Bus and Society

What do consumers expect from businesses?

to ensure their products' safety, promote their services honestly, and be transparent in their advertising.

How do consumers bear responsibility for protecting their own rights and making sure they are not harmed?

the relationship among consumers, business firms, government regulators, and the courts is not a one-way street:

consumers must themselves use care in selecting and using products and services, organize to protect themselves in the marketplace, and even bring lawsuits as last resorts.

What are government regulators and the courts expected to do?

back up consumers' rights.

What are the five core rights that consumers and their advocates are entitled to in their relationships with businesses?

• The right to be informed

• The right to safety

• The right to choose

• The right to be heard

• The right to privacy

The right to be informed

to be protected against fraudulent, deceitful, or grossly misleading information, advertising, and labeling, and to be given the facts to make an informed purchasing decision.

The right to safety

to be protected against the marketing of goods that are hazardous to health or life.

The right to choose

to be assured, wherever possible, access to a variety of products and services at competitive prices; and in those industries in which competition is not workable and government regulation is substituted, to be assured satisfactory quality and service at fair prices.

The right to be heard

to be assured that consumer interests will receive full and sympathetic consideration in the formulation of government policy, and fair and expeditious treatment in the courts.

The right to privacy

to be assured that information disclosed during a commercial transaction or while using social media or searching online—such as health conditions, financial status, or identity—is not shared with others unless authorized.

What are the four main ways that core rights of consumers can be protected?

• Consumerism (consumers act to protect their own interests)

• Government Regulation (the government regulates product safety and protects consumer privacy)

• Law/Courts (people sue when they are injured by a product)

• Industry “self-regulation” (businesses and industries protect their customers through product recalls, quality programs, and voluntary codes)

Consumer Movement

a social movement that seeks to augment the rights and powers of consumers. (also known as consumerism)

Who are the organized groups that actively promote and speak for the interests of consumers?

in the united states, one organization alone, the Consumer Federation of America, brings together nearly 300 nonprofit groups to espouse the consumer viewpoint.

other active u.s consumer advocacy organizations include Public Citizen, the National Consumers League, the Public Interest Research Group (PIRG), and the consumer protection unit of the American Association for Retired People (AARP).

Consumer Reports (CR, formerly called Consumers Union) conducts extensive test on selected consumer products and services and published the results of its tests, with ratings on a brand-name basis.

Consumers also self-organize online, for example, by creating groups of people injured by a specific product on social media platforms or using review tools to express approval or disapproval of products and services

Consumer protection laws

laws that provide consumers with better information, protect consumers from possible hazards, encourage competitive pricing, protect privacy, or permit consumer lawsuits.

Goals of Consumer Laws

• to provide consumers with better information when making purchases

• to protect consumers against possible hazards

• to promote competitive pricing

• to provide consumer choice

Deceptive advertising

an advertisement that makes false or misleading claims about the company’s own product or its competitor’s product, withholds relevant information, or create unreasonable expectations; generally illegal in most countries.

What is the Federal Trade Commission mainly responsible for?

Competitive pricing, Deceptive trade practices, Packaging and labeling, Consumer credit disclosure and reporting, and Online Privacy.

What is the Food and Drug Administration mainly responsible for?

Safety, effectiveness, and labeling of drugs, foods, food additives, cosmetics, and medical devices. Standards for radiation exposure. Toxic chemicals research.

What is the Consumer Product Safety Commission mainly responsible for?

Safety standards for consumer products. Flammable fabrics, hazardous substances, and poison prevention packaging.

What is the National Highway Traffic Safety Administration (Transporation Department) mainly responsible for?

Motor vehicle safety standards, Automobile fuel economy standards, National uniform speed limit, Consumer safeguards for altered odometers.

What is the Department of Justice mainly responsible for?

Fair competition and Consumer civil rights.

What is the National Transportation Safety Board mainly responsible for?

Airline safety

What is the Consumer Financial Protection Bureau mainly responsible for?

Fairness and transparency in consumer financial products and services

What is the Department of Agriculture mainly responsible for?

Safety of meat and poultry.

Consumer Financial Protection Bureau

established by Congress, as part of the Dodd-Frank Act, as a consumer financial protection bureau.

Consumer Privacy

a consumer’s right to be protected from the unwanted collection and use of information about that individual for use in marketing.

What has given new urgency to the broad issue of consumer privacy?

Rapidly evolving information technologies. shoppers have always been concerned that information they reveal during a sales transaction—for example, their credit card or driver’s license numbers—might be misused.

but in recent years, digital technologies have increasingly enabled businesses to collect, buy, sell, and use vast amounts of personal data about their customers and potential customers.

What technologies reveal individuals’ information

Cookies or Flash cookies (more powerful), Web beacons, Deep packet inspection, GPS technology, and the Internet of things (smart thermostats and home alarm systems give service providers a transparent window into very personal aspect of their customers’ lives.)

Behavioral Advertising

advertising that is specifically targeted to individuals, based on their observed online behavior.

Who do advertisements tailored to a user’s interests and preferences benefit?

Buyers, who are more likely to receive relevant messages, and Sellers, who are more likely to reach prospective customers. But collection of information that makes this possible carries risks.

for example, in a practice called web lining, individuals may be denied opportunities, such as credit, based on their online profiles.

When are most U.S. Technology users are willing to share personal information?

If they feel it is necessary to complete a transaction or if they receive benefits—such as free services, useful information, or discounts—in exchange.

What percent of Americans worry about their personal information?

Seventy percent believe that their personal information is less secure than it was five years ago. However, seventy-nine percent are concerned about what companies are doing with the data collected from them. while six percent say they understand a great deal about it.

in short, most consumers felt worried, but poorly informed, about company use of their data.

What are the three major solutions have been proposed to protect consumers privacy?

1. consumer self-help - in this view, consumers can act to protect their own data privacy through technologies that enable them to protect their own privacy like privacy settings.

2. industry self-regulation - many internet-related businesses have argued that they should be allowed to regulate themselves. in their view, the best approach would be for companies to adopt voluntary policies for protecting individual privacy.

3. privacy legislation - some favor stronger government regulations protecting consumer digital privacy. such protections are generally stronger in the European Union than in the United States.

Product liability

legal responsibility of a firm for injuries caused by something it made or sold.

Strict liability

a legal doctrine that holds that a manufacturer is liable for injuries resulting from the use of its products, whether or not the manufacturer was negligent or breached a warranty.

Why do businesses hate strict liability?

they argue that the evolution of strict liability has unfairly burdened them with excess costs. liability insurance rates have gone up significantly, especially for small businesses, also the costs of defending against liability lawsuits and paying large settlements to injured parties. moreover, they argue that it is unfair to hold them financially responsible in situations where they were not negligent.

When was the Class Action Fairness Act (CAFA) passed and what does it do?

it was passed in 2005, the first significant reform of product liability laws in many years.

two key elements of this act were:

• most large class-action lawsuits were moved from state to federal courts.

• attorneys in some kinds of case were paid based on how much plaintiffs actually received, or on how much time the attorney spent on the case.

Product Quality

everything an organization does to assure the quality of its products.

Consumer Affairs Officer

manages the complex network of consumer relations.

Product Recall

occurs when a company, either voluntarily or under an agreement with a government agency, takes back from its distribution channels all items found to be dangerously defective.