What Does Consumer Protection Really Mean? 3 Laws You Should Know

In 2019, about 3.2 million consumer complaints were reported across the United States, according to the Federal Trade Commission (FTC). In recent years, the number of consumers reporting cases of fraud, identity theft, and other scams have increased.

Sadly, the vast majority of deceptive, unfair, and fraudulent practices consumers suffer are committed by the very businesses they trusted. To help minimize cases of consumer abuse, the FTC enforces laws that ensure consumer protection.

Through policy initiatives, consumer education, and law enforcement, the FTC ensures that your personal information as a consumer is well protected. This consumer protection agency helps American consumers feel more confident in an ever-changing marketplace.

But what exactly does consumer protection mean? What consumer protection laws exist that you should be aware of? What should you do when you’ve been the victim of consumer abuse?

These are some of the issues we discuss in this guide. Keep reading to learn more.

What Is Consumer Protection?

Consumer protection refers to the practice of safeguarding customers from unfair marketplace practices. Generally, consumer protection practices are established by law. All 50 states plus the District of Columbia have UDAP statutes to defend consumers from unscrupulous, deceptive, and predatory business practices.

Consumer protection laws also safeguard the general public, which may be adversely affected by a certain product or its production. State and federal regulations require companies to provide detailed information about the products they manufacture or carry. This is especially the case in sectors where public health is an issue, such as food products.

Consumer Protection Laws You Should Know

Consumer protection laws in America are overseen by the FTC and managed by the Consumer Protection Bureau.  The FTC has different divisions that dictate meant to ensure fairness and justice in the marketplace. Let’s take a close look at some of these divisions.

  1. The Division of Privacy and Identity Protection

Identity theft is more common in America than you may have thought. In 2019 alone, a staggering 14.4 million consumers suffered identity fraud in the US. That’s more than twice the worldwide average.

Interestingly, a significant percentage of victims of identity theft have experienced it more than one. So, who’s safeguarding your identity and privacy?

Since 2006, the FTC has overseen how businesses handle consumers’ information. The agency does so through the Division of Privacy and Identity Protection (DPIP). This division protects your identity and privacy from deceptive and unfair actions.

The DPIP has four sections of legislation focusing on various aspects of consumer identity and privacy. These are:

Section 5 of the Federal Trade Act

There’s a section of the FTC Act enforced by the Consumer Financial Protection Bureau (CFPB) referred to as Section 5.  This consumer protection act states that businesses must treat consumers fairly.

No business should deceive or put at risk its consumers. A common instance of a deceptive or unfair action is where a business makes a statement or an omission that’s likely to mislead consumers.

The Fair Credit Reporting Act (FCRA)

The FCRA focuses on credit reporting agencies. The act holds these businesses responsible for the security of consumers’ personal information.

The FCRA ensures all reporting bureaus handle and manage your credit information safely and fairly. The act also gives consumers the right to know what information credit reporting agencies have on them.

The Gramm-Leach-Bliley Act (GBLA)

The GBLA requires every financial institution in the country to clearly explain in writing how it handles and protects your nonpublic personal information. This information is highly sensitive and includes:

  • Full name
  • Personal address
  • Credit information
  • Security number

The GBLA also restricts how a financial institution shares the data above with a third party.

The Children’s Online Privacy Protection Act (COPPA)

The primary objective of COPPA is to make the internet safer for children. This act regulates the information that companies may collect about children and how they use that information. This law prohibits unfair and deceptive use of personal information belonging to children under the age of 13.

If you suspect that someone has breached this law, contact a consumer protection attorney right away.

  1. Division of Advertising Practices

This division focuses on protecting consumers from various types of deceitful claims and fraudulent actions by some marketers as they bring products to the market. In particular, the division is concerned with:

Deceptive Advertising

Deceptive advertising refers to the use of words and images in print, video, or digital format to directly or indirectly make claims about a product that aren’t true. Marketers may also omit certain information that’s necessary for consumers to fully understand the truth.

