Everyday Law for Consumers

Michael L. Rustad

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9781594514524
• eBook ISBN: 9781317260219
• Topic: Law
• Subtopic: Alternative Dispute Resolution
• Index: Law

"Your toolkit for prevention, redemption, and occasionally retribution." -Ralph Nader Whenever you purchase goods or services in a personal, household, or family capacity, you are entitled to the rights and remedies of state and federal consumer law. Realistically, only a very small percentage of consumer problems can be addressed by hiring a private attorney. Everyday Law for Consumers teaches practical self-help remedies that ordinary Americans can use to protect their consumer rights. Michael L. Rustad, a nationally known practicing attorney and legal scholar, translates into plain English the legalese that forms the basis for many common transactions, including consumer loans, credit repair, credit, consumer leases, usury, interest rates, Internet transactions, identity theft, distance contracts, home shopping, television advertisements, door-to-door sales, and telephone solicitations. Using real-life examples, sample complaint letters, and an appendix of further examples, this easy-to-read book empowers everyday people to become effective self-advocates in an increasingly consumer-driven society.

1

Introduction

Chapter 1 introduces you to the big picture about consumer law. Modern consumer law has evolved out of centuries of experience and must continue to evolve into the twenty-first century. The values and needs of society have transformed businesses from entities that serve the interests of only their shareholders to those that serve the public interest as well. Modern consumers are indebted to the consumer activists of earlier eras who took direct action to establish consumer rights, including the creation of governmental units for consumer protection.

The rest of the chapters of this book provide you with practical legal strategies for taking direct action to protect your rights in consumer transactions. Each chapter explains your rights, focusing on what practical steps you can take to protect them. Although you cannot learn all consumer rights and remedies from this book, you will have the basis for taking action to resolve many consumer complaints. Even if you decide to retain a lawyer, you will gain a basic understanding of consumer law rights, which will help you to effectively use legal services and win your case.

The chapters in Part I explain how self-help remedies enable you to obtain individual justice in the consumer marketplace. Chapter 2 is a comprehensive guide on how to take direct action by filing private lawsuits and complaints to vindicate your rights under state or federal consumer law. Chapter 3 provides specific information on what you need to know before you go to small claims court. Chapter 4 gives you guidance on finding an attorney and using his or her services effectively. The emphasis of this book is on self-help, but in some cases, it is necessary to retain a lawyer, notably in products liability, consumer class actions, bankruptcy, and medical malpractice actions.

Chapter 5 is a guide to mandatory arbitration and alternative dispute resolution in consumer transactions. Businesses of all types, from nursing homes, employers, financial services companies, and countless other companies selling goods or rendering services to consumers often present consumers with arbitration agreements. When the parties agree to arbitration, a third party decides the hearing and settlement of their dispute by agreement. When consumers agree to arbitration, they are giving up their right to a jury trial and other important legal rights before a dispute has arisen. This chapter explores the advantages and disadvantages of alternative means of dispute resolution.

Part II focuses on your rights and liabilities when it comes to consumer contracts, tort actions, and defective products. Chapter 6 arms you with knowledge about how to protect your rights and avoid infringing the rights of others in commonly occurring consumer problems. Chapter 7 introduces you to your rights and remedies in consumer transactions resulting in personal injury. The remainder of the book applies all of these general principles to common problems that confront many Americans such as: “Automobile Sales, Services, and Financing” (Chapter 8), “Obtaining Credit” (Chapter 9), “Banking, Credit Cards, and Debit Cards” (Chapter 10), “Credit Reports and Discrimination in Lending” (Chapter 11), “Your Debtor’s Rights and Remedies” (Chapter 12), “Protecting Home Sweet Home” (Chapter 13), and “Consumer Protection in Cyberspace and Identity Theft” (Chapter 14). The theme of each substantive chapter is that informal resolution of consumer problems is often the best option.

Consumer class action is one avenue not covered in this book for consumers. That vehicle, which has been advancing rapidly in recent years, enables hundreds, sometimes thousands, of consumers victimized by shoddy products to join in a single suit against the company that has caused them harm. A class action lawsuit is a highly technical, but extremely powerful, device that always requires an experienced attorney. Because it enables a large group to sue for their combined damages, the potential recovery—and the socially beneficial effect of the suit—may be large.

