Consumer protection is the effort to promote the interests of buyers of goods and services. It seeks to protect consumers from unsafe products, deceptive advertising and sales methods, and unfair business practices. It also tries to provide accurate information about products so that consumers can make informed purchasing decisions. Consumer advocates (supporters) urge businesses and governments to deal with the concerns of consumers. They also help consumers receive compensation for damages or injuries caused by faulty products. Efforts to protect consumers are sometimes called the consumer movement or consumerism.
The actions of individual consumers play a significant role in consumer protection. However, the movement’s most visible activities are carried out by consumer organizations. Such organizations include the Consumer Federation of America, the Consumers’ Association of Canada, and Consumers International. These and other groups have helped bring about government regulations on the packaging and labeling of food, the marketing of cigarettes, the manufacturing of automobiles, and numerous other issues that affect consumers.
The consumer movement also includes the efforts of businesses to regulate themselves and to protect their customers. For instance, businesses in many cities operate better business bureaus, which protect the public from unfair business practices. Many companies also offer warranties and money-back guarantees to ensure consumer satisfaction. Most warranties are statements that promise repair, replacement, or a refund if a product fails to perform as the manufacturer said it would. A money-back guarantee promises a refund if the buyer is not completely satisfied.
The consumer’s rights
Consumer advocates believe consumers have several basic rights. Such rights include (1) the right to safety, (2) the right to information, (3) the right to choose, and (4) the right to be heard. Consumers also have certain responsibilities. For example, they should use a product only for its intended purpose, and they should follow the instructions provided with the product.
The right to safety.
Countries throughout the world have laws that regulate the safety of goods and services. For instance, the Consumer Product Safety Act, originally passed in 1972, seeks to protect the people of the United States against unsafe consumer products. In the United Kingdom, the General Product Safety Regulations set safety standards for many consumer products.
Government agencies may test products, inspect factories, investigate complaints, and order manufacturers to recall (take back) unsafe products. The United States, for instance, has a number of government agencies that promote consumer safety. They include the Food and Drug Administration, which regulates the safety of food, drugs, and cosmetics; the National Highway Traffic Safety Administration, which administers safety requirements for automobiles and related products; and the Consumer Product Safety Commission, which sets standards for many household products.
Despite the efforts to promote consumer safety, product-related accidents do occur. In such cases, many countries have systems through which consumers can receive compensation for injury or loss.
The right to information.
Most people agree that consumers have a right to thorough and truthful information about the goods or services they buy. Consumers rely on information they receive through advertisements, product packaging and displays, sales presentations, websites, and other means.
Advertising messages.
Government agencies in many countries seek to eliminate false advertising and other deceptive sales practices. In the United States, for instance, the Federal Trade Commission (FTC) monitors the truthfulness of claims made in advertisements. If a claim cannot be verified, the FTC may order the business to stop using the advertisement. In some cases, the FTC may order the business to present accurate information through corrective advertising.
Some nongovernment organizations also work to regulate advertising and sales practices. Advertising Standards Canada, for instance, is a regulatory organization operated by the advertising industry in Canada.
Product information.
Many countries have laws that protect the consumer’s access to truthful and thorough product information. In the United States, for instance, the Fair Packaging and Labeling Act of 1966 requires that the package used for a product provide certain information. This information includes the identity of the product, the manufacturer’s name and address, and the net quantity of the contents.
The consumer’s right to information is most widely recognized in the area of food products. Laws in many countries require food producers to provide certain information on the labels of their products. This information usually includes the name of the product and of its manufacturer, packer, or distributor; the amount of food in the package or container; a complete list of ingredients; and the name of any chemical substance added. Some countries may require additional information, such as recommended storage temperatures for frozen foods.
Many food stores use unit pricing, which indicates a product’s price per ounce or per gram. This system helps consumers determine the best buy among several products in packages of different sizes. Food manufacturers also inform consumers by freshness labeling, also called open dating. A package is stamped with a date, which is the last day the product should be sold or used.
Consumers can also receive information from consumer organizations, such as Consumers Union in the United States; Which? in the United Kingdom; and the Australian Consumers Association. Such organizations test a wide variety of products and publish reports in magazines, newsletters, and online publications. Some groups also encourage the development of consumer education programs. Such programs emphasize the rights of consumers and provide information about managing money and making wise purchases.
The right to choose.
Consumers benefit from the ability to choose from among a variety of products. To protect this ability, the consumer movement has long sought to promote free and fair competition among businesses.
The consumer’s right to choose can be threatened by mergers, collusion, and exclusionary practices. A merger is the joining of multiple business firms into one company. Although some mergers have beneficial effects for consumers, others interfere with competition and reduce consumer choice. Collusion involves coordinated strategies among businesses to take advantage of consumers. Price fixing arrangements—in which businesses agree on a noncompetitive price they will charge for products—are a common form of collusion. Exclusionary practices are actions through which one business seeks to drive out or keep out its competitors.
