Consumers and the Economy

1
Consumers and the Economy

• Chapter 1
• Business Concepts

2
3 Realms of Consumer Rights

• Social
• Political
• Economic

3
Economic Roles

• Worker
• Consumer (goods/services)
• Citizen

4
6 Consumer Rights

• March 15, 1962, John F. Kennedy declared these 4
  basic human rights
• The right to safety
• The right to be informed
• The right to be heard
• The right to choose
• March 15 is now recognized as World Consumer
  Rights Day

5
Rights vs Responsibilities

• Are rights and responsibilities the same?

6
6 Consumer Rights

• Right to consumer education
• 1975 President Ford
• Right to service
• 1994 President Clinton

7
Right to be Informed

• Protection from fraudulent advertising,
  mislabeling, and misrepresentation
• Helps you make wise choices
• Right is meaningless unless you take the time to
  educate yourself
• Labels, warranties, guarantees, credit terms

8
Right to Choose

• Consumer is King!
• Reasonable access to a variety of products and
  services at reasonable prices
• Reject poor quality
• Needs vs Wants

9
Right to Safety

• Protection against injury of illness from
  hazardous products and services
• Government agencies
• Department of Agriculture
• Food and Drug Administration (FDA)
• Consumer Product Safety Commission

10
Responsibilities for Safety

• Follow instructions
• Practice good maintenance
• Use good sense
• Watch out for others

11
Right to be Heard

• Your interest as a consumer will get a
  sympathetic hearing from both business and
  government
• Enforcement of protection laws
• Complaint and compliment

12
Right to Consumer Education

• Receive fundamental understanding of the
  marketplace and rights and responsibilities in
  all sectors of life
• Continuous education
• High school students could only correctly answer
  42 of questions considered fundamental for
  competent consumer decision making (1993)

13
Right to Consumer Education

• Benefits individuals
• Life skills
• Critical thinking
• Benefits society
• Encourages citizen awareness
• Benefits business
• Satisfies customers
• Realistic expectations of products and services

14
Right to Service

• Not a clear relationship to federal consumer law
• More often treated in state law

15
Consumer Protection
Consumer Groups
Government Agencies
CONSUMER
Industry Self-Regulation
See page 8 of book for Consumer Protection
Statutes
16
GOVERNMENT AGENCIES

• Federal Trade Commission (FTC)
• Initially focused on fostering fair trade
• Eventually expanded its reach
• Ad claims, selling practices, price-fixing, etc.
• FTC Home
• U.S. Dept. of Agriculture
• Food Safety
• Ag Home

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Government Agencies

• Food and Drug Administration (FDA) Protects
  consumers against potentially harmful drugs,
  food, cosmetics, and therapeutic devices.
• http//www.fda.gov/opacom/7alerts.html
• Consumer Product Safety Commission (CPSC)
  product related accidents.
• Mandatory Safety Standards e.g., for cigarette
  lighters to reduce fire hazard
• Recall of Malfunctioning products.http//www.cpsc
  .gov/cpscpub/prerel/category/toy.html

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Government Agencies

• Securities and Exchange Commission (SEC) Makes
  sure companies provide access to certain basic
  facts about an investment prior to buying it and
  while owning it
• Insider trading, accounting fraud, and providing
  false or misleading information about securities
  and the companies that issue them
• Martha Stewart-insider trading

19
Consumer Groups

• Organizations that look out for consumer
  interests. (e.g., Consumers Union, Action for
  Childrens Television, National Wildlife
  Federation, etc.)
• Consumers Union (Publisher of Consumer Reports)

More Americans die each year from
hospital-acquired infections than from auto
accidents and homicides combined
Free Credit Report
thanks to the Fair and Accurate Credit
Transactions Act, free copy of their credit
report (FACTA) will be available to all
consumers throughout the country by September 1,
2005.
20
Industry Self-Regulation

• Consumer Action Panels
• Take care of consumer complaints and keep
  industry abreast of what consumer expect
• Better Business Bureau
• Private organization that helps consumers settle
  complaints

21
Consumer Movement
Your Moneys Worth (1927) showed how
advertisers mislead the public about their
products

• Stuart Chase F. J. Schlink
• Upton Sinclair
• Harvey Wiley
• Rachel Carson
• Jessica Mitford
• Paul Douglas
• Ralph Nader

The Jungle lead to passage of Meat Inspection
Act of 1906
Research led to the Food and Drug Act of 1906
Silent Spring (1962) prompted many
environmental laws
The American Way of Death (1963) prompted the
Funeral Rule
Truth-in-lending legislation (1968)
Unsafe at Any Speed (1965) helped improve
highway safety, meat inspection, and FTC
activities
22
Federal Laws and Statutes

• This law requires truth in lending. Consumers
  must be told exactly what the credit charge is on
  a purchase or loan.

