1. ES 6.0 UNDERSTAND SALES, CONSUMER, PROPERTY & CYBER LAW
Objective 6.01 Understand sales and consumer law
BB30 Business Law 6.01 Summer 2013

2. CONSUMER PROTECTION LAWS
Purpose
to assist consumers in judging the quality of a product and its advantages or disadvantages, and
to create an equal field with the sellers in an affluent and technology oriented marketplace.
BB30 Business Law 6.01 Summer 2013

3. Why have consumer protection laws?
To ensure consumers get adequate decision-making information to compare products
to ensure fairness and competition in the marketplace
to protect consumers against unfair and deceptive practices or the sale of substandard or dangerous goods
to require licenses and inspections to ensure compliance with the law
to provide remedies for injured parties
BB30 Business Law 6.01 Summer 2013

4. Consumer Product Safety Act
Created the Consumer Product Safety Commission (CPSC)
Sets product standards for hazardous products
Requires manufacturer or seller to test quality and reliability before marketing product
Can require recall, repair, replacement or refunding of the purchase price, of unsafe products
Examples:
Children’s toys with dangerous parts
Defective vehicle tires that cause accidents
BB30 Business Law 6.01 Summer 2013

5. Food, Drug and Cosmetic Act
Created by the Food and Drug Administration (FDA)
Passed in 1903 after President Teddy Roosevelt read “The Jungle” by Upton Sinclair
Prohibits adulteration or mislabeling of foods, drugs or cosmetics
Creates standards for packaged foods, drugs and cosmetics
Approves new pharmaceuticals (prescription drugs)
BB30 Business Law 6.01 Summer 2013

6. Food, Drug and Cosmetic Act
FDA regulates packaged Food, Drugs, Cosmetics including:
Inspecting production facilities for cleanliness
Setting standards of purity and quality
Approving ingredient lists as to fitness for human consumption or use
Requiring labeling with manufacturer, packager, distributor, weight & nutritional information to assist consumer in informed decision making
BB30 Business Law 6.01 Summer 2013

7. Food, Drug and Cosmetic Act
New drugs cannot be marketed in the US without FDA approval.
FDA is sometimes criticized for being too cautious in granting new drug approvals.
Some Americans go to other countries to get drugs the FDA has not approved that they feel may be life-saving.
FDA recalls drugs from the market when dangerous side effects are identified.
BB30 Business Law 6.01 Summer 2013

8. NC Weights and Measures
Promotes uniformity in weights and measures laws, regulations, and standards
Allows consumers to make comparison shopping decisions such as unit pricing
Regulates scales in grocery stores, produce stands, gas pumps, etc.
BB30 Business Law 6.01 Summer 2013

9. FTC TRADE REGULATION RULES
Cooling-Off Rule
adopted by the FTC to give consumers three business days to cancel most contracts made with door to door salespersons.
The rule relates to sales of $25 or more made outside the salesperson’s regular place of business.
BB30 Business Law 6.01 Summer 2013

10. FTC TRADE REGULATION RULES
Pre-notification Negative Option Rule
How "Prenotification” Plans Work
Joining a plan means you agree to the plan's sales method as long as you're a member.
Company sends member information on merchandise they can buy, and the merchandise is sent to member automatically unless they return the form rejecting the offer within the specified time.
Example: Book clubs, Music clubs, Movie clubs
BB30 Business Law 6.01 Summer 2013

11. FTC TRADE REGULATION RULES
How Negative Option Rule Works
Requires companies give you information about their plans, clearly and conspicuously, in any promotional materials that consumers can use to enroll.
If the sales presentation for a plan is made orally, say on the phone, the terms and conditions still must be disclosed clearly and conspicuously during the presentation.
BB30 Business Law 6.01 Summer 2013

12. TELEMARKETING SALES RULE
Gives the FTC and state attorneys general law enforcement tools to combat telemarketing fraud
Gives consumers added privacy protections and defenses against unscrupulous telemarketers
Helps consumers tell the difference between fraudulent and legitimate telemarketing.
Prohibits calling consumers who have put their phone numbers on the National Do Not Call Registry
Limits when telemarketers may call consumers
Requires transmission of Caller ID information
BB30 Business Law 6.01 Summer 2013

13. UNFAIR AND DECEPTIVE ACTS AND PRACTICES
Provide the main protection to consumers against predators and unscrupulous businesses
Laws vary from state to state
(N.C. Gen. Stat. §§ through 75-35)
BB30 Business Law 6.01 Summer 2013

14. UNFAIR AND DECEPTIVE ACTS AND PRACTICES
Fraudulent Misrepresentation
(any practice that misleads (or has the potential to mislead) a consumer)
Some examples includes
Work at home schemes
Illegal Lotteries and Scams
Work At Home Scheme - An advertisement to make big money easily at home by calling a number or buying a book or video. Frequently the scam includes payment up front for “lists”, other undisclosed charges, limited or non-existent training. If it appears you can “GET RICH QUICK”, it is probably a scam.
Illegal Lotteries & Scams - A con artist contacts you by mail stating you have won a lottery drawing and to contact him immediately to claim your prize. Upon contact the con states once you pay your “clearance fee” a certified check will come in the mail. You pay the fee and your check never comes. “Gotcha”. ?? How can you win a lottery you did not enter??
BB30 Business Law 6.01 Summer 2013

15. UNFAIR AND DECEPTIVE ACTS AND PRACTICES
Bait and Switch Advertising
Advertising a non-existent bargain to lure customers so they can be sold a more expensive item.
BB30 Business Law 6.01 Summer 2013

16. WARRANTIES Express Implied Warranty of Title Exclusions
BB30 Business Law 6.01 Summer 2013

17. REMEDIES Contact Company Better Business Bureau
Give notice of the problem and allow time to resolve conflict with involved parties.
Better Business Bureau
A private, non-government agency available at local and state levels that logs complaints from consumers
Passes complaint information to businesses that are members, frequently resolving issue
Makes complaints available for public viewing
Tries to steer consumers to reliable businesses that conduct business ethically
BB30 Business Law 6.01 Summer 2013

18. REMEDIES Government Regulation Agency Attorney General
Contact the government regulatory agency related to your complaint.
Examples:
Consumer Product Safety Commission
Federal Communication Commission
Federal Trade Commission
US Postal Service
Attorney General
Contact State Attorney General’s office for assistance
BB30 Business Law 6.01 Summer 2013

19. REMEDIES File Lawsuit Cease and desist Class action
An order or request to halt an activity (cease) and not to take it up again later (desist) or else face legal action
Can be issued by a judge or government agency
Class action
form of lawsuit in which a large group of people collectively bring a claim to court
NC Small claims court
Local civil court that handles cases involving $5,000 or less
BB30 Business Law 6.01 Summer 2013