Chapter 48 – The Federal Trade Commission Act and Consumer Protection Laws
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used for personal, family, or household purposes), c) to a consumer. Example:
Problem Case #5.
c. Note also that the portions of the act relevant here apply to consumer products
costing more than $15 per item. The various sections of the FTC regulations
version of 16 C.F.R. part 702.
6. Truth In Lending Act
the terms of consumer loans.
b. The “scope” material on the TILA should speak for itself.
this edition) tracks many TILA provisions and makes them applicable to consumer
leases.
7. Fair Credit Reporting Act
a. Begin by describing credit bureaus, the role they play, and the resulting potential for
of the various duties.
c. When discussing the act’s disclosure duties, be sure to distinguish those imposed on
users from those imposed on consumer reporting agencies. Then, track through the
procedures that apply when someone disputes the completeness or accuracy of the
credit bureau’s information.
credit rating, but the charge that would have been levied if credit rating had not been
accounted for.
Points for Discussion: It is understandable that GEICO would argue that rates are not
increased when no lower rate was ever in place anyway. But that argument would
Chapter 48 – The Federal Trade Commission Act and Consumer Protection Laws
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8. FACT Act.
regulatory measures to combat identity theft are quite likely in the near future.
9. Equal Credit Opportunity Act
a. Note the act’s broad coverage, both as to entities covered and prohibited bases of
discrimination.
b. Emphasize that in addition to its broad coverage regarding entities and protected
groups, the ECOA also covers many facets of the decision to grant credit. In fact,
even creditor behavior not specified in the regulations may still violate the ECOA.
Example: Problem Case #10.
10. Fair Credit Billing Act
a. The text’s discussion of this statute is probably best approached by asking the class
questions such as: “What can you do if there is an error in your credit card bill?” Note
11. Fair Debt Collection Practices Act
a. Stress that the act generally covers only those in the business of collecting debts
owed to others when they seek to recover consumer debts. Also, you might note that
debt collection tactics can result in intentional tort liability. See Chapter 6.
and advertisements for the sale of any debt in order to coerce payment of it.
Additional “false or misleading misrepresentations” include statements that any
individual is an attorney. Additional examples of “unfair practices” include:
communicating with the debtor by post card; and taking or threatening to take any
harassing, and unfair conduct becomes more lenient when a lawyer is involved; (3)
that the standard for misleading statements shifts as well; (4) that settlement offers
sent directly to consumers may or may not be lawful, depending upon their content;
(5) that coercive settlement offers are not per se lawful simply because they are
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likelihood of deception is best to establish the unlawfulness of a settlement offer; and
(8) that the determination that a statement is false or misleading is not always a
matter of law.
Additional Examples: Problem Cases #6 and #12.
d. Note the “bona fide error” defense set forth in the FDCPA, but mention the Supreme
Court’s decision in Jerman (see p. 1327of the text). In that case, the Court held that
the bona fide error defense does not apply to mistakes about the legal requirements in
errors.
9. The text’s discussion of product safety-related matters provides a general overview. Note
the roles of the Consumer Product Safety Commission.
IV. RECOMMENDED REFERENCES
publication).
B. C. EDWIN BAKER, ADVERTISING AND A DEMOCRATIC PRESS.
C. ROY L. MOORE, ADVERTISING AND PUBLIC RELATIONS LAW.
ADVERTISING.
E. MARGARET C. JASPER, CONSUMER RIGHTS LAW.
V. ANSWERS TO PROBLEMS AND PROBLEM CASES
1. No. As the text states, the FTC is able to order such corrective advertising. As the D.C.
unless corrected, long after Warner-Lambert ceased making the claims.” Warner-Lambert
2. The FTC’s argument was correct. Therefore, the FTC won the appeal. The Ninth Circuit
district court to modify its injunction so that Pantron could no longer represent in its ads that
33 F.3d 1088 (9th Cir. 1994).
3. Yes. The representations made by Gill and Murkey were false. They could not permanently
remove accurate, non-obsolete information from consumers’ credit reports. Given the nature
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
violated. The court also held that Gill and Murkey violated a statute enacted in 1997—the
Credit Repair Organizations Act (CROA). Among other things, the CROA prohibits credit
repair organizations from using deceptive advertising or other deceptive practices. Federal
Trade Commission v. Gill, 265 F.3d 944 (9th Cir. 2001).
4. Yes. First, even though the harm to each individual consumer was small, the consumer injury
still was “substantial” because Orkin made $7,000,000 and small individual harms to a large
reason to anticipate the increases. Also, recourse to competitors was not a reasonable option
because there was no evidence that they were willing to offer a deal comparable to the one
1988).
5. No. “The provisions of the Magnuson-Moss Warranty Act [apply] to consumer products
[such] purposes.” Patron Aviation, Inc. v. Teledyne Indus., 267 S.E.2d 274 (Ga. Ct. App.
6. The court ruled that the defendants violated the FDCPA by threatening to take an action that
to file suit. U.S. v. National Finance Services, Inc., 65 U.S.L.W. 2257 (1996).
7. NCMG violated both section 5 and the TSR. It violated section 5 by expressly or impliedly
making the following false or misleading representations: that NCMG would provide a
likely to mislead reasonable consumers. NMMC violated the TSR by, among other things,
engaging in unauthorized check debiting, failing to disclose the total costs of services, failing
8. The Second Circuit reversed the dismissal. The court held that a person cannot be held liable
would rest upon whether the Scotts’ insistence that no credit check be done was a condition of
9. No. Once Grant disputed the entry in the initial credit report, the FCRA required TRW to
reinvestigate the matter and record the current status of the relevant information unless it had
Grant v. TRW, Inc., 789 F. Supp. 690 (D. Md. 1992).
Chapter 48 – The Federal Trade Commission Act and Consumer Protection Laws
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
10. No. Public’s action was not forbidden sex discrimination under the ECOA. Miller’s husband
was required to cosign because of Miller’s lack of creditworthiness, not because of her
gender. Miller’s other remedy is to attack the consumer reporting agency’s report under the
FCRA. Miller v. Elegant Junk, 616 F. Supp. 551 (S.D. W.Va. 1985).
11. No. The relevant portion of the Fair Credit Billing Act (15 U.S.C. section 1666(a)) only
Express Co. v. Koerner, 452 U.S. 233 (1981).
12. Yes. Applying a “least–sophisticated-consumer” test, the U.S. Court of Appeals for the
occurrence in bankruptcy cases. Decisions such as this one, however, may curtail that