Objective 6.01 - Understand Sales and Consumer Laws

1. Objective 6.01 - Understand Sales and Consumer Laws BB30 Business Law 6.01 Summer 2013

2. Why have consumer protection laws? • To ensure consumers get adequate decision-making information to compare products • to ensure fairness and competition in the marketplace • to protect consumers against unfair and deceptive practices or the sale of substandard or dangerous goods • to require licenses and inspections to ensure compliance with the law • to provide remedies for injured parties BB30 Business Law 6.01 Summer 2013

3. Consumer Product Safety Act • Created the Consumer Product Safety Commission (CPSC) • Sets product standards for hazardous products • Requires manufacturer or seller to test quality and reliability before marketing product • Can require recall, repair, replacement or refunding of the purchase price, of unsafe products • Examples: • Children’s toys with dangerous parts • Defective vehicle tires that cause accidents BB30 Business Law 6.01 Summer 2013

4. Food, Drug and Cosmetic Act • Created by the Food and Drug Administration (FDA) • Passed in 1903 after President Teddy Roosevelt read “The Jungle” by Upton Sinclair • Prohibits adulteration or mislabelingof foods, drugs or cosmetics • Creates standards for packaged foods, drugs and cosmetics • Approves new pharmaceuticals (prescription drugs) BB30 Business Law 6.01 Summer 2013

5. Food, Drug and Cosmetic Act • FDA regulates packaged Food, Drugs, Cosmetics including: • Inspecting production facilities for cleanliness • Setting standards of purity and quality • Approving ingredient lists as to fitness for human consumption or use • Requiring labeling with manufacturer, packager, distributor, weight & nutritional information to assist consumer in informed decision making BB30 Business Law 6.01 Summer 2013

6. Food, Drug and Cosmetic Act • New drugs cannot be marketed in the US without FDA approval. • FDA is sometimes criticized for being too cautious in granting new drug approvals. • Some Americans go to other countries to get drugs the FDA has not approved that they feel may be life-saving. • FDA recalls drugs from the market when dangerous side effects are identified. BB30 Business Law 6.01 Summer 2013

7. NC Weights and Measures • Promotes uniformity in weights and measures laws, regulations, and standards • Allows consumers to make comparison shopping decisions such as unit pricing • Regulates scales in grocery stores, produce stands, gas pumps, etc. BB30 Business Law 6.01 Summer 2013

8. FTC TRADE REGULATION RULES Cooling-Off Rule • adopted by the FTC to give consumers three business days to cancel most contracts made with door to door salespersons. • The rule relates to sales of $25 or more made outside the salesperson’s regular place of business. BB30 Business Law 6.01 Summer 2013

9. FTC TRADE REGULATION RULES Pre-notification Negative Option Rule How "Prenotification” Plans Work • Buying plans • Joining a plan means you agree to the plan's sales method as long as you're a member. • Company sends member information on merchandise they can buy, and the merchandise is sent to member automatically unless they return the form rejecting the offer within the specified time. • Example: Book clubs, Music clubs, Movie clubs BB30 Business Law 6.01 Summer 2013

10. FTC TRADE REGULATION RULES How Negative Option Rule Works • Requires companies give you information about their plans, clearly and conspicuously, in any promotional materials that consumers can use to enroll. • If the sales presentation for a plan is made orally, say on the phone, the terms and conditions still must be disclosed clearly and conspicuously during the presentation. BB30 Business Law 6.01 Summer 2013

11. TELEMARKETING SALES RULE • Gives the FTC and state attorneys general law enforcement tools to combat telemarketing fraud • Gives consumers added privacy protections and defenses against unscrupulous telemarketers • Helps consumers tell the difference between fraudulent and legitimate telemarketing. • Prohibits calling consumers who have put their phone numbers on the National Do Not Call Registry • Limits when telemarketers may call consumers • Requires transmission of Caller ID information BB30 Business Law 6.01 Summer 2013

12. UNFAIR AND DECEPTIVE ACTS AND PRACTICES Fraudulent Misrepresentation • (any practice that misleads (or has the potential to mislead) a consumer) • Some examples includes • Work at home schemes • Illegal Lotteries and Scams BB30 Business Law 6.01 Summer 2013

13. UNFAIR AND DECEPTIVE ACTS AND PRACTICES Bait and Switch Advertising • Advertising a non-existent bargain to lure customers so they can be sold a more expensive item. BB30 Business Law 6.01 Summer 2013

14. REMEDIES • Contact Company • Give notice of the problem and allow time to resolve conflict with involved parties. • Better Business Bureau • A private, non-government agency available at local and state levels that logs complaints from consumers • Passes complaint information to businesses that are members, frequently resolving issue • Makes complaints available for public viewing • Tries to steer consumers to reliable businesses that conduct business ethically BB30 Business Law 6.01 Summer 2013

15. REMEDIES • Government Regulation Agency • Contact the government regulatory agency related to your complaint. • Examples: • Consumer Product Safety Commission • Federal Communication Commission • Federal Trade Commission • US Postal Service • Attorney General • Contact State Attorney General’s office for assistance

16. REMEDIES • File Lawsuit • Cease and desist • An order or request to halt an activity (cease) and not to take it up again later (desist) or else face legal action • Can be issued by a judge or government agency • Class action • form of lawsuit in which a large group of people collectively bring a claim to court • NC Small claims court • Local civil court that handles cases involving $5,000 or less