1. Part 7 Business and the Consumer
Chapter Sixteen
Consumerism

2. Chapter Sixteen Learning Objectives
Define Consumerism: a protective movement.
Define Consumerism: a belief system.
Familiarize ourselves with some of the personalities and ideas that contributed to the consumer movement.
Familiarize ourselves with the functions of those organizations that comprise the consumer’s protective shield.
Discuss the functions of some of the more important federal agencies that protect consumers.
Examine the four fundamental theories of law whereby manufacturers and sellers of products can be held liable.
Review advertising controls at the federal level: Who is responsible for what?
Look at the FTC’s approach to privacy in the future.
HJ Taft & LE Taft 2001

3. CONSUMERISM: One Meaning
A movement to improve the rights and powers of consumers in relation to the sellers of products and services. It is also a protest movement of consumers against what they or their advocates see as unfair, discriminatory and arbitrary treatment. There is nothing new about the idea of consumerism. It is as old as business.
HJ Taft & LE Taft 2001

4. CONSUMERISM: The Other Meaning
“The belief that goods give meaning to individuals and their roles in society… Americans define themselves and their relationships with others through the exchange and use of goods…Consumerism is a more powerful worldview than political ideologies, religions, or class and ethnic distinctions.”
Gary Cross
HJ Taft & LE Taft 2001

5. PEOPLE & IDEAS (identified with the current consumer movement)
PETER F. DRUCKER
Professor of management in the New York University system who, in The Practice of Management, said:
“There is only one valid definition of business purpose: to create a customer… It is the customer who determines what a business is… The customer is the foundation of a business and keeps it in existence.”
HJ Taft & LE Taft 2001

6. PEOPLE & IDEAS (identified with the current consumer movement)
RALPH NADER
Sometimes referred to as the father of the consumer movement
Identified dangerous design and production flaws of the Chevrolet Corvair in his book Unsafe at any Speed
Continued over the next 40+ years advocating on behalf of consumers.
HJ Taft & LE Taft 2001

7. PEOPLE & IDEAS (identified with the current consumer movement)
JOHN F. KENNEDY
As President of the United States, in 1962 addressed Congress and defined the basic rights of consumers:
The right to safety
The right to be informed
The right to choose
The right to be heard
This speech is often referred to as the Consumers’ Magna Carta.
HJ Taft & LE Taft 2001

8. The Consumer’s Protective Shield
A massive statutory shield protects consumers from abuses, real and imagined, in the operation of the free competitive market:
well over 50 federal agencies are directly active in consumer affairs
many, many State and local agencies are also in place with similar, often duplicate, functions
the legal system is highly organized to provide a means to seek damages against manufacturers, retailers and other providers of goods and services
HJ Taft & LE Taft 2001

9. The Most Important Federal Agencies
Federal Trade Commission
Consumer Product Safety Commission
National Highway Traffic Safety Administration
Food and Drug Administration
Food Safety and Inspection Service of the Department of Agriculture
Environmental Protection Agency
Securities and Exchange Commission
Federal Deposit Insurance Corporation
Department of Energy
HJ Taft & LE Taft 2001

10. LIABILITY LAW: Four Fundamental Theories
Negligence
Breach of Warranty
Strict Liability
Joint-and-Several Liability
HJ Taft & LE Taft 2001

11. LIABILITY LAW: The Impact on Business
Attention to design
Improving quality
Instructions and warning labels
Product recalls

12. FEDERAL AGENCIES Responsible for Advertising
Federal Trade Commission
Food And Drug Administration
U.S. Department Of Agriculture
Department Of Labor
HJ Taft & LE Taft 2001

13. The FTC: Privacy Problems in the Information Age
Risks to physical security
Risks of economic injury: Identity Theft
Uninvited intrusions into privacy
Telephone solicitors
solicitations