US legislators have tried to ensure consumer rights and protect them from deceptive, unfair, and fraudulent business practices through various federal and state laws. Consumers have the right to file lawsuits or be penalized if they fail to observe these laws. That fact makes it crucial that business owners remain aware of such laws and comply with them.
Federal Laws To Protect Consumers
Several federal government laws promote fair trade, protect consumer rights, and ensure companies sell safe products. The FTC or Federal Trade Commission is the authority entrusted with the task of enforcing federal fair-trade statues. The Consumer Product Safety Commission (CPSC) looks after the safety of products sold by businesses. Let’s discuss more of them in brief:
Fair Trade Laws
The very purpose of setting up the FTC was to ensure that markets remain competitive and to provide protection to consumers from deceptive, unfair, or outright fraudulent marketplace business practices. The FTC has the task of developing a fair trade policy. It also investigates firms that might be breaching the federal regulations. It can also sue companies that are violating federal laws. It is also responsible for responding to violations of such laws against businesses by consumers or other companies. Federal law prohibits false or misleading advertisements.
Upon receiving a trade law violation complaint, the FTC starts an investigation. When the investigation finds a violation of trade laws, it might issue a consent order. The consent order is an instruction to the offending firm to stop the business malpractice voluntarily. In case the firm refuses to relent, the FTC may proceed to take further steps and request the initiation of formal legal proceedings in the court of an administrative law judge. If the judge agrees with the FTC’s findings, then the likely outcome is a cease-and-desist order. Suppose the company continues with the offending practice after an FTC order. In that case, they might incur a penalty, or the authorities might serve a legal order.
Laws Concerning Product Safety
Businesses producing items for sale to the public have to adhere to the CPSC rules and regulations. The CPSC is entrusted with regulating all products that are not overseen by another specialized agency like medicines and guns. CPSC formulates products’ safety requirements, declares recalls, and bans hazardous products if they are found to be dangerous after evaluation.
In case the organization finds a product to be dangerous for the public, it sends a letter to the producer with an explanation of the violation and the exact correction needed. The CPSC might ask the manufacturer to do any of the following:
- Notify the people about the danger
- Stop the sale of the product
- Fix the hazards posed by it
- Recall the product entirely
- A specific combination of the above
The situation is particularly hard for small businesses. They need to observe legal stipulations with minimum resources. The people behind Employment and Consumer Law Group explained that small businesses can also better understand the safety protocols they need to follow by consulting the Small Business Ombudsman, set up by the CPSC.
State Laws To Protect Consumers
Almost all of the US states have in place legal provisions aimed to protect consumers from unethical business practices. These statutes are referred to as UDAP laws. The attorney general of the state is responsible for enforcing them. An excellent example of a UDAP law would be the law laying out the specific procedure’s insurers must follow while settling a claim. This law is also known as the Unfair Claims Settlement Practices Act.
The majority of UDAP laws enacted by state legislatures give the consumers the right to sue companies if a product causes injury or damage or adopts deceptive or unfair business practices. Suppose the business is found guilty of such events or procedures. In that case, they might have to provide both compensations and attorney fees.
Most products that are on sale in the market come associated with a warranty. A warranty is essentially a promise made to a buyer. Through a warranty, a manufacturer states his course of action in case the product is defective. Warranties can be of two types viz:
- The oral or written warranty
- Implied warranty
Written or oral warranties are governed by federal laws, while the state is responsible for regulating, manage, and oversee implied warranties.
Written warranties again can be of two types viz:
- Suitability for specific purposes
The consumer is the center of the very foundation of the world of business and commerce. And to be deceived or misled regarding their purchases is something antithetical to the American legal and judicial system’s ethos. Accordingly, our lawmakers have over the years enacted several statutes meant to safeguard and protect your basic right for a fair commercial transaction. Businesses need to be aware of the same or face the legal and law-enforcement results. It is indeed preferable to be on the safe side than to be sorry later on.