chapters 22, 23, 24 Flashcards
Know the difference between unfair/deceptive advertising, and “puffery”
unfair/deceptive advertising, which would mislead a reasonable consumer
“puffery” which does not violate FTC rules
Know the several different corrective actions which may be taken by the FTC when it determines that a company has engaged in deceptive advertising
FTC Orders and Remedies. If the FTC succeeds in proving that an advertisement is unfair or deceptive, it usually issues a cease-and-desist order requiring the company to stop the challenged advertising. In some circumstances, the FTC may also require counteradvertising, in which the company advertises anew—in print, on the Internet, on radio, or on television—to inform the public about the earlier misinformation. The FTC sometimes institutes a multiple product order, which requires a firm to cease and desist from false advertising in regard to all of its products, not just the product that was the subject of the action.
Damages When Consumers Are Injured. When a company’s deceptive ad involves wrongful charges to consumers, the FTC may seek other remedies, including restitution.
Understand what is meant by “bait-and-switch” advertising
Bait-and-Switch Advertising
The FTC has issued rules that govern specific advertising techniques. One of the most important rules is contained in the FTC’s “Guides Against Bait Advertising.”Footnote
Some retailers systematically advertise merchandise at low prices to get customers into their stores. When the customers arrive, they find that the merchandise is not in stock. Salespersons then encourage them to buy more expensive items instead. This practice, known as bait-and-switch advertising, is a form of deceptive advertising. The low price is the “bait” to lure the consumer into the store. The salesperson is instructed to “switch” the consumer to a different, more expensive item.
According to the FTC, bait-and-switch advertising occurs if the seller refuses to show the advertised item or fails to have reasonable quantities of it available. It also occurs if the seller fails to promise to deliver the advertised item within a reasonable time or discourages employees from selling the item.
Know which kinds of sales are covered by the FTC rules which provide for a three-day “cooling-off” period (right to cancel).
Many states and the FTC have “cooling-off” laws that permit the buyers of goods sold in certain transactions to cancel their sales contracts within three business days. The FTC rule also requires that consumers be notified in Spanish of this right if the oral negotiations for the sale were in that language. The contracts that fall under these cancellation rules include trade show sales contracts, contracts for home equity loans, Internet purchase contracts, and home (door-to-door) sales contracts. In addition, some states have passed laws allowing consumers to cancel contracts for things like dating services, gym memberships, and weight loss programs.
Know which federal agency regulates food product labels
The U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) are the primary agencies that issue regulations on food labeling. These rules are published in the Federal Register and updated annually. For instance, current rules require labels on fresh and frozen fruits and vegetables to indicate where the food originated so that consumers can know if their food was imported.
Know what actions the Consumer Product Safety Commission (CSPC) may take regarding a consumer product which is found to be unsafe
The CPSC’s Authority
The CPSC conducts research on the safety of individual products and maintains a clearinghouse on the risks associated with various products. The Consumer Product Safety Act authorizes the CPSC to do the following:
Set safety standards for consumer products.
Ban the manufacture and sale of any product that the commission believes poses an “unreasonable risk” to consumers. (Products banned by the CPSC have included various types of fireworks, cribs, and toys, as well as many products containing asbestos or vinyl chloride.)
Remove from the market any products it believes to be imminently hazardous. The CPSC frequently works with manufacturers to voluntarily recall defective products from stores.
A tenant is responsible for damages
he may cause (beyond normal wear and tear), but not for normal wear and tear.
Know what a credit bureau (such as Equifax) is required to do by the Fair Credit Reporting Act (FCRA) if a consumer complains to the credit bureau that there may be a mistake in his credit report
Consumer Notification and Inaccurate Information
Any time a consumer is denied credit or insurance on the basis of his or her credit report, the consumer must be notified of that fact. The same notice must be sent to consumers who are charged more than others ordinarily would be for credit or insurance because of their credit reports.
Under the FCRA, consumers can request the source of any information used by the credit agency, as well as the identity of anyone who has received an agency’s report. Consumers are also permitted to have access to the information contained about them in a credit reporting agency’s files.
If a consumer discovers that the agency’s files contain inaccurate information, he or she should report the problem to the agency. On the consumer’s written (or electronic) request, the agency must conduct a systematic examination of its records. Any unverifiable or erroneous information must be deleted within a reasonable period of time.
Remedies for Violations
A credit reporting agency that fails to comply with the act is liable for actual damages, plus additional damages not to exceed $1,000 and attorneys’ fees.Footnote Creditors and other companies that use information from credit reporting agencies may also be liable for violations of the FCRA. Punitive damages may be awarded for willful violations. The United States Supreme Court has held that an insurance company’s failure to notify new customers that they were paying higher insurance rates as a result of their credit scores is a willful violation of the FCRA.Footnote
Know who the Fair Debt Collection Practices Act (FDCPA) applies to, and what debt collection practices are prohibited by the FDCPA.
Requirements
Under the FDCPA, a collection agency may not do any of the following:
Contact the debtor at the debtor’s place of employment if the debtor’s employer objects.
