Consumer Protection Acts

Why This Matters

Consumer protection law represents one of the most heavily tested areas in Business Law because it sits at the intersection of government regulation, contract enforcement, and individual rights. You're being tested on your ability to identify which agency enforces which law, what specific rights consumers gain under each act, and how businesses must modify their practices to comply. These statutes demonstrate the evolution of American regulatory philosophy—from caveat emptor ("let the buyer beware") to a framework where the government actively shields consumers from information asymmetries and power imbalances.

Understanding these acts requires you to think categorically: some laws regulate disclosure requirements (forcing businesses to share information), others create enforcement mechanisms (establishing agencies with investigative power), and still others establish prohibited conduct (banning specific unfair practices). Don't just memorize the name and date of each act—know what problem it solved, which agency enforces it, and what remedies consumers can pursue when violations occur.

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Regulatory Agencies and Enforcement Power

These foundational acts created the institutional framework for consumer protection by establishing federal agencies with investigative, rulemaking, and enforcement authority.

Federal Trade Commission Act (FTC Act)

• Established the FTC in 1914—the primary federal agency responsible for preventing unfair or deceptive acts or practices (UDAP) in commerce
• Section 5 authority grants broad power to investigate false advertising, fraud, and anticompetitive behavior across virtually all industries
• Consumer education mandate requires the FTC to inform the public about their rights, making it both an enforcer and educator

Consumer Product Safety Act

• Created the CPSC in 1972—an independent agency with authority to set mandatory safety standards for over 15,000 consumer product categories
• Recall authority allows the CPSC to mandate recalls of hazardous products and ban inherently dangerous items from the market
• Manufacturer reporting requirements obligate companies to notify the CPSC of known defects or safety hazards within 24 hours of discovery

Consumer Financial Protection Act (Dodd-Frank)

• Established the CFPB in 2010—created in response to the 2008 financial crisis to consolidate consumer financial protection authority
• Broad jurisdiction over mortgages, credit cards, student loans, and other financial products previously regulated by multiple agencies
• Unfair, deceptive, or abusive acts or practices (UDAAP) standard extends FTC Act principles specifically to financial services

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Credit and Lending Disclosures

These acts address information asymmetry in credit markets by mandating standardized disclosures that allow consumers to compare offers and make informed borrowing decisions.

Truth in Lending Act (TILA)

• Requires disclosure of APR and total cost of credit—lenders must present terms in a standardized format using uniform terminology
• Regulation Z implements TILA and mandates the conspicuous display of key terms like finance charges and payment schedules
• Right of rescission gives consumers three days to cancel certain credit transactions, particularly home equity loans

Fair Credit Reporting Act (FCRA)

• Regulates credit reporting agencies (CRAs)—Equifax, Experian, and TransUnion must follow strict accuracy and privacy standards
• Consumer access rights entitle individuals to one free credit report annually and the right to dispute inaccurate information
• Permissible purpose doctrine limits who can access your credit report to those with legitimate business needs

Fair Credit Billing Act (FCBA)

• Dispute resolution procedures—consumers have 60 days to dispute billing errors, and creditors must investigate within two billing cycles
• Liability cap of $50$ for unauthorized credit card charges if reported promptly (often waived by card issuers)
• Creditor investigation requirements mandate written acknowledgment within 30 days and resolution within 90 days

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Anti-Discrimination and Equal Access

This category ensures that protected characteristics cannot be used to deny consumers access to credit or financial services.

Equal Credit Opportunity Act (ECOA)

• Prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance
• Adverse action notice requirement—lenders must provide specific reasons when denying credit or offering less favorable terms
• Regulation B implements ECOA and restricts what information lenders can request during the application process

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Debt Collection and Billing Practices

These statutes regulate post-transaction conduct, protecting consumers from harassment and ensuring fair treatment when debts arise or products fail.

Fair Debt Collection Practices Act (FDCPA)

• Prohibits harassment and abuse—debt collectors cannot use threats, obscene language, or repeated calls intended to annoy
• Validation notice requirement—collectors must provide written verification of the debt within five days of initial contact
• Time and manner restrictions limit calls to between 8 a.m. and 9 p.m. and prohibit contact at inconvenient places like work if requested

Magnuson-Moss Warranty Act

• Regulates written warranties on consumer products costing more than $15$—requires clear disclosure of warranty terms and coverage
• Full vs. limited warranty distinction—a "full warranty" must meet federal minimum standards including free repair or replacement
• Anti-tying provision prohibits manufacturers from conditioning warranty coverage on the use of specific branded parts or services

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Electronic and Modern Transactions

As commerce evolved beyond cash and paper, Congress extended consumer protections to electronic payment systems.

Electronic Fund Transfer Act (EFTA)

• Covers debit cards, ATM transactions, and direct deposits—essentially any electronic movement of funds from a consumer account
• Tiered liability structure for unauthorized transfers: $50$ if reported within 2 days, $500$ if reported within 60 days, unlimited thereafter
• Regulation E implements EFTA and requires financial institutions to provide clear disclosures about fees, error resolution, and consumer rights

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Quick Reference Table

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Self-Check Questions

1. Which two acts both create federal agencies with rulemaking and enforcement authority, and how do their jurisdictions differ?

2. A consumer discovers an error on their credit card statement. Which act governs their dispute rights, and what are the key deadlines they must meet?

3. Compare and contrast the liability limits for unauthorized transactions under EFTA versus FCBA—why might Congress have created different standards for debit and credit cards?

4. If a lender denies a credit application and provides no explanation, which act has been violated, and what specific remedy does the consumer have?

5. A debt collector calls a consumer at work repeatedly after being told to stop. Identify the act violated and explain which specific provisions were breached.