Consumer protection laws are made to protect consumers from fraudulent business practices, defective products, and dangerous goods and services. They play an important role in a reliable market economy, helping to keep sellers honest, with no threat of unpleasant surprises.

Consumer protection laws in the U.S. are comprised of various federal and state laws, each of which governs a particular area of the economy. The government oversees consumer protection through the Federal Trade Commission (FTC), while states use a variety of agencies and statutes to enforce consumer protection and sometimes expand on these laws. Not all jurisdictions protect consumers in the same way, with some being more pro-consumer than others.

Consumer Warranties and Service Contracts

Whenever you buy merchandise, it comes with a warranty. This is a guarantee that it will serve the purpose it was purchased for—in other words; it will function.

Express and Implied Warranties 

The two basic types of warranty are express and implied. An express warranty is a promise from the seller, either written, oral, or expressed in an ad, promising that the item will perform its function for a specified period. Whether the item purchased is new or used, an express warranty is a guarantee that the item will work. However, not all items come with an express warranty.

The law automatically provides the second type of warranty, the implied warranty. Implied warranties are a part of all retail sales of new and used consumer goods. The retailer of an item implies that the item will work properly and be of average grade and quality, as long as it is used for the purpose it was sold. For example, a refrigerator will keep stuff cool as long as you are not trying to cool the entire room, and a blender will blend as long as you are not blending rocks.

Whenever you buy something, it’s important to get warranty specifics in writing. Find out what the warranty covers. Does it include service fees if the item needs to be repaired? How long is the warranty? According to the FTC, an implied warranty can last as long as four years, but the actual time period can vary according to the state.

Dealing With Warranty Breach

If a warranty is breached, get the item replaced or repaired by the seller. If that doesn’t work, try resolving the dispute through mediation. If that fails, you have the right to sue the manufacturer or seller.

Service contracts cannot be canceled after you’ve signed them, but according to the FTC, there is a cooling-off period in which, under certain circumstances, you might be able to void a contract. Contact the Federal Trade Commission at FTC.gov for information on the right way to approach your particular situation.

To file a complaint about a seller or manufacturer, you can contact the Federal Trade Commission, Consumer Product Safety Commission, or call up your local prosecutor and ask for the consumer fraud division. If you were defrauded by a telephone solicitor or fell into a TV advertiser’s trap, the Federal Communications Commission is the place to turn for help.

Key Consumer Protection Laws

Federal Securities Act

One of the most important consumer protections in finance is the Securities Act of 1933, which was enacted during the Great Depression. The act strictly limits the sale of investment contracts (“securities”) and requires issuers to disclose the details of their financing and business plans. The act also established the Securities and Exchange Commission, which enforces securities laws and punishes violations.

Fair Credit Reporting Act

The Fair Credit Reporting Act was passed in 1970 to regulate the collection of credit information, which is frequently used to determine mortgage and lending rates. The law limits who can access a consumer’s credit history, and prohibits lenders from providing outdated or inaccurate information. The law also allows consumers to read their own credit reports, and to contest any inaccurate information.

Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act, usually shortened to “Dodd-Frank Act,” was a sweeping reform of U.S. financial regulations in the wake of the 2008 financial crisis. The act stepped up oversight of banks and financial institutions, particularly those deemed to have been responsible for the Great Recession. It created the Financial Stability Oversight Council, with the ability to break up banks that were “too big to fail” or to increase their reserve requirements. It also established the Consumer Finance Protection Bureau, which regulates subprime mortgages and other predatory lending practices.

The Fair Housing Act

The Fair Housing Act protects buyers and renters of housing from being discriminated against by sellers, landlords, or financial institutions.

The Fair Debt Collection Practices Act (FDCPA)

This law limits the actions of third-party debt collectors when attempting to collect debts on behalf of another person or entity. It outlines when and how often a third-party debt collector can contact a debtor, with noncompliance resulting in lawsuits.

Section 5 of the Federal Trade Act

Section 5 of the Federal Trade Commission Act, sometimes just referred to as “Section 5,” demands that consumers be treated fairly and not deceived or put at risk by businesses. That includes:

• Causing substantial injury to a consumer
• A statement, omission, or practice likely to mislead consumers

Telephone Consumer’s Protection Act (TCPA)

This act ensures that consumers are not deceived and harassed by telemarketers. Thanks to the TCPA, a national do-not-call list was created.

The CAN-SPAM Act

The Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003 is a law passed in 2003 that governs email communication. It establishes requirements for commercial messages, including not using false or misleading headers and subject lines, identifying messages as ads, and providing a postal address and information on how to opt-out of being contacted in the future. Recipients have the right to stop being contacted, and penalties will be dished out to those who violate the act’s rules.

The Gramm-Leach-Bliley Act (GBLA)

The GBLA, among other things, requires all U.S. financial institutions to reveal in writing how they handle, share, and protect consumers’ information.

The Children’s Online Privacy Protection Act

This act governs what information websites directed to children under 13 years of age can collect from their visitors.

Be Aware of Scams

According to the book “The Truth About Avoiding Scams,” by Steve Weisman, scam artists always take advantage of whatever is happening at a particular place in time. In the wake of the housing bust of 2008, for example, there were a lot of phony foreclosure rescues that caused people to lose the equity in their houses to so-called rescuers.

There has also been an increase in scam attempts through automated phone calls. During the COVID-19 pandemic, the Federal Trade Commission began receiving reports of scammers posing as government officials, using the promise of unemployment benefits to extract social security numbers, private bank accounts, or other sensitive information.

How to Avoid Scams

Consumer protection laws exist to protect consumers and make us feel more confident about buying things. However, having this protection doesn’t mean we shouldn’t care about getting scammed. It’s better for everyone if a complaint is never made.

Tips include using credit cards rather than debit cards for online shopping and closely reviewing every item on your monthly bills. Customers should also use a separate email account for their online shopping. This method helps avoid spam. Also, never respond to emails asking you to “confirm” recent transactions after you shop because they can be phishing scams.

The Bottom Line

The modern economy is dependent on consumer protection laws. These rules help eliminate bad businesses as well as give consumers peace of mind and encourage them to spend more. Over the past few decades, the number of laws has continued to grow and evolve to reflect new technologies and business practices. And thanks to the internet and other technologies, consumers are better informed of their rights than ever before.