Chapter 15
Consumerism
This chapter:
 Defines and discusses the idea of consumerism.
 Describes the protective shield of statutes,
regulations, and consumer law that has risen to
protect consumers since Harvey Wiley’s era.
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Harvey W. Wiley
Opening Case
 In the late 1800s, Harvey W. Wiley, a professor at
Purdue University, began working with Indiana
state officials to detect adulteration in food
products.
 A large, highly competitive food industry applied
new food chemistries using preservatives,
colorings, flavorings, texturizers, and other
additives.
 With few laws to police dishonorable operators,
dangerous, fraudulent, and cheapened products made
their way to market.
 At age 39, Wiley took charge of the Bureau of
Chemistry in Washington, D.C.
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Harvey W. Wiley
Opening Case (continued)
 Wiley began to agitate for a national pure food law.
 Wiley set up an experiment whose participants
were nicknamed the “poison squad.”
 In 1906, Congress finally passed the Pure Food
and Drug Act.
 The Bureau of Chemistry evolved into the Food
and Drug Administration, a powerful agency that
protects public health.
America’s memory of Dr. Wiley has dimmed, but his work still
touches our lives. The law he fought for is the foundation of
modern food and drug regulation.
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Consumerism
 Consumerism is a word
with two meanings:
 A movement to promote
the rights and powers of
consumers in relation to
sellers.
 A powerful ideology in
which the pursuit of
material goods beyond
subsistence shapes
social conduct.
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Consumer
A person who uses
products and
services in a
commercial
economy.
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Consumerism as
an Ideology
 Consumerism describes a society in which
people define their identities by acquiring
and displaying material goods beyond
what they need for subsistence.
 The full emergence of consumerism came
as economic changes interacted with
cultural and social developments.
 Declining influence of religion
 The industrial revolution
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The Rise of Consumerism
in America
 In the 1800s, a commercial economy began to
appear.
 Consumerism in America began with a confluence
of events at the turn of the 20th century.
 Railroads
 Great merger wave of 1896-1904
 Mass production of consumer goods
 Electricity and other new technologies
 Movement of people
 People began to express role and status through
products they consumed.
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Consumerism in Perspective
 Marketing research reveals a widespread,
profound effort to find love, status, and individuality
in products.
 Materialism is an emphasis on material objects or
money that displaces spiritual, aesthetic, or
philosophical values.
 Thorstein Veblen, in his book The Theory of the
Leisure Class, challenged the conventional
economic wisdom that consumers bought goods
for their functional utility.
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Consumerism in Perspective
(continued)
 Complaints about consumerism include:
 It leads to commodification of all parts of life
 It encourages unwise, irrational, and
unproductive uses of money
 Heavy consumption is profligate with natural
resources
 Consuming beyond necessity violates “the idea
the God’s world is already full and complete”
 It distorts our values
 It is a pathology of corporate capitalism
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The Global Rise of
Consumerism
 The ideology of consumerism has risen in
Russia, Asia, Latin America, the Middle
East, and even Africa.
 It may be less a Western than a universal
phenomenon, coming with human nature,
economic progress, and cultural change
interact at a certain moment in a
modernizing society.
 Once it takes hold, consumerism seems
irrepressible, but resistance continues.
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Consumerism as a
Protective Movement
 The idea of collective interest in protecting
consumers dates back to the earliest transactions
between merchants and customers.
 1870s when Populist farmers attacked railroads
 Food and Drug Act of 1906
 The 1960s and 1970s prompted another wave of
legislation to protect consumers and expand their
rights.
 Consumer protection is today a major function of
government.
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The Consumer’s
Protective Shield
 Besides federal laws and regulations, there are
significant protections at the state and local level.
 Every state and local government has extensive
consumer protection laws.
 More than 50 federal agencies and bureaus are
active in consumer affairs.
 These agencies and bureaus are effective despite
changing ideologies in administrations, powerful
critics, budget restraints, and too little staff to meet
all their statutory mandates.
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The Consumer Product
Safety Commission
 Created by Congress in 1972.
