1. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3Consumer Protection  Explain why consumers need the government to protect them from defective or dangerous products.  Understand how you can take responsibility for your own protection as a consumer.  Know how to protect yourself from identity theft and what to do if your identity is stolen. Objectives

2. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3Consumer Protection  Food and Drug Administration (FDA)  Federal Trade Commission (FTC)  cease and desist order  Consumer Product Safety Commission (CPSC)  Environmental Protection Agency (EPA)  identity theft Key Terms

3. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 3 Government Efforts to Protect Consumers Most consumers rely on manufacturers to be responsible and on the government to set quality and safety standards to protect them from harm. The government intervenes in the market in an effort to protect consumers from dishonest or careless producers.

4. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 4 The Pure Food And Drug Act The Pure Food and Drug Act (1906) Food, Drug, and Cosmetic Act (1938) Food and Drug Administration (FDA)— federal agency that sets standards for foods and drugs produced or sold in the United States

5. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 5 The Federal Trade Commission Federal Trade Commission Act (1914) Federal Trade Commission (FTC)— government agency that ensures that businesses compete and market their products fairly and honestly Enforces antitrust laws Sets standards for product packaging and labeling and honesty in advertising Cease and desist order is an FTC-issued directive to stop a firm making a false or misleading advertising claim.

6. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 6 The Consumer Product Safety Commission Consumer Product Safety Commission (CPSC)—federal agency created to protect consumers from dangerous products they might purchase or use

7. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 7 Number of CPSC-Ordered Recalls in the Month of April, 2000–2006 Figure 20.3

8. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 8 The Environmental Protection Agency Environmental Protection Agency (EPA)—federal agency that interprets and enforces laws passed by Congress that involve the environment

9. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 9 Other Government Protections Other federal agencies Many other federal agencies are responsible for protecting consumers in other ways. These agencies are designed to provide a degree of safety to consumers they could not reasonably be expected to achieve on their own. State and local protection All state and many local governments also have agencies that are responsible for protecting consumers.

10. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 10 Take Responsibility for Your Own Protection Understand consumer rights and responsibilities Use common sense

11. CONTEMPORARY ECONOMICS© Thomson South-Western 20.3 Consumer Protection SLIDE 11 Dealing with Identity Theft Identity theft—a crime in which one person fraudulently uses another’s identity to obtain credit or to access financial accounts Protect yourself from identity theft Know what to do if your identity is stolen