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Chapter Protection



The consumer bill of rights
1) The right to safety:
• To be protected against the marketing of goods that are
hazardous to health or life.
2) The right to be informed
• To be protected against fraudulent, deceitful, or grossly
misleading information, advertising, labeling, or other
practices, and to be given the facts to make an informed choice.
3) The right to choose
• To be assured, wherever possible, access to a variety of products and
services at competitive prices and in those industries in which
competition is not workable and government regulation is substituted,
to be assured satisfactory quality and service at fair prices.
4) The right to be heard
• To be assured that consumer interests will receive full and sympathetic
consideration in the formulation of government policy, and fair and
expeditious treatment in its administrative tribunals.
Figure 15-1a
Major consumer protections specified
by consumer laws
Information protections
• Hazardous home appliances must carry a warning label.
• Home products must carry a label detailing contents.
• Autos must carry a label showing detailed breakdown of price and
all related costs.
• Tobacco advertisements and products must carry a health warning label.
• Alcoholic beverages must carry a health warning label.
• All costs related to real estate transactions must be disclosed.
• Warranties must specify the terms of the guarantee and the buyer’s rights.
• False and deceptive advertising can be prohibited.
• Food and beverage labels must show complete information.
• Food advertising must not make false claims about nutrition.
Figure 15-1b
Major consumer protections specified
by consumer laws
Direct hazard protections
• Hazardous toys and games for children are banned from sale.
• Safety standards for motor vehicles are required.
• National and state speed limits are specified.
• Hazardous, defective, and ineffective products can be recalled
under pressure from EPA, CPSC, NHTSA, and FDA
• Pesticide residue in food is allowed only if it poses a negligible risk.
Pricing protections
• Unfair pricing, monopolistic practices, and noncompetitive acts are
regulated by FTC and Justice Department and by states.
Liability protections
• When injured by a product, consumers can seek legal redress.
Other protections
• No discrimination in the extension of credit.
Goals of consumer laws

1) To provide customers with better information

when making purchases.

2) To protect consumers against possible hazards from

products they may purchase.

3) To promote competitive pricing and consumer choice.

4) To protect privacy.
Figure 15-2a
Major federal consumer protection agencies
and their main responsibilities

Federal Trade Food and Drug Consumer Product

Commission Administration Safety Commission

• Competitive pricing •Safety, effectiveness, • Safety standards for

• Deceptive trade and labeling of drugs, consumer products
practices foods, food activities, • Flammable fabrics,
• Packaging cosmetics, and hazardous substances,
and labeling medical devices poison prevention
• Consumer credit • Standards for packaging
disclosure and radiation exposure
reporting • Toxic chemicals
• Online privacy research
Figure 15-2b
Major federal consumer protection agencies
and their main responsibilities

National Highway Department of National

Traffic Safety Justice Transportation
Administration Safety Board

• Motor vehicle safety • Fair competition • Airline safety

standards • Consumer civil
• Automobile fuel rights
economy standards
• National uniform
speed limit
• Consumer safeguards
for altered odometers
Protecting consumer privacy

Consumer self-help
Internet users should use technologies that enable them to protect their
own privacy.

Industry self-regulation
Businesses should adopt voluntary policies and technical standards that
protect the privacy of their customers.

Privacy legislation
The government should pass laws that establish minimum privacy
standards for collecting information online.
Product liability reform proposals

1) Set up uniform federal standards for determining liability.

2) Shift the burden of proving liability to consumers.

3) Eliminate some bases for liability claims.

4) Require the loser to pay the legal costs of the winner.

5) Limit punitive damages.

Business responses to consumerism
Total quality management
This approach emphasizes achieving high quality and customer satisfaction
through teamwork and continuous
improvement of a company’s product or service.

Voluntary industry codes of conduct

In some cases, businesses in an industry have banded together to agree
on voluntary codes of conduct, spelling out how they
will treat their customers.

Consumer affairs departments

These centralized departments normally handle consumer inquiries and
complaints about a company’s products and services.

Product recalls
Occurs when a company, either voluntarily or under an agreement with a
government agency, takes back all items found to be dangerously defective.