Contact the debtor at inconvenient or unusual times (such as three o’clock in the morning), or at any time if the debtor is being represented by an attorney.
Contact third parties other than the debtor’s parents, spouse, or financial adviser about payment of a debt unless a court authorizes such action.
Harass or intimidate the debtor (by using abusive language or threatening violence, for instance) or make false or misleading statements (such as posing as a police officer).
Communicate with the debtor at any time after receiving notice that the debtor is refusing to pay the debt, except to advise the debtor of further action to be taken by the collection agency.
The FDCPA also requires a collection agency to include a validation notice whenever it initially contacts a debtor for payment of a debt or within five days of that initial contact. The notice must state that the debtor has thirty days in which to dispute the debt and to request a written verification of the debt from the collection agency. The debtor’s request for debt validation must be in writing.
What are the different rules concerning personal property which is: mislaid, lost or abandoned?
Exhibit 23-1
Mislaid, Lost, and Abandoned Property
Mislaid Property Property that is placed somewhere voluntarily by the owner and then inadvertently forgotten. A finder of mislaid property will not acquire title to the goods, and the owner of the place where the property was mislaid becomes a caretaker of the mislaid property.
Lost Property Property that is involuntarily left by the owner. A finder of lost property can claim title to the property against the whole world except the true owner.
Abandoned Property Property that has been discarded by the true owner, who has no intention of reclaiming title to the property in the future. A finder of abandoned property can claim title to it against the whole world, including the original owner.
Understand the difference between ordinary bailments, and special bailments.
Also, you should know the 3 kinds of ordinary bailments
What is the bailee’s legal responsibility (“standard of care”) for each one?
Bailments are either ordinary or special (extraordinary). There are three types of ordinary bailments. They are distinguished according to which party receives a benefit from the bailment. This factor will dictate the rights and liabilities of the parties, and the courts use it to determine the standard of care required of the bailee in possession of the personal property.
A business is likely to engage in some special types of bailment transactions in which the bailee’s duty of care is extraordinary and the bailee’s liability for loss or damage to the property is absolute. These situations usually involve common carriers and hotel operators. Warehouse companies have a higher duty of care than ordinary bailees but are not subject to strict liability. Like carriers, warehouse companies are subject to extensive regulation under federal and state laws, including Article 7 of the UCC.
Bailment for the sole benefit of the bailor. This is a gratuitous bailment (a bailment that involves no consideration) for the convenience and benefit of the bailor. Basically, the bailee is caring for the bailor’s property as a favor. Therefore, the bailee owes only a slight duty of care and will be liable only if she or he is grossly negligent in caring for the property.
Bailment for the sole benefit of the bailee. This type of bailment typically occurs when one person lends an item to another person (the bailee) solely for the bailee’s convenience and benefit. Because the bailee is borrowing the item for her or his own benefit, the bailee owes a duty to exercise the utmost care and will be liable for even slight negligence.
Bailment for the mutual benefit of the bailee and the bailor. This is the most common kind of bailment and involves some form of compensation for storing property or holding property while it is being serviced. It is a contractual bailment and may be referred to as a bailment for hire or a commercial bailment. In this type of bailment, the bailee owes a duty to exercise a reasonable degree of care.
Besides the land itself, what other things are usually considered part of the real property?
Real property consists of land and the buildings, plants, and trees that are on it. Real property also includes subsurface and airspace rights, as well as personal property that has become permanently attached to the real property. Whereas personal property is movable, real property—also called real estate or realty—is immovable.
An owner of real property in “fee simple” is subject to what government restrictions?
The rights that accompany a fee simple include the right to use the land for whatever purpose the owner sees fit. Of course, other laws, including applicable zoning regulations, noise regulations, and environmental laws, may limit the owner’s ability to use the property in certain ways. A fee simple owner cannot build a manufacturing plant on the property if doing so would violate applicable city or county rules and regulations, for instance. Also, a person who uses his or her property in a manner that unreasonably interferes with others’ right to use or enjoy their own property can be liable for the tort of nuisance.
What are the responsibilities of a “life tenant” regarding care of the real property?
A life estate is an estate that lasts for the life of some specified individual. A conveyance, or transfer of real property, “to Alex Munson for his life” creates a life estate. In a life estate, the life tenant’s ownership rights cease to exist on the life tenant’s death.
The life tenant has the right to use the land provided that he or she commits no waste (injury to the land). In other words, the life tenant cannot use the land in a manner that would adversely affect its value.
Compare “tenants-in-common” to “joint tenants,” regarding how ownership passes when one owner dies.
Tenancy in Common
The term tenancy in common refers to a form of co-ownership in which each of two or more persons owns an undivided interest in the property. The interest is undivided because each tenant shares rights in the whole property. On the death of a tenant in common, that tenant’s interest in the property passes to her or his heirs.
Joint Tenancy
In a joint tenancy, each of two or more persons owns an undivided interest in the property, but a deceased joint tenant’s interest passes to the surviving joint tenant or tenants. The right of a surviving joint tenant to inherit a deceased joint tenant’s ownership interest—referred to as a right of survivorship—distinguishes a joint tenancy from a tenancy in common.
