Chapter 7: Consumer Law & Contracts Section 2: Consumer Protection

1. Chapter 7: Consumer Law & ContractsSection 2: Consumer Protection Business Law Mrs. Sisk pp. 168-175

2. Consumer Protection • Laws apply to transactions between consumers and businesses • Consumer • Someone who buys or leases goods, real estate, or services for personal, family or household purposes

3. Consumer Protection • Federal Consumer Protection Law • Federal Trade Commission (FTC) • Government agency that promotes free trade and fair competition • Bureau of Consumer Protection – protects consumers against unfair/deceptive practices • Consumer Product Safety Act • Protects from unreasonable risk of injury while using consumer products sold in interstate commerce (across state borders) • Product must be tested before it is shipped • Must prove testing and safety

4. Consumer Protection • Federal Consumer Protection Law • Consumer Leasing Act • Requires lease agreements to include certain terms of the lease • Required number of lease payments • Lease payment dollar amounts • Penalties for not paying on time • Lump sum due at end of lease (if applicable)

5. Consumer Protection • State and Local Laws • Federal gov’t – no control over intrastate commerce (manufacturing and selling goods within a state) • States have their own: • Liability laws • Department of Consumer Affairs

6. Consumer Protection • Unfair and Deceptive Practices • Act that misleads consumers • Most states enacted the Uniform Trade Practices Act or their own similar laws

7. Consumer Protection • Unfair and Deceptive Practices • Fraudulent Misrepresentation: • Any statement that deceives a buyer • Occurs when a seller misstates/fails to disclose the facts about something that is important to the consumer • Example: Used car dealer does not inform the consumer the car was damaged in a flood

8. Consumer Protection • Unfair and Deceptive Practices • Bait and Switch Advertising: • Store advertises bargains that do not really exist • Lures the customer in hoping they will buy something more expensive • Why is this illegal? • Advertiser is trying to sell a different product than the one advertised

9. Consumer Protection • FTC Trade Regulation Rules • Negative Option Rule: • Subscribe to magazine, book club, CD club, etc. • Receive description of current selection • Don’t want it – must tell seller not to send it • No response – seller sends it automatically

10. Consumer Protection • FTC Trade Regulation Rules • Negative Option – Seller must tell you: • How many selections you must buy • How to notify seller when you do not want the selection • When you get credit for return of selection • How often you will receive announcements • How/when you can cancel your membership

11. MINI WEBQUEST – DVD CLUB Joining DVD, CD, Book Clubs, etc. might sound like a great idea, but it is important to understand the terms of what such an agreement entails. Columbia House says, “There is not a more convenient way to buy DVD’s” but is that really accurate? In the next few slides, you will be taking a look at one of the most well known DVD Clubs, Columbia House, to learn more about how the DVD Club works and what your membership requirements are.

12. MINI WEBQUEST – DVD CLUB • Go to the website: http://www.columbiahouse.com/ • Scroll all the way down to the bottom of the screen and click on “How it Works”

13. MINI WEBQUEST – DVD CLUB Answer the following questions: • What do you get if you “Join the Columbia House DVD Club now”? • 3 DVD’s for $1 each with free shipping • How do you get started? • Select introductory DVD’s and sign up in two easy steps online

14. MINI WEBQUEST – DVD CLUB • What benefits does the club provide? • Unbeatable deals – great discounts • Preorder new releases • Save up to 60% of regular club prices • Thousands of titles to choose from • How do you become a member? • Online – respond to Director’s Selection

15. MINI WEBQUEST – DVD CLUB • If you are not satisfied with your DVD’s/membership, what can you do? • Return introductory package w/in 10 days • At expense of Columbia House • Membership will be cancelled, you will owe nothing • Payment will be credited/refunded

16. MINI WEBQUEST – DVD CLUB Click the “Membership Agreement” link and answer the following questions: • When you sign up, when will you be charged? • Once membership is approved • How many DVD’s do you have to buy in the next year? • 3 at regular club prices

17. MINI WEBQUEST – DVD CLUB • What are “regular club prices?” • $19.95 plus shipping and processing • When can you cancel your membership? • Anytime after you purchase the 3 additional movies and pay the $19.95 plus shipping and processing

18. MINI WEBQUEST – DVD CLUB • What is the “Advance Bonus Offer!” and what does it provide? • 4th movie now for $9.95 + tax • No shipping charges • Less to buy later • 2 more DVD’s at regular prices in the next year • 5th movie now for $9.95 + tax – no shipping • How often will a member receive club mailings? • Every 3 weeks – 21 days

