Understanding Consumer Protection Laws

In order to understand consumer protection laws, it is useful to be familiar with the legal concepts of express and implied warranty. Express warranty is a written guarantee included in or on the packaging of a product. It contains promises regarding the quality of a product, and will often include instructions for a refund of defective products.

Express warranties may be specifically tailored to each product in terms of coverage and expiration date. Additionally, not all products contain express warranties.

When a product does not contain an express warranty, consumer protection laws automatically provide implied warranties which are meant to protect consumers. These warranties guarantee that the product will be of suitable quality, and will perform as advertised when used as intended.

Consumer protection laws are government regulations, both state and federal, which protect consumers from fraud or abuse by salespersons, shopkeepers, or manufacturers. The purpose of these laws is to ensure that information about a product is truthfully disclosed to consumers.

Federal consumer protection laws are comprehensive and cover a wide range of goods, services, and transactions. Examples include:

• The Fair Credit Reporting Act: Regulates how a consumer’s credit information is used, by ensuring that information on a person’s credit report is accurate;
• The Fair Debt Collection Practices Act: Regulates the way that debt is collected in order to avoid abusive and deceptive practices by debt collectors; and
• The Fair Credit Billing Act: Allows consumers to dispute and correct billing errors made by a creditor, such as a credit card company.

In general, the Federal Trade Commission is the foremost regulatory body that enforces these laws, and ensures that anyone who violates these laws are penalized. At the state level, consumer protection laws vary. While each state has laws prohibiting deceptive practices, depending on the state you live in, consumer protection may be more strictly regulated.

What Are Some Other Consumer Protection Laws?

The wide variety of consumer protection laws can range from prohibiting false advertising and mandating product safety measures, to regulating debt collection practices and protecting the identity information of consumers.

Some significant federal laws governing consumer protection include:

• The Magnuson-Moss Warranty Act: Requires that warranties for consumer goods be fully and conspicuously disclosed, and in readily understood language;
• The Fair Credit Billing Act: Requires a credit card company to promptly and appropriately handle mistakes regarding billing;
• The Credit Card Accountability, Responsibility, and Disclosure Act: Precludes credit card companies from issuing rate increases without giving prior notice;
• The Fair Debt Collection Practices Act: Prohibits the use of deceptive and unfair techniques when collecting bills;
• The Truth in Lending Act: Requires a lender to provide details about the loan, such as the loan length and the amount of money that has to be paid;
• The Consumer Product Safety Act: Protects consumers by regulating products that are potentially dangerous; and
• The Used Car Rule: Requires a dealer to display a “Buyer’s Guide” in the vehicle window.

The federal government formed the Consumer Financial Protection Bureau (“CFPB”) after the 2008 financial crisis, in order to protect people from deceptive and exploitative practices such as predatory lending. The CFPB covers financial transactions such as:

• Money transfers;
• Bank accounts;
• Credit cards;
• Credit reports;
• Mortgage, auto, student, payday and personal loans; and/or
• Money transfers

The Food and Drug Administration (“FDA”) regulates consumer-related product safety issues, including those which involve:

• Food;
  Drugs;
• Medical devices;
• Cosmetics; and
• Tobacco products.

These laws are enforced by the U.S. Department of Justice, both civilly and criminally.

What Is Consumer Fraud?

According to consumer protection and fraud laws, consumer fraud refers to a specific type of criminal fraud in which the victim is a consumer, and the perpetrator is either a seller or advertiser of merchandise. Generally speaking, as long as the fraud involves some type of services or goods, it is considered to be consumer fraud.

Some examples of a few of the more common scams include:

• Sellers not providing adequate merchandise, such as a car dealer selling lemon cars;
• Sending merchandise to people without their knowledge, and then forcing them to pay for it by threatening legal action or to ruin their credit ratings;
• Sweepstakes and lotteries in the form of offering a prize if you pay a “fee,” and then failing to deliver the prize; and
• Charities pretending to be working for a good cause, and ask you for a donation.

Some specific types of consumer fraud include:

• False Advertising: Intentionally misleading a consumer about some aspect of a product. This factor was instrumental in the consumer’s decision to buy the product;
• Bait and Switch: The process of luring the consumer in with an unbeatable deal that is no longer available. Afterwards, only different products are offered; and
• Pyramid Schemes: Any sort of promotion or unrealistic return, when the only money made is the return on the funds of people newly recruited to the system. Pyramid schemes may also be referred to as multi level marketing, or MLM.

Can You File A Lawsuit For Violations Of Consumer Protection Laws?

Many consumer protection laws, especially at the state level, encourage consumers to report any instances of consumer fraud or abuse. Some laws even encourage consumers to file a private lawsuit in order to help with protection of consumer rights. Additionally, a consumer may be asked to participate in a class action lawsuit on behalf of a class of consumers who have been injured by the same company.

In a consumer protection lawsuit, the following issues will generally be addressed:

• Whether the law applies to the current issue;
• If the defendant engaged in the type of misconduct prohibited by the law; and
• Whether the plaintiff actually qualifies as a consumer.

The consumer may be able to recover damages for any injuries or lost profits caused by the violation of a consumer protection law. Alternatively, a judge may issue an injunction ordering the defendant to cease any dangerous and/or illegal activities that have occurred.

Part of the process of filing a consumer fraud complaint is involving the Consumer Protection Agency (“CPA”). The CPA is an agency responsible for the regulation of the consumer industry, including:

• Licensing and regulating professionals;
• Conducting investigations into consumer and financial scams; and
• Criminally prosecuting scammers who are found to be guilty.

Additionally, the CPA can help injured parties bring civil lawsuits against fraudulent businesses or professionals. The CPA conducts an investigation into the alleged fraudulent business misconduct, and once the investigation is complete, the Agency will make a determination regarding whether the business was fraudulent.

Do I Need A Lawyer For Help With Consumer Protection Laws?

There are many consumer protection laws at both the federal and state level. As such, it is important to understand how those laws affect you as a consumer, especially if you are experiencing consumer protection law violations.

If you are in a situation that would be governed by the protection of a consumer protection law, you should first contact the FTC in order to submit a consumer complaint. While the FTC cannot get your money back, it is an important first step as it ensures that you already reported the defendant. Doing so will also help when you contact a local consumer lawyer to help you file and defend your claim.