1. Consumer Law (Chapter 44) Professor Charles H. Smith Spring 2011

2. Introduction to Consumer Law  Traditional view – parties to contract bound by it and not entitled to any protection outside the contract.  Current view – consumers protected under federal and state law against wide variety of unfair trade practices, unsafe products, etc.  “Consumer” – customer of business or merchant; not a business or merchant.  Textbook concentrates on federal consumer protection law but we will discuss some California law as well.

3. Deceptive Advertising  Federal Trade Commission Act of 1914 – early example of consumer protection statute; created FTC to enforce goal of preventing unfair and deceptive trade practices.  Deceptive advertising occurs if reasonable consumer would be misled by advertising claim.

4. Deceptive Advertising cont.  Examples of what is – and is not – deceptive advertising include  Puffery – apparent generalities and exaggerations OK.  Half-truths – true but incomplete ad not OK if reasonable consumer led to false conclusion.  Bait and switch – not OK to advertise low-priced item and then  Refuse to show item to consumer,  Fail to have reasonable quantity of item in stock,  Fail to promise to deliver item within reasonable time, or  Discourage employees from selling item.  Online ads must have “clear and conspicuous” disclosure of any qualifying or limiting information based on assumption that reasonable consumer will not read entire website; must be near claim to be qualified or limited with hyperlinks OK only if lengthy disclosure.  Telemarketing – see pages 908-09.

5. Deceptive Advertising cont.  FTC investigates complaints from consumers, competitors, etc.  If FTC determines that ad is deceptive, it drafts and sends formal complaint to alleged offender who can then settle or fight in administrative hearing.  If FTC wins, remedies include  Cease and desist order.  Counteradvertising.  Multiple product order.  Case study – FTC v. Verity International, Ltd. (pages 907-08) – restitution remedy.

6. Sales  Regulation of sales include  Door to door sales – problems with high pressure sales tactics have led to special protections  3-day “cooling off” period provided to consumer to cancel contract.  Notice of “cooling off” period must be given in Spanish if oral negotiations for contract in Spanish; what about other languages or if negotiations in English and Spanish?  Receipt of unsolicited item in mail - both federal (39 U.S.C. § 3009) and California (Civil Code § 1584.5) permit consumer who receives unsolicited item in mail to keep it with no obligation; § 1584.5 uses the phrase “unconditional gift.”

7. Credit Protection  Truth-in-Lending Act (15 U.S.C. § 1601-1693r)  Disclosure required by lenders/sellers to disclose loan/credit terms clearly and conspicuously; these disclosure requirements apply only to persons who, in ordinary course of business, lend funds, sell on credit or arrange for extension of credit.  Debtor must be natural person, not business organization such as partnership or corporation.  Failure to comply with disclosure requirements entitles consumer to rescind contract (unconscionability?).  Credit cannot be denied on basis of race, religion, color, gender, marital status or age; otherwise qualified applicant cannot be required to provide spouse’s signature (unless spouse is co- applicant).

8. Credit Protection  Fair Credit Reporting Act (15 U.S.C. § 1681-81t)  Case study – Saunders v. Equifax Information Services, L.L.C. (pages 912-13).  Fair Debt Collection Practices Act (15 U.S.C. § 1692)  See pages 913-14 for limits on collection agencies (regularly attempt to collect debts for others, though can include creditor who causes debtor to believe it is collection agency).

9. Consumer Health and Safety  Case study – Abigail Alliance for Better Access to Developmental Drugs v. von Eschenbach (pages 915-16).  Discuss legal and ethical arguments that could be made for and against the proposition advanced by the plaintiff in this case; i.e., that the U.S. Constitution provides terminally ill patients with a fundamental right of access to experimental drugs.

10. Miscellaneous Case Studies  Reviewing Consumer Law (page 917).  Case Problems 44-1, 44-2, 44-4, 44-5, 44-6, 44-8 and 44-9.