contract Credit Cards Payments Defense Preservation Product Safety Credit, Collection, and Billing Methods Credit Standing and Reputation Protection Real Estate Sales Service Contracts Franchises The Defendant The ConsumerOverview

9. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 B. Areas of Consumer Protection 7. Advertising 7. Advertising 8. Labeling 8. Labeling 9. Selling Methods 9. Selling Methods 10. The Consumer Contract 11. Credit Disclosures 12. Credit Cards

10. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 B. Areas of Consumer Protection 13. Gift Cards 14. Payments 15. Preservation of Consumer Defenses 16. Product Safety

11. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 B. Areas of Consumer Protection 17. Credit, Collection, and Billing Methods 18. Protection of Credit Standing and Reputation 19. Other Consumer Protections

12. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 B. Areas of Consumer Protection [LO.2 – LO.4] 7.Advertising: (A) Deception not fraud is the critical element. Breach occurs without proof of intent to defraud or deceive. FTC requires records to support statements made in ads. (B) Corrective Advertising may be required by the FTC following false statements  McNeil-PPC v. Pfizer, Inc.: Ads must not misrepresent the results of scientific studies and mislead consumers.

13. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 B. Areas of Consumer Protection 8.Labeling: –Must give accurate product information that does not exaggerate or mislead. 9.Selling Methods: (A)Home-Solicited Sales. Over $25 may be set aside within 3 business days. (B)Telemarketing Fraud. Telephone Consumer Protection Act & National Do Not Call Registry.

14. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 B. Areas of Consumer Protection 10. The Consumer Contract: (A)Form of Contract is regulated (B)Contracts Printed on Two Sides must include a warning notice (C)Particular Sales and Leases require specific disclosures (D)Contract Terms prohibit certain clauses (E)Limitations on Credit focus on subprime and predatory lending (F)Unconscionability is prohibited

15. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 B. Areas of Consumer Protection 11.Credit Disclosures: –Interest charges & annual percentage rate (APR) –Truth in Lending Act (more than 4 installments) –Fair Credit & Charge Card Disclosure Act –Home Equity Loan Consumer Protection Act –Credit Card Accountability, Responsibility and Disclosure Act of 2009 –New Bureau of Consumer Financial Protection created under the Dodd-Frank Wall Street Reform and Consumer Protection Act

16. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 B. Areas of Consumer Protection 12.Credit Cards: (A)Unsolicited Credit Cards. Prohibited by law. (B)Credit Cards for Those Under the Age of 21. Substantially restricted under the CARD Act. (C)Surcharge Prohibited. Seller cannot charge more for a payment with a credit card. (D)Unauthorized Use. Cardholder liability is limited to $50. (E)Unauthorized Purpose. Cardholder is liable.

17. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 B. Areas of Consumer Protection 12.Credit Cards: (F) Late Payment Fee. Bill must be in consumers’ hands no less than 21 days before due date and late payment disclosures are required. (G) Credit Card Balance Transfers. CARD Act substantially amends regulations regarding fees and disclosures. 13.Gift Cards: ‒ Cannot expire for at least 5 years and inactivity fees are now controlled.

18. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 B. Areas of Consumer Protection 14.Payments: –Regulated extensively under the CARD Act. 15.Preservation of Consumer Defenses 16.Product Safety 17.Credit Collection, and Billing Methods: (A) Equal Credit Opportunity Act: Credit Discrimination is unlawful. When an application is refused, applicant must be furnished a written explanation.

19. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 B. Areas of Consumer Protection 17.Credit, Collection, and Billing: (B)Fair Credit Billing Act: Correction of Errors (C)Improper Collection Methods. (1)Fault of Agent or Employee is not a defense. (2)Fair Debt Collection Practices Act prohibits improper collection practices.  Commonwealth v. Thompson: Using force to collect collateral or money violates debt collection protection statutes.

20. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 B. Areas of Consumer Protection 17.Credit, Collection, and Billing: (C)Improper Collection Methods. (2)Fair Debt Collection Practices Act i.Collection Letters cannot threaten or violate the debtor’s privacy. ii.What is not a Defense. Legitimacy of the debt is not a defense against improper collection practices. iii. Federal Preemption. Federal laws preempt or displace state statutes.

21. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21 B. Areas of Consumer Protection 18.Protection of Credit Standing and Reputation: –Fair Credit Reporting Act applies only to consumer credit. –(A) Privacy. Credit reporting agencies cannot disclose information to persons not having a legitimate use for it.  Phillips v. Grendahl: The information obtained was a consumer report and the reason the information was obtained was not permitted under law.

22. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 B. Areas of Consumer Protection 18.Protection of Credit Standing and Reputation: –(B) Protection from False Information. Information obtained may be hearsay evidence. Credit bureaus must take steps to determine the accuracy of disputed information. –(C) Credit Repair Organizations are regulated by bankruptcy reforms and state law.

23. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Twomey-Jennings, Anderson’s Business Law and the Legal Environment, 21 st Ed. Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22 nd Ed. © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23 B. Areas of Consumer Protection 19.Other Consumer Protections: (A)Real Estate Development Sales: Interstate Land Sales Full Disclosure Act. Anyone buying or renting a parcel in a subdivision must be given a property report. (B) Service Contracts are treated the same as a consumer sale of goods. (C) Franchises. FTC requires franchisors to give prospective franchisees a disclosure statement. (D) Automobile Lemon Laws protect consumers from buying defective automobiles.