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Chapter 15 Product Liability and Consumer Protection
Chapter 15
Product Liability and Consumer Protection
I. Key Words
Annual percentage rate (APR) (p. 367) Finance charge (p. 367)
Bait-and-switch scheme (p. 361) Interstate commerce (p. 359)
Balloon payment (p. 370) Intrastate commerce (p. 359)
Buyer’s Guide (p. 361) Lemon law (p. 366)
Cancellation form (p. 362) Mail order and telephone
Can Spam Act (p. 364) order rule (p. 363)
Class-action lawsuit (p.359) Product liability (p. 353)
Commerce (p. 359) Public interest (p. 355)
Consent order (p. 359) Public policy (p. 355)
Consumer (p. 358) Strict liability (p. 355)
Continuity plan (p. 363) Slamming (p. 364)
Cooling-Off Rule (p. 362) Spam (p. 364)
Dunning letters (p. 360) Used Car Rule (p. 361)
II. Learning Objectives
1. Describe the link between social engineering and the law.
2. Explain the difference between public interest and public policy.
3. Explain the difference between negligence and strict liability.
4. State the purpose of the Consumer Product Safety Act.
5. Explain the enforcement of the Federal Trade Commission Act.
6. Develop a list of unfair or deceptive practices.
7. Identify several FTC rules designed to protect the consumer.
8. Identify the function of the Truth-in-Lending Act.
9. Explain the latest amendments to the Truth-in-Lending Act.
III. Major Concepts
15-1 Product Liability
Public interest refers to the idea that certain activities affect the entire social structure and
must, therefore, be regulated by the government. Public policy, in contrast, seeks to
implement behavior that promotes the public consensus and eliminates behavior that does
not. Both concepts are inherent within the legal doctrines of product liability. Under the
theory of product liability, a buyer or user of a product who is injured because of the
product’s unsafe or defective condition may recover damages from the manufacturer, the
seller, or the supplier of the goods. Product liability suits can now be based on one of two
legal theories, negligence or strict liability, both of which are tort actions. Public policy
has not remained solely within the purview of the courts. Congress has also entered the
product safety arena by establishing the Consumer Product Safety Commission (CPSC)
to protect consumers from unreasonable risk or injury from hazardous products.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 15 Product Liability and Consumer Protection
15-2 Consumer Protection Laws
The Federal Trade Commission Act gave the Federal Trade Commission (FTC) the
authority to oversee and eliminate deceptive and unfair practices in commerce. The FTC
and the courts have determined that certain activities are unfair or deceptive. They
include fraudulent misrepresentations, sending unordered merchandise, bait-and-switch
schemes, and odometer tampering. To correct wrongdoings in the marketplace, the FTC
has also established trade regulation rules to govern the activities of interstate companies.
These rules include the Used Car Rule, the Cooling-Off Rule, the negative option rule,
the Mail and Telephone Order Rule, the telemarketing sales rule, and the rules connected
with 900 numbers. Other rules are set up by the antispam law and the anti-slamming law.
15-3 Consumer Credit Laws
Under the Truth-in-Lending Act, lenders must disclose the true nature of finance charges
and the annual percentage rate. The Equal Credit Opportunity Act ensures that all
consumers have an equal chance to receive credit. The Fair Credit Reporting Act
guarantees fair treatment by credit bureaus and consumer reporting agencies. Under the
Truth-in-Lending Act, credit card holders are not responsible for any unauthorized
charges made after the card issuer has been notified of the loss, theft, or possible
unauthorized use of the card. The Fair Credit Reporting Act promises that consumers will
be treated fairly by credit bureaus and consumer reporting agencies. To make it easier to
correct billing errors, Congress has passed the Fair Credit Billing Act (FCBA). Under the
Fair Debt Collection Practices Act, specific rules must be followed by companies that are
in the business of collecting debts for others. The Consumer Leasing Act requires leasing
companies to inform consumers of all of the terms of a lease of personal property.
IV. Outline
I. Product Liability (15-1)
A. Social Engineering and the Law
1. German philosopher Max Weber saw the law as a combination of consensus and
coercion.
2. To understand consensus and use coercion, the courts frequently call upon the
doctrine of public policy, a concept of based on the assumption that no one should be
permitted to do anything that harms the public interest.
3. Public policy is not the same as public interest.
4. Public interest refers to the idea that certain activities affect the entire social structure
and must, therefore, be regulated.
