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CHAPTER 14
CONSUMER PROTECTION
INTRODUCTION
Safeguarding consumers while continuing to supply them with the goods and services
they want, at the prices they want, is a prime social responsibility of business. Many
companies recognize that providing customers with excellent service and product quality
PREVIEW CASE
WEN Hair Care
CHAPTER OUTLINE
I. THE RIGHTS OF CONSUMERS
II. SELF-ADVOCACY FOR CONSUMER INTERESTS
III. HOW GOVERNMENT PROTECTS CONSUMERS
A. Goals of Consumer Laws
B. Major Consumer Protection Agencies
Teaching Tip: Introduction
The preview case introduces students to several issues in consumer
protection. A news clip (2:42) reporting on lawsuits against WEN hair
care products may be found at:
https://www.youtube.com/watch?v=ZU4uAkaE2z8
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IV. CONSUMER PRIVACY IN THE DIGITAL AGE
V. USING THE COURTS AND PRODUCT LIABILITY LAWS
A. Strict Liability
B. Product Liability Reform and Alternative Dispute Resolution
Teaching Tip: Drug Approval Decisions
The text discusses the FDA’s review of new pharmaceutical drugs and
devices prior to their introduction. Students may be asked to find a
current example of a drug under FDA review, or recently reviewed by
risks?
Teaching Tip: Consumer Privacy
Instructors may wish to organize a class exercise, giving the following
instructions to students, organized in small groups (3-5 students):
• Select a company of your choice.
• Please go online and investigate the customer privacy poIicy or
policies of your selected organization.
• What information might customers disclose on the website in
the course of using the product/service?
• What does the organization do with this information? Does it
share this information with others? If so, with whom and for
what purpose?
up a team member to write them on the board.
Teaching Tip: Product Liability
Students may be asked to evaluate the effects of the 2005 Class Action
Fairness Act. What has been the impact of this legislation, and to what
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VI. POSITIVE BUSINESS RESPONSES TO CONSUMERISM
A. Managing for Quality
B. Voluntary Industry Codes of Conduct
C. Consumer Affairs Departments
D. Product Recalls
VII. CONSUMERISM’S ACHIEVEMENTS
GETTING STARTED
KEY LEARNING OBJECTIVES
LO 14-1: Knowing the five major rights of consumers.
LO 14-2: Analyzing the reasons for consumer advocacy and the methods
consumer organizations use to advance their interests.
The consumer movement represents an attempt to promote the interests of consumers
LO 14-3: Assessing the ways in which government regulatory agencies protect
consumers and what kinds of products are most likely to be regulated.
LO 14-4: Determining how consumer privacy online can best be protected.
The widespread use of digital technologies has given new urgency to the issue of
Teaching Tip: Product Recalls
Students may be asked to bring in an example of a recent product
recall. Do you believe the company took the right action? What, if
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prior written consent of McGraw-Hill Education.
LO 14-5: Examining how the courts protect consumers and efforts by businesses
to change product liability laws.
LO 14-6: Evaluating how socially responsible corporations can proactively
respond to consumer needs.
Socially responsible companies have responded to the consumer movement by giving
serious consideration to consumer problems, increasing channels of communication
KEY TERMS
alternative dispute resolution
behavioral advertising
consumer affairs officer
consumer movement
consumer privacy
product recalls
quality management
strict liability
INTERNET RESOURCES
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www.consumersinternational.org Consumers International
www.cpsc.gov U.S. Consumer Product Safety Commission
www.ftc.gov U.S. Federal Trade Commission
www.beuc.eu The European Consumer Organization
www.consumerreports.org Consumer Reports
DISCUSSION CASE
VOLKSWAGEN’S “CLEAN DIESEL” CAMPAIGN
Teaching Tip: Volkswagon’s “Clean Diesel” Campaign
“Hard NOX” is an excellent 75-minute documentary on the
Volkswagen diesel deception, which appears as the first episode in the
Teaching Tip: Discussion Case
The discussion case mentions the marketing campaign for VW’s “clean
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Discussion Questions
1. In what ways were consumers (car owners) harmed by Volkswagen’s actions?
2. Did Volkswagen violate any U.S. consumer protection laws, and if so, which
ones?
3. What were the potential benefits and risks to Volkswagen of its decision to
defraud consumers and regulators?
4. If you were an owner of a VW, Audi, or Porsche vehicle equipped with a defeat
device, what would be your options? What would you choose to do, and why?
