consumer protection ?

• Why do consumers need protection in the marketplace?

  To balance the power between consumers and businesses
• What is the nature of the relationship between consumers and producers?

  It is not based on a level playing field
• Who generally has the advantage in purchasing situations?

  Big business
• How do businesses manipulate customer behavior?

  By controlling price and competition
• What is a potential issue with the goods and services produced by businesses?

  They may not fully meet consumer expectations
• What do legislators and consumer protection groups argue about businesses?

  They will maximize profits with little consumer consideration
• What is the role of laws in consumer protection?

  To protect consumers and limit capitalist excesses
• What are the two separate groups of regulations for consumer protection?

  1. Legislation for contracts with retailers or producers
  2. Legislation regarding competition policy
• What constitutes a contract in consumer protection?

  When goods or services are purchased
• What is the purpose of competition policy legislation?

  To control how markets operate
• consumer protection legislation ?

  When consumers purchase goods or services, contracts are formed between the consumer and the retailer and the producer of those goods or services. To clarify the nature of these contracts and to establish the requirements of producers and retailers, a series of

  laws have been passed.
• SALE AND SUPPLY OF GOODS ACT 1994

  • States that goods must be of merchantable quality, fit for their intended purpose, lasting for a reasonable amount of time and be as described
  • This means that the goods must be capable of doing what they were designed to do and what the purchaser would reasonably expect them to be able to do
• CONSUMER CREDIT ACT 1974

  • Controls the way that goods can be bought and sold on credit
  • Under this act the use of APR was established. APR is the annual percentage rate of interest – this must be clearly stated when credit is being offered. The use of APR allows consumers to easily compare competitive interest rates and to judge the true cost of borrowing
  • This act established the use of ‘cooling-off’ periods where in many cases consumers have 14 days in which they are able to change their mind about entering into a credit arrangement
• TRADE DESCRIPTIONS ACTS 1968 AND 1972

  - Designed to prevent and make it a criminal offence to give untrue or misleading descriptions of goods with regard to their content, size, weight and price

  Because of this legislation, manufacturers and retailers have to take a great deal of care about information presented on the packaging of their goods, or within advertisements and any other form of promotional material
• DISTANCE SELLING REGULATIONS

  • Protects consumers who buy over the phone or online. If businesses break these regulations then the consumer is not bound by the purchase contract
  • Provides the consumer with a cancellation period of 14 days: the ‘cooling off’ period during which consumers are entitled to change their minds and cancel the contract and receive a full refund, regardless of whether the product is defective
  • Consumers are not bound by charges they have not expressly agreed to – such as hidden delivery or card payment costs
• What is the role of the Competition and Markets Authority (CMA)?

  To enforce consumer protection legislation
• How does the CMA assist consumers beyond court enforcement?

  By encouraging voluntary codes of practice
• What are ABTA and ATOL?

  Organizations that protect holidaymakers
• What do ABTA and ATOL do for holidaymakers?

  Protect and reimburse if companies cease trading
• What local organizations help ensure compliance with legislation?

  Trading Standards and Environmental Health Departments
• What do Trading Standards officers do?

  Check for sales of counterfeit goods
• What is the purpose of competition policy legislation?

  To control the power of big businesses
• Why are monopolies concerning for market competition?

  They can control prices and production amounts
• What actions do governments take against monopolies?

  Implement laws and regulators to limit power
• What is one role of the CMA regarding illegal cartels?

  To examine companies acting together illegally
• How do businesses typically behave in a cartel?

  They avoid competing on price
• What can happen to companies found guilty of cartel activity?

  They can be fined up to 10% of turnover
• How is the fine for illegal cartel activity calculated?

  Based on 10% of annual turnover
• What is the impact of collusion between businesses?

  It limits competition and harms consumers
• What is the role of an ombudsman?

  To address customer complaints effectively
• What should a customer do if their complaint is not satisfactorily dealt with?

  Contact the Ombudsman Service for redress
• What types of issues can consumers complain about to the Ombudsman Service?

  Pricing, quality of service, quality of goods
• In which industries are the ombudsman findings binding?

  Financial services, communications, energy, property
• What is the consequence for businesses if they do not comply with ombudsman rulings?

  They must comply with the binding ruling
• What do businesses need to consider regarding their customers?

  Ethics of their relationships
• How can consumers be affected by businesses?

  They can be manipulated by marketing professionals
• What is subliminal advertising?

  Hidden images processed unconsciously
• What is 'pester power'?

  Children persuading parents to buy sweets
• Why is ethical marketing a problem for businesses?

  Balancing sales with responsible marketing