Business Law Notes Monday Nov 16, 2009 Business Law Notes Monday Nov 16, 2009 Federal Trade Commission FTC Act: Prohibits unfair or deceptive acts or practices affecting commerce Deceptive advertising is a prohibited practice: -an ad is deceptive if it contains an important misrepresentation or leaves out information which is likely to mislead a reasonable consumer -ads must be truthful and not misleading; claims made in ads must be substantiated Example of deceptive advertising: -ad for bracelet that claims to immediately relieve joint pain. -FTC had to file a lawsuit because they had no proof that it did work. Bait and switch: selling tactics are deceptive and therefore prohibited, i.e., advertising goods or services at a low price to attract buyers and then trying to switch the buyers to more expensive products or services. -specific sales practices banned (e.g., refusing to show bait item; having inadequate supply of bait item) FTC may investigate and send a formal complaint to the advertiser, who may settle the matter with he FTC without further process Complaints not settled initially are then taken to court, if FTC wins they issue a ?cease & desist? Consumer protection regs Restrictions on mail or telephone order merchandise -cannot solicit orders through mail unless seller reasonably expects to be able to ship goods w/ in 30 days of receipt of order (or a shorter time promised in catalog or ads). Must notify customer of shipping delays and new date and give customer the opportunity to cancel. Violations may result in FTC administrative hearing and C&D order. Unordered merchandise received in the mail can be treated as a gift. ?Cooling-off? period for door-to-door sales -for purchases over $25 buyer has three days to cancel order Telemarketing rule -applies to goods and services sold via interstate telephone calls where marketing initiated by the seller. -requires that marketer make certain disclosures prior to payment by customer (e.g., total costs, refund policy, odds of winning contest). -it is illegal to misrepresent information to the consumer. -calls limited to hours of 8 a.m. To 9 p.m. -company must remove consumer?s name from call list upon request. National Do Not Call Registry is maintained by the FTC ( HYPERLINK "http://www.donotcall.gov" www.donotcall.gov ). Applicable to personal phone numbers (cell & home numbers) Exemptions: calls from political organizations, charities, and telephone surveyors, and businesses with past relationship Fair Credit Reporting Act (1970) -main purpose is to provide accurate current information about individual consumers? credit history (not applicable to businesses). -consumers have right to know their credit information, which may be used in connection with getting a job, insurance, or credit Equifax, TransUnion, Experian are required to provide individuals with a free credit report every 12 months -FTC has authorized an online site for making report requests: Annual Credit Report.com -can freeze access to your credit report, helps stop identity theft. -FCRA allows consumers to sue for violations (damages, etc.) Equal Credit Opportunity Act of 1974 -initially required financial institutions to extend credit regardless of gender or marital status. Before this act, it was more difficult for women to get credit than men. -amended in 1976 to also prohibit credit discrimination based on national origin, race, religion, color, or age. ECOA provisions -restricted to commercial lenders -preserves lenders? rights to reject loan applicants because they are not creditworthy -does not require lenders to make loans -limits the basis for which creditors can turn down loan applicants
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