Consumer Laws in the US: What Do They Mean for a Customer and a Business Owner
Consumer protection includes both laws and organizations that protect the rights of consumers, govern commerce transactions of goods and services and fair trade and competition. Organizations like the Food and Drug Administration, the Federal Trade Commission (FTC) and the Better Business Bureau are a few of the entities that protect the interests of consumers and businesses.
Consumer laws regulate things like fraud, unfair business practices, product liability, privacy rights, and misrepresentation. The goal is to prevent scams that could result in someone getting hurt, or losing money. These laws also give consumers a voice, so they are heard. They provide the procedure for fighting back against illegal business practices and hold the seller to a standard of quality. Government agencies in charge of consumer protection laws provide resources, guidance and even legal counsel to help victims.
Consumer protection also includes things like the Fair Debt Collection Practices Act (FDCPA) that govern how companies can collect a debt from customers. They are not allowed to harass or abuse consumers.
Warranties and Guarantees
There are two types of warranties that come with products, express and implied. The warranty is a guarantee from the seller that the product will function as advertised. Express warranties may be communicated in an ad, verbally or in writing. They promise that a product will operate for a specific period. Like when you buy a car and it comes with a 5-year warranty. Not all companies offer express warranties with their products.
However, implied warranties are a government mechanism to protect consumers where no implied warranty exists — an implied warranty promise that a product must be of average quality and will work correctly if used as intended. For example, your blender will work to mix food, but you can’t use it to rototill the lawn and expect it to be ok. Implied warranties vary by state, but you can always check with the FTC on a particular product.
When you buy something, always get the warranty in writing directly from the seller.
If a product does not work within the warranty terms, try to have it repaired by the seller. If that does not work, you can engage in mediation to resolve the issue. If that fails, then you can sue the seller for the cost and any damages.
Although you cannot cancel a service contract once you have signed it, the FTC provides a cooling-off period where you can sometimes void them.
If you feel you have a legitimate complaint about a manufacturer, you can report it to the Consumer Product Safety Commission. Additionally, if an ad or phone solicitor defrauded you, you can contact the Federal Communications Commission for help.
Scams in the U.S. have become big business, and they are keeping the FTC quite busy filing injunctions against fraudulent companies.
Scam artists use whatever is going on to fool their victims. For example, when real estate collapses, a lot of fraudulent foreclosure relief organizations crop up. Some people without knowing it, think they are filing for bankruptcy, and instead they are giving a scammer personal information that can be used to steal their identity and their money. It’s always better to use credit cards when purchasing online rather than a debit card. Credit cards have more protection, and debit cards allow complete access to your checking or savings accounts.
Many scams target social media users, older people, and women. Always be on the lookout for scams. If something sounds “too good to be true,” it probably is. Avoid responding to any email solicitations or clicking on any links from someone you do not know.
Class Action Lawsuits
When government consumer protection agencies fail to compensate the victims of scams or fraudulent business practices adequately, class action lawsuits can help. By joining together and suing the company as a group, often litigators will be able to win a much larger settlement for everyone. Class action attorneys only get paid if you win. You always have the option of being included or opting-out of a class action lawsuit.
How Businesses Must Comply
As a business owner, you have a lot on your plate, but one thing you do not want to do is overlook consumer protection laws, that govern how you transact business.
Regardless if intended or not, you must be very careful in your advertising not to try and fool anyone. If you do, you could be subject to both state and federal sanctions. If a product fails to perform, consumers who sue can also go after the advertisers who created the ads.
Another big problem some companies are guilty of is misrepresenting their prices in comparison to other sellers, and when advertising something for free, that has a cost associated with it.
You cannot deceive the public into thinking they are getting a discount when one never existed.
When you give away free items, they must truly be free without any strings attached. For example, you cannot mark up another price to include the price of the free item, or take away other services to compensate for the free item. All of this is illegal and will get you into serious trouble if you are caught.
It is crucial when running a business to operate ethically and above the law. If you do not, not only could you lose thousands in revenue from lawsuits but consumers are legally able to request punitive damages also, and these costs could put you out of business.
Consumer Laws Vary
Consumer protection laws vary by state so consult your state attorney general’s office to find out how you can comply. If you are a consumer, you can ask them for help with a claim. California has the strictest consumer protection laws in the county.
These laws are in place to protect consumers but also the manufacturers and sellers as well. Consumer protection levels the playing field and creates fair, equitable trade standards for everyone.