 Directed by six major statutes that mandate it to:
 Protect the public against unreasonable risks of injury and
death associated with consumer products
 Help consumers evaluate the safety of products
 Develop uniform safety standards for products
 Promote research and investigation related to productrelated deaths, illnesses, and injuries.
 Often cooperates with business.
 Regulates every consumer product except guns,
boats, planes, cars, trucks, foods and drugs,
cosmetics, tobacco, and pesticides.
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The National Highway Traffic
Safety Administration
 Created by Congress in 1966 to:
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Mandate minimum safety standards for
automobiles, trucks, and their accessories.
Establish fuel economy standards.
Administer state and community highway
safety grant programs.
Conduct research on, and development and
demonstration of, new vehicle safety
techniques.
 No other agency has such extensive
controls over a single product.
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The Food and Drug
Administration
 Evolved out of the authority established by
Congress in the Food and Drug Act of 1906.
 Nineteen specific areas of responsibility.
Examples:
 Regulate the composition, quality, safety, and
labeling of food, food additives, and cosmetics.
 Require premarket testing of new drugs and
evaluate new drug applications and requests to
approve drugs for experimental use.
 Develop standards for the safety and
effectiveness of over-the-counter drugs.
 Inspect and license manufacturers of biological
products.
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Other Consumer
Protection Agencies
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The Federal Trade Commission
The Environmental Protection Agency
Occupational Safety and Health Administration
The Food and Safety Inspection Service
The Securities and Exchange Commission
The Department of Health and Human Services
The Equal Employment Opportunity Commission
The Federal Deposit Insurance Administration
The Pension Benefit Guaranty Corporation
Transportation Security Administration
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Product Liability Law
 Beyond regulation, a major restraint on
business is the ability of consumers to file
product liability lawsuits when they are
harmed.
 The tort system is designed to provide
compensation to victims and to deter future
misconduct.
 Product liability is the branch of tort law
that covers redress for injuries caused by
defective products.
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Negligence
 A tort involves either an intentional or a
negligent action that causes injury.
 Obstacles to consumers in early product
liability law:
 Caveat emptor
 Narrow interpretation of the doctrine of privity,
which held that consumers could sue only the
party that sold them the product
 This legal protective wall for manufacturers
was broken down by the milestone case of
MacPherson v. Buick Motor Co. in 1916.
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Warranty
 A warranty is a contract in which the
seller guarantees the nature of the
product.
 An express warranty is an explicit
claim made by the manufacturer to the
buyer.
 An implied warranty is an unwritten,
commonsense warranty arising out of
the buyer’s reasonable expectations.
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Strict Liability
 The doctrine of strict liability established that
anyone who engages in a dangerous activity is
liable for damages to others, even if the activity is
conducted with utmost care.
 The key to strict liability is that the injured person
need not prove negligence to prevail in court.
 Under strict liability an injured plaintiff must prove
only that:
 The manufacturer made a product in a defective condition
that made it unreasonably dangerous to the user
 The seller was in the business of selling such products
 It was unchanged from its manufactured condition when
purchased
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Perspectives on
Product Liability
 The U.S. legal system makes it easier
for plaintiffs to win large damage
awards from product makers than do
the systems of other countries.
 Nowhere else in the world has the
legal system created such a favorable
environment for product lawsuits as in
the United States.
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Cost and Benefits
of Lawsuits
 A recent estimate is that the tort system inflicts an annual
economic cost of $865 billion on society, about 2.8 percent of
GDP, more than triple the percent average of other industrial
nations.
 Dangerous products have been either taken off the market,
had their sales restricted, or been redesigned.
 Lawsuit threats and high liability insurance costs regularly
cause companies to drop high-risk products.
 An unknown number of new products never come to market
because their liability potential scares manufacturers.
 Business argues that product liability law has moved beyond
equitable victim compensation.
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Concluding Observations
 Consumerism is a word with two meanings:
it refers both to a kind of society and to a
protective movement.
 Consumerism as a way of life is spreading
around the world because the conditions
that support it are becoming more common.
 Consumers in the United States are now
more protected from injury, fraud, and other
abuses than in the past because of stronger
government regulation and more consumerfriendly common law doctrines.
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