Outcome: Regulatory Laws

What you’ll learn to do: explain the laws that regulate marketing

While there are situations in which we expect individuals to act according to higher moral laws, at a basic level we always expect business professionals to follow the law. Most of the laws that impact marketers fall into a category called consumer protection. Consumer protection laws are created to ensure the rights of consumers and to create a fair marketplace for consumers.

The History of Consumer Protection

Historically, consumer protection laws in the United States have been specific formal legal responses to address public outrage over the disclosure of industry abuses and crises. For example, in 1905 a man named Upton Sinclair exposed the terrible worker conditions in the American meat-packing industry. His work sparked public outrage and, in turn, led to the creation of the Food & Drug Administration and the first comprehensive inspection and regulation of food safety in the United States.[1]

Similarly, in the 1960s consumer advocate Ralph Nadar took on automobile safety, highlighting the immense profits made by auto companies relative to their investment in customer safety. In 1966 Congress unanimously passed the National Traffic and Motor Vehicle Safety Act, and the National Highway Traffic Safety Administration gained consumer protection powers. The number of vehicular deaths in the U.S. reached a high of 50,000 in 1960 and have continued to fall despite a larger number of drivers on the road.

Graph showing the steady decline of automobile deaths per 100,000 people for years 1975 to 2017. There are two lines, one labeled "Total Deaths" and another labeled "Deaths per 100,000 people". The "Total Deaths" Line starts around 45,000 in 1975 and rises to over 50,000 in 1980, then a period of rise and decline that stays steadily between 40,000 and 50,000 until about 2007 when it drops below 40,000 and ends in 2017 around 37,000. The "Deaths per 100,000" line follows the same trends as the "Total Deaths" line but remains below the "Total Deaths" line, beginning in 1975 at about 41,000 and ending in 2017 at around 23,000 deaths per 100,000 people.

Government Consumer Protection and Enforcement Agencies

A number of governments agencies are charged with protecting consumers. The U.S. Federal Trade Commission (FTC) was created in 1914 and is charged with protecting America’s consumers and promoting competition. The commission includes individual divisions that oversee a range of activities that are of importance to marketers, including the following:

  • Privacy and identity protection
  • Advertising practices
  • Marketing practices
  • Financial practices

The FTC’s Bureau of Consumer Protection stops unfair, deceptive, and fraudulent business practices by collecting complaints and conducting investigations, suing companies and people who break the law, developing rules to maintain a fair marketplace, and educating consumers and businesses about their rights and responsibilities.

In addition to government-based agencies, consumer associations and other nonprofit entities also play an important role in protecting the consumer.

As a marketer, it is important to understand the current laws and consider where there are risks to consumers that might lead to new legislation.

The specific things you’ll learn in this section include:

  • Explain product liability and its impact on marketing
  • Explain privacy law and its impact on marketing
  • Explain fraud in the marketing process and its impact

Learning Activities

The learning activities for this section include the following:

  • Reading: Product Liability
  • Reading: Privacy Laws
  • Reading: Fraud in Marketing
  • Self Check: Regulatory Laws
  1. Spencer Weber Waller, Jillian G. Brady, and R.J. Acosta, "Consumer Protection in the United States: An Overview," http://www.luc.edu/media/lucedu/law/centers/antitrust/pdfs/publications/workingpapers/USConsumerProtectionFormatted.pdf. ↵