Many countries have antitrust laws and specialized government agencies that work to protect competition. In the United States, for instance, the Sherman Antitrust Act of 1890 forbids monopolies, price fixing, and other noncompetitive practices. Canada’s main antitrust law is the Competition Act.
The right to be heard.
Consumer groups, governments, and businesses have established a variety of ways in which consumers can make their voices heard. Some countries have public officials who represent consumers and assist in the development of government policies. In the United Kingdom, for instance, the National Consumer Council seeks to ensure that the interests of consumers are brought to the attention of policymakers. Many businesses have special consumer affairs offices that receive input from consumers. Better business bureaus in many communities also bring attention to consumer issues. The bureaus may offer mediation or arbitration services to settle consumer disputes.
The right to be heard also involves the ability of consumers to bring their concerns before the courts and receive fair compensation for any loss or injury. In many countries, consumers can sue by means of a product liability suit or a malpractice suit. A product liability suit is brought against a manufacturer or seller for damage or injury that is caused by a product. A malpractice suit is filed against an individual or a company in a service field, such as medicine or dentistry. In some cases, a large number of consumers can combine their claims and file a class action suit. Many countries have small-claims courts that handle minor consumer complaints quickly and inexpensively.
Other consumer rights.
Many consumer advocates identify additional consumer rights. Such rights may include the right to satisfaction of basic needs and the right to a healthy environment. Some consumer groups have pressed for rights in particular areas of activity, such as patients’ rights and travelers’ rights.
History of consumer protection
Most early buyer-seller relations functioned under the principle of caveat emptor, a Latin phrase meaning let the buyer beware. People who purchased goods from shopkeepers or craftworkers were responsible for detecting faulty merchandise. Some early efforts to protect consumers emerged around the A.D. 1000’s, as European craft guilds (associations) established standards for products created by their members. Other forms of consumer protection included laws against usury, the lending of money at an excessive rate of interest.
Beginnings of modern consumerism.
During the late 1800’s and early 1900’s, the sale of many impure and unsafe products led to increased consumer interest in standards of quality. In the United States, a number of writers called muckrakers exposed abuses by various companies. For example, the novelist Upton Sinclair wrote The Jungle (1906), which described filthy conditions in the meat-packing industry. This book helped lead to the federal Food and Drugs Act of 1906.
The growth of large corporations and monopolies also contributed to an increased interest in consumerism. These giant business companies lacked competition from other firms, and so they controlled the supply of products and charged high prices. They also marketed many low-quality products. In the late 1800’s, the U.S. Congress passed the first antitrust and antimonopoly laws to protect consumers from these powerful companies. A number of other countries have also developed antitrust laws.
During the late 1800’s and early 1900’s, many businesses began hiring advertising agencies to carry out large-scale campaigns to promote their products. The consumer movement, in turn, increasingly emphasized the customer’s need for truthful and adequate information. Consumer organizations began testing and rating products for the benefit of consumers. The first such national organization in the United States was Consumers’ Research, Inc., which was incorporated in 1929. A group of employees from that organization formed Consumers Union in 1936.
Growth of the movement.
In 1962, U.S. President John F. Kennedy proposed the idea of a consumers’ bill of rights. In the following years, Congress passed consumer protection laws in a wide range of areas, including the safety of drugs and the terms of product warranties.
The consumer movement gained additional attention as a result of efforts by various writers and activists of the 1950’s and 1960’s. The American writer Vance Packard, in The Hidden Persuaders (1957) and The Waste-makers (1960), discussed business techniques designed to increase people’s desire for products. Ralph Nader, an American consumer activist, argued in Unsafe at Any Speed (1965) that many automobiles were unsafe. His book led to the establishment of new safety standards for motor vehicles. Nader and his group of investigators, sometimes called Nader’s Raiders, also raised awareness of safety issues involving other consumer products.
During the 1970’s, a period of inflation (rising prices), consumers became increasingly concerned with the cost and quality of products. Consumer boycotts of beef, coffee, and sugar succeeded in temporarily lowering the prices of those products in the mid-1970’s. During the 1980’s, increased concern for health led consumers to demand more nutrition information on food labels. In the 1990’s and early 2000’s, the consumer movement addressed a number of new issues. Such issues included the health risks of genetically modified foods and the financial risks of Internet fraud.
Consumer protection today.
Consumer organizations today play a larger role than ever before. Various groups work to educate consumers, influence government policies, and bring lawsuits on behalf of consumers. Such efforts have had major effects on business and industry. Most companies today recognize that long-term success depends heavily on the safety and satisfaction of consumers.