19. MINI WEBQUEST – DVD CLUB • What do the club mailings tell you? • Director’s Selection – hottest title and special offers • DVD’s to choose from – some at special prices • If you do not want to receive the current selection, what must you do? • Check the appropriate box on the order card and mail it back by the date specified

20. MINI WEBQUEST – DVD CLUB • If you “do nothing” what will happen? • The Director’s selection will be sent to you • How long do they give you to decide? • Approximately 10 days to decide • If given less time and don’t want the Director’s selection, return it at their expense • How can you “respond” to the mailing” • Respond by phone, mail or online

21. MINI WEBQUEST – DVD CLUB • Explain their “Risk-Free Offer.” • Receive membership agreement with introductory DVD’s • Review membership agreement for 10 days • Not satisfied – for any reason – return the unopened DVD’s at the company’s expense • No further obligation • Any payment will be credited/refunded • How do you think the “Risk-Free Offer” “gets people?”

22. MINI WEBQUEST – DVD CLUB Think about it: • What do you think are potential issues with a DVD (CD, Book, etc.) club? • Would you join a DVD (CD, Book, etc.)? Why or why not?

23. Consumer Protection • FTC Trade Regulation Rules • Cooling-Off Rule: • 3 business days to cancel a transaction made away from the seller’s regular place of business (ex: hotel, restaurant, fair, home, etc.) • Applies to purchases of $25 or more

24. Consumer Protection • FTC Trade Regulation Rules • Cooling-Off Rule: • Seller must: • Inform you of your right to cancel • Give you a cancellation form and copy of your contract/receipt • If you cancel – w/in 10 days seller must: • Cancel and return any papers you signed • Refund your money • Tell you whether any product left with you will be picked up • Return any trade in

25. Consumer Protection • FTC Trade Regulation Rules • Cooling-Off Rule: • Does not apply to contracts for: • Real estate • Insurance • Securities • Emergency home repairs

26. Consumer Protection • FTC Trade Regulation Rules • Telemarketing Sales Rule • Protects you from abusive people who try to sell you products by phone • Illegal for telemarketers to call you if you have asked them not to • Calling times – 8 a.m. to 9 p.m.

27. Consumer Protection • FTC Trade Regulation Rules • Telemarketing Sales Rule • Before “pitch” must inform you: • They are making a sales call • The company they represent • Must tell you: • Total cost of the products/services offered • Any restrictions that apply • **Illegal for telemarketers to make false statements about their goods/services

28. MINI WEBQUEST – DO NOT CALL NATIONAL DO NOT CALL REGISTRY “The National Do Not Call Registry gives you a choice about whether to receive telemarketing calls at home.” In the next few slides, you will be taking a look at the National Do Not Call Registry, how it works, what the guidelines are, and how it impacts the consumer (you) and the telemarketer/business.

29. MINI WEBQUEST – DO NOT CALL • Go to the website: https://www.donotcall.gov/default.aspx • On the main screen, click on the link “Most telemarketers”

30. MINI WEBQUEST – DO NOT CALL Answer the following questions: • Once you register your phone number, how many days to telemarketers have to stop calling you? • Who manages the Do Not Call Registry?

31. MINI WEBQUEST – DO NOT CALL • Are you able to take your number off the Do Not Call Registry? • How do you know your number was actually registered on the Do Not Call Registry?

32. MINI WEBQUEST – DO NOT CALL • Who is allowed to register consumers for the Do Not Call Registry? • What types of phone numbers and how many can I register?

33. MINI WEBQUEST – DO NOT CALL • How long will your number stay registered? Does it expire? • What do you need to register with the Do Not Call Registry online?

34. MINI WEBQUEST – DO NOT CALL • When you register with the Do Not Call Registry – all telemarketing calls will not stop. What calls will not stop and why? • If there are companies you do not mind receiving telemarketing calls from, what do you need to do to give them permission?

35. MINI WEBQUEST – DO NOT CALL • Can you still prohibit telemarketers from calling even if you do not register with the Do Not Call Registry? If so, how? • When are you able to file a do not call complaint?

36. MINI WEBQUEST – DO NOT CALL • How do you file a complaint? What do you need to file a complaint? • Where can you get more information?

37. MINI WEBQUEST – DO NOT CALL • If you have a valid email address: On the Do Not Call Registry website – click on the link on the left of the page that says “Verify a Registration” and enter your phone number(s) to see if it is registered. Check to see if your phone numbers are registered. • If you have a valid email address: You may register on the Do Not Call Registry. Just click on “Register a Phone Number” and follow the directions.