Overview of Consumer Law

A “consumer” is an individual who enters into a transaction primarily for personal, family, or household purposes. The term consumer product is normally used for items purchased for personal, family, or household purposes.¹

Countless Federal Trade Commission (FTC) regulations as well as hundreds of state and federal statutes governing such diverse topics as discriminatory credit, credit card charges, product warranties, door-to-door sales, and telemarketing, employ this definition. If you are purchasing goods or services outside your trade, profession, or occupation, you are a consumer protected by many mandatory consumer protection laws at the state and federal levels.

“Consumer transactions” may be broadly defined as the advertisement, offer for sale, sale or distribution of any merchandise or service to an individual for purposes that are primarily personal, family, or household. Consumer protection statutes are enacted by Congress and state legislatures, whereas the common law is judge-made law. If you are purchasing goods and services as part of your business, trade, or profession, the Uniform Commercial Code (UCC) and the common law will likely govern these transactions.

Consumer protection comprises public regulations of food, drugs, and products, as well as private remedies including class action lawsuits for defective goods, products, and services. American consumer law includes private remedies and public regulation of consumer transactions. In order to file a consumer lawsuit, you must establish the merchant’s or creditor’s liability. You are entitled to statutory or common law remedies if a seller delivers nonconforming goods, a property owner fails to return a security deposit, or a creditor fails to give you statutorily mandated disclosures before lending you money. A growing number of federal and state statutes, as well as the common law, help you obtain redress for economic losses, damages, or injuries arising out of consumer transactions. Consumer law is a matter of personal and corporate responsibility for causing damages or injuries. Judge-made laws, such as the common law of contracts and torts, supplement state and federal statutes.

Consumer law also prevents, punishes, and deters false, misleading, or deceptive acts or practices. Fraudulent trade practices, such as tampering with odometers, fraudulent packaging of products, or marketing dangerously defective consumer products deserve civil penalties by federal and state regulators. Even weight loss advertisements in major media outlets frequently employ dubious weight loss claims that constitute misrepresentation or outright fraud. Lenders who rip off taxpayers cheat all American taxpayers.

Many Americans are unaware of how to register a complaint about fraudulent business practices with federal and state agencies. The primary emphasis of this book is to help you vindicate your consumer rights and remedies, even if you cannot afford a lawyer, which is typical of most American consumers. Contingency fee lawyers will not find the typical consumer law case to be cost-justified, which is why you need knowledge of consumer law to take direct action.

Consumer law in the twenty-first century gives you rights and remedies not found in an earlier era. Prior to the last half of the twentieth century, the ethic was caveat emptor—buyer beware. In a society without consumer protection, you would have had to put up with systematic fraud such as odometer tampering, the sale of flood-damaged cars, discriminatory mortgages, and unregulated businesses and services. The consumer law protections you enjoy today are the result of a larger social movement by consumer activists, muckraking journalists, and brave individuals to uncover predatory practices that target low-income and middle-income consumers. Today, consumer law protects all Americans, though many statutes still specifically highlight systematic social problems experienced by Americans with limited means. However, as long as you are purchasing goods or services in your personal, family, or household capacity, you have all local, state, and federal statutory protections as well as common law rights, which are discussed in the subsequent chapters of this book.

Consumer law includes two components: public consumer law and private consumer regulation. The distinction between public law and private law deals with the difference between regulation and litigation. The FTC and other federal and state agencies enforce public consumer law, whereas consumers litigate by filing private civil actions. At the state level, the attorney general (or designated agency) has the primary role of enforcing statutes prohibiting unfair and deceptive acts and practices in consumer transactions. Federal and state agencies regulate and file criminal and civil actions on behalf of the consuming public. In contrast, private consumers file individual lawsuits to vindicate their rights. Private product liability actions are necessary when manufacturers breach their fiduciary duty by failing to protect consumers by adequately testing products.

