Consumer Protection Laws

The Federal Trade Commission ("FTC") is the main federal agency enforcing consumer protection statutes. The FTC uses what they call "industry guides" and trade regulations to define what's an "unfair or deceptive" trade practice. The FTC can also enforce consumer protection statutes such as the Magnuson-Moss Warranty Act and the Consumer Credit Protection Act.

State Enforcement

State laws also protect consumers. All states have "common law" (judge-made law) about fraud that provides broad, general protection against business practices that would be considered fraudulent. To prove common law fraud, you must usually provide evidence that:

• The person doing business with you made a false statement of "material fact" (a fact that was important in your transaction)
• The person making the statement knew or believed his or her statement was false
• You relied on the false statement to your detriment.

For example, an antique dealers tells you that a statue is valuable because it was made in Greece in the second century, knowing that it was made in the basement last week and is worth nothing. If you purchase the statue believing what the antique dealer said, the dealer has committed a fraud.

In many states, the broad principles of common law fraud have been enacted into specific consumer protection statutes, with state public agencies to enforce these statutes. Your state Attorney General often enforces consumer law, sometimes through a special agency called a "consumer affairs department."

Some states also have business-specific statutes that cover particular kinds of businesses practices in different industries. Business-specific state consumer fraud statutes cover businesses like:

• Mobile home sales
• Vehicle repairs and sales
• Travel agencies
• Storage of household goods
• Health club contracts

There are also private, volunteer groups, such as the Better Business Bureau ("BBB") which receive consumer complaints and conduct investigations of abusive business practices. These private groups can be an important source of information for you when you need to call on consumer protection laws.

Individual Enforcement

You can personally enforce federal and state consumer protection laws by bringing a private lawsuit under the statutes. Many consumer protection statutes award attorney's fees to consumers who win their lawsuits. Many consumer protection statutes also permit a judge to award triple the amount you actually lost, to encourage consumers to sue even when the actual individual damages may be low.

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