Chapter 24: Protecting Consumers

Consumer Organizations and Agencies

Finding Solutions to Consumer Problems

• At some point, you may have trouble with a product or service.
• There are things you can do to resolve the matter yourself.
  • When faced with a purchasing problem, review your receipts and warranties.
  • Consumer organizations may be able to help.
  • If you do not get the results you want, you might decide to file a claim in small claims court.

Nongovernmental Consumer Organizations

• There are many organizations that work on behalf of consumers.
  • Groups and individuals who work to protect, inform, and defend consumers are called consumer advocates.
• The Consumer Federation of America (CFA) works to inform the public and government about consumer issues.
• The National Consumers League is the nation’s oldest non- profit consumer group with membership open to anyone.
• Consumers Union is a nonprofit organization that publishes the magazine Consumer Reports
• Some industries have consumer assistance panels.
• The Major Appliance Consumer Action Program (MACAP) helps consumers solve problems with large appliances, such as washers, stoves, and freezers.
• Internet sites, radio, TV stations, and newspapers advocate for consumers.
  • They often have a consumer reporter who reports on issues that are important to consumers, such as product safety, testing, and shopping.

Government Consumer Organizations

• In the United States, each state has a consumer affairs division.
• Many state and federal agencies have been set up to protect consumers.
• The Federal Trade Commission (FTC) enforces federal antitrust and consumer protection laws by investigating complaints against companies
• The U.S. Department of Agriculture (USDA) inspects foods and grades them.
  • Grade labels indicate the level of quality of foods.
• The Food and Drug Administration (FDA) regulates the labeling and safety of food, drugs, cosmetics, dietary supplements, and medical devices sold in the United States.
• The National Highway Traffic Safety Administration is part of the U.S. Department of Transportation.
• A recall is an order to take back and repair or replace a product that has defective parts
• The U.S. Consumer Product Safety Commission is a federal government agency that oversees the safety of products such as toys, cribs, power tools, electronics, and furniture.
• State public utilities commissions regulate the rates charged by electric, gas, and water companies.
• A legal monopoly is a company that is allowed to operate without competition.
• State insurance commissions are the state government bodies responsible for regulating the activities of insurers and health plans.
• State licensing agencies issue licenses, or legal permits to conduct business.

Consumer Protection Laws

Laws that Protect Consumers

• The U.S. government allows businesses to compete in the marketplace with relative freedom.
  • However, many laws have been enacted to regulate and restrict business practices.
• Manufacturers of products for the public must become familiar with consumer protection laws.
• Price discrimination is the act of charging more than one price for the same product or service in different markets or to different customers.
  • The Clayton Act of 1914 and the Robinson- Patman Act of 1936 are aimed at prohibiting price discrimination.
• The Fair Packaging and Labeling Act requires that manufacturers’ labels truthfully list all ingredients and raw materials used in production.
• The Uniform Commercial Code (UCC) is a group of laws that regulate commercial business transactions.
  • The UCC protects the economic interests of buyers and sellers in contracts.
  • It also regulates sales warranties.
• The Consumer Credit Protection Act requires those who give credit to reveal all the terms and conditions of their credit agreements.
• The Federal Trade Commission Act protects consumers from false and misleading advertising with truth-in-advertising laws.

How Businesses Protect Consumers

• The business community protects consumers by providing information.
  • Labels, brochures, manuals, and online details are some of the ways that businesses educate consumers about their products and services.
• The Better Business Bureau (BBB) is a nonprofit organization that collects information on local businesses and handles complaints.
• Many businesses have a customer service department.
• A customer service representative can answer questions or help resolve problems
• Advertising can be a good source of consumer information.
• Some commercial magazines are good sources of consumer information.