5. Public interest is the equivalent of Weber’s social consensus.
6. Public policy seeks to implement behavior that promotes the public consensus and
eliminates behavior that does not and is the coercive social engineering strategy by
which social consensus is implemented.
7. Administrative agencies are major actors in the field of social engineering and public
policy.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 15 Product Liability and Consumer Protection
8. It is in the public interest to maintain a social structure that promotes health and
safety and thus prevents illness and injury.
9. Public policy demands that manufacturers, sellers, and distributors be held
responsible for any injuries that result from their products.
10. To meet the public interest goal of a safe society, the courts have produced two legal
strategies, negligence and product liability.
B. Negligence and Product Liability
1. Negligence is the failure to exercise the degree of care that a reasonable person would
exercise under the same circumstances.
2. To recover for negligence in a product liability case, the victim must prove:
a. that the manufacturer or seller owed a duty to the victim;
b. that the manufacturer or the seller violated that duty by not following the
appropriate standard of care;
c. that the victim suffered an injury because of that careless action;
d. that the careless action was both the actual and the proximate cause of the victim’s
injury.
C. Strict Liability and Product Liability
1. Strict liability imposes liability on manufacturers or suppliers for selling goods that
are unsafe, without regard to fault or negligence.
2. The principle consideration is the safety of the product, not the conduct of the
manufacturer or supplier.
3. Unavoidably unsafe products may require a warning to inform the consumer of
possible harm.
4. In addition to recovering compensatory damages, punitive damages may at times be
recovered in strict liability cases.
5. There has been reluctance on the part of the courts and legislatures to apply strict
liability to aviation accident cases.
D. The Consumer Product Safety Act
1. The Consumer Product Safety Commission was established by the Consumer Product
Safety Act to protect consumers from unreasonable risk or injury from hazardous
products.
2. The act covers products or component parts, American-made or imported, that are
manufactured or distributed for sale to a consumer for personal use, consumption, or
enjoyment.
3. The commission can order recalls of products found inherently unsafe and dangerous.
4. The commission can impose civil fines for violations of its standards and
cease-and-desist orders.
5. Private citizens may bring suit if the commission fails to act.
II. Consumer Protection Laws (15-2)
A. Introduction
1. A consumer is someone who buys or leases real estate, goods, or services for
personal, family or household purposes.
2. People who buy or rent things for personal use from a business are protected by
consumer protection laws.
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Chapter 15 Product Liability and Consumer Protection
3. Federal consumer protection law stems from the Federal Trade Commission Act.
4. The Act applies to businesses involved in interstate commerce, meaning business
activity that touches more than one state.
B. The Federal Trade Commission
1. The Federal Trade Commission Act transferred certain powers to the Federal Trade
Commission, giving it the authority to oversee and eliminate deceptive and unfair
practices in commerce.
2. If the Federal Trade Commission believes that a violation of the law has occurred, it
may attempt to obtain voluntary compliance by entering into a consent order with the
violating company.
3. If an agreement cannot be reached, the FTC may issue a complaint.
4. Consumers may bring individual or class action lawsuits against businesses for
violating FTC rules.
C. Unfair or Deceptive Practices
1. Fraudulent Misrepresentation
a. A fraudulent misrepresentation is a statement that has the effect of deceiving the
buyer.
b. A misrepresentation occurs when the seller misstates facts important to the
consumer or fails to disclose certain information.
2. Unordered Merchandise
a. With limited exceptions, it is a violation of postal law and the FTC Act to send
merchandise through the mail to people who did not order it.
b. People who receive unordered merchandise through the mail may treat it as a gift.
3. Bait-and-Switch Schemes
a. A bait-and-switch scheme is an alluring but insincere offer to sell a product or
service that the advertiser in truth does not intend or want to sell.
b. Its purpose is to switch customers from buying advertised merchandise to buying
something else.
c. FTC law states “No advertisement containing an offer to sell a product shall be
made when the offer is not a bona fide effort to sell the advertised product.”
4. Odometer Tampering
a. The Odometer Law is a federal law that prohibits people from disconnecting,
resetting, or altering the odometer of a motor vehicle to register any mileage other
than the true mileage driven.
b. Anyone who gives away or sells a car must provide the new owner with a written
statement disclosing the odometer reading at the time of the transfer.
c. If the seller has reason to believe that the mileage reading on the odometer is
incorrect, the disclosure statement must indicate that the actual mileage traveled is
unknown.
