Consumer Protection
Laws and Agencies that Provide Financial Safeguards
BIG IDEAS
 Credit and debt can be used to achieve
….?
 personal financial goals
 Consumer protection laws provide
financial safeguards
What rights do you think you have as a
consumer?
Consumer Protection Laws
 Who provides these laws?
 Federal, state and local laws
provide safeguards for personal
finances
 Laws are monitored and
enforced by different
government organizations
 Securities and Exchange
Commission (SEC)
 Federal Trade Commission
(FTC)
 Consumer Product Safety
Commission (CPSC)
Securities and Exchange Commission
 Regulates the ….
 buying and selling of stock
 Monitors brokerage firms and
stock exchanges
 Investigates possible “wrong
doing” in regards to the trading of
stocks and securities
 A large government bureaucracy
Securities and Exchange Commission
 Investigates potential
manipulation of the
market
 “Well-timed” sales of
stock
 Often referred to as
“insider trading”
 When a stock
holder has “inside”
knowledge about
the future of a
particular stock’s
value
Securities and Exchange Commission
Not all actions
on the stock
market are
legal
Rules and
regulations are
based on Acts
passed by
Congress
 Definition of 'Sarbanes-Oxley Act Of
2002 - SOX'
An act passed by U.S. Congress in 2002 to
protect investors from the possibility of
fraudulent accounting activities by
corporations.
 The Sarbanes-Oxley Act (SOX) mandated
strict reforms to improve financial
disclosures from corporations and prevent
accounting fraud.
 SOX was enacted in response to the
accounting scandals in the early 2000s.
Scandals such as Enron, Tyco, and
WorldCom shook investor confidence
in financial statements and required
an overhaul of regulatory standards.
 1. Section 302: A mandate that requires
senior management to certify the accuracy
of the reported financial statement
 2. Section 404: A requirement that management and
auditors establish internal controls and reporting
methods on the adequacy of those controls. Section
404 had very costly implications for publicly traded
companies as it is expensive to establish and maintain
the required internal controls.
 Definition of 'Glass-Steagall Act‘
An act the U.S. Congress passed in 1933 as
the Banking Act,
 which prohibited commercial banks from
participating in the investment banking
business.
 The Act was passed as an emergency measure to counter
the failure of almost 5,000 banks during the Great
Depression. The Glass-Steagall lost its potency in
subsequent decades and was finally repealed in 1999.
 The Glass-Steagall Act's repeal in
1999 is believed in some circles to have
contributed to the 2008 global credit
crisis.
 Commercial banks, around the world,
were saddled with billions of dollars in
losses due to the excessive exposure of
their investment banking arms to
derivatives and securities that were tied
to U.S. home prices.
Federal Trade Commission
 Provide financial safeguards
 Includes the Bureau of
Consumer Protection
 Protects consumers against
unfair, deceptive or
fraudulent practices
 Enforces consumer
protection laws enacted by
Congress
 Regulates financial practices
Federal Trade Commission
 Originally created
as a way for the
federal government
to engage in “Trust
Busting”
 Still enforces
antitrust regulations
 Protects consumers
from fraud
Consumer Product Safety Commission
 Issues recalls on
products available
for purchase
 NOT food
(FDA)
 Publishes
information about
product safety
 Publishes annual
list of “safe
holiday toys”
Name That Recall
 The electrical
components of the
tree’s light strings can
overheat and melt,
posing fire, burn, and
shock hazards to
consumers.
Name That Recall
 The bicycle’s front
brake can fail,
posing a crash
hazard
Name That Recall
 the lamp cord was
Children’s wall-mounted lamps
pulled into the crib by
the infants, creating a
strangulation hazard.
 Consumers should stop
using this product unless
otherwise instructed. It is
illegal to resell or attempt
to resell a recalled
consumer product.
Name That Recall
 The colored arches can
break, creating a small part
which poses a choking
hazard to small children.
 Consumers should stop
using this product unless
otherwise instructed. It is
illegal to resell or attempt
to resell a recalled
consumer product.
Can you name any other organizations ?
Other Organizations
Better Business Bureau
• Allows a person to:
• Research companies
• File a complaint about a company
• Provide information about types
of scams
• Is both national and local –
Cleveland has a branch
Ohio Consumer’s Council
•“Residential utilities consumer
advocate”
• Educates consumers about
utility issues
• Acts as a representative for
Ohio residents in court against
utility companies
• Electric, Water, Natural Gas,
Telephone