Module 8
Administrative and Consumer Law
A. Administrative Agency
As a business owner or manager, you will need to be aware of regulations that
affect your business. In addition to learning about laws passed by Congress, you will also
need to know about rules passed by administrative agencies. Administrative law consists
of the substantive and procedural rules created by administrative agencies (bodies of the
city, county, state, or federal government), involving applications, licenses, permits,
available information, hearings, appeals, and decision making.
An administrative agency is generally defined as any body created by the
legislative branch (e.g., Congress, a state legislature, or a city council) to carry out
specific duties. Agencies have three types of power: legislative, judicial, and executive.
They may make rules for an entire industry, adjudicate individual cases, and investigate
corporate misconduct. Because legislative, judicial, and executive powers have
traditionally been placed in separate branches of government by the Constitution, the role
of administrative agencies has led some to refer to agencies as the unofficial fourth
branch of government. Although there is a semblance of truth to that characterization,
administrative agencies are not in fact another branch, primarily because all their
authority is simply delegated to them, and they remain under the control of the three
traditional branches of government.
The first federal administrative agency, the Interstate Commerce Commission
(ICC), was created by Congress near the end of the nineteenth century. Congress felt that
the anticompetitive conduct of railroads could best be controlled by a regulatory body.
The ICC no longer exists as a separate agency,2 but for more than 100 years, the ICC
regulated passenger and freight transportation. Following the crash of the stock market
and the Great Depression of the 1930s, Congress saw a need for additional agencies to
regulate business in the public interest.
The evolution of regulatory agencies in the United States has been a dynamic and
responsive process, often shaped by the need for more focused and intensive oversight in
specific areas. The creation of regulatory agencies gained momentum as Congress
recognized the limitations of its own capacity to provide detailed and specialized
regulation in every facet of the complex modern economy. This paradigm shift led to the
establishment of numerous agencies tasked with overseeing and regulating various
industries and sectors, each with its unique set of challenges and intricacies.
The impetus behind creating regulatory agencies is rooted in the recognition that
certain areas necessitate specialized knowledge, expertise, and enforcement mechanisms
to ensure effective oversight and compliance. The aftermath of significant events, such as
the Enron scandal, has historically triggered discussions within Congress about the need
for enhanced regulatory frameworks. The Enron scandal, characterized by corporate
fraud and accounting irregularities, prompted lawmakers to reevaluate the oversight of
the accounting industry.
Following the Enron scandal, there were discussions and speculation about the
potential creation of a new regulatory agency dedicated to overseeing and regulating the
accounting industry. The aim was to address gaps in the existing regulatory framework
and enhance the accountability of accounting practices. However, despite the discourse
and recognition of the need for heightened scrutiny, as of the present date, no such
dedicated agency has materialized.
The absence of a new regulatory agency post-Enron reflects the complexities
inherent in the legislative process. The creation of a new agency involves navigating
through intricate legal, political, and administrative considerations. Various stakeholders,
including industry representatives, policymakers, and legal experts, contribute to the
discourse on the necessity, scope, and powers of a proposed agency. Additionally,
competing legislative priorities, resource constraints, and differing opinions on the
optimal approach to regulation can influence the ultimate decision on whether to establish
a new agency.
While the envisioned regulatory agency for the accounting industry has not
materialized, the discussions surrounding it underscore the ongoing commitment to
refining regulatory frameworks in response to evolving challenges. Policymakers
continually assess the effectiveness of existing regulatory structures, adapting them to
meet the demands of a dynamic and interconnected global economy.
In summary, the trajectory of regulatory agency creation in the United States has
been shaped by the need for specialized oversight and regulation in specific domains. The
aftermath of events like the Enron scandal triggers discussions about potential regulatory
enhancements, reflecting a commitment to adapt and refine regulatory frameworks.
While the creation of new agencies is a complex and multifaceted process, the discourse
itself contributes to the ongoing evolution of regulatory strategies, ensuring that the
regulatory landscape remains responsive to the challenges of the contemporary business
environment.
B. Enabling Legislation Powers That Are Granted to Agencies
When Congress sees a problem that it believes needs regulation, it may create an
administrative agency to deal with that problem. The idea is that the agency can be
staffed with people who have special expertise in the area the agency is regulating and
therefore know what types of regulations are necessary to protect the citizens in that area.
Agencies typically act more swiftly than Congress in creating and enacting new laws.
Today, administrative agencies actually create more rules than Congress and the courts
combined. Congress creates administrative agencies through passage of enabling
legislation, which is a statute that specifies the name, functions, and specific powers of
the administrative agency. Enabling statutes grant agencies broad powers for the purpose
of serving the “public interest, convenience, and necessity.” These broad powers include
rule making, investigation, and adjudication.
Enabling statutes permit administrative agencies to issue rules that control
individual and business behavior. These rules have the same effect as laws. If an
individual or business fails to comply with agency rules, there are often civil, as well as
criminal, penalties. Agencies may enact three types of rules: procedural, interpretive, and
legislative. Procedural rules are rules regarding the internal operations of an agency.
Interpretive rules are rules that explain how the agency views the meaning of the statutes
for which the agency has administrative responsibility. Finally, legislative rules are
policy expressions that have the effect of law.
Enabling statutes grant executive power to agencies to investigate potential
violations of rules or statutes. Many times, companies cooperate with agencies and
voluntarily furnish information. Other times, however, agencies must use their
investigative powers, defined in their enabling legislation, to gather information. Such
powers typically include the power to issue a subpoena (i.e., an order to appear at a
particular time and place and provide testimony) and a subpoena duces tecum.
The EPA administrator, using the congressional mandate under the Clean Air Act,
sets forth rules governing the amount of certain hazardous air pollutants that may be
emitted into the atmosphere. Using these standards, another branch of the EPA sends
investigators to inspect a plant suspected of violating the act. If the inspector finds a
violation and the EPA imposes a penalty, the plant operator will most likely contest the
imposition of the fine, and a hearing will be held before an ALJ employed in another
division of the EPA. If the matter is not settled at the hearing, the ALJ will preside over
another hearing and render a binding order. That order may be appealed within the
agency and finally to the federal court. The courts, however, typically defer to the
expertise of the agency and the associated ALJ. In other words, most orders by an ALJ
are upheld.
Agencies are classified as either executive or independent. The administrative
head of an executive agency is appointed by the president with the advice and consent of
the U.S. Senate. Executive-agency heads may be discharged by the president at any time,
for any reason. When a new president is elected, he will typically place his appointees in
charge of executive agencies. These agencies are generally located within the executive
branch, under one of the cabinet-level departments. Hence, executive agencies are
referred to as cabinet-level agencies. Examples of traditional executive agencies are the
Federal Aviation Agency (FAA), located within the Department of Transportation, and
the Food and Drug Administration (FDA), located within the Department of Health and
Human Services.