23
Federal Laws and Statutes

• Consumer Credit Protection Act
• This law requires truth in lending. Consumers
  must be told exactly what the credit charge is on
  a purchase or loan.

24
Federal Laws and Statutes

• This statute requires truth in packaging. It is
  designed to help consumers compare goods. The
  act requires that certain facts be printed
  clearly on packaging. These facts include net
  contents, size of serving, list of ingredients.

25
Federal Laws and Statutes

• Fair Packaging and Labeling Act
• This statute requires truth in packaging. It is
  designed to help consumers compare goods. The
  act requires that certain facts be printed
  clearly on packaging. These facts include net
  contents, size of serving, list of ingredients.

26
Federal Laws and Statutes

• This law is designed to assure consumers of the
  safety, purity, and wholesomeness of food
  products. It also covers the safety and
  effectiveness of drugs and cosmetics. The act
  requires that these products be informatively
  labeled and truthfully advertised.

27
Federal Laws and Statutes

• Food, Drug and Cosmetic Act
• This law is designed to assure consumers of the
  safety, purity, and wholesomeness of food
  products. It also covers the safety and
  effectiveness of drugs and cosmetics. The act
  requires that these products be informatively
  labeled and truthfully advertised.

28
Federal Laws and Statutes

• This act helps consumers compare new automobiles.
  It requires that manufacturers label ach car,
  listing its suggested retail price, the price of
  any extra, and the total price.

29
Federal Laws and Statutes

• Automobile Information Disclosures Act
• This act helps consumers compare new automobiles.
  It requires that manufacturers label ach car,
  listing its suggested retail price, the price of
  any extra, and the total price.

30
Federal Laws and Statutes

• The purpose of this act is to protect children
  from dangerous goods, including toys. The act
  bans the shipment and sale of such dangerous
  items from state to state.

31
Federal Laws and Statutes

• Child Protection and Toy Safety Act
• The purpose of this act is to protect children
  from dangerous goods, including toys. The act
  bans the shipment and sale of such dangerous
  items from state to state.

32
Federal Laws and Statutes

• This statute requires warning labels on all
  products that might be hazardous. The labels
  must list such things as precautions for use and
  first-aid procedures in case of accident.

33
Federal Laws and Statutes

• Federal Hazardous Substances Labeling Act
• This statute requires warning labels on all
  products that might be hazardous. The labels
  must list such things as precautions for use and
  first-aid procedures in case of accident.

34
Federal Laws and Statutes

• This law helps consumers compare textiles and
  fabrics. It requires that labels list fiber
  content by weight, manufacturers name and
  address, family name of the fiber, and similar
  items.

35
Federal Laws and Statutes

• Textile Fiber Products ID Act
• This law helps consumers compare textiles and
  fabrics. It requires that labels list fiber
  content by weight, manufacturers name and
  address, family name of the fiber, and similar
  items.

36
Federal Laws and Statutes

• This act sets out a procedure for consumer to
  follow in having billing errors corrected

37
Federal Laws and Statutes

• Fair Credit Billing Act
• This act sets our a procedure for consumer to
  follow in having billing errors corrected

38
Federal Laws and Statutes

• This act allows for credit reporting agencies to
  release information to those businesses with
  legitimate need for the information, such as
  financial institutions, credit card companies, or
  employers.

39
Federal Laws and Statutes

• Consumer Credit Protection Act
• This act allows for credit reporting agencies to
  release information to those businesses with
  legitimate need for the information, such as
  financial institutions, credit card companies, or
  employers.

40
Federal Laws and Statutes

• This law allows solicitors to call from 8 a.m.-9
  p.m. local times, and they must maintain a
  federal Do Not Call list.

