ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
LESSON 3.2
Government and Consumer Protection
GOALS
►Describe the evolution of the consumer movement.
►Identify government agencies and laws that help
protect consumers.
►Describe different types of products warranties and
how they protect consumers.
Slide 1
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
What is the
Consumer Movement?
 consumer movement – seeks to protect and
inform consumers by requiring such
practices as honest advertising, product
warranties and improved safety standards.
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
The Rise of the
Consumer Movement
►A growing concern as products have become more
complex and difficult for the average consumer to
evaluate
►For example: medicines, foods, electronics
►A growing awareness for the need of better consumer
protection arose in the 1960’s after a book, Silent
Spring, was published (predicted the loss of birds due
to pesticide use)
►The consumer movement (consumerism) exploded in
the 1960’s
Slide 3
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
The Rise of the
Consumer Movement
Why do many people feel that consumers
need protection more now than in the past?
►Today’s more complicated products make them more
difficult to evaluate, leaving consumers vulnerable to
poor-quality or even dangerous goods and services
Slide 4
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
Government Protection
►Federal Trade Commission (FTC) – the most important
federal consumer protection agency.
►Cease-and-desist order – issued by the FTC, this order
requires a company to stop using a deceptive
advertisement.
►Consumer Product Safety Commission (CPSC) – Agency
created to protect consumers from dangerous products.
►Environmental Protection Agency - Agency created to
enforce laws that protect our environment
►State and local protection – for local situations
Slide 5
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
Government Protection
 What federal agencies are charged with protecting
consumers from false advertising, dangerous products,
and pollution?
• FTC protects consumers from unfair or deceptive
business practices
• CPSC protects consumers from dangerous products
• EPA is responsible for protecting the environment
Slide 6
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
The Consumer
Movement Today
►Sierra Club – environmental protection
►Consumers Union – tests products and publishes the
results in Consumer Reports
►News media coverage
Slide 7
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
Warranties
►The Magnuson-Moss Warranty Act
►Passed by Congress in 1975
►Doesn’t require warranties be provided, but specifies how
a warranty must be written if offered
►Divides warranties into 2 types - full warranty or limited
warranty
►Implied warranties
►Even without a written warranty, you are entitled to some
warranty rights
Slide 8
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
Warranties
 What differences are there between full and limited
warranties? How do warranties benefit businesses that
offer them?
 Businesses that offer warranties provide an incentive to
customers to buy products with the stated protection
Slide 9
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3
Warranties
 warranty - a company’s promise that a product will meet
specific standards over a given time period or the
company will repair/replace or give a refund.
 full warranty – a written guarantee that promises the
company will repair/replace a defective product within
a specified time period at no charge.
 limited warranty – a written warranty that does not
meet the standards of a full warranty because of
specified limitations.
 implied warranty – an unwritten guarantee that the
product is of sufficient quality to fulfill the purpose for
which it was designed.
Slide 10
© 2010 South-Western, Cengage Learning