Part 11- Regulation of Business, Chapter 48: The Federal Trade Commission Act and Consumer Protection Laws, Note 8

Summary of Cases and Questions on the Federal Trade Commission Act and Consumer Protection Laws 1. Credit Repair Services (Keith Gill and Richard Murkey)    Issue: Gill and Murkey claimed they could remove accurate and nonobsolete negative information from consumers’ credit reports. Legal Analysis: This constitutes a deceptive practice under § 5 of the FTC Act, as they cannot legally remove accurate and non-obsolete negative information. Conclusion: Their actions likely violated § 5 of the FTC Act. 2. Orkin Exterminating Company    Issue: Orkin breached contracts by unilaterally raising fees for lifetime termite protection agreements without providing additional benefits. Three-Part Test for FTC Act § 5 Violation: 1. Substantial Consumer Injury: Over 200,000 customers paid $7 million in excess fees. 2. Lack of Countervailing Benefits: Orkin offered no additional services for the increased fees. 3. Avoidability of Harm: Customers could not foresee or avoid the increased fees due to the contract terms. Conclusion: Orkin violated FTC Act § 5. 3. Magnuson-Moss Warranty Act (Patron Aviation v. Teledyne)    Issue: Does the Magnuson-Moss Act apply to defective airplane engines sold to a commercial entity? Legal Analysis: The Magnuson-Moss Act applies to consumer products, not commercial transactions. Airplane engines for business use are not considered consumer products. Conclusion: The Act does not apply to this transaction. 4. National Financial Services and Attorney Letters   Issue: National Financial Services sent letters falsely claiming imminent legal action by an attorney. Legal Analysis: Misleading representations in debt collection violate the FDCPA (§ 1692e). o The form letters falsely suggested that legal action was imminent. Conclusion: The court should find National Financial, its president, and the attorney in violation of the FDCPA. o  5. National Credit Management Group (NCMG)    Issue: NCMG misled consumers through deceptive advertising, false guarantees of credit card approval, and unauthorized checking account debits. Legal Analysis: o FTC Act Violation: NCMG’s actions involved deceptive practices under § 5 of the FTC Act. o Telemarketing Sales Rule (TSR): Unauthorized debits and misrepresentations also violate the TSR. Conclusion: NCMG violated both § 5 of the FTC Act and the TSR. 6. Unauthorized Credit Checks (Gatewood Realty and Simonoff)    Issue: A real estate broker ran credit checks without proper authorization, violating the FCRA. Legal Analysis: o The FCRA prohibits obtaining credit reports under false pretenses. o The broker falsely claimed authorization and violated the FCRA. Conclusion: The appellate court should rule that the FCRA was violated. 7. Incorrect Credit Reporting (Grant v. TRW)    Issue: TRW incorrectly reported a judgment against Grant, leading to repeated denials of his credit applications. Legal Analysis: o The FCRA requires credit reporting agencies to ensure accuracy and promptly correct errors. o TRW’s failure to update Grant’s report violated these obligations. Conclusion: Grant’s case should not be dismissed. 8. ECOA and Credit Discrimination (Miller v. Public Industrial Loan Company)    Issue: Miller was denied credit without her husband's cosignature due to a negative credit report. Legal Analysis: o ECOA Violation: Requiring a husband’s cosignature constitutes prohibited sex discrimination under the ECOA. o Alternative Remedy: Miller can seek damages under the ECOA. Conclusion: Public’s actions violated the ECOA. 9. Fair Credit Billing Act (Koerner v. American Express)    Issue: Does the Fair Credit Billing Act (FCBA) apply to disputes involving a company credit card account? Legal Analysis: o The FCBA applies primarily to consumer credit accounts, not commercial accounts. o However, personal use of the card might qualify those specific transactions under the FCBA. Conclusion: The FCBA likely does not apply to this dispute. 10. Misrepresentation of Third-Party Debt Collection (North Shore Agency and BOMC)    Issue: BOMC and North Shore created a false impression of independent third-party involvement in debt collection. Legal Analysis: o FDCPA prohibits misrepresenting the involvement of a third party to pressure debtors (§ 1692j). o BOMC’s close collaboration with North Shore created a false impression of independence. Conclusion: Both BOMC and North Shore violated the FDCPA. 11. FTC Website Information  Offices and Responsibilities: o Bureau of Consumer Protection: Enforces laws against deceptive or unfair business practices. o Bureau of Competition: Promotes free and fair competition. o Bureau of Economics: Analyzes economic impacts of FTC actions. o Regional Offices: The FTC operates regional offices in cities including New York, Chicago, Atlanta, Dallas, San Francisco, and Seattle.