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
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
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
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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