Public Consumer Law

Public consumer law is a subset of administrative law that governs the relationships between the business community and the government. Federal and state agencies enforce public law consumer regulations through civil penalties as well as criminal law fines that go to the state or federal treasury. The executive branch of our government enforces administrative law, whether at the state or federal levels. Government regulators or prosecutors assess civil or criminal penalties against companies that charge excessive credit charges, roll-back odometers, or “flip” home mortgages, and they redress other public consumer law abuses discussed in this book. The FTC, the Securities and Exchange Commission (SEC), and other federal and state agencies are playing an increasingly prominent regulatory role protecting consumers in cyberspace, which is the subject of Chapter 14. The Federal Bureau of Investigation (FBI), for example, arrested a former employee of Internet Wire for writing a bogus news release about shares of Emulex common stock. That false communication caused countless investors to suffer economic injuries.

The public law of consumer protection is one of the broadest fields of law that protects you in the event of consumer bankruptcy, shoddy service contracts, fraudulent automobile repairs, used car warranties, and countless other unfair and deceptive acts and practices. Consumer law also covers consumer rights and remedies in alternative dispute forums such as arbitration, mediation, and small claims courts. The public branch of consumer law rids the marketplace of unfair and deceptive trade practices and acts harming all Americans. Public state and federal agencies have well-established mechanisms for investigating consumer complaints. You can help serve the public interest by making consumer complaints, which call marketplace abuses to the attention of government officials.

Your single best source for federal statutes, regulations, and rules is the Internet. Every consumer protection agency maintains a website with comprehensive information about public consumer law. The FTC website displays information on hundreds of statutes that it enforces and administers, including the Truth in Lending Act (TILA; Title I of the Consumer Credit Protection Act), the Consumer Leasing Act (CLA), and the Fair Debt Collection Practices Act (FDCPA), to name just a few.²

Every jurisdiction has enacted scores of consumer laws protecting you in your capacity as a consumer. Every state has enacted general consumer protection statutes arming you with remedies to redress unfair and deceptive trade practices. In addition, specific state laws address particular programs such as garnishment—a creditor’s attachment of a portion of your wages or property to repay a debt. The amount that a creditor may garnish is a matter of state law. In addition, creditors may seize your real or personal property to enforce a security agreement or lien on sales or services. In almost every consumer case, one must consider both federal and state statutes. The FTC, the Consumer Product Safety Commission (CPSC), the U.S. Postal Service (USPS), and the Food and Drug Administration (FDA) are the chief constables of consumer protection among hundreds of federal agencies protecting consumers. You can make direct consumer complaints to these federal agencies; complaint forms are available online. (See http://www.ftc.gov.)

State legislatures around the country enacted general purpose consumer protection statutes punishing and deterring unfair and deceptive trade practices acts in the 1960s and 1970s. Consumers, for example, may recover attorney’s fees under a lemon law if they are the prevailing party in either a lawsuit or arbitration proceeding. All but a few states operate websites where you may download consumer protection statutes and their implementing regulations. California, New York, and Massachusetts are among the states that accept online complaints and provide you with an easy-to-use online complaint form that will save you postage and time.

Public consumer law also includes state enforcement by consumer protection divisions of state attorneys general or consumer affairs bureaus of state agencies. Your state’s attorney general or designated agency is the place to lodge complaints about state consumer law rules and regulations. You can learn more about your state’s consumer protection units by doing a simple Google search to locate your state’s consumer protection website. Specific state statutes address everyday consumer transactions, including used car sales, the labeling of commodities, car repair, the packaging of goods, and the sale and lease of goods, among many other commercial transactions.

Local consumer protection agencies at the city or county level enforce state regulations in California, New York, Massachusetts, and other consumer-friendly jurisdictions.

Many state attorneys general devote significant resources to public education, including useful practical guides on how to protect your rights. Keep in mind that the purpose of public consumer law, at the federal and state level, is to detect and punish conduct inimical to a large number of consumers, not just the individual.

To obtain an individual remedy, you need to turn to private consumer law. Fortunately, the majority of s...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface and Acknowledgments
• List of Acronyms and Abbreviations
• 1 Introduction
• PART I: PRIVATE CONSUMER REMEDIES
• PART II: COMMON LAW’S CONSUMER PROTECTION
• PART III: SPECIFIC CONSUMER PROTECTION
• Appendixes
• Index
• About the Author