D. Trade Regulation Rules
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Chapter 15 Product Liability and Consumer Protection
1. Used Car Rule
a. The Used Car Rule requires used-car dealers to place a Buyer’s Guide sticker in
the window of each used car they offer for sale.
b. The guide becomes part of the sales contract and overrides any contrary provision
that may be in the contract.
c. A dealer is defined as anyone who sells more than five used cars in a 12-month
period.
2. Cooling-Off Rule
(a) Under the cooling-off rule, sales of consumer goods or services over $25
made away from the seller’s regular place of business, such as at a customer’s
home, may be canceled within three business days after the sale occurs.
(b) The seller must give the buyer two copies of a cancellation form.
(c) There are several exceptions to the rule.
(d) In some states, the three-day right to cancel does not begin until the seller
gives the buyer a written notice of the right to cancel.
3. Negative Option Rule
a. The Negative Option Rules applies when consumers subscribe to a magazine, CD
club, or other plan that sends products on an ongoing basis.
b. Under negative options plans, the seller notifies the subscriber about the next
selection before shipment; and, if the seller does nothing, the seller wills ship the
selection automatically.
c. The Negative Option Rule demands that sellers tell subscribers certain
information regarding, for example, the circumstances under which they can
withdraw.
d. The Negative Option Rule does not apply to continuity plans under which the
seller sends goods without first sending an announcement.
e. Continuity plans are regulated by standard consumer protection rules, meaning
that the seller must notify the subscriber of all terms and conditions in a clear and
unambiguous way.
4. The Mail and Telephone Order Rule
a. The Mail and Telephone Order Rule protects consumers who order goods by mail,
telephone, Internet, or fax machine.
b. Sellers must ship orders within the time promised in their advertisement.
c. If no time period is promised, a seller must either ship an order within 30 days of
its receipt or send the consumer an option notice allowing the customer an
opportunity to cancel the order.
5. Telemarketing Sales Rule
a. The rule has established the Do Not Call Registry for consumers to reduce the
number of unwanted sales calls they get.
b. The law also imposes a number of rules on telemarketers.
900-Telephone-Number Rules
c. The 900 telephone number is used in telemarketing because the consumer, rather
than the seller, pays the phone charge.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 15 Product Liability and Consumer Protection
d. FTC rules require telemarketers who use 900 numbers to warn callers of the cost
of the calls and to give those callers a chance to hang up before being charged.
e. Customers are permitted to ask telephone companies to block all 900-prefix
number calls.
6. Antispam Law
a. The Can Spam Act is an attempt by the federal government to reduce the use of
unsolicited commercial e-mail.
b. The law imposes restrictions including the requirement that unsolicited
commercial e-mail messages be truthful and not use misleading subject lines or
incorrect return addresses.
c. The rule has been amended to include messages that are intended for mobile
phones, provided that a domain name is used as part of the Internet address.
7. Antislamming Law
a. Slamming is the illegal practice of changing a consumer’s telephone service
without permission.
b. Consumer protection rules created by the FCC provide a remedy for slamming.
E. Cyber-law Developments and Updates
1. Revised Children’s Online Privacy Protection Rule
a. The Children’s Online Privacy Protection rule mandates that website operators
who have children as their target market or who are aware that children will
provide them with personal data to inform parents and obtain consent before
doing anything with that data.
b. The rule has been updated including a revision and an expansion of the rules for
defining what is meant by personal data in relation to children.
c. Personal data now includes information involving personal identifiers.
2. Identity theft and the “Reclaim Your Name” Program
a. The FTC is exploring the initiation of a new program titled, “Reclaim Your
Name,” which is designed to help consumers obtain the electronic ability to
monitor the use of their own personal data.
b. The goal of the program is to empower consumers with the ability to determine
when and where to share information about their personal lives, finances,
employment, buying habits, bank accounts, and so on.
F. State Consumer Law Developments and Updates
1. Uniform Consumer Sales Practices Act
a. The National Conference of Commissioners on Uniform State Laws (NCCUSL)
writes model laws that states are free to adopt.
b. The goal of the Uniform Consumer Sales Practices Act act is to streamline, refine,
and update state statutes that regulate consumer sales contracts.
c. One goal of the act is to shield innocent buyers from unscrupulous sellers who
engage in fraudulent practices.
2. State Law Innovations
a. States are free to reject or modify the Uniform Consumer Sales Practices Act.
b. Some states have crossed from civil to criminal law and have authorized the state
attorney general to investigate consumer fraud that is criminal in nature.
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Chapter 15 Product Liability and Consumer Protection
c. Some states have added their own cyber-law provisions that are aimed at
investigating such things as telemarketing and telecommunications fraud.
d. Some states attempt to provide assistance to sellers such as offering them the right
to offer a cure.
