1. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. Twomey & Jennings BUSINESS LAW Chapter 32 Consumer Protection Chapter 32 Consumer Protection

2. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 2 General Principles Consumer protection statutes originally were meant to protect persons of limited means and knowledge. Now, a consumer may be defined as any person or entity that uses goods or services. Some consumer protection statutes have been expanded to protect all consumers. Consumer protection statutes originally were meant to protect persons of limited means and knowledge. Now, a consumer may be defined as any person or entity that uses goods or services. Some consumer protection statutes have been expanded to protect all consumers.

3. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 3 Legal Environment of the Consumer General Law Contract Tort Administrative Consumer Protection Law 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 Consumer

4. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 4 Consumer Remedies When a consumer protection statute is violated, an action may sometimes be brought by the consumer against the wrongdoer. More commonly, an action is brought by an administrative agency or by the state attorney general. When a consumer protection statute is violated, an action may sometimes be brought by the consumer against the wrongdoer. More commonly, an action is brought by an administrative agency or by the state attorney general. State Ex Rel. Salazar v The Cash Now Store (2001) Are these usurious loans?

5. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 5 Consumer Protection Laws Included in consumer protection laws: –Payments must be applied to the oldest debts first. –Consumers may not waive their right to defenses in a a contract. –Standards for product safety are set. –Discrimination in the issuance of credit and improper collection methods are outlawed. –Consumer has the right to privacy and protection from false information in credit reports. Included in consumer protection laws: –Payments must be applied to the oldest debts first. –Consumers may not waive their right to defenses in a a contract. –Standards for product safety are set. –Discrimination in the issuance of credit and improper collection methods are outlawed. –Consumer has the right to privacy and protection from false information in credit reports.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 6 Areas of Consumer Protection Fraudulent or Deception Advertising. –Regulated by FTC. The consumer is protected in a sales transaction agreement by: –regulation of its form, –prohibition of unconscionable terms, and –limitation of the credit that can be extended to a consumer. Fraudulent or Deception Advertising. –Regulated by FTC. The consumer is protected in a sales transaction agreement by: –regulation of its form, –prohibition of unconscionable terms, and –limitation of the credit that can be extended to a consumer.

7. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 7 Areas of Consumer Protection Selling Methods. –Deceptive Practices: not necessary to prove fraud. –Disclosure of Transaction Terms. More than Four Installments Rule. Contract on Two Sides. Consumer Leases. Home-Solicited Sales (three days to cancel). Selling Methods. –Deceptive Practices: not necessary to prove fraud. –Disclosure of Transaction Terms. More than Four Installments Rule. Contract on Two Sides. Consumer Leases. Home-Solicited Sales (three days to cancel).

8. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 8 Areas of Consumer Protection Selling Methods (cont’d). –Referral Sales. –Telemarketing Fraud. Selling Methods (cont’d). –Referral Sales. –Telemarketing Fraud. Missouri Ex Rel. Nixon v American Blast Fax, Inc. (2001) Put us on your no-fax list!

9. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 9 Areas of Consumer Protection Consumer Contracts. –Form of Contract (cannot be unconscionable). –Contract Terms. Federal Warranty Disclosure Act. Some states prohibit acceleration clauses. –Limitation of Credit. –Unconscionability. Consumer Contracts. –Form of Contract (cannot be unconscionable). –Contract Terms. Federal Warranty Disclosure Act. Some states prohibit acceleration clauses. –Limitation of Credit. –Unconscionability.

10. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 10 Credit Cards Credit card protections include: –prohibition of the unauthorized distribution of credit cards, –prohibition of surcharge for use of credit cards, –limited liability of the cardholder for the unauthorized use of a credit card. Credit card protections include: –prohibition of the unauthorized distribution of credit cards, –prohibition of surcharge for use of credit cards, –limited liability of the cardholder for the unauthorized use of a credit card. Charles v Lundgren & Assoc., P.C. (1997) Is the Bad Check a Debt?

11. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 11 Credit Standing Protection Fair Credit Reporting Act. –Applies to only consumer credit. –Privacy (Investigative Consumer Report). –Protection from False Information. Fair Credit Reporting Act. –Applies to only consumer credit. –Privacy (Investigative Consumer Report). –Protection from False Information.

12. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 12 Credit, Collection & Billing Methods

13. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 13 New Consumer Protections In some cases of real estate development sales, stricter standards of disclosure apply. Some service contracts are treated like a consumer sale of goods. Franchisors must give prospective franchisees a disclosure statement before contracting. Lemon laws provide special protection to buyers of automobiles for personal, household, or family use. In some cases of real estate development sales, stricter standards of disclosure apply. Some service contracts are treated like a consumer sale of goods. Franchisors must give prospective franchisees a disclosure statement before contracting. Lemon laws provide special protection to buyers of automobiles for personal, household, or family use.