Bauer Consumer Protection Fall 2015
8/24/15
· Consumer protection is partly based on contracts and torts.
· Doctrine of Caveat Emptor:
o Buyer beware (buy as is).
o Burden is on the buyer to inspect but it also expects buyers to be intelligent about the products they are buying.
o Modern Era à Most of our purchases occur online or in a magazine where you can’t see the product and can’t sample it etc.
o It’s hard for consumers to get information all on their own.
o For example, no one is required to offer a warranty but most products offer a warranty and it’s required to be displayed although most times they are not.
o The nanny state à overregulating government.
§ Problematic for a lot of reasons à at some point we have to accept some personal responsibility to make intelligent decisions If the government assumes most of these responsibilities it will cost way more than the damages on the economy. The government can’t just do it all so we have a modified caveat emptor to this day but make sure that whoever is selling you something is telling you everything so that you can make your own intelligent decision about it.
o We want businesses to give enough information so people can make intelligent decisions such as disclosing return policy, ingredients, guarantees, warranties, etc. But this is often a struggle. Why? Financial industry claims that financial literacy is so bad that the more information they disclose the more confused people get. So they’re trying to create a veil of ignorance.
· Advertisements
o It’s a matter of creating certain memory pathways so that it addresses a problem that you didn’t know you had or it suggests something to you so that it seems like a better choice for you.
o Puffery à Think of tag lines
· Financial Instruments
o Credit Cards
o Credit Reporting
o Credit Scores
o Credit Promises
o Credit Interests
· End User License Agreements
· Credit Reports
o Permissible to look at credit reports for employment
o No correlation between your driving and your credit history
o No correlation between your debt and work performance.
o Do you own any of your own information? NOPE!
§ Europeans are calling this the right to be forgotten. The EU has decided that there is a right to be forgotten.
§ In the US the credit reporting agencies that have access to your information own your information bc they write their own laws.
o Are they accurate? No.
o Identity theft.
o As of October, the US is switching in a “half ass way.” Swiping a card and a signature is not good enough. So 10 years ago, in EU, they switched to chip and pin technology. It doesn’t do anything for online purchases and they’re still problematic but stolen credit cards and duped credit cards that you swipe so what the EU did is they created this technology. The chip is powered by the chip reader and it generates a 256 encrypted number that is a one-time generated number that flows through the system and pretty much impossible to duplicate. The EU went one step further and required a pin. This way, no one touches your credit card. But the US thought this was too complicated so we’ll have chip and signature. As of October, if a customer has a card with a chip and the store swipes, then the store is responsible for fraud and the banks no longer absorb the fraud and most merchants do not know this. The stores will respond by charging people to use a credit card.
· Contract law and tort law form the fundamental philosophical foundation of consumer protection.
· If you actually litigate you want to throw in tort and contract COA.
· Why did we need consumer protection law and why aren’t contracts and torts enough? Because the standard of proof is really high. Remedies are not viable because attorney’s fees and costs are not part of contracts at all and barely part of torts. So if you forced consumers to use them, then no one will ever be sued and no one will ever win.
· In contracts there are expressed warranties and implied warranties but they’re hard to prove and win under. There’s also rescission/return. There’s also negligence but really hard to prove. Thus we have consumer protection laws.
· Tort
o Fraud
o Deceit
o Misrepresentation
o Negligence
· Contracts
o Breach
o Implied warranties
o Express warranties
· Consumer Protection (FTC)
o Unfair + Deceptive acts
§ Some states have added à “unconscionable” (FL has done this too)
o FL à Florida Unfair Deceptive Trade Practices Act (FLUDPTA)
8/26/15
· The basic concept of consumer protection
o Unfairness and unconscionable (state consumer protection)
o But what we’re really talking about is deception. That’s the key because caveat emptor still forms the predicate of what we think about (that people should look out for themselves) but if they’re being deceived then they can’t look out for themselves.
· State vs. Federal
o Industrial revolution (NY and PA)
o NYC became the biggest city almost overnight and the supply chain became complicated and people had to bring things from afar so consumer protection was born.
o Federal Trade commission in 1914 primary function was antitrust but it got better defined in the 1930s when the federal government and congress looked at the NY consumer protection law and decided to prohibit unfair and deceptive acts and practices in interstate commerce.
o FTC’s mandate has always been enormous and the way that congress controls it is bc the law is so broad they should’ve narrowed it down but they’ve just made a narrow budget for the FTC.
o So the FTC only go after the biggest things that affect the most amount of people.
o There is one and only one entity in the US tha can enforce the FTC Act but it’s the FTC. So what started to happen in the 50s and 60s is our society became very complicated and there was a lot more consumer fraud.