3. State Lemon Laws
a. State lemon laws will compensate buyers for losses that result from such defective
products.
b. Although when most people think of lemon laws they focus on automobiles, most
lemon laws involve other products too, usually appliances, machinery, and other
vehicles.
III. Consumer Credit Laws (15-3)
A. The Federal Truth-in-Lending Act
1. Lenders must disclose the finance charge, meaning the actual cost of the loan.
2. Lenders must also disclose the annual percentage rate, meaning the true rate of
interest on the loan.
B. Equal Credit Opportunity
1. The Equal Credit Opportunity Act was passed to ensure that all consumers are given
an equal chance to receive credit.
2. It is illegal for banks and businesses to discriminate against credit applicants because
of their sex, race, marital status, national origin, religion, or age or because they get
public assistance income.
3. The law provides consumers other rights in regard to applying for credit.
C. Unauthorized Use of Credit Cards
1. Under the Truth-in-Lending Act, credit cardholders are not responsible for any
unauthorized charges made after the card issuer has been notified of the loss, theft, or
possible unauthorized use of the card.
2. Notice may be given by telephone, letter, or any other means.
3. Even prior to the giving of notice, credit cardholders are responsible only for the first
$50 of any unauthorized charges.
4. Debit cards do not have built-in protection.
5. The credit cardholder can avoid the $50 liability if the credit card issuer has not
included on the card a method of identification of the cardholder.
6. Congress recently launched the Consumer Financial Protection Bureau as a watchdog
in the credit industry.
D. Fair Credit Reporting
1. The Fair Credit Reporting Act was passed by Congress to ensure that consumers are
treated fairly by credit bureaus and consumer reporting agencies.
2. A consumer has the right to know all information (other than medical information)
that is in the consumer’s file.
3. If errors are found in a consumer’s file, credit bureaus must investigate and make
corrections.
4. If the credit bureau retains information that the consumer believes to be incorrect, the
consumer’s version of the facts must be inserted in the file.
5. Creditors are required to tell consumers the specific reasons for the denial of credit.
E. Billing, Collecting, and Leasing
1. The Fair Credit Billing Act
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Chapter 15 Product Liability and Consumer Protection
a. The Fair Credit Billing Act establishes a procedure for the prompt handling of
billing disputes.
b. Under the act, when consumers believe an error has been made in a bill, they must
notify the creditor within sixty days after the bill was mailed; the creditor must
acknowledge the notice within 30 days; and, within 90 days, the creditor must
conduct an investigation and either correct the mistake or explain why the bill is
believed to be correct.
c. Another provision of the act gives consumers protection when they buy
unsatisfactory goods or services with credit cards.
2. Fair Debt Collection Practices
a. Specific rules must be followed by companies that are in the business of
collecting debts for others.
b. Debt collectors who violate this law may be sued for actual damages, punitive
damages, and attorneys’ fees.
3. The Consumer Leasing Act
a. The Consumer Leasing Act is a federal law requiring leasing companies to inform
consumers of all of the terms of a lease of personal property.
b. The law applies only to personal property leased by an individual for a period of
more than four months for personal, family, or household use.
c. The law has a number of consumer protection including the placement of a limit
on the amount of a balloon payment to no more than three times the average
monthly payments.
d. Advertisements of leases are also regulated by law.
V. Background Information
A. Cross-Cultural Notes
1. Throughout Africa, licensed street vendors sell items ranging from food to clothing to
household goods. These vendors peddle their wares from stalls along the street or
carry them through public places such as bus stations and bars.
2. The Saudi Arabian government enforces health and sanitation regulations on all
imported foods. Any products containing narcotics, alcohol (including pharmaceutical
drugs containing alcohol traces), and pork are strictly forbidden. Additional
information regarding Saudi Arabia can be found on the website of the United States
Department of Agriculture including a link to specific restrictions at
http://www.fas.usda.gov/data/saudi-arabia-food-and-agricultural-import-regulations-a
nd-standards-certification.
3. An article in the Georgetown Journal of International Law titled “Strict Liability in
Contemporary European Codification: Torn Between Objects, Activities, and Their
Risks” by Erdem Buyuksagis and Willem H. van Boom, at 44 Geo. J. Int'l L. 609
(2013), discusses problems within legislative frameworks in Europe that limit the
scope of strict liability.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 15 Product Liability and Consumer Protection
B. State Variations
1. North Carolina does not recognize strict liability in tort in product liability actions in
that state. Plaintiffs need to establish negligence, breach of warranty, or some other
basis of recovery.
