Consumers and Choice

A consumer can be broadly defined as a person who needs, uses, or has used a particular service or product. In this sense, we are all consumers. Consumers make up the largest economic group, affecting and affected by almost every public and private economic decision. Yet often their views are not heard.

Individual consumers tend to be dispersed, while producers and traders can be organized and powerful, with greater access to information. Consumers are therefore more vulnerable to exploitation through deceptive advertising and selling, provision of substandard, fake, and adulterated products, predatory loans and fraudulent, unethical, and monopolistic trade practices. This can result in not only poor value for money, which undermines welfare and efficiency, but also present risks to health and safety. Children, elderly people, disabled people, the poor, uneducated, and illiterate are particularly vulnerable.

The principle of caveat emptor (“buyer beware”) is not sufficient, and consumers need specific protections, and the rights to safety, choice, information, and redress. Consumer protection supports economic prosperity, as it enables honest and efficient businesses to compete, and it helps consumers make the best use of resources.

The choices people make as consumers can affect their health, safety, welfare, and financial security, and that of those around them and the wider environment. Choices also offer a means by which people can influence society. Demographic changes, economic growth, international trade, and technology innovation are opening up new opportunities for consumer welfare, but they’re are also creating new challenges. Enabling people to be informed and active consumers is critical to developing a participative, critical, and competent citizenship.

Consumer protection laws often mandate the posting of notices such as this one, which appears in all automotive repair shops in California.

Consumer Protection Legislation

In the United States a range of laws at both the federal and state levels regulate consumer affairs. Federal consumer protection laws are mainly enforced by the Federal Trade Commission, the Consumer Financial Protection Bureau, the Food and Drug Administration, and the U.S. Department of Justice. The function of such legislation is to protect consumers from unscrupulous business practices or potentially dangerous products. Several of the most far-reaching pieces of consumer protection legislation are discussed below.

The Fair Credit Reporting Act is U.S. Federal Government legislation enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. It was intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports. To that end, the FCRA regulates the collection, dissemination, and use of consumer information, including consumer credit information. Together with the Fair Debt Collection Practices Act (“FDCPA”), the FCRA forms the foundation of consumer rights law in the United States. It was originally passed in 1970 and is enforced by the U.S. Federal Trade Commission and the Consumer Financial Protection Bureau.

The Fair Debt Collection Practices Act (FDCPA), is a consumer protection amendment to the Consumer Credit Protection Act, establishing legal protection from abusive debt collection practices. The statute’s stated purposes are to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy. The act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the act.

The United States Federal Food, Drug, and Cosmetics Act  is a set of laws passed by Congress in 1938 giving authority to the U.S. Food and Drug Administration (FDA) to oversee the safety of food, drugs, and cosmetics. It covers everything from food coloring (Red Dye #6) to bottled water, homeopathic remedies, and medical devices.

At the state level, many states have adopted the Uniform Deceptive Trade Practices Act. This statute allows local prosecutors or the attorney general to press charges against people who knowingly use deceptive business practices in a consumer transaction, and it authorizes consumers to hire a private attorney to bring an action seeking their actual damages, punitive damages, and attorney’s fees. The deceptive trade practices prohibited by the Uniform Act can be roughly subdivided into conduct involving the following:

1. unfair or fraudulent business practice and
2. untrue or misleading advertising.

Also, the majority of states have a Department of Consumer Affairs devoted to regulating certain industries and protecting consumers who use goods and services from those industries. For example, in California, the California Department of Consumer Affairs regulates about 2.3 million professionals in more than 230 different professions, through its forty regulatory entities. In addition, California encourages its consumers to act as private attorneys general through the liberal provisions of its Consumers Legal Remedies Act. Other states have been the leaders in specific aspects of consumer protection. For example, Florida, Delaware, and Minnesota have legislated requirements that contracts be written at reasonable readability levels, because a large proportion of contracts cannot be understood by most consumers who sign them.

Antitrust Legislation