Consumer Protection Law is an expansive area of law primarily in place to protect your privacy and human rights at each consumer touchpoint you experience in your daily life.
But…
…If you wanted to learn more about it all:
Scanning through the Consumer Protection Bureau’s website would take hours.
(even with a legal dictionary by your side).
So to make things easier for you to learn about your consumer rights, we’ve put together this guide outlining the most important consumer protection laws you should know.
What’s in it for you?
If you read through this entire guide, which may take about 6-8 minutes, you will have a firm grasp of:
- Your overall rights as a consumer
- The 14 most important consumer laws protecting you on a daily basis
Looking for a specific law?
No problem! Simply scan through the chapter headings for the law or area of consumer law you’re looking for. For example, there is a section titled “The CAN-SPAM Act” which outlines how companies must act when they email you.
Now that we’ve made the introductions, let’s start with some consumer protection law basics:
What is Consumer Protection Law?
Consumer Protection Law is an area of law managed by the Bureau of Consumer Protection and overseen by the Federal Trade Commission (FTC). It protects you and me, consumers, from unethical and careless actions taken by businesses.
The Consumer Protection Bureau achieves this by setting and enforcing rules and regulations for every commercial transaction.
Plus by placing restrictions on how businesses may handle the transfer and security management of consumers’ personal information.
With this in mind, let’s continue by looking at the particular division of the Consumer Protection Bureau that dictates how your personal information should be handled.
The Division of Privacy and Identity Protection
Who’s keeping our privacy and identity safe?
Created in 2006, The Division of Privacy and Identity Protection overseas how consumer’s information is handled by businesses, with the goal of protecting the consumer’s privacy and identity from unfair or deceptive actions.
In this guide, we focus on the four most significant areas of legislation in the DPIP, according to the Federal Trade Commission.
Each of the four sections of legislation focuses on a different aspect of protecting your privacy and identity.
They are:
Section 5 of the Federal Trade Act
The Consumer Protection Bureau enforces a section of the Federal Trade Commission Act known simply as “Section 5”.
This section of the FTC outlines that consumers should be treated fairly, and not deceived or put at risk due to unfair or deceptive acts performed by businesses.
Examples of unfair or deceptive actions:
- A statement, omission or practice likely to mislead the consumer, and;
- Practices likely to cause significant injury to consumers
The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is the area of law that focuses more specifically on credit reporting businesses; such as consumer reporting agencies, holding them responsible for the accuracy and security of personal information collected and shared with third parties.
This is the law that makes sure reporting bureaus like Equifax, Experian, and TransUnion manage and handle consumer’s credit information in a fair and safe manner.
Btw…
Were you aware of the fact that you have the right to know what information these credit reporting agencies have on you?
(It’s part of the Section 5 legislation.)
By law, credit reporting agencies must give you access to review and contest the accuracy of the information they collect on you and share with others.
This brings us to the next legislation:
The Gramm-Leach-Bliley Act (GBLA)
Otherwise known as the financial modernization act of 1999; the GBLA requires all US financial institutions to explain, in writing, how they handle and protect consumers’ information.
Specifically…
A consumers’ nonpublic personal information.
This is sensitive personal information that includes their social security number, credit information, full name, and personal address.
The Gramm Leach, Bliley Act (named after the law’s three co-sponsors) outlines that every financial institution must create and maintain a publicly available written plan detailing how they keep their consumer’s personal information secure.
Also, the Financial Modernization Act restricts how financial institutions share sensitive data with third parties.
Now it’s time for the last area of law specifically focused on privacy and identity protection:
The Children’s Online Privacy Protection Act
The COPPA provides children and their parents protection by regulating what information a company may collect about a child and how that information is used.
The Children’s Online Privacy Protection Act prohibits deceptive or unfair acts in association with the online collection of children’s personal information and regulates how personal information is co1llected and used by online services knowingly collecting personal information from children under the age of 13.
Primarily, the COPP Act helps make the internet a safer place for children.
Feel that your consumer rights have been breached? Get in touch to learn more about what to do next.
Marketing & Advertising Practice Divisions
The Consumer Protection Bureau’s Marketing & Advertising Divisions focus on preventing common types of fraudulent claims and deceptive actions taken by marketers while bringing their products to market.
In this section, we will look at the different areas of marketing and advertising monitored and regulated by the consumer protection bureau.
Deceptive Advertising
What is deceptive advertising?
