Anshul Dogra
What is a Consumer?
The definitions of a “consumer” under state and federal law basically have various key elements in common. A consumer is an individual (meaning someone who is not a business or other organization) who purchases or leases goods and services for personal or household utilization. Many laws draw a distinction between transactions intended for personal or household use and those intended for business use. Consumer law protects personal and household purchases, leases, and other transactions.
Anyone who acquires goods, pay for services, rents a home or other type of property, makes purchases on credit, keeps money in a bank, or engages in any of the nearly infinite other types of commercial activity in our society is a “consumer.” An extensive body of consumer law has developed at the state and federal levels to safeguard consumers from fraud and other deceptive practices.
State attorneys general ordinarily implement state consumer protection laws, often through divisions established to focus exclusively on consumer issues. Individual consumers can implement some consumer statutes on behalf of the state through “private attorneys general statutes.” Once a plaintiff files suit under one of these statutes, the state must decide whether to take over prosecution of the lawsuit. If it refuses to do so, the individual plaintiff may continue to pursue the case. Either way, the plaintiff is authorized to a percentage of damages and recovery of attorney’s fees from an unsuccessful defendant.
At the federal level, various agencies investigate violations of consumer statutes, and they occasionally file civil suits to enforce these statutes. The Federal Trade Commission (FTC), the Department of Justice, and the Consumer Product Safety Commission are three of the significant and most important agencies charged with enforcing federal consumer law. The FTC handles many well-known programs, such as the “Do Not Call List” targeting telemarketers.
Many state and federal agencies permits consumers to report violations of consumer protection statutes. If the relevant agency does not take action, the consumer may be able to file a suit to retrieve any damages.
Class action litigation allows large numbers of consumers with alike claims against one or more common defendants to join their cases into a single lawsuit. This is particularly favourable when individual consumers might not be able to afford to litigate the claims on their own.
Small claims courts are accessible to consumers whose claims do not have a huge amount of damages, and who want to assert their rights in a less formal setting than the general court system.
Deceptive Practices –
An act or practice is deceptive when it meets the following criteria:
- A representation, omission, or practice misleads or is likely to mislead the consumer.
- A consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances.
- The misleading representation, omission, or practice is material.
The term “unfair trade practice” relates the use of deceptive, fraudulent, or unethical methods to attain business advantage or to cause injury to a consumer. Unfair trade practices are regarded unlawful under the Consumer Protection Act. The motive of the law is to ensure that consumers have the opportunity to make informed, rational decisions about the goods and services they purchase.
Unfair trade practices include false representation of a good or service, targeting vulnerable populations, false advertising, tied selling, false free prize or gift offers, false or deceptive pricing, and non-compliance with manufacturing standards. Alternative names for unfair trade practices are “deceptive trade practices” or “unfair business practices.”
Section 5(a) of the Federal Trade Commission Act forbids “unfair or deceptive acts or practices in or affecting commerce.” Per the rule, unfair practices are those that give rise to, or are likely to give rise to, injury to consumers, those that consumers cannot avoid, and those in which the benefits of the product or service do not outweigh the deception. Deceptive practices are defined as those in which the seller misrepresents or misleads the consumer, and the misleading practice is substantial. The Federal Trade Commission (FTC) is a federal agency that bring to bear consumer protection laws. Consumers may seek recourse for unfair trade practices by suing for compensatory or punitive damages. Plaintiffs do not have to prove intent. Showing that the practice itself was unfair or deceptive is sufficient.
Consumer Fraud –
Consumer fraud is basically defined as deceptive business practices that cause consumers to tolerate financial or other losses. The victims be of the opinion that they are participating in a legal and valid business transaction when they are actually being defrauded. Fraud against consumers is often related to false promises or inaccurate claims made to consumers, as well as practices that directly cheat consumers out of their money.
The Federal Trade Commission accepts complaints about businesses that have possibly committed fraud. In cooperation with law enforcement, the agency investigates fraud and unfair business practices against consumers.
Consumers may experience misrepresentations or fraud during their interactions with numerous types of businesses. Professionals in specialized industries have a knowledge advantage over the ordinary person, which they may exploit. If you have been defrauded or deceived by an unscrupulous professional or business, you should know your rights under federal and state law. You may be able to bring a civil claim for damages in addition to reporting the matter to the appropriate government agency for investigation.
The situations in which consumer fraud can emerge are nearly countless, but this is an overview of some common examples.
1-Advance Fee Fraud:-
Advance fee fraud, also called upfront fee fraud, is any scam that, in exchange for a fee,
Promises to send you money, products, or services; Offers you the opportunity to participate in a special deal; Asks for your assistance in removing funds from a country in political turmoil; or Asks for your assistance to help law enforcement catch thieves. Whatever the scammers call the upfront fees (membership fee, participation fee, administrative or handling fee, taxes) all have one thing in common: the victims never see their money, or the scammers, again. Advance fee schemes come in many forms.
2-Credit Card Fraud:-
Similar to identity theft, credit card fraud can involve the theft of your personal financial information or the theft of specific credit cards. Thieves may steal tangible cards, or hackers may breach the computer systems of businesses that store the financial information of their customers. This can result in debts based on purchases that you did not make, as well as damage to your credit. Under a federal law, the Fair Credit Billing Act, you will not be held accountable for inaccurate or fraudulent credit card charges if you promptly dispute them. Read more here about credit card fraud.
3-Auto Dealer Fraud:-
A manufacturer may be held accountable for defects in a car or a car part, but auto dealers may deceive consumers regarding the condition or price of a car. You should make sure to carefully examine any new or used car that you are considering buying and make sure that you are satisfied with the integrity of the dealer. Some dealers may deceive consumers by including hidden fees, using bait and switch schemes, selling a used car as a new car, claiming that a car has features that it does not have, or hiding information about a car that a reasonable consumer would want to know. Other violations may relate to financing the purchase. Read more here about auto dealer fraud and how to protect yourself.
4-Mortgage Fraud:-
Lenders sometimes try to exploit homeowners who are concerned about paying off a mortgage. Predatory lending may involve requiring unaffordable loans based on a borrower’s assets, making misrepresentations to borrowers, or encouraging a borrower to refinance a loan so that the lender can receive additional fees. However, some forms of mortgage fraud are perpetrated not by lenders but by third-party scammers. They may try to convince a homeowner who fears foreclosure that they can save their home by transferring the property to a third party and then buying it back. Or they may tell a homeowner that they can negotiate a loan modification in exchange for a fee, only to take no action, which can result in foreclosure. Read more here about common types of mortgage fraud.
5-Telemarketing:-
You probably are familiar with unsolicited phone calls from representatives of companies trying to sell you something that you do not want. (You also may receive spam emails in your inbox and junk mail in your mailbox each day.) A federal law known as the Telephone Consumer Protection Act has placed certain restrictions on telemarketers. The National Do Not Call Registry allows consumers to remove their phone numbers from the call lists of telemarketers, although it exempts certain types of callers. You can sue for violations of the Telephone Consumer Protection Act and related laws. Read more here about your rights regarding telemarketing.
6-Construction Fraud:-
Your home carries immense financial and emotional value, and you may invest your hard-earned money in improvements or repairs to it. However, general contractors, specialty contractors, and even builders or architects may engage in fraud or misrepresentations. They may attempt to charge clients for services and products that were not covered in a contract, deceive consumers about the materials used or permits required, or file fraudulent mechanic’s liens, among other examples. Many state laws protect homeowners from these practices and allow them to recover damages if they have been subjected to scams. Other scammers unfortunately take advantage of people whose homes have been damaged or destroyed in natural disasters. Read more here about fraud involving the construction industry.