2. In New York, at the time of purchase or lease of a used motor vehicle from a dealer,
the dealer shall provide to the consumer a notice, printed in not less than 10 point
boldface type, entitled “USED CAR LEMON LAW BILL OF RIGHTS.” Additional
information regarding consumer rights is available from the state at
http://www.ag.ny.gov/consumer-frauds/used-car-lemon-law-fact-sheet.
3. Many states, including Kansas, Oklahoma, and New Hampshire, have Fair Credit
Reporting Acts patterned after the federal Fair Credit Reporting Act. These state
statutes are not preempted by federal legislation because the act specifically allows
states to be more protective of their citizens if they choose.
VI. Terms
1. Students will easily differentiate between interstate and intrastate commerce if they
know that inter is a prefix meaning “between” and intra means “within.”
2. A dun is a type of immature fly. The act of dunning means to pester someone without
relief, just as some flies do.
3. The word unscrupulous describes some- one without principles or something that
would result from a lack of principles.
VII. Related Cases
1. In Our Fair Lady Health Resort v. Miller, 564 S.W.2d 410 (Tex. Ct. App. 1978), a suit
was brought against Our Fair Lady for deceptive practices. Miller was told, upon
enrolling as a new member of the resort, that her signed contract would not be
binding if she canceled within three days. When Miller attempted to cancel the
contract before the trial period was up, Our Fair Lady refused, stating that the contract
had already been “sent in.” The court upheld the jury’s finding that the plaintiff was
the victim of deceptive trade practices. According to the court there are exceptions to
the rule that extrinsic evidence is inadmissible to vary, add to, or contradict the terms
of a valid instrument that on nits face is complete. The court also recognized that
parol evidence is admissible to show that the parties did not intend the contract to
take effect immediately.
2. In U.S. v. American Future Systems Corp., 743 F.2d 169, 181 (3d Cir. 1984), AFS was
charged with violations of the Equal Credit Opportunity Act. AFS, which sold china,
cookware, crystal, and tableware, was in the practice of extending credit to its
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Chapter 15 Product Liability and Consumer Protection
customers. The corporation targeted sales to single, white women between the ages of
eighteen and twenty-one who lived at home with a parent who could cosign for a
credit extension. AFS shipped goods to these customers without doing a credit check,
but required credit checks before making shipments to black women. The court found
that AFS discriminated on the basis of race, sex, and marital status.
3. In Anarion Investments LLC v. Carrington Mort. Servs. LLC, Nos. 14-5781/5993,
2015 WL 4503588 (6th Cir. 2015), the Sixth Circuit held that a limited liability
company could sue as a “person” within the meaning of the Fair Debt Collections
Practice Act.
4. In Union Carbide Corp. v. Nix, 142 So.3d 374 (Miss. 2014), the Supreme Court of
Mississippi provides length discussion regarding the law in a products liability
lawsuit involving exposure to asbestos. Part of the court’s ruling involved a reversal
of a punitive damages award based on comments by the trial judge with the case
being remanded for a new trial on punitive damages only.
VIII. Teaching Tips and Additional Resources
1. Further information regarding the Federal Trade Commission, which is charged with
consumer safety, can be found at http://www.ftc.gov/bcp/consumer.shtm. The drop
down menu has extensive information regarding protection in areas such as credit,
mortgages, and privacy.
2. The FTC has information available for consumers on topics such as tips for
consumers when buying a used car at
http://www.ftc.gov/bcp/edu/pubs/consumer/autos/aut03.shtm.
3. USA.gov provides A to Z resources on consumer protections at
http://www.usa.gov/Citizen/Topics/Consumer_Safety.shtml.
4. The U.S. Department of Transportation has a web site enabling the filing of
complaints against airlines at http://airconsumer.dot.gov/problems.htm.
5. Many states have consumer protection agencies such as the Department of Consumer
Protection in Connecticut referenced at http://www.ct.gov/dcp/site/default.asp.
Consider asking students to find information regarding consumer protection agencies
in their home states.
6. The U.S. Consumer Product Safety Commission has information regarding product
recalls at http://www.cpsc.gov/en/Recalls/. Consider asking students to check the site
and report on different product recalls.
7. An article titled “10 tips: Nab odometer roll-back scammers” is available at
http://money.cnn.com/2006/11/03/autos/odometer_rollback/index.htm.