Deceptive advertising is when images and words used in print, digital format, or video advertisements directly or indirectly imply claims about products which aren’t true or omit necessary information for a full understanding of the truth.
According to the Federal Trade Commission and consumer protection practices:
Product names, pricing, and claims must not mislead consumers.
Mostly, anything that would affect consumers’ behavior or decisions about the product or service must be truthful.
This includes:
- Product packaging,
- labeling,
- brochures,
- advertisements,
- digital media
A simple example of deceptive advertising:
An ice-cream promotes itself in a social media post as a dairy-free alternative. However certain ingredients are, in truth, derived from dairy products.
This would be a violation of consumer protection laws.
Also, an advertisement is classified as misleading if it fails to provide information necessary for the consumer to be well-informed.
For example:
A new dietary supplement promotes itself as a solution to a severe nutritional deficiency which leads to migraines.
But…
The advertising fails to inform people that less than 1% of people suffering from migraines have this deficiency.
This is considered misleading and would be in direct violation of consumer protection laws because consumers are likely to assume that the supplement will help anyone with a migraine.
Speaking of which;
Both as business owners and consumers, we must be vigil when it comes to dietary supplements. This product category is especially susceptible to consumer deception and untruthful marketing.
Which is why…
The FTC has created an advertising guide for dietary supplements and weight-loss products to outline what marketers may, and may not do when promoting their product’s health benefits.
Consumer Protection Law and Environmental claims
The Federal Trade Commission stipulates that environmental claims should be:
- Specific
- Truthful, and;
- backed up with evidence, such as official
Some commonly used environmental terms used are words like “biodegradable,” “recyclable,” or “Non-toxic.”
However, to remain compliant with Consumer Protection Laws, such claims need to be proven with certifications or clear explanations as to how they achieve that environmental claim.
For example…
If a product’s material is labeled as “recyclable,” marketers need to explicitly list the known recyclable materials and explain this on the packaging.
Ie. “Our products are made from 100% bamboo, which is a known recyclable and sustainable material.”
If you’d like to know more about what environmental claims can and cannot be made, take a look at the FTC’s “Green Guides.” This is the FTC’s guideline marketers must follow to remain compliant with Consumer Protection Laws when making environmental promises.
“Made in USA” claims
The country of origin for a product implies an expected standard and perceived value which can affect a consumer’s purchasing habits. It’s for this reason that misleading origin claims are deceptive and in violation of Consumer Protection Laws.
Imagine:
You have two identical pens.
One was manufactured in the United Kingdom, whereas the other was made in Bangladesh. Most consumers would associate different values to each pen because of commonly held perception differences between manufacturing practices in these two countries.
That means…
Knowing the origin of the product would influence their purchase decision.
Therefore:
Implying the pen was made in the UK, when it was made in Bangladesh would be a violation of the FTC consumer protection Act.
The CAN-SPAM Act
Counter to its common name, the CAN-SPAM Act protects consumers from what may be considered spam or unwanted electronic communications by enforcing communication requirements such as:
- Providing accurate subject lines which do not mislead the reader
- Allowing readers an easy way to opt-out of receiving messages
(and honoring their decision by opting them out) - Senders displaying their business’ physical location,
- Senders must state who they are and their intentions.
So, next time you receive an unwanted email from someone you already unsubscribed from, know that they are in violation of the law and that you have every right to pursue them legally may they continue to ignore your “unsub” request.
Telemarketing Sales Rules
Getting that call right as you sit down for dinner, then realizing it’s someone trying to sell you something. We all hate it, right?
Thankfully, strict laws are in place to protect consumers from unfair and deceitful actions taken by telemarketers, outlined in a piece of legislature known as the Telephone Consumer’s Protection Act, or TCPA.
These laws ensure that consumers are not harassed, deceived, or mistreated by telemarketers. They cover topics such as:
- Robocalls, or automated dialing systems;
- Automated Text Messages;
- The National Do Not Call Registry List
- When and how a telemarketer may contact you
If you have been harassed by an automated phone call or text message, get in touch with a trained TCPA lawyer. You may be entitled to up to $1,000 per instance of contact.
Franchise & Business Opportunity Rules
If you’re like me, you have seen a fair share of advertisements claiming to offer business systems for quick profits or franchises “guaranteed” to make you rich.
The truth?
Many of these are just scams, creating profits only for the deceitful marketers selling the deceitful schemes.
And…
The FTC has taken note.
