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Americans spend billions of dollars each year on everything from appliances to motorcycles to yo-yos. We shop in brick-and mortar stores and online. Truly, consumer purchases never stop; they take place 24/7 and around the globe. It’s not uncommon, then, for things to go wrong sometimes.
The item you bought may not work as promised, or you may be overcharged or a charged for an item you never even bought. Federal and state consumer protection laws exist to give protection against many forms of fraud and unfair business practices. Know the key laws, agencies that enforce them and how they can help you.
The Federal Trade Commission
The Federal Trade Commission (FTC) is the main federal agency enforcing consumer protection laws. The FTC uses what it calls “industry guides” and trade regulations to define what “unfair or deceptive” trade practices are.
The FTC enforces most federal consumer laws, including the:
- Fair Credit Reporting Act (FCRA) – outlines the steps you need to take to correct mistakes or errors on your credit report
- Truth in Lending Act (TILA) – credit card companies can’t bill you more than $50 per card for unauthorized charges made to those cards
- Fair Credit Billing Act – sets out how to fix billing errors on your credit card accounts, including fraudulent charges
- Fair Debt Collection Practices Act (FDCPA) – bars debt collectors from using unfair and deceptive practices to collect overdue bills
- Magnuson-Moss Warranty Act – requires manufacturers and sellers to explain warranty coverage, terms and exclusions
- Identity Theft and Assumption Deterrence Act of 1998 (ITADA) – created services for education on identity theft and filing complaints on identity theft
- Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) – limits fees and penalties charged by credit card companies, as well as when they may increase interest rates and by how much
The FTC enforces these laws though administrative proceedings, lawsuits or its rulemaking power. Often, the FTC takes action after consumers file complaints about particular products, services or businesses.
The FTC provides many tools and resources to help you learn about and protect your consumer rights.
State laws also protect consumers. All states have common law (judge-made law) giving protection against fraudulent business practices. To prove common law fraud, usually you have to show that:
- The person doing business with you made a false statement of “material fact” (a fact important to your decision to go through with the transaction)
- The person making the statement knew or believed the statement was false
- You relied on the false statement and you suffered damages
For example, an antique dealer tells you that a statue is a valuable ancient Greek artifact. However, the dealer knows the statue is really a new knock-off. It’s fraud if you buy it based on the dealer’s statement.
In many states, the common law has been compiled into state consumer protection laws. Your state attorney general may enforce these laws, or your state may have a separate consumer protection agency. Many state laws are very similar to the federal consumer protection laws.
Some states also have business-specific laws for select industries. These laws cover businesses like:
- Mobile home sales
- Vehicle repairs and sales
- Travel agencies
- Storage of household goods
- Health club contracts
Private, volunteer groups, such as the Better Business Bureau (BBB), also take consumer complaints and investigate abusive business practices. These groups can encourage businesses to abide by consumer protection laws and help settle consumer disputes.
Next: What steps you can take