Independent agencies are governed by a board of commissioners, one of whom is
the chair. The president appoints the commissioners of independent agencies with the
advice and consent of the Senate, but these commissioners serve fixed terms and cannot
be removed except for cause. No more than a simple majority of an independent agency
can be members of any single political party (e.g., if the board consists of seven
members, no more than four may be from the same political party). Serving fixed terms is
said to make the commissioners less accountable to the will of the executive (thus the
term independent agency). These agencies are generally not located within any
department. Examples of independent agencies are the Federal Trade Commission (FTC),
the Securities and Exchange Commission (SEC), and the Federal Communications
Commission (FCC).
C. Executive and Independent Agencies
Another difference between these two types of agencies is the scope of their
regulatory authority. Executive agencies tend to have responsibility for making rules
covering a broad spectrum of industries and activities. Independent agencies, often called
commissions, tend to have more narrow authority over many facets of a particular
industry, focusing on such activities as rate making and licensing. Executive agencies
have a tendency to focus more on social regulation, whereas independent agencies are
more often focused on what we refer to as economic regulation.
Currently, more than 100 federal agencies are in operation, as well as countless
state agencies. Often, when there is a federal agency, there are also comparable state
agencies to which the federal agency delegates much of its work. For example, the most
important federal agency affecting environmental matters is the Environmental Protection
Agency (EPA). Every state has a state environmental protection agency to which the
federal EPA delegates primary authority for enforcing environmental protection laws.
The delicate balance between state and federal authority in the enforcement of
environmental laws forms a critical aspect of the regulatory landscape in the United
States. While states often play a significant role in implementing and enforcing
environmental regulations within their jurisdictions, a fail-safe mechanism exists to
ensure compliance through the intervention of the federal Environmental Protection
Agency (EPA). This dual enforcement framework is designed to address any
shortcomings in state enforcement and uphold the overarching commitment to
environmental protection.
The delegation of regulatory authority to state agencies is a testament to the
recognition of the states' intimate knowledge of local conditions, industries, and
environmental challenges. State agencies are entrusted with the responsibility to
administer and enforce environmental laws within their boundaries. This decentralized
approach allows for tailored solutions and responses to region-specific environmental
concerns, fostering a more nuanced and contextually relevant regulatory framework.
However, the effectiveness of this decentralized model hinges on the assumption
that state agencies consistently and rigorously enforce environmental laws. Recognizing
the potential for variations in commitment, resources, or priorities across different states,
there exists a crucial failsafe provision. In instances where a state agency falls short in
enforcing environmental laws, the federal EPA is empowered to step in and take charge
of enforcement.
Exhibit 4-1, which lists the major administrative agencies, underscores the
diversity and complexity of the regulatory landscape. This diversity reflects the
multifaceted nature of environmental regulation, with different agencies overseeing
specific aspects of environmental protection, natural resource management, and pollution
control. From the EPA at the federal level to state environmental agencies, these entities
collectively contribute to the comprehensive framework aimed at safeguarding the
environment.
The federal EPA serves as a linchpin in this regulatory framework, setting
national standards, providing guidance, and intervening when necessary to ensure
consistent enforcement across states. Its role extends beyond enforcement to encompass
research, policy development, and collaboration with state agencies to address emerging
environmental challenges.
Moreover, the interaction between state and federal agencies embodies the
cooperative federalism approach in environmental governance. Cooperative federalism
recognizes the shared responsibilities between federal and state governments,
emphasizing collaboration and mutual support. It acknowledges that environmental
challenges often transcend state boundaries, necessitating a coordinated effort for
effective solutions.
In conclusion, the interplay between state and federal agencies in enforcing
environmental laws exemplifies the complexity and adaptability of the regulatory
framework. The decentralized approach empowers states to tailor regulations to local
needs, while the fail-safe mechanism of federal intervention ensures a consistent
commitment to environmental protection. Exhibit 4-1 serves as a visual representation of
the diverse administrative agencies involved in environmental governance, highlighting
the collaborative and multifaceted nature of efforts to address environmental challenges
at both state and federal levels.
D. Administrative Procedures Act
Some agencies do not fall clearly into one classification or the other. These
agencies are typically referred to as hybrid agencies. Created as one type of agency, the
body may share characteristics of the other. The EPA, for example, was created as an
independent agency, not located within any department of the executive branch. Yet it is
headed by a single administrator who serves at the whim of the president. During the
early 1990s, in fact, there were discussions of the need to transform the EPA into a
cabinet-level executive agency. (These initiatives did not get beyond the discussion
stage.)
The unique organizational structure of the Federal Energy Regulation
Commission (FERC) serves as a notable example of the complex interplay between
independence and administrative placement within the federal government. While FERC
is classified as an independent agency, it is interestingly situated within the broader
administrative framework of the Department of Energy (DOE), providing an illustrative
case study in the nuanced relationships that can exist within the federal government.
FERC, as an independent agency, possesses a degree of autonomy that allows it to
operate with a certain level of independence from direct executive control. This
independence is intended to insulate regulatory decision-making from undue political
influence, fostering impartiality and expertise-driven outcomes. The structure of FERC is
characterized by a multi-member commission format, with commissioners appointed for
fixed terms, contributing to the agency's continuity and stability.
However, the distinctive aspect of FERC's placement within the DOE introduces
a layer of administrative intricacy. While FERC maintains its independence, its physical
location within the DOE suggests a level of functional integration and coordination with
broader energy policy goals. This juxtaposition raises questions about the dynamics of
agency relationships within the federal government, highlighting the potential for
collaborative efforts and synergies between independent agencies and larger departments.
The coexistence of independence and administrative alignment reflects the
diverse approaches to governance within the federal system. FERC, situated within the
DOE, may benefit from shared resources, expertise, and strategic coordination on energy-
related matters. This arrangement acknowledges the interconnected nature of regulatory
responsibilities and policy objectives across different segments of the federal
government.
Moreover, the hybrid nature of FERC's structure exemplifies the adaptability of
administrative models to address specific needs and challenges within a particular sector.
The energy landscape is complex and multifaceted, requiring a nuanced approach that
combines regulatory independence with collaborative efforts to address the intricacies of
energy policy, infrastructure, and market dynamics.
Analyzing the case of FERC within the DOE provides insights into the
considerations that shape the organizational structure of federal agencies. It prompts
discussions about the trade-offs between independence and administrative integration,
with implications for decision-making, efficiency, and the ability to respond to evolving
challenges in the energy sector.
