Consumer Protection 2007 Prentice Hall Business Law sixth

Consumer Protection Laws • Government statutes and regulations that promote product safety and prohibit abusive, unfair, and deceptive practices. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 2

Federal Food, Drug, and Cosmetic Act • Provides the basis for the regulation of much of the testing, manufacture, distribution, and sale of foods, drugs, cosmetics, and medicinal products and devices in the United States. • Administered by the Food and Drug Administration (FDA). • The FDA is empowered to regulate food, food additives, drugs, cosmetics, and medicinal devices. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 3

Food Labeling • Nutrition Labeling and Education Act – Requires food manufacturers to place labels on foods that discloses nutritional information about the food. • Number of calories • Amount of fat • Dietary fiber • Cholesterol © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 4

Regulation of Drugs (continued) • The law requires all users of prescription and nonprescription drugs to receive: – Proper directions for use – Including method and duration of use – Adequate warnings about any related side effects © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 5

Regulation of Cosmetics • The FDA has issued regulations that require cosmetics: – To be labeled – To disclose ingredients – To contain warnings if they are carcinogenic or otherwise dangerous to a person’s health • The manufacture, distribution, or sale of adulterated or misbranded cosmetics is prohibited. • The FDA may remove from commerce cosmetics that contain unsubstantiated claims. – Preserving youth – Growing hair © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 6

Regulation of Medicinal Devices • The Medicinal Device Amendment to the FDCA gives the FDA authority to regulate medicinal devices and equipment. • The mislabeling of medicinal devices is prohibited. • The FDA is empowered to remove “quack” devices from the market. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 7

Consumer Product Safety Act • Federal statute that regulates potentially dangerous consumer products. • Created the Consumer Product Safety Commission (CPSC). © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 8

Consumer Product Safety Commission Independent federal regulatory agency empowered to: 1. 2. 3. Adopt rules and regulations to interpret and enforce the Consumer Product Safety Act. Conduct research on safety. Collect data regarding injuries. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 9

Unfair and Deceptive Practices • Prohibits unfair and deceptive practices including: – False and deceptive advertising – Bait and Switch © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 10

False and Deceptive Advertising – Containing misinformation or omitting information that is likely to mislead a reasonable consumer, or – Makes an unsubstantiated claim. – Proof of actual deception not required. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 11

Bait and Switch • Seller advertises low-cost item to attract customers. • Seller pressures buyers to upgrade. – Often refuses to show advertised merchandise. – Discourages employees from selling advertised merchandise. – Fails to have adequate quantities on hand. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 45 - 12