41
Federal Laws and Statutes

• Telephone Consumer Protection Act of 1991
• This law allows solicitors to call from 8 a.m.-9
  p.m. local times, and they must maintain a
  federal Do Not Call list.

42
Federal Laws and Statutes

• This act signed into law in 2000 as an amendment
  to the Fair Credit Reporting Act, allows for
  consumers to receive one free credit report per
  year.

43
Federal Laws and Statutes

• Fair and Accurate Credit Transaction Act
• This act signed into law in 2000 as an amendment
  to the Fair Credit Reporting Act, allows for
  consumers to receive one free credit report per
  year.

44
Federal Laws and Statutes

• This act established the School Breakfast
  Program, a federally assisted meal program that
  provides low-cost or free breakfasts to children
  in public and non-profit schools as well as child
  care institutions.

45
Federal Laws and Statutes

• Child Nutrition Act 1966
• This act established the School Breakfast
  Program, a federally assisted meal program that
  provides low-cost or free breakfasts to children
  in public and non-profit schools as well as child
  care institutions.

46
Federal Laws and Statutes

• The act which created the SEC, outlawed
  manipulative and abusive practices in the
  issuance of securities, required registration of
  stock exchanges, brokers, dealers, and listed
  securities, and required disclosure of certain
  financial information and insider trading.

47
Federal Laws and Statutes

• Securities and Exchange Act of 1934
• The act which created the SEC, outlawed
  manipulative and abusive practices in the
  issuance of securities, required registration of
  stock exchanges, brokers, dealers, and listed
  securities, and required disclosure of certain
  financial information and insider trading.

48
Federal Laws and Statutes

• 1949, this act created a program to provide low
  cost or free school lunch meals to qualified
  students through subsidies to schools .

49
Federal Laws and Statutes

• Richard B. Russell National School Lunch Act
• 1949, this act created a program to provide low
  cost or free school lunch meals to qualified
  students through subsidies to schools .

50
Federal Laws and Statutes

• Allowed for meat inspection and condemnation of
  any foods deemed unfit for human consumption and
  set sanitation standards for meat packing plants.

51
Federal Laws and Statutes

• Meat Inspection Act of 1906
• Allowed for meat inspection and condemnation of
  any foods deemed unfit for human consumption and
  set sanitation standards for meat packing plants.

52
Federal Laws and Statutes

• This act provided for accurate labeling of food
  products and forbade the manufacture, sale, or
  transportation of adulterated food products or
  poisonous patent medicines.

53
Federal Laws and Statutes

• Pure Food and Drugs Act of 1906
• This act provided for accurate labeling of food
  products and forbade the manufacture, sale, or
  transportation of adulterated food products or
  poisonous patent medicines.

54
Federal Laws and Statutes

• This act banned food additives proven to cause
  cancer and required that any new additives had to
  be proven not to cause cancer before being used.

55
Federal Laws and Statutes

• Food Additives (Delaney) Amendment
• This act banned food additives proven to cause
  cancer and required that any new additives had to
  be proven not to cause cancer before being used.

56
Federal Laws and Statutes

• This amendment, passed in 1913, provided that all
  food packages must be plainly and conspicuously
  marked on the outside .

57
Federal Laws and Statutes

• Gould Amendment
• This amendment, passed in 1913, provided that all
  food packages must be plainly and conspicuously
  marked on the outside .

58
Federal Laws and Statutes

• Passed in 1990, this act set up the standard
  serving size requirement on food labels,
  standardized the label information, and required
  that health claims on labels be consistent with
  federal standards. .

59
Federal Laws and Statutes

• Nutritional Labeling and Education Act
• Passed in 1990, this act set up the standard
  serving size requirement on food labels,
  standardized the label information, and required
  that health claims on labels be consistent with
  federal standards. .

60
Federal Laws and Statutes

• The Act provides that any warrantor warranting a
  consumer product to a consumer by means of a
  written warranty must disclose, fully and
  conspicuously, in simple and readily understood
  language, the terms and conditions of the warranty

61
Federal Laws and Statutes

• Magnuson-Moss Warranty Act
• The Act provides that any warrantor warranting a
  consumer product to a consumer by means of a
  written warranty must disclose, fully and
  conspicuously, in simple and readily understood
  language, the terms and conditions of the warranty

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• Be smart
• Stay informed
• Know your rights responsibilities
• Make good choices