o The FTC along with the national commission for uniform state laws (uniform law commission) which is the body that creates model codes like the UCC and they created three model consumer protection laws and it’s a little messy probably bc it doesn’t matter. Some states adopt one, some two, some all three, some states added words. So the model law that says unfair and deceptive acts, FL adopted it and added the word unconscionable.
o None of it really matters. In the end, the three laws are very similar.
o The language that comes at the end of every state consumer protection act and it varies from all federal and state law under using this model statute shall be binding precedent in this jurisdiction. The other extreme FL à all federal and consumer protection law shall be persuasive authority.
o Every single consumer protection law in the country allows you to introduce law from other jurisdictions and says it’s either persuasive or binding.
o When you do research for consumer protection law to advance a client’s interest you can look at federal and state courts and other jurisdictions outside of your own can also be very helpful.
o FL has a very active consumer protection program particularly if it involves elders.
o The law is pretty much the same across the country and it’s all about deception.
o State laws are called very different things but most refer to them as little FTC acts.
o The entire theory behind consumer protection is deception, the law says deception, but if you go to the typical state they may have 50 consumer protection laws. There are lots of micro consumer protection laws. What does that mean? It’s geared towards one very specific type of conduct and the theory is still deception but they will mention a specific type of deception. Either a state legislator gets ripped off by a specific type of conduct and then it’s their mission to end it OR some very high power constituent donating money gets ripped off and then they pass a law prohibiting that particular act. If you’re representing a client you have to figure it out, you’ll bring up the major state consumer protection law, you’ll see if there’s a micro consumer protection law, and don’t forget contracts and torts and hope that something sticks. That’s the theory of litigation.
o Almost every state (low 40s) added an additional sentence to their consumer protection law à penalties are higher if it specifically goes after someone because of who they are. It started off that if someone is over the age of (blank) and that person was the target bc of that age then the penalties are much higher (includes Florida). A scam targeted towards elders, for example, has a higher punishment.
§ Disability and veteran status
§ We’re punishing conduct not b
o If something is observable you’re out of luck but that’s not the law in FL or in a slight majority of states.
o Personal property does not have caveat emptor, Caveat emptor slightly exists in property and almost doesn’t exist in other consumer goods
o What do you think about treating personal and real property different? Real property is not a fungible consumer good, houses are considered a large purpose, the more unique and the more expensive it is the more responsibility you have to protect yourself as a buyer. That’s why typically there’s this basic maxim in property that all property is unique and therefore under consumer protection the more unique and the more expensive something is the higher the burden you have unless of course the seller lies.
8/31/15
· Stambovsky
o HAUNTED house as a matter of law
o The house was essentially a tourist attraction so the buyer said that he didn’t want the house.
o The buyer wanted a recession (contractual remedy) based on fraudulent misrepresentation that the house was haunted and the buyers didn’t tell him.
o What was undeniably true about the house is that it was a tourist attraction and the buyers being out of towners, they didn’t know about this fact.
o The sellers made it into a tourist attraction, pushed it, and enjoyed the notoriety that came with it. But the buyers had no way to know that they were buying a tourist attraction.
o Living at the house is inconvenient given that it’s a tourist attraction.
· If a mass murder occurred at the house, the seller has a duty to disclose anything that the buyer cannot physically observe and has no way of discovering it. But the opposite argument could also be made. Maybe a dozen states have laws that specifically require sellers to disclose mass murders (affirmative disclosure).
· The issue is one of a latent defect; unless the state has created a duty then it’s not a defect unless it’s something else like a tourist attraction.
· What if you know a registered sex offender lives next door? You do not have a duty to disclose most things bc it’s not a latent defect in the house and it’s readily available to the public.
· Johnson standard in FL à Required to disclose a material defect but what if you don’t know about it? Well this standard holds sellers to have constructive knowledge on material defects.
· Here we’re talking about stuff homeowners know about and will somehow hurt the value of any variety of products and not just homes.
· Remember the Nanny state, we don’t want to remove all the burdens from buyers of any product bc we want them to be vigilant.
· FTC act and the little FTCs apply to trader commerce as well. IF you sell something once to someone or you barter then it’s not trader commerce (ebay). If your primary source of income is running an amazon or ebay store front then it’s different analysis but otherwise consumer protection laws do not apply to bartering or selling used items once.
· Unfairness is related to safety.
· There are two flexible standards (1) which relates to the buyers; and (2) one with relates to the sellers. Under what circumstances do sellers have greater duty? Professionals and the more expertise that you represent the higher the duty. There’s a split among the states, in the majority consumer protection applies to professionals like doctors and lawyers but in the minority of states licensed professionals are exempt as malpractice takes care of that.