The Consumer Protection Bureau has cracked down on such fraudulent business and their franchise opportunities. One way they have done this is by requiring sellers to provide all prospective buyers with what is known as a disclosure document.
A disclosure document outlines 23 specific points of information a business must disclose into potential buyers to remain compliant. Details include business and income claims and must provide evidence to support those claims.
This restricts sellers from making hyped-up income or business claims which could hurt the consumer while protecting otherwise unsuspecting individuals looking for a better life.
Consumer Protection Laws and Technological Changes
Keep in mind; Consumer Protection laws aren’t stagnant. They are always evolving to meet changes in technology and society.
The most significant change in recent years has, of course, been the worldwide adoption of the internet.
This change has created many new threats to consumer’s privacy and protection, spurring the creation of new consumer protection laws specifically designed to protect consumer’s privacy and rights online.
Now, for the final section of this guide
Division of Financial Practices
Almost all Americans become financial services consumers at some point in their lifetimes. More importantly, the use of these services directly correlates with significant milestones in a consumer’s lifetime. Like:
- Going to university – student loan
- Buying their first car – car loan
- Buying a home to start a family – mortgage
That’s why ensuring a positive experience is a pinnacle.
Luckily…
The Consumer Protection Bureau regulates financial services in their activities when dealing with consumers.
Here are the most important laws (in our opinion) under the Division of Financial Practices.
The Fair Debt Collection Act (FDCPA)
It’s a stressful situation for any consumer when they cannot repay a loan, and abrasive debt collectors do not help this fact and often add to the problem.
Therefore, the FTC created The Fair Debt Collection Act (TFDCA). This law protects consumers by restricting unethical or unfair actions by third-party debt collection businesses attempting to collect outstanding debts on behalf of another entity.
Here are a few actions debt collections are prohibited from doing:
- Being verbally abusive
- Harassing you
- Talking to your family members or work about your debt
- Contacting you outside of reasonable hours
- Lying or behaving deceitfully
If you feel a debt collector has treated you wrongfully, make sure to read our 5 step guide to dealing with harassing debt collectors.
While on the topic of debt…
Mortgage, Credit and Debt Relief Services
People facing financial issues are often more susceptible to scams and unethical treatment by those looking to take advantage of their situation.
When left unchecked, predatory credit and debt relief service providers have been known to put consumers in even more precarious situations with their services.
Thankfully…
The Division of Financial Practices within the FTC monitors and restricts financial service businesses from making deceitful and unfair claims to consumers seeking relief from dire financial situations such as being unable to service their mortgage or credit card debt.
This helps to protect consumers at such delicate junctures in their lives.
Similarly:
Short-term lending
Most people have at least one month in their life where it becomes difficult to keep up with expenses. When this happens, many consumers turn to short-term lenders to help them over this difficult period.
One of the things the Division of Financial Practices does is:
Ensure the protection of citizens seeking short-term or emergency loans and enforce safeguards, so their personal information is secure during this process.
Motor Vehicle Sales, Financing
As of May 2017, 107 million Americans had car loans, which accounts for almost half of the total adult population.
In fact:
For millions of Americans, their vehicle will be the most expensive purchase of their lives. This makes it of utmost importance to protect them during this transaction.
That’s why…
The Consumer Protection Bureau frequently monitors and enforces privacy protection and restricts fraudulent practices throughout the automotive financial services industry.
This is achieved by making sure industry service providers remain compliant with laws such as The Gramm-Leach-Bliley Act (GBLA) and FTC Section 5 regulations.
Education Financial Practices
Lastly, but perhaps the most overlooked financial services giant, is the educational financial services industry. Did you know that an estimated 1.5 trillion dollars is owed in student debt by US citizens?
That’s almost 10% of the entire annual GDP.
With such large sums and people’s futures at stake, the Financial Practices division and Consumer Protection law professionals maintain a vigilant eye on financial service providers and their actions.
In conclusion
There are hundreds, if not thousands of pages of legal texts encompassing Consumer Protection, which impact every aspect of every American’s life.
But, when it comes down to it, what is Consumer Protection Law, in a nutshell? Consumer Protection law focuses mainly on two core goals:
- To protect consumer’s privacy and identity.
- To protect consumers from unfair or deceitful actions.
So remember, if any business fails to protect your privacy or identity, or they are untruthful or deceitful, they are most likely in violation of your Consumer Protection rights.
Thanks for reading this guide.
Which of the 14 areas of consumer law have you interacted with over the last week?
