Make sure you know the law when it comes to protecting consumers against unethical and illegal business practices
Most of us are aware that laws exist to protect us when we buy goods and services. However, is the average person aware of the laws and how they work? The answer is usually resounding no.
Here’s the problem: While many different consumer protection laws exist, businesses (and their lawyers) are almost always going to look out for themselves and their bottom lines first.
That’s why we created this guide. You need to know about the laws that are designed to protect you, so you know when companies violate the laws, and how to fight back against injustice. Think of this as reference manual for the laws that protect you when interact with companies.
We’ help you understand what laws are in place, what they cover, how they’re enforced, and how you as a consumer can always make sure the law works for you.
Here are the 11 consumer protection laws we think you should know, and what you should know about the laws.
Consumer protection laws exist on multiple levels of government. We’re going to dive into laws at the federal level, which means they apply equally to all U.S. residents regardless of what state or county they live in.
Here are 10 federal consumer protection laws that cover a wide range of subjects and industries. We think these are generally the most important laws for consumers to know. A solid understanding of these laws helps consumers protect themselves in a wide variety circumstances.
Enacted in: 1914
How it protects you: We’re starting with a really big one. Section 5 of the Federal Trade Commission (FTC) Act, which is part of a much larger piece of legislation that created the Federal Trade Commission, details a number of different ways consumers are protected by law. The main parts of the section that pertain to individual consumers prohibit:
Unfair or deceptive acts by businesses
Business conduct that causes or is likely to cause injury to consumers
Business conduct that will mislead or is likely to mislead consumers
Section 5 also includes a set of regulations that have come to be known as “Truth In Advertising” rules. These further define and prohibit unfair or deceptive acts by businesses and business conduct that will mislead consumers (commonly known as false advertising).
Some examples of things that are required under Section 5:
If a business advertises a product or service at a certain price, it must have that product or service available somewhere at that price.
Product demonstrations must show how products will actually function under normal use.
Businesses must be truthful about where their products were manufactured.
If a business makes any claims about its products, it must be able to back those claims up with evidence.
Put more simply, businesses can’t lie to consumers to make their products more appealing. That would be prohibited under Section 5.
How it’s enforced: The FTC Act created the Federal Trade Commission, which oversees the law, including Section 5. The FTC can take administrative actions to fine companies which violate the act, including suing companies in court.
Enacted in: 1938
How it protects you: The Federal Food, Drug, and Cosmetic Act (FFDCA) is a sweeping set of laws enacted in 1938 that gave authority to the Food and Drug Administration (FDA) to oversee the safety of food, drugs, cosmetics, and medical devices.
The FFDCA is long and complex, defining testing procedures and safety standards for foods (including chewing gum and bottled water), pharmaceutical drugs, medical devices, food additives, and cosmetics. It regulates ingredients and ensures that no hazardous materials or additives are used to make the food, drugs, cosmetics, or medical devices it covers.
Notably, the FFDCA does not currently apply to dietary supplements, which are not tested for safety or efficacy by the FDA.
How it’s enforced: The FFDCA is enforced by the Food and Drug Administration.
Enacted in: 1970
How it protects you: The Fair Credit Reporting Act (FCRA) regulates how consumers’ credit information is collected, as well as access to consumers’ credit reports. It dictates how and what information credit bureaus are allowed to collect about you, including your:
Bill payment history
Current and previous addresses
Whether you’ve ever filed for bankruptcy
Whether you owe child support
Whether you’ve ever been arrested
FCRA also dictates who is allowed to see a consumer’s credit report and under what circumstances. For example, it states that credit reports can be accessed by:
Lenders, if the consumer applies with them for a mortgage, car loan, or other form of credit
Insurance companies, if the consumer applies for a policy
The government, if the consumer is applying for certain types of government-issued licenses, or if a court order or subpoena requests a credit report
FCRA also states that there are circumstances in which a company or agency needs written permission from a consumer before accessing their credit report, like if an employer asks for a credit report as part of a job application.
FCRA allows consumers to access their own credit reports for free once each year. It also grants consumers the right to:
Verify the accuracy of their own credit report
Be notified if information from their credit report is the reason they’re denied credit or another transaction
Dispute information on their own credit report that’s incomplete or inaccurate
Remove outdated, negative information from their credit report (after seven years, in the case of most delinquent accounts).