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Chapter 15 Product Liability and Consumer Protection
8. An article discussing different types of product defects titled “Product Liability:
Manufacturing Defects vs. Design Defects” can be found on the FindLaw website at
http://library.findlaw.com/2000/Mar/1/128522.html.
9. Information regarding vehicle safety efforts of the National Highway Traffic Safety
Administration can be found at
http://www.nhtsa.gov/portal/site/nhtsa/menuitem.bead436724af02e770f6df1020008a
0c/.
10. The U. S. Department of Justice provides information on recent cases in which it is
involved at http://www.justice.gov/civil/current-and-recent-cases.
11. Ask students to report any problems they have had with defective products and
whether they believe strict liability should be enforced against manufacturers and
sellers.
12. Divide the class into small groups and assign each a corporation or industry to
investigate for examples of alleged negligence. Have the students delegate
responsibilities within their groups and make a short presentation of their findings to
the class. Reports may include specific cases such as alleged defects in vehicles or
illness caused by unwholesome food.
13. Hold a brief discussion in class on the idea of abolishing strict liability laws,
encouraging students to explain their opinions. Bring into the discussion such factors
as insurance costs, lawyer’s fees, alternative assistance for the needy, and
consequences to business.
14. CISG Article 5 limits the seller’s liability for death or personal injury caused by the
goods in any form. The purpose of the exclusion is to leave issues of personal liability
to applicable national law. What problems would this cause an American suing a
foreign corporation? How would a judgment be collected?
15. In common law, it is assumed that a buyer who inspects the goods will be aware of
any defects. Before the practice of issuing warranties became standard, the Latin term
caveat emptor, meaning “let the buyer beware,” applied to sales transactions.
Government regulations, warranties, and liability suits have since created a situation
of caveat venditor, or “let the seller beware.”
16. Ask students to list different types of money transactions they have performed in the
last week. Discuss whether any of these transactions would be covered by consumer
protection laws or the UCC.
17. FTC regulations cannot be enforced by an individual. However, since the FTC
defines unfair practices in its trade regulation rules, consumers are legally protected
from such practices in any agreements they enter.
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Chapter 15 Product Liability and Consumer Protection
18. Ask each student to bring to class the details of one FTC investigation. Suggest that
they check the Internet. Ask the students how many of the investigations they found
involved consent orders and how many involved complaints. What were the outcomes
of the investigations? Is there any correlation between whether the investigations
involved complaints or consent orders and their outcomes?
19. Have students write to their state’s consumer protection office for copies of consumer
protection literature. What are the most common complaints filed in their state? What
are the results of these complaints?
20. Take a poll to find out how many students have purchased a used car. In each case,
ask the students to describe the experience. Did they think the seller/dealer acted
properly according to the FTC rules?
21. Stress that the ability to cancel a contract within three days applies to contracts made
away from the place of business of the seller, such as door-to-door sales. Discuss with
the students why this distinction is made.
22. Have teams of students investigate the claims of suspicious-sounding newspaper or
magazine ads, TV commercials, and 1-900 numbers (if your class has a budget that
would permit it). As a class, analyze whether or not the claims were fair or deceptive.
23. Review various FTC rules available at
https://www.ftc.gov/enforcement/rules/rules-and-guides. Have students discuss rules
with which they agree or disagree.
24. One way to help students learn the content of the Consumer Credit Laws is to have
them develop lists of ways consumers would need credit protection or ways they
could be treated unfairly in the area of credit. Then students can divide these into
categories such as collection, credit terms reporting, equal opportunity, and leasing.
Students can compare their “laws” with the actual ones.
25. Challenge teams of students to find the best deal in town for borrowing $10,000.
Remind them to consider the finance charge offered and the APR. Is there a way to
have the interest tax deductible (home equity loans)? Provide students with copies of
the APR tables so they can calculate the exact APR offered.
26. Ask students to bring to class copies of credit card applications they have received in
the mail or any that are available at banks. Have students analyze the applications to
find out whether they violate the Equal Credit Opportunity Act.
27. Many financial experts agree that consumers who find an error on their credit card
statement should report the error in writing. A clearly written, businesslike letter
explaining the problem creates a paper trail, which will help if the problem becomes
complicated. Also the documentation will exist as a record of the number of times
errors occur.
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Chapter 15 Product Liability and Consumer Protection
28. Invite the collection officer of a local bank and a representative of a local collection
agency to your class. Have each describe their methods of collecting debts. Prepare
students in advance to question the officers about what strategies they can legally use
to collect on debt without violating the Fair Debt Collection Practices Act.
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