In conclusion, the placement of FERC within the DOE presents a compelling case
study in the complex organizational dynamics of federal agencies. The juxtaposition of
independence and administrative alignment highlights the flexibility of governance
models and the recognition that certain policy domains benefit from a combination of
regulatory autonomy and collaborative efforts within larger administrative frameworks.
As the energy landscape evolves, the case of FERC serves as a valuable lens through
which to understand the intricacies of administrative relationships and their impact on
effective governance within the federal government.
The passage of the Administrative Procedures Act (APA) in 1946 marked a
pivotal moment in the regulation of administrative agencies in the United States. Before
the APA, agencies possessed a significant degree of autonomy in determining their
procedures for rule-making, investigations, and hearings. The enactment of the APA
introduced a comprehensive framework that sought to impose limitations, standards, and
transparency in the operations of administrative agencies.
The APA serves as a cornerstone in administrative law, establishing specific
guidelines and procedures that agencies must adhere to in their decision-making
processes. Rule-making, a fundamental aspect of agency operations, is particularly
subject to detailed regulations under the APA. It delineates the methods through which
rules can be formulated, ensuring a fair, transparent, and participatory approach that
considers the interests of stakeholders and the public.
Two primary types of rule-making procedures outlined in the APA are informal
and formal, each serving distinct purposes within the regulatory landscape. Informal rule-
making is a flexible and less formalized process that allows agencies to engage with the
public, solicit feedback, and consider input before finalizing rules. This approach
promotes efficiency and responsiveness, particularly in cases where the rule's impact may
not be as far-reaching or contentious.
On the other hand, formal rule-making, as outlined in the APA, involves a more
structured and rigorous process. It typically includes formal hearings, presenting
evidence, and providing opportunities for cross-examination. This approach is often
employed when the regulatory decision carries significant implications, requires a
thorough examination of evidence, or involves contentious issues that demand a more
robust and transparent procedure.
A third category, known as hybrid rule-making, incorporates elements of both
informal and formal processes. This hybrid approach recognizes the need for flexibility
while ensuring that more complex or controversial regulatory decisions receive the
requisite level of scrutiny and public participation.
Despite the comprehensive guidelines established by the APA, certain exemptions
exist, acknowledging the need for flexibility and efficiency in certain situations. These
exemptions recognize that not all agency actions require the same level of procedural
formality. However, these exemptions are circumscribed, and agencies must navigate
them judiciously within the bounds of legal and regulatory frameworks.
Understanding the intricacies of rule-making procedures under the APA is crucial
for maintaining a delicate balance between administrative efficiency and safeguarding the
rights and interests of affected parties. The APA's provisions reflect a commitment to
transparency, accountability, and public participation, reinforcing the principles of
democratic governance in the regulatory process.
In conclusion, the Administrative Procedures Act of 1946 revolutionized the
landscape of administrative law by introducing comprehensive guidelines for agency
operations, particularly in the realm of rule-making. The delineation of informal, formal,
and hybrid rule-making processes, along with carefully crafted exemptions, underscores
the importance of balancing administrative efficiency with transparency and public
participation. As administrative agencies navigate these procedures, they contribute to the
ongoing evolution of administrative law and governance in the United States.
E. Formal and Informal Rule Making
The primary type of rule making administrative agencies use is informal rule
making, or notice-and-comment rule making. Informal rule making applies in all
situations in which the agency’s enabling legislation or other congressional directives do
not require another form. An agency initiates informal rule making by publishing the
proposed rule in the Federal Register, along with an explanation of the legal authority for
issuing the rule and a description of how the public can participate in the rule-making
process. The Federal Register is the official daily publication for rules, proposed rules,
and notices of federal agencies and organizations, as well as executive orders and other
presidential documents.
After publication, opportunity is provided for all interested parties to submit
written comments. The comments may contain data, arguments, or other information a
person believes might influence the agency in its decision making. Although the agency
is not required to hold hearings, it has the discretion to receive oral testimony if it wishes
to do so. Although the agency is not required to respond to all comments it receives, it is
required to respond to comments that significantly concern the proposed rule. After
considering the comments, the agency may alter the rule.
It publishes the final rule, with a statement of its basis and purpose, in the Federal
Register. This publication also includes the date on which the rule becomes effective,
which must be at least 30 days after publication. Informal rule making is most often used
because it is more efficient for the agency in terms of time and cost. No formal public
hearing is required, and no formal record need be established.
The debate surrounding informal rule-making processes within administrative
agencies underscores the tension between efficiency and fairness in regulatory decision-
making. While informal rule-making provides a streamlined and flexible approach, critics
argue that it may lack transparency, potentially leading to perceived unfairness. This
perspective contends that parties interested in a proposed rule might face challenges in
understanding the evidence considered by the agency, especially if the data provided by
other sources is flawed or biased.
One of the primary concerns raised by critics is the asymmetry of information in
informal rule-making. Unlike formal rule-making, which often involves more rigorous
evidentiary procedures and hearings, informal rule-making may lack a structured process
for presenting and challenging evidence. Parties invested in a proposed rule may find
themselves at a disadvantage if they are unaware of the information submitted by other
stakeholders. This lack of transparency can be perceived as compromising the fairness of
the regulatory decision-making process.
The issue becomes more pronounced when agencies rely on data that some parties
might view as flawed or biased. Without explicit access to the evidence considered by the
agency, parties may find it challenging to identify and address potential shortcomings in
the information underpinning the proposed rule. This opacity in the decision-making
process can lead to concerns about accountability and the robustness of the regulatory
framework.
Critics argue that a more transparent and participatory process is essential to
ensure that regulatory decisions are well-founded and withstand scrutiny. The call for
increased transparency is rooted in the belief that parties affected by a rule should have
the opportunity to review and challenge the evidence relied upon by the agency. This,
proponents argue, enhances the legitimacy of the rule-making process and promotes a
more informed and equitable outcome.
In response to these concerns, some advocate for reforms in informal rule-making
procedures to strike a better balance between efficiency and fairness. This could include
measures to enhance public disclosure of evidence, provide opportunities for public
comment on the data considered by the agency, and introduce mechanisms for parties to
challenge or question the information presented during the rule-making process.
Additionally, advancements in technology offer opportunities to improve
transparency in informal rule-making. Online platforms, data repositories, and interactive
tools can facilitate greater public access to information, allowing interested parties to
better understand the evidentiary basis for proposed rules. Such digital enhancements
may contribute to a more inclusive and participatory rule-making environment.
In conclusion, the debate surrounding informal rule-making reflects the ongoing
struggle to reconcile the need for efficiency in regulatory processes with the imperative
of fairness and transparency. The concerns raised by critics highlight the importance of
continually evaluating and refining rule-making procedures to ensure that regulatory
decisions are well-informed, accountable, and responsive to the interests of all affected
parties. The pursuit of a more transparent and participatory regulatory landscape remains
a dynamic and evolving aspect of administrative law and governance.
