Part 11- Regulation of Business, Chapter 48: The Federal Trade Commission Act and Consumer Protection Laws, Note 7

Summary: Federal Trade Commission Act and Consumer Protection Laws (Part 2) 1. Communication Standards Under the FDCPA   Lawyers Representing Consumers: The FDCPA assumes that lawyers are generally knowledgeable about debt collection laws. However, the act requires that the same written notice (e.g., information about the debt) be sent to a lawyer representing a consumer as would be sent directly to the consumer. Deception and Misrepresentation Standards: o For Lawyers: Deceptive practices that would not mislead a competent lawyer are generally not actionable. However, false factual statements, such as misrepresenting the unpaid balance, are actionable regardless of the recipient’s sophistication. o For Consumers: The FDCPA adopts the "unsophisticated consumer" standard, focusing on whether a statement could mislead a person of limited education or commercial experience. o Special Cases: When targeting vulnerable consumer groups (e.g., non-English speakers), courts assess communications from the perspective of the most vulnerable members of that group. 2. Settlement Offers    Potential Misleading Practices: Settlement offers often use urgent language, such as “limited-time offer,” which may mislead unsophisticated consumers into thinking they have no future opportunities to settle. Safe Harbor Language: To address concerns of deception, debt collectors can include statements such as, “We are not obligated to renew this offer,” which acknowledges the possibility of future offers while avoiding deception. Use of Consumer Surveys: Evidence such as professionally conducted surveys is necessary to establish whether communications are likely to mislead a significant number of recipients. 3. Case Summaries  Lauer Case: A debt collector failed to provide the required notice to either the lawyer or consumer. Threatening to dispose of items with sentimental   value was potentially coercive and could violate FDCPA provisions. The district court's dismissal was reversed. Captain Case: A debt collector's settlement letter included a potentially deceptive statement about a $15 daily penalty, which could violate state law. Dismissal of this claim was reversed. Evory and Jackson Cases: Both involved settlement offers directly sent to consumers. The courts emphasized that while such offers are not deceptive per se, liability depends on evidence of consumer deception. The district court's ruling in Evory was reversed; Jackson's dismissal was upheld due to insufficient evidence. 4. Consumer Product Safety Regulation   Consumer Product Safety Act (CPSA): Established the Consumer Product Safety Commission (CPSC), which regulates consumer product safety through: 1. Issuing safety standards and warnings. 2. Banning hazardous products. 3. Pursuing legal actions to mitigate imminent dangers. 4. Addressing substantial product hazards reported to the agency. 2008 Amendments: In response to toy safety concerns, Congress increased the CPSC’s budget, mandated studies on chemical hazards in children's products, and enacted regulations to address safety issues, including bans on hazardous all-terrain vehicles (ATVs). 5. Case Example: International Harvester    Issue: For 17 years, International Harvester failed to adequately warn consumers about the risks of "fuel geysering" from its gasoline-powered tractors, leading to severe injuries and one death. FTC Action: The FTC found the lack of warnings "unfair" under the FTC Act because the injuries outweighed the costs of providing effective warnings. Ethical Debate: Balancing human safety against economic costs raises moral concerns: o Some argue human life is invaluable and should not be weighed against economic benefits. o Others justify cost-benefit analyses to ensure feasible solutions without imposing disproportionate burdens on businesses. 6. Advertising and Deceptive Practices  Listerine Case: The FTC required Warner-Lambert to issue corrective advertising for false claims that Listerine could prevent or treat colds and sore throats.