How do consumer protection laws keep you and your money safe?
These laws keep predatory financial practices and dangerous products out of the market
Consumer protection laws help keep businesses honest by shielding consumers against companies that operate with unfair, deceptive and fraudulent business practices. These laws have also created a framework for consumers to file complaints against businesses that violate them and for those businesses to be hit with penalties when they violate those laws.
There are a myriad of consumer protection laws in place, including laws that protect consumer credit and privacy.
- Federal and state laws have been put into place to protect consumers from unfair business practices, predatory lending and the inappropriate use of their personal information.
- Some consumer protection laws help people avoid deceptive debt collection practices and harassment by bill collectors.
- The Consumer Financial Protection Bureau, the Federal Trade Commission and other federal agencies oversee protection laws. States have their own agencies that enforce state-based legislation.
Why were consumer protection laws created?
Different consumer protection laws have been put into place at various times throughout history. However, commercial litigation attorney Christian B.W. Stephens of Eckert Seamans says modern consumer protection laws were enacted in the early 20th century and "continued to rise in popularity throughout the century in individual states."
Stephens said these laws generally stemmed from "a desire to improve an individual consumer’s bargaining power and the remedies available to individual consumers and businesses for unscrupulous commercial practices."
Both federal and state government agencies in the U.S. enact and enforce their own consumer protection laws. While the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) oversee most consumer protection laws at the federal level, individual state attorney generals and consumer protection agencies enforce their laws at the state level.
» MORE: What is predatory lending?
What do consumer protection laws protect against?
All consumer protection laws are unique, protecting consumers against fraudulent practices, privacy violations, harassment and more.
"These laws are instrumental in ensuring equity, transparency and accountability within the marketplace while shielding consumers from fraudulent activities, deceptive practices, substandard products and inequitable business practices," explained attorney and consumer advocate Jessica Anvar Stotz.
Consumer warranties and service contracts
Consumer protection laws can help oversee and govern product warranties that aim to repair or replace items that have defects or stop working during the warranty period. These laws can oversee manufacturers' warranties, extended warranties and service contracts.
Consumer privacy laws protect individuals from harassment and having their sensitive personal information shared without their consent. Some consumer protection laws also protect individuals from being contacted in certain situations, including at work or home after certain hours.
Unfair trade practices
Some laws protect consumers from unfair trade practices that can result in financial losses. These laws protect people from businesses that would otherwise use deceptive or fraudulent practices to market their products and services.
There are laws that make it illegal for lenders to discriminate against consumers based on their age, gender, race, religion, marital status and more. These laws also prohibit lenders from performing certain practices like offering less favorable credit terms and closing accounts based on these factors.
Some laws protect consumers' credit information, including preventing the release of information without proper consent. These laws also require lenders, insurance companies and other businesses to notify consumers when information in their credit reports results in adverse actions.
» MORE: How to handle bill collectors
List of consumer protection laws
There are many consumer protection laws in place today, and the most significant ones to know about are at the federal level.
Here's a rundown of the most important consumer protection laws keeping you safe from unfair and deceptive practices, harassment and more.
Equal Credit Opportunity Act
This law prohibits the denial of credit based on these factors and prevents lenders from discouraging applying for credit or offering unfair or less favorable terms based on these factors.
Fair Credit Reporting Act
Finally, the FCRA promotes accuracy and fairness when it comes to the personal information of consumers.
Fair Debt Collection Practices Act
Federal Securities Act
Telephone Consumer Protection Act
The Fair Housing Act
Truth in Lending Act
Which government bodies make consumer protection laws?
Consumer protection laws are put into action at both the federal and state level. The following entities oversee them:
- CFPB: The CFPB is a federal agency that protects individual consumers against unfair, deceptive or abusive practices while penalizing companies that violate the rules and break the law.
- FTC: The FTC also protects consumers against unfair and deceptive practices while protecting the public from unfair marketplace conditions.
- Food and Drug Administration (FDA): The FDA oversees various industries, including food production and pharmaceuticals, to protect consumers against harmful products.
- Individual states: Stotz points out that, at the state level, each state maintains its own consumer protection agency or division entrusted with enforcing state-specific consumer protection laws. "State attorney generals and local consumer protection offices also contribute to the enforcement of these statutes," she said.
What is the intent of consumer protection laws?
Consumer protection laws were instituted with the fundamental objective of safeguarding the rights and interests of consumers in commercial interactions.
What are some things that consumer protection laws cover?
Consumer protection laws vary in scope but can cover credit and credit billing issues, consumer privacy issues, warranties and service contracts, unfair trade practices and more.
Who enforces federal consumer protection laws?
Federal agencies like the CFPB and FTC oversee federal consumer protection laws, whereas individual states have their own agencies to enforce state laws.
- Federal Trade Commission, “ About the FTC .” Accessed Sept. 11, 2023.
- Consumer Financial Protection Bureau, " The Bureau ." Accessed Sept. 11, 2023.
- USA.gov, " State consumer protection offices ." Accessed Sept. 11, 2023.
- Federal Trade Commission, " Businessperson's Guide to Federal Warranty Law ." Accessed Sept. 11, 2023.
- Federal Trade Commission, " Fair Debt Collection Practices Act ." Accessed Sept. 12, 2023.
- Federal Trade Commission, " Protecting Consumer Privacy and Security ." Accessed Sept. 12, 2023.
- Georgetown Law, " Consumer Protection ." Accessed Sept. 12, 2023.
- Consumer Financial Protection Bureau, " What protections do I have against credit discrimination? " Accessed Sept. 12, 2023.
- Federal Trade Commission, " Fair Credit Reporting Act ." Accessed Sept. 12, 2023.
- Food and Drug Administration, " What We Do ." Accessed Sept. 12, 2023.
- Congress.gov, " H.R.4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act ." Accessed Sept. 12, 2023.
- Consumer Financial Protection Bureau, " What laws limit what debt collectors can say or do? " Accessed Sept. 12, 2023.
- Georgetown Law, " Securities Law ." Accessed Sept. 12, 2023.
- Federal Trade Commission, " Gramm-Leach-Bliley Act ." Accessed Sept. 12, 2023.
- Federal Communications Commission, " FCC Actions on Robocalls, Telemarketing ." Accessed Sept. 12, 2023.
- U.S. Department of Justice, " The Fair Housing Act ." Accessed Sept. 12, 2023.
- Federal Trade Commission, " Truth in Lending Act ." Accessed Sept. 12, 2023.
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