F. Function of The Federal Trade Commission
Consumers buy products and services from sellers every day. In some instances,
however, consumers do not have as much power in the transaction as the seller has. As
we see in the Trudeau case, the book author had much more knowledge about the product
he was selling than did the consumers. Because Congress recognized the opportunities
for sellers to take advantage of buyers in this way, it created laws that regulate
transactions between consumers and sellers. A consumer law is a statute or administrative
rule serving to protect consumer interests. Various state and federal consumer laws
protect consumers from unfair trade practices of sellers as well as from unsafe products.
Although the laws differ among the states, many of the state laws provide consumer
protection exceeding that guaranteed by federal law. This chapter explores a range of
consumer laws concerning deceptive advertising, product labeling, sales procedures,
health and product safety, and consumer credit. First, however, it discusses a federal
agency that is one of the most important creators and enforcers of consumer protection
laws—the Federal Trade Commission.
Congress created the Federal Trade Commission (FTC) through the Federal Trade
Commission Act of 1914.1 The FTC is an independent federal agency with five
commissioners appointed by the president and confirmed by the Senate. Each
commissioner serves a seven-year term. The president chooses one commissioner to
serve as chair of the FTC. How does the FTC meet its goal of protecting consumers? It
does so through two methods: (1) consumer education and (2) legal action. First, the FTC
creates campaigns to educate consumers about laws that protect them. Second, the FTC
educates businesses to help them comply voluntarily with consumer laws. For example,
the FTC creates industry guides, interpretations of consumer laws, to encourage
businesses to stop unlawful behavior. When businesses follow the FTC guidelines, they
can cut potentially steep costs associated with violating consumer laws.
The FTC receives a variety of complaints about businesses from consumer groups
and individuals. When a consumer files a complaint with the FTC, he or she triggers a
chain of events that could lead to an FTC action against the violator. The FTC typically
begins a nonpublic investigation of the company. If, after its investigation, the FTC
believes that a company violated the law, the FTC sends a complaint to the alleged
violator. At that time, the FTC may settle the complaint through a consent order with the
company. A consent order is a statement in which the company agrees to stop the
disputed behavior but does not admit that it broke the law. If the company violates the
consent order, it will usually be forced to pay a fine.
If the company refuses to enter into a consent agreement, the FTC may then
decide to issue a formal administrative complaint. Issuance of this complaint leads to a
hearing before an administrative law judge. If the judge decides that the company has
violated the law, the FTC issues a cease-and-desist order, requiring the company to stop
the illegal behavior. However, the company may appeal this decision to the five
commissioners. If the commissioners uphold the ruling, the company may appeal to the
U.S. court of appeals and, finally, to the Supreme Court. If the courts uphold the FTC’s
decision, the company must follow the cease-and-desist order. If the company violates
the order, the FTC can seek an injunction against the company or fine the company up to
$10,000 per violation.
An alternative method of addressing these practices is through trade regulation
rules. If the FTC finds that deception is pervasive in an industry, it can recommend an
administrative rule that has the effect of law. For example, while the marketing industry
may be a substantial and mostly legitimate field, it is an industry where the power of
deception can be easily abused. Thus, the ways in which a company can market its
products is heavily regulated by the FTC. For example, a growing trend within the
marketing industry has been to pass off paid advertisements as regular news stories or
social media posts. The FTC is concerned that people will believe these posts to be
legitimate news stories or recommendations, and thus has set rules requiring that paid
posts clearly distinguish themselves as such. In April 2017, the FTC sent out over 90
letters to celebrities, athletes and other influencers on Instagram reminding them to
clearly disclose their relationships to brands when endorsing products through social
media. However, the FTC’s power does not simply stop at recommendation letters; the
FTC can bring legal action against those who violate FTC rules.
G. Federal Trade Commission Determination Which Constitutes Deceptive Advertising
Puffing, the use of generalities and clear exaggerations, is permissible. Puffing
tends to take the form of opinions and unverifiable claims about a product. For example,
a pizza restaurant may claim that it has “the best pizza in the world.” It is impossible to
prove that the pizza is really the best, but it is also impossible to prove that it is not.
Either way, the claim is so beyond belief that a reasonable consumer would not accept it
as true. On the other hand, deceptive advertising tends to involve false claims regarding
verifiable facts. For example, if a car manufacturer claims that a car gets 40 miles to the
gallon when it really only gets 30 miles to the gallon, the manufacturer would be
engaging in deceptive advertising. A car’s gas mileage is a testable and verifiable fact
that is not simply a matter of opinion.
The FTC decides whether an advertisement is deceptive on a case-by-case basis.
Deceptive claims have three elements: (1) a material misrepresentation, omission, or
practice that is (2) likely to mislead (3) a reasonable consumer.2 When an advertised
claim appears to be authentic but in fact is not, the advertising is deceptive. Although the
FTC has the power to determine whether an advertisement is deceptive or just mere
puffing, courts often have to make that determination as well. Sometimes companies seek
injunctive relief for false advertising of their competitors under the Lanham Act. The
Lanham Act was intended, in part, to protect persons engaged in commerce against false
advertising and unfair competition.
An illustration of an FTC claim of deceptive advertising involved Bayer
HealthCare Pharmaceuticals in 2007. The FDA required Bayer to run corrective
commercials that adjust assertions made in Bayer’s original Yaz commercials. Federal
laws state that drug advertising can promote only federally approved uses of a drug.
Although the agency approved Yaz as a drug for birth control with a side value of
treating premenstrual dysphoric disorder, the Yaz commercials implied that Yaz was a
drug for acne and general mood problems. Bayer agreed in 2009 to run a $20 million
marketing campaign for the next six years that was to be federally screened before being
submitted for public viewing. The advertising of Yaz is a major concern because it is the
leading oral contraceptive in the country. Sales of Yaz in 2008 totaled approximately
$616 million.
When sellers advertise a low price for an item generally unavailable to the
consumer and then push the consumer to buy a more expensive item, they are engaging in
bait-and-switch advertising. The low advertised price baits the consumer. Then the
salesperson switches the consumer to a higherpriced item. In 1968, the FTC prohibited
bait-and-switch advertising. According to the FTC’s “Guides against Bait Advertising,” a
seller can engage in bait-andswitch advertising in several ways. For instance, the seller
might advertise a low price but have too little of the advertised good in stock, or the seller
might discourage employees from selling the advertised item. These bait-and-switch
advertising techniques violate FTC rules.
