• Recognize laws that protect consumers
• Understand how antitrust legislation benefits consumers

Importance of Consumer Protection Laws

Consumer spending is the largest component of U.S. GDP at about 68% or over $13 trillion.^[1]  The willingness of consumers to spend is essential to the health of the U.S. economy and the country’s relative political stability, prosperity, and quality of life. The purpose of consumer protection laws is to ensure that consumers trust the manufacturers and retailers of goods so that they keep spending their money which drives our economy.

Below, you will learn about some laws that are intended to benefit consumers.

Consumer Protection Laws

In the United States, consumer protection laws are mainly enforced by many different government agencies. Consumer protection legislation includes statutes that address:

• Product Safety
• Consumer Credit
• Automotive Safety

Product Safety

The federal Consumer Product Safety Act (CPSA) established the Consumer Product Safety Commission and authorized the agency to develop and enforce standards, including the right to ban products.^[2] This is the agency that can step in if a product like laundry detergent is found to be contaminated with harmful bacteria,^[3] or a children’s toy is found to be a choking hazard.^[4] While the agency can order a recall of dangerous products, businesses often voluntarily recall products when they become aware of the problem.

In contrast, the Food and Drug Act mandates regulation of food, drugs, cosmetics, biologics, medical products, and tobacco. The FDA’s authority includes public education, investigation, and enforcement. One of the products that has gotten much attention from the FDA is e-cigarettes as a result of vaping brands marketing their products to teenagers. Although the agency required e-cigarette businesses to apply for approval to enter the market, it has been a slow process as businesses use the legal system to challenge the FDA’s efforts to ban products such as Juul’s e-cigarettes.^[5]

Consumer Credit

The federal Fair Credit Reporting Act promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. The act requires credit reporting agencies, such as Experian and Transunion, to allow consumers to review their credit data on file and to verify any information disputed by a consumer. For example, here are some of your rights related to credit reporting:

• You must be told if information in your file has been used against you.
• You have the right to know what is in your file.
• You have the right to dispute incomplete or inaccurate information.

An amendment to the law, the Fair and Accurate Credit Transactions Act, allows consumers to obtain one free credit report (not to be confused with your credit score) annually. A credit report is a summary of your credit history like how you pay your bills. This is formation can be accessed as part of a background check so it can affect whether you get a job. Businesses use this information to decide whether to loan you money (like a mortgage), give your credit (like a credit card), sell you insurance, or rent you a home. If your credit history shows problems paying your bills, it can cause a lender or credit card company to offer you higher interest rates.^[6]

To request your free credit report, you can visit Annual Credit Report’s website.

Automotive Safety

The Highway Safety Act established the National Highway Traffic Safety Administration to enforce vehicle safety and performance standards.^[7] This agency can issue recalls in cases of manufacturing or design defects in cars. It is also involved with educating the public about safe driving practices such as using seat belts and car seats for children.

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