13 Consumer Rights Violations You Need to Know

Published on July 7, 2020

 

Emails from Nigerian princes are such a common scam, they’ve become a meme.

The details change from email to email, but the basics are the same: You get an email from someone in Nigeria (or another foreign country) who claims to be royalty and offers you a huge sum of money from their royal coffers. There’s one small catch, though. You have to provide your banking details so they know where to send the cash. Tempting, right?

Most people know by now that that’s a scam with a capital “S.” But in the early days of email, it roped in a lot of hopeful (if naive) new internet users. So many that the U.S. government actually took action against Western Union, a company that was used for so many of the money transfers for this kind of scam. They argued that Western Union owed its customers better protection than to ship their money overseas to a scammer.

And that’s just one example of a common consumer rights violation. There are plenty more. For-profit colleges. Internet, TV, and phone companies. Food and beverage producers. They’ve all come under fire just in the last for years for failing to protect their customers like the law says they should.

If you live in the U.S., you probably think your consumer rights are pretty well protected.

And that’s true — to an extent. In the U.S., there’s a large number of laws at both the federal and state levels that are designed to protect consumers from companies that might take advantage of them.

But do companies always follow those laws?

The short answer is no. You can never be sure that a company will be perfectly scrupulous and do business with your rights as a consumer in mind. A lot of businesses are willing to cut corners in the name of profits, which is just one reason why it’s important for consumers to know how to protect themselves. 

You can’t always trust companies to look out for your interests, but you can trust yourself — if you know what to watch for when it comes to common consumer rights violations. This is not an exhaustive list, but just some of the more common consumer rights violations everyone should be able to identify. It’s the best way to protect yourself, after all. Ready to learn more? Read on.

What Are Consumer Rights?

The phrase “consumer rights” gets thrown around quite a bit. What does it actually mean?

Broadly speaking, “consumer rights” refers to a body of law at federal, state, and local levels, that dictates the things producers and sellers of goods must do to protect consumers from harm. 

In general, there are four rights that consumers should have in any transaction:

  • The right to safety, meaning the consumer should be able to assume that products they buy are safe when used as directed for their intended purpose.
  • The right to be informed, meaning the consumer should have access to enough information about a product to compare it to other options, and that information should be fair and accurate.
  • The right to choose, meaning the consumer should be able to choose among competing goods and services at different prices and qualities. Antitrust laws protect consumers’ right to choose.
  • The right to be heard, meaning the consumer should be able to report violations of their rights to the appropriate governing agency (often the Federal Trade Commission, the Food and Drug Administration, or the Securities and Exchange Commission), who will then investigate to see whether a violation actually took place.

What Are the Most Common Consumer Rights Violations?

Any law made to protect consumer rights can be broken. But there are some general rules and common violations that all consumers should learn to look out for.

Deceptive Advertising

Deceptive advertising is when the images and words used in print, digital format, audio, or video advertisements make claims about products that are untrue, misleading, or omit important information. Companies that mislead their customers are in violation of deceptive advertising laws whether they do so on purpose, or unintentionally.

Deceptive advertising laws are enforced by the FTC and outlined mostly in Section 5 of the FTC Act. The Act outlines a lot of different types of deceptive advertising, but the basic rule is that merchants cannot mislead their customers in any way.

Here’s an example of deceptive advertising you might recognize: In 2014, Red Bull agreed to pay $13 million in a settlement to customers who were disappointed that the drink didn’t actually give them wings, as the brand’s slogan implies. Lawyers argued that the “Red Bull gives you wings” slogan implied the drink gave consumers a lift or physical enhancement, without any scientific evidence to back that up. Technically, they were right, and Red Bull paid for years of deceptive advertising.

False Product Information

Another type of deceptive advertising that’s fairly common is false product information, or when companies make false or misleading claims on the packaging or labeling for their products. 

Here’s an example of this: An ice cream company releases a line of desserts that it claims on the packaging are “dairy free.” While they aren’t traditional ice creams made with heavy cream, they do have ingredients that are derived from dairy products. That would make the “dairy free” claim on the packaging false and violate consumer rights.

“Made in USA” Claims

Another part of false advertising laws that’s commonly broken is that if a company claims its product is made in the U.S., it must actually be made in the U.S. And that doesn’t mean just assembled within American borders. According to the FTC, a business that makes a “Made in USA” claim must be able to prove that “all or virtually all” of the product is made in America, including all significant parts, processing, and labor that go into the product.

As an example, say a company claims its shoes are made in the U.S. In reality, though, while the shoes are assembled at a U.S. factory, the fabrics, soles, and laces are made in other countries. This would violate consumer rights.

Undisclosed Fees

And finally, another common type of false advertising consumers are likely to encounter at some point is undisclosed, or “hidden” fees. Consumer protection laws state that companies need to be clear and upfront about charges and fees, particularly when consumers are signing contracts (for example, for cell phone or internet service). That means all fees need to be clear and explained, and not hidden in fine print.