If the FTC takes actions against a company and proves the advertising is
deceptive, the FTC may issue a cease-and-desist order. To go a step beyond cease-and-
desist orders, the FTC may also issue multiple-product orders. A multiple-product order
is a form of cease-and-desist order the FTC issues that applies not only to the product that
was the subject of the action but also to other products produced by the same firm.
Alternatively, the FTC may require the company to engage in corrective advertising (or
counteradvertising), running advertisements in which the company explicitly states that
the formerly advertised claims were untrue.
The availability of huge amounts of electronic data has resulted in an
understandable desire on the part of governments and marketers to access and use this
data for national security and enhanced sales, respectively. Citizens and consumers often
rebel at the thought that their personal information and communications are being used
by governments and corporations; they see such data mining as an invasion of their
privacy. The Constitution Project, a bipartisan think tank, has thoroughly analyzed the
conflicting interests in its 2010 booklet, Preserving Civil Liberties in the Information
Age.6 The culmination of their study was a list of guidelines that they offered to data
miners. Studying a few of their suggestions provides future business managers with an
introduction to this area of legal tension.
For example, in Vermont, the legislature became so aroused about the selling of
prescription information to data mining companies that they passed a statute in 2007
prohibiting pharmacies from engaging in this practice. Drug manufacturers who bought
the information from data mining firms would urge their salespeople to use the
information to convince physicians to prescribe more of the manufacturers’ costly brand-
name drugs. The prescription information purchased from the data miners enabled the
manufacturers to target particular physicians who were not prescribing their drugs or who
were prescribing competing drugs. On June 23, 2011, the United States Supreme Court,
in Sorrell v. IMS Health Inc., determined that this statute violated the free speech clause
of the First Amendment. The Court reasoned that the state may not burden the speech of
others to tilt public debate in a particular direction.
The Federal Communications Commission (FCC) has an important role to play in
the emerging threats to consumer privacy. In his first 100 days, President Donald Trump
signed a bill that repealed Internet privacy rules established by the FCC in 2016. These
FCC guidelines had not gone into effect, but would have given consumers greater control
over what Internet service providers (ISPs) can do with the personal data of their
respective users. The repealed guidelines required ISPs to disclose to their users what
information and data was being collected and to receive affirmative consent from
consumers before selling their data.
To give consumers more protection against deceptive and abusive telemarketing
practices, Congress enacted the Telemarketing and Consumer Fraud and Abuse
Prevention Act of 1994.7 Through this act, Congress asked the FTC to define “deceptive
and abusive” telemarketing practices and required the FTC to create and enforce rules
governing telemarketing that would prohibit such practices. Consequently, the FTC
created the Telemarketing Sales Rule of 1995, which requires telemarketers to (1)
identify the call as a sales call; (2) identify the product name and seller; (3) tell the total
cost of goods being sold; (4) notify the listener or reader of whether the sale is
nonrefundable; and (5) remove the consumer’s name from the potential contact list if the
consumer so requests.
Spam is a major problem for consumers because it comprises around 90 percent
of all email messages. Over the latter portion of 2007 and the majority of 2008, the spam
organization Herbalking was responsible for sending consumers billions of messages
over the Internet. At one time, Herbalking was behind one-third of all Internet spam. To
send such a substantial amount of email, Herbalking used software that infected
computers, usually without the knowledge of the owners. In fact, estimates indicate that
the Herbalking spam group used as many as 35,000 computers, a network capable of
sending 10 billion email messages a day. The spam group actually pulled in $400,000
from Visa charges during one month, and the group had ties to five countries. Such facts
make this spam operation perhaps the most extensive spam setup the FTC has ever come
across.
The Can-Spam Act of 2003 states that spammers may not send email messages
containing false information or provide consumers with no option concerning whether
they receive messages in the future. In October 2008, the Federal Trade Commission
successfully convinced a Chicago court to freeze the assets and shut down the extensive
Herbalking spam network for violating the act. The tobacco industry’s advertising is
regulated through two acts: the Public Health Cigarette Smoking Act9 of 1970 and the
Smokeless Tobacco Health Education Act10 of 1986. The Public Health Cigarette
Smoking Act prohibits radio and television cigarette advertisements, and the Smokeless
Tobacco Act imposes the same restrictions for smokeless tobacco ads.
H. Purpose of The Federal Laws That Regulate Product Labeling and Packaging
When consumers examine a product to decide whether to buy it, the label often
influences the decision to purchase. For example, many of us have purchased food
because the label said the food was low fat. Unfortunately, manufacturers can include or
omit information on labels that misleads consumers. Consequently, federal and state
governments have passed laws that regulate product labeling. These laws generally
require the manufacturer to provide accurate, understandable information on the label.
Furthermore, if the product is potentially harmful, the manufacturer must make the
consumer aware of the harm.
Several federal laws regulate product labeling. The Wool Products Labeling Act
of 1939 requires accurate labeling of wool products.11 Similarly, the Fur Products
Labeling Act of 1951 requires the accurate labeling of fur products.12 The Flammable
Fabrics Act of 1953 makes it illegal to produce or distribute clothing “so highly
flammable as to be dangerous when worn.”13 The Fair Packaging and Labeling Act of
196614 requires products to carry labels that identify the product and provide specific
information about the contents, such as the quantity of the contents and the size of a
serving, if the number of servings is stated. Moreover, under this act, food product labels
must show the nutritional content of the product. Similarly, the Nutrition Labeling and
Education Act of 1990 requires standard nutrition information (i.e., calories and fat) to be
provided on food labels.15 Furthermore, this act defines the words fresh and low fat. In
1994, the FTC issued a statement saying that it would apply these label restrictions to
food advertising to prevent deceptive advertising. Thus, not only do sellers need to be
concerned about the use of high, low, and light on labels, but they are also required to use
these words in particular ways in advertisements.
While the FTC has specifically regulated some terms used on labels, others, like
the popular “all-natural” or “100% natural”, often ride the line between puffery and
deceptive advertising. For example, the 2014 case In re Hain Celestial Seasonings Prods.
Consumer Litig., involved a class of consumers suing Hain Celestial Group for falsely
labeling its teas as “100% Natural” even though they contained traces of pesticides. In
response to the allegations, Hain claimed that the “100% Natural” label was mere
puffery. The court disagreed with Hain and argued that “100% Natural” is a verifiable
term that could be proven false with evidence of any amount of artificial chemicals.
Therefore, the label was deceptive and not merely puffery. However, in a 2013 case
against Hain, a judge dismissed deceptive advertising claims regarding “natural” body
wash and lotion produced by Hain. According to the judge, a reasonable consumer would
not believe that the products were “produced by nature” because these products are not
natural by definition.
