Consumer Protection Part 3

Right to Information in Advertising

  • Focus: Consumers' need for information that is clear, accurate, and adequate.

  • Controversial Advertising Issues:

    • Advertising cigarettes

    • Advertising alcoholic drinks

    • Advertising to children

Advertising to Children

  • Ethical Concerns:

    • Companies view children as lifelong consumers, targeting them with advertisements.

    • Intention of companies is to create brand loyalty from a young age.

  • American Pediatrics Association's Position:

    • Children should not be advertised to due to underdeveloped brains.

    • Children cannot distinguish between facts and deception or make informed decisions.

  • Consequences:

    • Contributes to the child obesity epidemic in the U.S.

    • Obesity among children is labeled a public health menace.

Child Obesity Statistics and Issues

  • Reference: Yale University's Rudd Center findings:

    • Least healthy cereals are aggressively marketed to children.

    • Some cereal manufacturers are responding by promoting "better for you" options.

  • Question of Definition:

    • Who decides what is "better" for children?

  • Demographics Affected:

    • Overweight/obese children are more prevalent in ethnic and racial groups, especially those in poverty.

  • Growth of the Problem:

    • Rise in obesity rates from 2003 to 2017 correlates with increased chronic disease risks, like diabetes.

    • This affects healthcare costs and productivity for society.

Ethical and Regulatory Questions

  • Consider these questions:

    • Is it unethical for food companies to target children in advertising, especially when parents are busy?

    • How can children be better protected from targeted ads?

    • Should government restrict food advertisements targeting children?

    • Can food companies self-regulate effectively?

Economic Crisis of 2008-2009

  • Overview of Impact:

    • Loss of $3.4 trillion in real estate wealth.

    • Average loss: $30,300 per U.S. household.

    • Nearly 8 million foreclosures from 2007 to 2016, costing 3.6 million jobs.

  • Causes of Crisis:

    • Senate's Levin-Coburn report identified high-risk financial products and systemic failures.

  • Financial Crisis Inquiry Commission:

    • Widespread failures in financial regulation and corporate governance led to the crisis.

Role of Credit Card Industry

  • Findings by Government Accountability Office (GAO):

    • Fast rise of credit card fees beyond inflation.

    • Difficulty in understanding regulations and disclosures.

    • Failure to inform customers about fees and penalty impacts.

Regulatory Response: Dodd-Frank Bill (2010)

  • Purpose:

    • Designed to prevent another financial crisis.

  • Key Provisions:

    • "Too big to fail" provision preventing government bailouts.

    • Establishment of the Consumer Financial Protection Bureau (CFPB):

      • Enforces rules on financial institutions.

      • Monitors and reports on the financial markets.

      • Collects and tracks consumer complaints.

Post-Crisis Financial Landscape

  • Increased Economic Power of Banks:

    • Banks have grown more influential post-2008.

    • Increased contributions to political campaigns and lobbying efforts.

  • Consumer Protection Need:

    • Highlighted by Wells Fargo scandal in 2016, where the bank was caught cheating customers.