How it’s enforced: The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are the two federal agencies tasked with overseeing and enforcing the FCRA.
If a company has caused you harm by violating the Fair Credit Reporting Act—such as by reporting incorrect information and not correcting it when you notify them—you can typically bring legal action against the company yourself. Often those claims must be brought through consumer arbitration.
Enacted in: 1991
How it protects you: Before spam emails, the way consumers were constantly annoyed was with telemarketer calls. (Unfortunately these seem to be making a comeback). The Telephone Consumer Protection Act, or TCPA, put several rules in place to protect consumers from being harassed, deceived, or mistreated by telemarketers.
This was a pretty expansive piece of legislation that introduced a lot of new rules about telemarketers’ conduct, but the parts of the law that have the most direct impact on consumer protections are these:
Solicitors can’t call residences before 8 a.m. or after 9 p.m., local time
The TCPA created the “Do Not Call” registry and requires solicitors to maintain their own registries and honor them
Solicitors must provide their name, the person or company they’re calling for, and a phone number or address for that company so the consumer can contact them directly
Solicitors can’t make calls to residences that include an artificial voice or recording
Solicitors can’t use automated dialing equipment to make calls to cell phones or any other service where the consumer gets charged for the call
Solicitors can’t make calls to hospital, health care facility, or nursing home rooms
The TCPA was not responsible for the national “Do Not Call” registry The FTC created the national registry in 2003 under the Do-Not-Call Implementation Act after it was found that the TCPA’s requirement that every solicitor have their own registry wasn’t effective at protecting consumers’ right to opt out of telemarketing.
How it’s enforced: The TCPA is enforced by the Federal Communications Commission (FCC), but if you’re receiving calls from solicitors after putting your number on the national “Do Not Call” registry, that’s something you would report to the Federal Trade Commission (FTC).
You can typically pursue TCPA violations as an individual. If they come from a company that you are under contract with, then the right way to pursue that claim is often through consumer arbitration.
Enacted in: 1977
How it protects you: Anyone who’s ever been on the receiving end of collections calls knows how stressful they can be. The Fair Debt Collection Practices Act, or FDCPA, was enacted into law to protect consumers from being harassed or deceived by third-party debt collectors, who, under the law, must follow a number of rules designed to keep your financial information private and protect you in other ways.
Here are the most important consumer protection rules in the FDCPA:
Debt collectors can’t call consumers before 8 a.m. or after 9 p.m., local time.
Consumers can give written notice that they don’t want to be contacted any further by debt collectors, and then contact must cease (with certain exceptions, like if the debt collectors sues the consumer).
Debt collectors can’t make harassing calls that cause the phone to ring continuously or engage the consumer in conversation repeatedly. They also can’t use abusive language or profanity with consumers.
If a consumer tells a debt collector not to try to contact them at their place of work, they have to stop calling there.
Debt collectors can’t contact a consumer if that consumer is represented by a lawyer in the case of the debt.
A consumer can request verification of a debt, and the debt collector can’t pursue collection efforts for the next 30 days or until the debt has been verified.
Debt collectors cannot misrepresent themselves in any way, like posing as lawyers or police officers.
Debt collectors can’t reveal the nature of a consumer’s debt, like by contacting them via a postcard that anyone can see and read, or by contacting coworkers, friends, or neighbors.
How it’s enforced: Originally, the FDCPA was under the jurisdiction of the Federal Trade Commission, but since reforms made under the 2010 Dodd-Frank Act, it’s primarily enforced by the Consumer Financial Protection Bureau.
Like some other law we’ve mentioned, you as an individual consumer typically have a right to bring claims against companies that violate your rights under the FDCPA. These claims are often subject to consumer arbitration.
Enacted in: 2003
How it protects you: Ever been annoyed by spam email messages? Most people have, but this act, known as the CAN-SPAM Act is designed to help with that. It states that commercial email messages have to comply with certain rules, including:
Clear identification of who’s sending the email
No false or misleading header information
No deceptive subject lines
Emails must include a way for the recipient to opt out of future communication
The message must be identified as an advertisement or solicitation
How it’s enforced: The CAN-SPAM Act is enforced by the Federal Trade Commission (FTC). In certain circumstances, it can also be enforced by the Federal Communications Commission (FCC), internet service providers, and state attorneys general.