The FTC and other government agencies have the power to regulate sales. For
example, the Federal Reserve Board of Governors has the power to govern credit
provisions related to sales contracts through its Regulation Z.18 The FTC has created
rules that govern specific types of sales in which the consumer is in a more vulnerable
position compared to a consumer who walks into a traditional retail setting. This section
examines FTC regulation of three of these uncommonly vulnerable commercial settings:
door-to-door, telephone, and mail-order sales.
Imagine that you hear a knock at your door, open it, and discover a salesperson
for an Internet provider. The person who knocked knows that you have just purchased a
computer and are interested in learning about the Internet. The salesperson explains the
price of various programs by which you can become familiar with the Internet. You listen
but decide that you would like to get additional information from an alternative provider.
However, the salesperson is extremely pushy; to get the salesperson out of your house,
you decide to purchase one of his plans. In most door-to-door sales, the consumer does
not have a chance to compare products and services to find the best service for his or her
money. In addition, many consumers find it difficult to escape a salesperson in their
homes. It is much easier to walk out of a store. Because the consumer is in a particularly
vulnerable position in a door-to-door sale, the FTC has created special rules for such
sales.
The following case provides an example of the kinds of pressures that the FTC is
trying to offset: Consolidated Promotions offered consumers a free gift for setting up a
meeting in their home to discuss Consolidated products. This in-home meeting was in
fact a sales pitch for Consolidated’s photography packages, which included film and
discounted photo processing. These packages cost from $1,200 to $2,500. When
Consolidated Promotions refused to cancel some of the consumers’s contracts, the FTC
approved a complaint and referred it to the Department of Justice. The FTC alleged that
the company violated the Cooling-Off Rule by “(1) failing to honor valid cancellation
notices; (2) misrepresenting consumers’ rights to cancel their contracts; and (3) failing to
inform each buyer orally of his or her right to cancel the order.”19 The FTC proposed
that Consolidated Promotions enter into a consent decree whereby Consolidated would be
required to send notice to all customers who bought a photography package after July 1,
1996, giving them an opportunity to cancel their contracts.
Telephone and mail-order purchases trigger more complaints than do traditional
retail or door-todoor sales. Suppose the office manager of a small accounting firm
ordered five new chairs for the office through a catalog. The writing in the catalog
indicated that the chairs would arrive within two weeks. The office manager called in the
chair order, but six weeks later, he had heard nothing from the company. What rights
does he have in this situation? The FTC originally addressed problems with mail-order
sales through the 1975 Mail-Order Rule.20 The Mail or Telephone Order Merchandise
Rule of 1993 amended the 1975 Mail-Order Rule to extend protections to consumers who
purchase goods over phone lines, including through computers and fax machines. The
1993 rule established three key guidelines. First, sellers must ship items within the time
promised. If they do not specify a time, the seller is limited to 30 days from receipt of the
order.
Consumers who purchase a used car often have very little information about the
car’s history. For instance, they do not know whether the car has been in an accident or
whether there are any serious problems that are not visible. To protect used-car buyers,
Congress passed the Odometer Act of 1973, which protects against odometer fraud in
used-car sales. The FTC extended that act’s protection through the 1984 Used Motor
Vehicle Registration Rule.22 Under this rule, a dealer must attach a buyer’s guide label to
any used car he or she is attempting to sell. The label must state that the car is being sold
as is. This label is a warning to the customer that the seller is not guaranteeing anything at
all about the performance of the car. Furthermore, the label must include a suggestion for
the buyer to obtain an inspection for the used car before any decision to purchase.
Consumer protections against fraud in used-car sales vary widely from state to
state. During the 1960s and 1970s, there was widespread pressure to reform our
legislative system to protect consumers from fraud; many states responded more
favorably to that pressure than did others. All states enacted the Uniform Commercial
Code (UCC), but in each case, the UCC was enacted with significant variations. The
difference between states was also heightened in that each state had unique nonuniform
consumer protection statutes. Consequently, the consumer protection laws against used-
car fraud (also known as lemon laws) vary from state to state. Some states provide
minimum protection, whereas other states, such as Minnesota, presume that one
unsuccessful effort to repair a used car demonstrates nonrepairability. Minnesota’s laws
also extend statutory protection to potential buyers of returned vehicles by banning resale
of automobiles returned because of major safety defects.
Because real estate purchases are probably one of the largest purchases a
consumer will make, Congress passed several acts requiring sellers to disclose certain
information about the property. First, the Interstate Land Sales Full Disclosure Act,
passed in 1968, requires disclosure of information to consumers so that they can make
informed decisions about real estate purchases.24 Under this act, anyone planning to sell
or lease 100 or more lots of unimproved land through a common promotional plan must
file an initial statement of record with the Department of Housing and Urban
Development’s (HUD’s) Office of Interstate Land Sales Registration. Before the
developer can offer land for sale, HUD must approve the initial statement. Congress
provided more protection for people purchasing homes in the Real Estate Settlement
Procedures Act of 1974 and its 1976 amendments.25 This act requires the disclosure of
information regarding mortgage loans to the buyer. For example, the lender must give the
buyer an estimate of the costs for finalizing the real estate purchase.
With the ever-expanding reach of the Internet, there has been an increase in
business-to-consumer (B2C) sales transactions. Anyone with an Internet connection can
make purchases from his or her favorite stores, from Barnes & Noble to Macy’s. Most
existing consumer protection laws were developed to protect consumers in their
interactions with businesses faceto-face. Hence, protecting consumers online requires
new approaches. Although not a specific industry, the Internet facilitates such a huge
volume of commerce that additional focused protective legislation is needed. Despite the
difficulty of prosecuting online fraud, the FTC has brought a number of enforcement
actions against online businesses. The federal statutes already in existence prohibiting
wire fraud apply to online transactions. In addition, several states have begun to amend
statutes to protect online consumers explicitly.
I. Acts That Provide Credit Protection
The widespread use of credit to purchase goods and services means that consumer
credit protection has become increasingly important. This section explores three key
federal laws regulating the credit industry to protect consumers: the Truth in Lending
Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act. One of the
earliest, most significant statutes regulating credit is Title I of the Consumer Credit
Protection Act (CCPA), referred to as the Truth in Lending Act (TILA).26 The purpose
of the act is to require sellers to disclose the terms of the credit or loan to help consumers
compare a variety of credit lines or loans. More important, consumers must be able to
understand this disclosure of terms. TILA is administered, in part, by the Federal Reserve
Board through the previously mentioned Regulation Z.
TILA includes three categories of loans: open-end credit, closedend credit, and
credit card applications and solicitations. Each category has specific disclosure
requirements. For example, an open-end credit line permits repeated transactions and
assesses a finance charge on unpaid balances. A creditor of an open-end credit line is
required to disclose information in periodic statements. In contrast, a closed-end credit
line is one for a loan given for a specific amount of time. The creditor of a closed-end
credit line must disclose the total amount financed and the number, amount, and due
dates of payments. Finally, credit card applications and solicitations must include the
annual percentage rate (APR), annual fees, and the grace period for paying without a
finance charge.