Telecom companies are particularly known for violating this rule. In just the last year, AT&T, CenturyLink, and Spectrum have all faced lawsuits over hidden fees for their services.

Telemarketing Rules

The Telephone Consumer’s Protection Act, or TCPA, has strict rules about when and how telemarketers can contact consumers and push for sales. The laws forbid telemarketers from engaging in any activity that harasses, deceives, or mistreats consumers, and covers robocalls, automated dialing systems, automated text messages, and the national “Do Not Call” registry.

According to the law, if you’ve been harassed by automated phone calls or text messages, or if you receive calls from telemarketers after putting your number on the “Do Not Call” registry, you could be entitled to up to $1,000 per instance.

Fake Contests and Sweepstakes

With the rise of the internet and email, scams involving fake contests and sweepstakes have become common. The FTC warns about these types of scams, which usually involve a letter or email notifying a consumer that they’ve won a prize, but requiring them to send in a form with a small fee to retrieve their prize. Some of these are also “phishing” scams, in which the scammer uses the promise of a won prize to get personal information such as banking details or a social security number.

The FTC warns that if a contest, sweepstakes, or offer seems too good to be true, it often is. And it’s important for consumers to remember that it’s highly unlikely you’ll win a prize from a contest you never entered.

Auto Dealer Fraud

Car sellers, and in particular used car dealers, have a bad reputation for taking advantage of customers. Some common consumer rights violations that come up when dealing with auto dealers are:

  • Bait and switch scams
  • Hidden fees
  • Selling used cars as new cars
  • Claiming cars have features they don’t have
  • Hiding information about a car, including damage or defects
  • Not disclosing the full terms of auto financing

These are all prohibited, and consumers should be on the lookout for this kind of treatment whenever they buy a new or used car.

Mortgage Fraud

It should come as no surprise that mortgages are carefully regulated by consumer protection laws. But that doesn’t stop some predatory lenders from targeting homeowners. Some common consumer rights violations to look out for when buying a home include:

  • Lenders who require unaffordable loans
  • Misrepresenting a loan or its terms
  • Encouraging a buyer to refinance a loan so the lender can collect extra fees

It’s also important to look out for mortgage-related scams that come not from the lender, but from third parties. A common scam that targets homeowners in foreclosure says they can save their home by selling it to a third party and then buying it back. Other scammers may promise to negotiate a loan modification (for a fee, of course), but never take any action, causing the homeowner to go into foreclosure. 

Home Construction and Repair Fraud

Similarly, when constructing a home or contracting repairs, homeowners need to be on the lookout for even more common consumer rights violations. Some of the most common include:

  • Contractors who attempt to charge clients for materials or services that weren’t covered in the contract
  • Attempts to deceive consumers about permits or materials
  • Fraudulent mechanic’s liens
  • Scams that target homeowners who have been the victims of natural disasters

Credit Card Fraud

In many cases, credit card fraud involves theft of your personal or banking information. Thieves can steal your physical credit card, or they can hack digital payment information.

But consumer protection laws also protect consumers from shady practices by their financial institutions. For example, the law says banks and financial institutions must be upfront about credit card interest and fees. They must also clearly state, in writing, how they will keep your personal information safe from hackers and scammers.

Broker and Securities Fraud

Consumers who invest their money may hire a broker to help them. Consumer protection laws prevent brokers from:

  • “Churning” your investments to generate more commissions for themselves (making more frequent trades so they can collect the commission on each one)
  • Making unauthorized trades
  • Recommending bad or unsuitable investments

Franchise and Business Opportunity Rules

Everyone wants to get rich quick, but when a franchising or business opportunity promises to help you do just that, it’s likely too good to be true. Still, there are a ton of business opportunity-related scams — so many that the FTC and Consumer Protection Bureau now require what’s called a “disclosure document” detailing 23 specific business points, to be given to consumers before they purchase a franchise or a business system.

This prevents sellers from making false or misleading claims about income or the work or money that’s required to build a successful franchise or business.

Deceptive Practices in Healthcare

Of course, there are consumer protection laws in place to govern how healthcare workers and institutions can treat consumers, especially when they’re at their most vulnerable. Healthcare entities are required to follow false advertising laws, which means they can’t mislead consumers to boost their sales or justify high prices for procedures.

Consumers must also look out for health insurance fraud, particularly extra charges for procedures or services they didn’t receive, or fraudulent denial of claims under a policy.

What Do You Do When Your Consumer Rights Are Violated?

Maybe reading this list made you realize you’ve already been targeted by an unscrupulous business. Or maybe you already knew, and you’re looking for answers as to what you should do next.

Different types of consumer rights are governed by different laws (at local, state, and federal levels) and different government agencies. Depending on how you were wronged, a little research can point you toward the right government agency for filing a complaint. If all else fails, calling your local Attorney General and explaining the situation may help you find out about what options you have for your next step.

One potential avenue for justice is consumer arbitration, an independent legal process that helps many consumers claim the justice and compensation they deserve. Want to learn more? Check out FairShake to see if arbitration can help.

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