Chapter 15 Consumer Protection. Governmental Protection Consumer – individual who acquires goods...
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Transcript of Chapter 15 Consumer Protection. Governmental Protection Consumer – individual who acquires goods...
Chapter 15
Consumer Protection
Governmental Protection
Consumer – individual who acquires goods that are intended for personal use.
Caveat Emptor Let the buyer beware
Caveat Venditor ???
Why the change in philosophy?
Class Actions
Class Actions – Allows one or several people to sue on behalf of themselves, and others. Is this necessary? Why?
http://www.consumer-action.org/lawsuits/
Governmental Procedure
Cease-and-desist order: an order requiring a company to stop the specified conduct.
Consent order: voluntary, court-enforceable, agreement to stop a practice.
Restitution: Permits a party to a contract to recover money or property given to the other party.
http://www.memphisdailynews.com/news/2014/jul/17/uber-lyft-operating-despite-city-notices/
http://files.consumerfinance.gov/f/201309_cfpb_jpmc_consent-order.pdf
Protection Against Inferior Services and Goods
Licensing Who needs a license to operate? Who would you rather go to?
Unsafe Products
1972 Consumer Product Safety Act Created the Consumer Product Safety
Commission (CPSC)
Toys!!
http://www.cbsnews.com/pictures/10-most-dangerous-toys-of-2014/2/
http://www.cpsc.gov/en/Recalls/Violations/
Food, Drugs and Cosmetics
Food and Drug Administration (FDA) Requires Food, Drugs and Cosmetics be
clean Adulterated = does not meet standards Requires labeling Very cautious (praise and criticism)
http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/SanitationTransportation/ucm056174.htm
Weights and Measures
Weights and Measures Division Nat’l Institute of Standards and
Technology Uniformity
Pound is a Pound, Gallon is a Gallon, etc. How big is a 2 x 4?
Seals certify accuracy
Protection Against Unfair Trade Practices
Unfair Trade Practice: any method of business that is dishonest or fraudulent or that illegally limits fair competition.
Unfair Trade Practices
Price Fixing False / Misleading Advertising
Bait and Switch Federal Trade Commission
Corrective Advertising Cease and desist
http://www.arentfox.com/newsroom/alerts/costcos-alleged-bait-and-switch-advertisement-could-cost-them#.VIEJc9LF-So
http://mentalfloss.com/article/19217/6-cases-shamelessly-false-advertising
Unfair Trade Practices
Illegal Lotteries Punishable by fine and or imprisonment
What about Bingo?
Confidence Games Pyramid scheme (Madoff)
Unfair Trade Practices
Unfair Pricing Free, artificial two for one, low estimates
Mislabeled Goods
Product Liability
Product Liability: Affixing of responsibility to compensate for injuries caused by a defective product. Product Liability suit
Based on Breach of Warranty: an assurance the seller makes about quality
Expansion of Product Liability
Warranty = Contract Parties involved
Privity of Contract : relationship that exists between buyer and seller
Product Liability Now……Extends to…..
1. The Retailer (Walmart)
2. The Wholesaler (Middle Man-U.S. Company)
3. The Manufacturer (Toy Company – China?)
Chapter 15 Slide 15
Recovery for Tortious Conduct
Product Liability suit can be based on Breach of warranty Fraud Negligence Strict Liability
Has been expanded due to high burden of proof
Defenses to Liability
Used for non-intended purpose Used for non-foreseeable purpose Altered Product Improper conduct Misusing Product
Warranties
Express Warranty: An assurance of quality explicitly made by the seller.
Can be made by Oral or written Conduct – show a sample
Breach of Warranty = Breach of Contract
Opinions vs. Warranties
Puffing: Exaggerated Seller’s talk. Expert Opinions
May create warranties Jeweler says a diamond is flawless
Requirements of Express Warranties
Magnuson Moss Warranty Act of 1975 Not REQUIRED to give an express
warranty IF Express Warranty must identify as
FULL – free repair / replacement of any defective part for reasonable time
LIMITED – fails to meet one or more requirements of a full warranty
Must be in readily understood language Samsung Warranty
Implied Warranties
Implied Warranty: An implicit warranty obligation imposed by law. Warranty of title
You own what you’re selling Free against encumbrances Warranty of Fitness for a Particular
Purpose
Implied Warranties Given Only by Merchants
Warranty against infringement Free of third party’s claims
Trademark, copyright, patent, etc.
Warranty of merchantability Fit for ordinary purposes
Quality and safety May be disclaimed
Exclusion of Warranties
Disclaimer: a notice of exclusion Conspicuous and in writing
Ex: “With All Faults”, “As Is”, “There are no warranties of merchantability or fitness that extend beyond the description on the label.”
• Usually tied to vehicles, but may extend to other products
• New product
• Major defect within warranty period
• Same repair made with no improvement
• Replace product
Warranties
Full Warranty: An express warranty that obligates the seller to repair or to replace a defective product without cost to the buyer, in a reasonable amount of time.
Limited Warranty: Any warranty that provides less protection than a full warranty.
Debate
Hot Debate What protection does Edison have? How should this case be resolved?
What’s Your Verdict Pg 259 How should this case be resolved?