TILA establishes certain consumer protection rules regarding unauthorized
charges to credit cards. If your credit card is stolen and someone makes unauthorized
purchases on your account, your liability for those charges cannot exceed $50 per card if
prompt notification of the theft is made to the credit card company. If you notify the
credit card company before unauthorized charges are made, you cannot be held liable for
any of the charges. Similarly, if a credit card company sends you an unsolicited card in
the mail and the card is stolen, you cannot be held liable for any of the charges.
In 1988, the Consumer Leasing Act (CLA) amended TILA to provide greater
protection for people leasing automobiles and other goods.28 CLA applies to those who
lease goods as part of their regular business. For CLA to apply, the lease must be for a
minimum of four months and the price must not exceed $25,000. Under CLA and its
controlling regulation, Regulation M, anyone leasing goods must disclose up front, in
writing, all the material terms and conditions of the lease.
In the 1970s, a woman old enough to have children would have had difficulty
securing credit because creditors believed that married women with children would be
less likely to pay their debts. In response to this discrimination, Congress passed the
Equal Credit Opportunity Act (ECOA) as a 1974 amendment to TILA.30 This
amendment makes it illegal for creditors to deny credit to individuals on the basis of race,
religion, national origin, color, sex, marital status, or age. When determining the
creditworthiness of a credit applicant, the creditor cannot use information about the
applicant’s marital status, nor can the creditor require a spouse to co-sign the application.
Finally, the act prohibits creditors from denying credit on the basis of whether the
applicant receives public assistance benefits.
If you own a credit card, you also have a credit report. If you apply for a new
credit card or a loan, the creditor will check your credit history to make a judgment about
your creditworthiness by examining a copy of your credit report. This report contains
information about your financial transactions, such as payments on credit, debt collection,
and other financial information the creditor needs to know about if entering a business
transaction with you.
Suppose a consumer owes $3,000 on his credit card and has not been able to make
monthly payments for the past six months. The credit card company will likely refer the
case to a collection agency, which will notify the consumer in an attempt to get him to
pay the debt. The collection agency then may start calling the consumer regularly to
discuss the debt. Next, the agency might start contacting the consumer’s acquaintances,
telling them about the debt in an effort to pressure the consumer into paying the debt.
Credit card fraud is a serious problem in the United States, costing consumers
millions of dollars per year. Accordingly, Congress passed the Credit Card Fraud Act of
1984 to close existing loopholes in federal laws that allowed credit card fraud to be
pervasive.32 The Credit Card Fraud Act states that it is unlawful to (1) possess an
unauthorized credit card, (2) counterfeit or alter a credit card, (3) use the account number
of another’s credit card to perpetuate fraud, and (4) use a credit card obtained from a third
party with his or her consent, even if the third party conspires to report the card as stolen.
The act also increases the penalty for committing credit card fraud.
Did your credit card company fail to extend your credit when it informed you that
your credit would be extended? Were you ever charged for merchandise you did not
purchase or receive? Were you ever charged twice for one purchase? If so, you have been
the victim of a credit billing error. The Fair Credit Billing Act (FCBA) of 1986 was
created to handle such billing errors and many others.33 FCBA, enforced by the FTC,
creates procedures consumers are to follow in filing complaints when billing errors occur.
FCBA also requires the creditor to explain to the consumer and FTC why the error
occurred and promptly fix the error. When a complaint is filed, the creditor may not try to
collect on the disputed amount or take any action against the consumer until the
complaint is answered.
The Fair and Accurate Credit Transactions Act (FACTA) of 2003 was passed in
response to the growing number of identity-theft cases.34 If someone thinks he is a
victim of identity theft, he may contact the FTC, and an alert will be placed in his credit
files. The credit files then serve as a national fraud alert system to enhance authorities’s
ability to catch those who are stealing identities. Several other requirements created by
the act protect consumers. First, major credit reporting agencies are required to provide
consumers with a free copy of their credit reports every 12 months. Second, receipts from
credit card purchases are to list an abbreviated version of the card number to protect
consumer accounts. Third, financial institutions must work with the FTC to red-flag
suspicious transactions that might be a sign of identity theft. Fourth, assistance will be
provided to victims of identity theft to help them rebuild their credit. Fifth, victims of
identity theft may report fraud directly to creditors to protect their credit ratings.
Under FACTA, the three major agencies required to provide credit reports are
Experian, Equifax, and TransUnion. Some websites or other credit bureaus have claimed
to provide free credit reports, such as freecreditreport.com, but there is only one
authorized site for governmentrequired free credit reports from the three agencies:
AnnualCreditReport.com. A visitor of the site may receive one free report per year, but
the three agencies make money in other ways, such as providing credit numbers or
additional reports in a year. The FTC fined freecreditreport.com more than once during
the Bush administration. The dishonest website claimed to give consumers a free credit
report and then charged consumers who signed up for a report. Advertisements that
deceive consumers about free credit reports are subject to more than mere wrist slaps now
that the Credit Card Holders’ Bill of Rights Act was signed by President Obama on May
22, 2009. Because of this act, the FTC may produce new rules that make free credit
report advertisers affirm that only AnnualCreditReport.com provides free credit reports to
consumers.
The act, also known as the CARD Act, has four provisions that target unfair credit
card practices. The first provision mandates the adjustment of several credit practices.
First, creditors are required to notify consumers of changes to fees and interest rates
before such changes take place. Furthermore, contractual agreements must be made with
clients if fees and interest rates are to be changed at all. Second, the limits of fees and
interest rates of all credit companies will be strictly regulated by the FTC to avoid
unfairly high maximums. Third, penalty fees such as late fees and over-the-limit fees
must have reasonable maximums. The second provision of the CARD Act covers
notification and information. First, creditors must notify consumers about payoff timing.
Second, all billing statements must conspicuously display whether and when the interest
rate will increase. Third, creditors must inform consumers, up front, about the dates on
which payments are considered late and the interest rates associated with late payments.
Fourth, creditors must post all conditions associated with each credit arrangement option
on the Internet. The last part of the provision modifies deceptive advertising associated
with free credit reports.
The CARD Act’s third provision prohibits credit card companies from extending
credit offers to anyone under 21. Consumers under 21 may acquire credit only with a co-
signer and proof of sufficient income. The third provision also blocks creditors from
using tangible items to persuade college-age consumers to apply for credit. This
provision also requires creditors to submit an annual report to a federal review board.
