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Understanding Consumer Protection: Governmental and Individual Actions

This chapter discusses consumer protection mechanisms available in the marketplace, emphasizing the need for governmental involvement to safeguard consumers from substandard goods and unfair trade practices. It explores the concepts of "caveat emptor" (buyer beware) and "caveat venditor" (seller beware), legal actions against vendors, and various consumer protections offered by product liability and warranties. Additionally, it highlights the vital role of organizations such as the Consumer Product Safety Commission and the importance of understanding express and implied warranties in sales transactions.

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Understanding Consumer Protection: Governmental and Individual Actions

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  1. CHAPTER 14Consumer Protection How are you protected? 14-1 Protection through Governmental Action 14-2 Protection through Action by the Consumer

  2. 14-1 Protection through Governmental Action GOALS • Explain the need for governmental involvement in the marketplace • Constitution says gov’t is created to protect the people • Identify protections against substandard goods • Recognize unfair trade practices Chapter 14

  3. FOCUS • Who is a consumer? • A person who acquires goods for personal or household use. Chapter 14

  4. GOVERNMENTAL PROTECTION IN TODAY’S MARKETPLACE • Consumer caveats – “Caveat emptor” • Let the Buyer Beware – consumers are thought to be smart enough to judge a product’s safety • “Caveat Venditor” = now let the seller beware. • Class actions-one case represents many in a lawsuit against vendorsl ex. tobacco • Governmental procedure • Cease and desist order • Consent order • restitution Chapter 14

  5. Define the terms caveat emptor and caveat venditor. Chapter 14

  6. PROTECTION AGAINST INFERIOR SERVICES AND GOODS • Licensing • Consumer Product Safety Commission • Unsafe products- FDA or food and drug administration regulates • Adulterated food, drugs, and cosmetics • Improper weights and measures Chapter 14

  7. What commission sets safety standards for most consumer products? Chapter 14

  8. SIX FORMS OF UNFAIR TRADE PRACTICES AGAINST THE PEOPLE • Agreements to control or fix prices • False and misleading advertising- • Bait and switch- only have a few of advertised product. • Illegal lotteries and confidence games • Unfair pricing and service • Mislabeled goods • Other unfair trade practices Chapter 14

  9. List at least six forms of unfair trade practices. Chapter 14

  10. 14-2 Protection through Action by the Consumer GOALS • Describe the protection afforded consumers by the law of product liability • Identify the various warranties that may apply to a sales transaction Chapter 14

  11. FOCUS • What legal action can the individual consumer take to protect herself or himself? Chapter 14

  12. WHAT IS PRODUCT LIABILITY? • Expansion of product liability • Privity of contract – is the relationship between the buyer and seller. Years ago buyer could only sue the retailer. Today the buyer and his family can sue everyone up to the manufacturer. • Recovering damages Chapter 14

  13. Under what product liability approach is a person injured by a defective product most likely to recover damages? Chapter 14

  14. HOW IMPORTANT ARE WARRANTIES? • Requirements of express warranties-obligates the seller to repair or to replace a defective product without cost to the buyer and within a reasonable time. Anything less than that is a limited warranty. • Opinions v. warranties- “superb quality” best on market is an opinion, not backed by facts. This is also called “puffing”. • Express warranties made by all sellers- bound by the facts they utter • Implied warranties given by all sellers- implicit warranty on sellers imposed by law. There are 3 types: • Warranty of title • Warranty against encumbrances-claims of 3rd parties, liens • Warranty of fitness for a particular purpose Chapter 14

  15. HOW IMPORTANT ARE WARRANTIES? (continued) • Implied warranties given only by merchants • Warranty against infringement- delivered free of claims • Warranty of merchantability-goods must be fit for the ordinary purpose for which they are used. • Exclusion of warranties – usually if defective, example of used cars • Lemon laws Chapter 14

  16. Distinguish express and implied warranties. Chapter 14

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