BSTAT 3310 Chapter 19

how much the average development cost of a new drug is

1 billion dollars

the scam where a postcard informing the recipient that they won valuable prizes results in the recipient having to pay money to get the prizes. Know what the FTC can do about it

The FTC staff proposes complaints to the five commissioners, who decide by majority vote whether to issue a complaint. Most dealt with by Consent Decree which is a judgment entered by consent of the parties and approval of a court, whereby the defendant agrees to stop alleged illegal activity without admitting guilt or wrongdoing. Often used to settle complaints by regulatory agencies.

FTC three-prong test for deception

There is a misrepresentation or omission of information in a communication to consumers.

The deception is likely to mislead a reasonable consumer.

The deception is material; that is, it is likely to be misleading to the detriment of consumers.

(Hint: Are they lying)

FTC test for unfairness (it also has three elements)

It causes substantial harm to consumers.

The injury is harmful in its net effects.

Consumers cannot reasonably avoid injury

example of what is not deceptive advertising

calling a pastry 'Danish' when it was made in America is not deceptive

law that allows a private person to sue a false advertiser

False Advertising and the Lanham Act

what kind of damages a company can get when its competitor makes false statements about the company in advertising

Double Damages

what the FTC must do to finalize a new regulation

have to publish it in the federal register

FTC v. Consumer Defense, LLC

court held that a restraining order could be issued to shut down consumer defense immediately for actions in violation of the rule

how states deal with deceptive business practices

allow state's Attorney Generals or private citizens to go after false advertisers and deceptive business practices

KS Trade LLC v. International Gemological Inst. Inc.

court held that case could produce as KS provide misrepresentation of diamond value

the five requirements put on creditors by the Consumer Credit Protection Act (CCPA)

Creditors must disclose all relevant terms in credit transactions (truth in lending).

Procedures for correcting inaccurate and disputed bills and charges must be provided (fair credit billing).

Credit-reporting agencies must provide accurate information in consumer reports (fair credit reporting).

Creditors may not use certain personal characteristics, such as sex or race, in determining a person's creditworthiness (equal credit opportunity).

Abusive debt collection techniques are prohibited (fair debt collection practices). (<- important one)

what Truth in Lending requires

creditors in consumer transactions to disclose basic information about the cost and terms of credit to the consumer-borrower.

who Truth in Lending applies to

anyone that provides credit as a normal part of their business they are subject to Truth in Lending

what right a consumer has under the Fair Credit Reporting Act

if you are rejected on credit if you request it, they must give you all the information the used to reject you (Credit Report)

what a credit reporting company must do when a consumer notifies it of an error on their credit report

Respond to consumer complaints about inaccurate information within 30 days.

Tell consumers, on request, who has asked for copies of their credit history in the past year.

Provide a toll-free consumer service number.

Get the consumer's permission before giving a report to an employer or before releasing a report containing medical information.

which statute gives you the right to see your credit report for free once a year

Fair and Accurate Credit Transactions Act

the name of the statute that prohibits discrimination in credit

Equal Credit Opportunity Act

what the Fair Debt Collection Practices Act prohibits

Harassing, deceptive, and unfair debt collection practices

including threats of violence or arrest, obscene language, the publication of a list of delinquent consumers, and harassing phone calls—are prohibited.

Debt collectors may not discuss the debts with other people, including the debtor's employer.

The act prohibits the use of false or misleading representations in collecting a debt.

Chuway v. National Action Financial Services

appeals court held that debt collector use inaccurate terms about the balance terms that violated FTC