ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3LESSON 3.2Government and Consumer Protection

GOALS►Describe the evolution of the consumer

movement.►Identify government agencies and laws

that help protect consumers.►Describe different types of products

warranties and how they protect consumers.

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

consumer movement – seeks to protect and inform consumers by requiring such practices as honest advertising, product warranties and improved safety standards.

What is the Consumer Movement?

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

The Rise of the Consumer Movement►A growing concern as products have

become more complex and difficult for the average consumer to evaluate►For example: medicines, foods, electronics

►A growing awareness for the need of better consumer protection arose in the 1960’s after a book, Silent Spring, was published (predicted the loss of birds due to pesticide use)

►The consumer movement (consumerism) exploded in the 1960’s

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

The Rise of the Consumer MovementWhy do many people feel that consumers need protection more now than in the past?

►Today’s more complicated products make them more difficult to evaluate, leaving consumers vulnerable to poor-quality or even dangerous goods and services

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

Government Protection►Federal Trade Commission (FTC) – the

most important federal consumer protection agency.►Cease-and-desist order – issued by the

FTC, this order requires a company to stop using a deceptive advertisement.

►Consumer Product Safety Commission (CPSC) – Agency created to protect consumers from dangerous products.

►Environmental Protection Agency - Agency created to enforce laws that protect our environment

►State and local protection – for local situations

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

Government ProtectionWhat federal agencies are charged with

protecting consumers from false advertising, dangerous products, and pollution?

• FTC protects consumers from unfair or deceptive business practices

• CPSC protects consumers from dangerous products

• EPA is responsible for protecting the environment

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

The ConsumerMovement Today►Sierra Club – environmental protection►Consumers Union – tests products and

publishes the results in Consumer Reports

►News media coverage

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

Warranties►The Magnuson-Moss Warranty Act

►Passed by Congress in 1975►Doesn’t require warranties be provided,

but specifies how a warranty must be written if offered

►Divides warranties into 2 types - full warranty or limited warranty

►Implied warranties►Even without a written warranty, you are

entitled to some warranty rights

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

WarrantiesWhat differences are there between full

and limited warranties? How do warranties benefit businesses that offer them?

Businesses that offer warranties provide an incentive to customers to buy products with the stated protection

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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

Warranties warranty - a company’s promise that a

product will meet specific standards over a given time period or the company will repair/replace or give a refund.

full warranty – a written guarantee that promises the company will repair/replace a defective product within a specified time period at no charge.

limited warranty – a written warranty that does not meet the standards of a full warranty because of specified limitations.

implied warranty – an unwritten guarantee that the product is of sufficient quality to fulfill the purpose for which it was designed.

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