The Division of Advertising Practices stipulates that product names, claims, and pricing shouldn’t be misleading to consumers. Anything with the potential to influence a consumer’s buying decisions must always be truthful.

Environmental Claims

The FTC requires that any environmental claim a company makes about its products be specific, truthful, and backed by official evidence. For instance, if a business says that their product is recyclable, they need to clarify how the product achieves that environmental claim. They should provide an explicit list of the materials used to make the product on the packaging.

Claims About Origin of a Product

The country a product is manufactured in implies its perceived value and expected standard. This information can affect your purchasing habits. Providing misleading country of origin claims violates consumer protection laws.

The Can-Spam Act

This act is meant to protect you from unwanted digital communications or spam. The FTC requires that all communication must have truthful subject lines that do not mislead readers. Senders must also allow consumers to opt-out of getting messages easily.

According to the act, a sender must clearly state who they are. They also need to display the company’s physical location. Lastly, senders must disclose their intentions from the outset.

If you’ve already unsubscribed from receiving messages from someone, they shouldn’t send you a message in the future. If they do, you have the right to take legal action.

Telemarketing Sales 

How often have you answered a phone call only to realize it was someone trying to get you to buy something? It’s one of the most annoying things you can think of.

Fortunately, there are strict regulations to protect you from deceitful and unfair actions by telemarketers. These laws are outlined in the Telephone Consumer’s Protection Act (TCPA).

The TCPA covers many topics, including how and when telemarketers may contact a consumer. The laws safeguard you from harassment, mistreatment, and deceit by telemarketers.

Franchise and Business Opportunity Laws

Advertisements that claim to offer franchise opportunities and business systems guaranteed to make people rich are common. But many of these opportunities are nothing more than scams meant to make deceitful marketers rich.

To weed out these scams, the CFPB has, in the past, cracked down on unscrupulous business people offering fraudulent franchise opportunities. Currently, all sellers are required to provide prospective buyers with disclosure documents. These documents provide all the information a consumer needs to make up their mind whether to invest in a franchise opportunity or not.

  1. Financial Practices Division

Almost every American becomes a financial services consumer at some point. For instance, when going to college, you take a student loan. Chances are you’ll also take a car loan for your first car and a mortgage for your home.

The CFPB goes to great lengths to ensure that financial service providers offer a positive experience to consumers. Some important laws under the division for financial practices include:

The Fair Debt Collection Act (FDCPA)

Finding yourself in a situation where you can’t repay a loan can be stressful. Your loan provider may opt to use a debt collector to recover what you owe them. Unfortunately, debt collectors can be abrasive, adding to the problem.

That’s why the FTC created the FDCPA. It’s a law that restricts unfair or unethical actions by a third-party debt collector trying to collect an outstanding debt on behalf of a loan provider. This law prohibits debt collectors from:

  • Verbal abuse
  • Behaving deceitfully
  • Harassment
  • Talking to a debtor’s family members or workmates about their debt
  • Contacting debtors at unreasonable hours

If you have reason to believe that a debt collector is treating you wrongfully, you are entitled to taking legal action.

Short-Term Lending

Almost everyone has at least a month in their lives where keeping up with expenses becomes a challenge. During such times, short-term lenders can help.

But not all short-term lenders are transparent and trustworthy. To safeguard citizens from unscrupulous lenders, the CFPB has regulations that ensure that consumers’ personal information is kept safe. These regulations also ensure that lenders don’t threaten, harass, or mistreat borrowers who face challenges paying back the loan.

Now You Know the Consumer Protection Laws on Your Side

The marketplace can be an unsafe place for the consumer, regardless of where you live or shop. Luckily, many consumer protection laws exist. These laws keep you safe from unjust and fraudulent practices by unscrupulous businesses.

Would you like to learn more about consumer protection? Please keep visiting our blog.

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