Enacted in: 1968
How it protects you: The Truth In Lending Act (TILA) was created to protect consumers from taking on loans or other types of credit without fully knowing and understanding the terms they were signing up for. Its provisions also make it easier for borrowers to comparison shop before taking out credit.
Under TILA, lenders must disclose important information about a loan or line of credit to the consumer before they sign, including:
The annual percentage rate (APR)
The term of the loan
The total cost to the borrower
This information must be displayed somewhere easy to see on the documents given to the borrower before they sign. In some cases, all this information needs to be included on periodic billing statements that are sent to the borrower, too.
How it’s enforced: TILA was originally under the jurisdiction of the Federal Reserve Board, but the 2010 Dodd-Frank Act transferred authority for overseeing TILA to the Consumer Financial Protection Bureau. (And also streamlined the requirements for how this information is presented.)
Enacted in: 1974
How it protects you: The Fair Credit Billing Act (FCBA) was created as an amendment to the Truth In Lending Act to give consumers better protection against unfair billing practices and allow them to dispute errors in credit card billing. The FCBA says that if a consumer notices an error on their credit card statement, they can trigger an investigation by providing written notice of the error to the creditor. The creditor is required under the act to acknowledge the dispute within 30 days and make a decision within 90 days about whether there was an error. If no error is found, the consumer can request written evidence from the creditor.
The FCBA protects consumers from racking up interest and other charges on open-ended credit accounts while a disputed charge is being investigated.
How it’s enforced: While the FCBA is an amendment to the TILA, it’s mainly overseen and enforced by the Federal Trade Commission.
Also known as the Financial Modernization Act of 1999
Enacted in: 1999
How it protects you: The Gramm-Leach-Bliley Act (GLBA) applies only to financial institutions — businesses that offer banking, insurance, stocks and bonds, financial advice, investing, and other financial services.
First, the GLBA says that financial institutions must have certain precautions in place that protect the security and confidentiality of the financial records and private information of their customers.
Second, the GLBA says that financial institutions must provide customers with written notice of their information-sharing practices, as well as the option to opt out of having certain information sold to other banks, credit card companies, and other businesses.
Unfortunately, the GLBA doesn’t give consumers the right to stop financial institutions from sharing their private information with “affiliate” companies, which is why it’s important to carefully research financial institutions you do business with and make sure you’re comfortable handing them your personal information.
How it’s enforced: The GLBA is enforced by the Federal Trade Commission (FTC).
Enacted in: 1998
How it protects you: Children’s Online Privacy Protection Act’s (COPPA) primary goal is to allow parents to control what private information can be collected about their kids online. It applies to children under the age of 13, and says that websites and online services (whether they’re marketed to children or not, and including mobile apps) must:
Post clear and direct privacy policies describing how they collect information from children and what they do with that information
Obtain parental consent before collecting any information from children
Allow parents to see information collected from their kids to review it or have it deleted
Keep information collected from children safe and secure, and only release it to third-parties that are also able to keep it safe and secure
Delete personal information collected from children immediately after the information has been used for its intended purpose
How it’s enforced: COPPA is overseen and enforced by the Federal Trade Commission (FTC). Unfortunately the protections for adults’ own data aren’t as consistent and uniform.
One thing that makes it difficult to have a comprehensive understanding of American consumer protection laws is that many of them exist on the state level. This creates a patchwork of different laws and different protections depending on where you live.
Because of this, it takes looking into your own state’s laws to truly understand how you’re protected as a consumer. Some good places to start are:
This summary of state by state Unfair and Deceptive Practices laws put together by the National Consumer Law Center.
Many states have adopted the Uniform Deceptive Trade Practices Act (UDTPA) as a way to create some uniformity across state consumer protection laws.
The language of the law may still differ from state to state, especially in states that have adopted a revised version. But if your state has adopted the act, it’s another good place to start learning about consumer protections that are afforded by your local laws.
For states who have not passed the uniform act, they will typically have their own version covering many of the same topics. For some states (like California) their laws will be stronger on balance than the UDTPA, while other states’ laws could be weaker.
District of Columbia (Washington, D.C.)
* denotes states that have adopted the act, but with significant revisions or modifications.
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