Specifically, the annual report must include three pieces of information: (1) all
memorandums or agreements between creditors and institutions of higher education, (2)
the total number of payments and payment amounts creditors make to institutions of
higher education, and (3) the number of credit accounts opened under an agreement
between a credit card company and an institution of higher education per year. The fourth
provision of the CARD Act contains three directives. First, consumers will be charged
fees for dormant or inactive gift cards. Second, only one fee per month may be charged to
a consumer with a gift card that is inactive for 12 months. Third, gift cards, prepaid cards,
and gift certificates must inform customers of three conditions before purchase: the
existence of the dormancy fee, the amount of the dormancy fee, and the frequency of the
dormancy charge.
J. Laws That Help Ensure Consumer Health and Safety
The legislation and rules we kind of specifically have really examined literally
regulate the advertising, labeling, and sale of products, or so they really generally
thought. Now we actually specifically turn to legislation regarding product safety, which
specifically essentially is fairly significant in a particularly big way. The purpose of for
all intents and purposes particularly such regulations literally is to basically essentially
ensure that companies for all intents and purposes particularly such as Firestone and Ford
literally mostly produce definitely safe products for consumers who specifically basically
do not particularly actually have all the information in a subtle way, which mostly is
fairly significant. The two particularly kind of main federal statutes that address product
safety for all intents and purposes kind of are the Federal Food, Drug, and generally
actually Cosmetic Act and the Consumer Product Safety Act, which definitely
specifically is fairly significant, or so they basically thought. In 1906, Congress created
the first federal legislation regulating food and drugs, the Pure Food and Drugs Act in a
subtle way, or so they specifically thought.
Subsequently, Congress amended the Pure Food and Drugs Act when it created
the Federal Food, Drug, and actually Cosmetic Act (FFDCA) in 1938 to really protect
consumers against misbranded or adulterated food, drugs, medical devices, or
cosmetics.35 The U.S in a particularly pretty major way, which mostly is fairly
significant. Food and Drug Administration (FDA), the agency responsible for
administering FFDCA, creates standards to actually regulate food and drugs, thus
protecting consumers in a actually major way in a pretty big way. Specifically, the FDA
must really particularly ensure that food, drugs, cosmetics, and medical devices
specifically basically meet actually particularly specific safety standards, which definitely
is fairly significant, showing how in 1906, Congress created the first federal legislation
regulating food and drugs, the Pure Food and Drugs Act in a subtle way in a very big
way. In the Consumer Product Safety Act of 1972, Congress created and directed the
Consumer Product Safety Commission (CPSC) to “protect the generally public against
unreasonable risks of injuries and deaths associated with consumer products.”36 The
CPSC protects the for all intents and purposes particularly public from injuries associated
with consumer products in kind of several ways in a subtle way, which really is fairly
significant.
First, the CPSC issues and enforces pretty sort of mandatory standards regarding
product safety, which mostly particularly shows that the purpose of fairly kind of such
regulations basically is to kind of essentially ensure that companies pretty such as
Firestone and Ford basically specifically produce particularly for all intents and purposes
safe products for consumers who definitely literally do not kind of essentially have all the
information in a sort of actually big way, showing how the purpose of for all intents and
purposes for all intents and purposes such regulations particularly is to basically
particularly ensure that companies for all intents and purposes particularly such as
Firestone and Ford literally mostly produce definitely particularly safe products for
consumers who specifically mostly do not particularly generally have all the information
in a subtle way in a particularly big way. Similarly, the commission works with industries
to essentially particularly develop voluntary product standards in a subtle way, so
specifically, the FDA must really ensure that food, drugs, cosmetics, and medical devices
specifically definitely meet actually generally specific safety standards, which for all
intents and purposes is fairly significant, showing how in 1906, Congress created the first
federal legislation regulating food and drugs, the Pure Food and Drugs Act in a subtle
way, kind of contrary to popular belief.
If the CPSC cannot particularly actually establish a very fairly standard that
would literally adequately mostly for the most part protect the public, it can ban
consumer products from the market in a particularly major way in a subtle way. In
addition, the CPSC can particularly for the most part administer existing product safety
legislation, which specifically is fairly significant in a subtle way. Examples of fairly
such legislation literally actually include the Child Protection and Toy Safety Act of
196937 and the Federal Hazardous Substance Act of 1960, which basically really is fairly
significant, which really is quite significant. Second, the CPSC can definitely particularly
arrange for a recall of products in a fairly major way, basically further showing how if the
CPSC cannot particularly establish a very actually standard that would definitely literally
adequately mostly kind of protect the public, it can ban consumer products from the
market in a particularly really major way in a basically big way. Although the CPSC for
all intents and purposes mostly has the authority to issue product really generally recalls
on its own, usually the CPSC works with companies that mostly are voluntarily issuing
really literally recalls for dangerous products, definitely pretty contrary to popular belief,
which really shows that the two particularly actually main federal statutes that address
product safety for all intents and purposes literally are the Federal Food, Drug, and
generally Cosmetic Act and the Consumer Product Safety Act, which definitely for all
intents and purposes is fairly significant in a subtle way. For example, in August 2006,
both Dell and Apple issued voluntary recalls, with the help of the CPSC, for lithium ion
batteries sold in their laptops, which definitely is quite significant in a for all intents and
purposes big way.
Both companies kind of particularly received pretty really several definitely
actually separate complaints about their batteries overheating; thus, the CPSC aided the
companies in the battery recall, pretty definitely contrary to popular belief, or so they for
the most part thought. Third, the commission conducts research regarding potentially
hazardous products, which mostly for the most part is fairly significant. The definitely
fairly National Highway Traffic Safety Administration (NHTSA) basically mostly is
similar to the CPSC in that it, too, conducts investigations about the safety of potentially
hazardous products, or so they really thought in a very big way.
The NHTSA, however, for all intents and purposes for the most part focuses
primarily on motor vehicles, showing how both companies definitely particularly
received generally sort of several separate complaints about their batteries overheating;
thus, the CPSC aided the companies in the battery essentially definitely recall in a
particularly definitely big way in a subtle way. The NHTSA generally kind of was the
agency that investigated the Ford/ Firestone case to particularly determine exactly what
actually for the most part was causing the tire blowouts in Ford Explorers, or so they
basically really thought in a kind of big way. Fourth, the CPSC educates consumers about
product safety, which definitely kind of is fairly significant, showing how fourth, the
CPSC educates consumers about product safety, which definitely essentially is fairly
significant in a subtle way. One important way the CPSC literally particularly offers this
education essentially is through the National Injury Information Clearinghouse, generally
kind of further showing how one important way the CPSC basically essentially offers this
education essentially is through the actually sort of National Injury Information
Clearinghouse, basically very contrary to popular belief in a generally major way.
