Why were consumer protection laws created?
Different consumer protection laws have been put into place at various times throughout history. However, commercial litigation attorney Christian B.W. Stephens of Eckert Seamans says modern consumer protection laws were enacted in the early 20th century and "continued to rise in popularity throughout the century in individual states."
Stephens said these laws generally stemmed from "a desire to improve an individual consumer’s bargaining power and the remedies available to individual consumers and businesses for unscrupulous commercial practices."
Both federal and state government agencies in the U.S. enact and enforce their own consumer protection laws. While the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) oversee most consumer protection laws at the federal level, individual state attorney generals and consumer protection agencies enforce their laws at the state level.
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What do consumer protection laws protect against?
All consumer protection laws are unique, protecting consumers against fraudulent practices, privacy violations, harassment and more.
"These laws are instrumental in ensuring equity, transparency and accountability within the marketplace while shielding consumers from fraudulent activities, deceptive practices, substandard products and inequitable business practices," explained attorney and consumer advocate Jessica Anvar Stotz.
Consumer warranties and service contracts
Consumer protection laws can help oversee and govern product warranties that aim to repair or replace items that have defects or stop working during the warranty period. These laws can oversee manufacturers' warranties, extended warranties and service contracts.
Consumer privacy
Consumer privacy laws protect individuals from harassment and having their sensitive personal information shared without their consent. Some consumer protection laws also protect individuals from being contacted in certain situations, including at work or home after certain hours.
Unfair trade practices
Some laws protect consumers from unfair trade practices that can result in financial losses. These laws protect people from businesses that would otherwise use deceptive or fraudulent practices to market their products and services.
These laws are instrumental in ensuring equity, transparency and accountability within the marketplace…”
Borrowing practices
There are laws that make it illegal for lenders to discriminate against consumers based on their age, gender, race, religion, marital status and more. These laws also prohibit lenders from performing certain practices like offering less favorable credit terms and closing accounts based on these factors.
Consumer credit
Some laws protect consumers' credit information, including preventing the release of information without proper consent. These laws also require lenders, insurance companies and other businesses to notify consumers when information in their credit reports results in adverse actions.
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List of consumer protection laws
There are many consumer protection laws in place today, and the most significant ones to know about are at the federal level.
Here's a rundown of the most important consumer protection laws keeping you safe from unfair and deceptive practices, harassment and more.
Dodd-Frank Act
After becoming law in 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) aimed to improve accountability and transparency within the American financial system. Its goal is to protect taxpayers against abusive financial practices and expensive bailouts. This law was originally envisioned and put into place due to the 2008 financial crisis.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act (ECOA) makes it illegal for companies and lenders to discriminate based on color, race, religion, national origin, sex, marital status and age. It also prevents bias against consumers receiving public assistance or exercising rights afforded under the Consumer Credit Protection Act.
This law prohibits the denial of credit based on these factors and prevents lenders from discouraging applying for credit or offering unfair or less favorable terms based on these factors.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) ensures no one can receive a consumer’s personal credit information without a purpose specified in the act. This act also ensures that insurance companies, lenders and other businesses that use consumer credit information notify customers if they take adverse actions in response to information in their credit reports.
Finally, the FCRA promotes accuracy and fairness when it comes to the personal information of consumers.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) governs companies that collect debts and ensures they don’t use abusive, deceptive or unfair practices while collecting consumers’ debts. However, this law only applies to personal debts and not business debts.
Federal Securities Act
Put into law in 1933, the Federal Securities Act requires securities (e.g., stocks, bonds, packages of loans) sold to the public to be registered with the U.S. Securities and Exchange Commission (SEC). The full information on the security is available to investors.
Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act (GLBA) legally requires financial institutions and banks to explain in writing how they share information with customers. This law also ensures these companies share information they use to protect sensitive data, including encryption practices.
Telephone Consumer Protection Act
According to the Federal Communications Commission (FCC), the Telephone Consumer Protection Act (TCPA) sets regulations and restrictions on telemarketing calls and the use of automatic phone dialing systems (robocalls).
The Fair Housing Act
The Fair Housing Act protects consumers from discrimination in the housing market . Essentially, landlords, home mortgage lenders, real estate companies and other related businesses can’t discriminate against housing applicants based on race, color, religion, gender or sex, national origin, familial status or disability.
Truth in Lending Act
The Truth in Lending Act (TILA) protects against numerous instances of inaccurate and unfair credit card and credit billing practices. For example, TILA gives consumers the right to back out of loans without losing any money within a certain period. It also requires lenders to put many disclosures concerning financial charges and transactions into writing.
Which government bodies make consumer protection laws?
Consumer protection laws are put into action at both the federal and state level. The following entities oversee them:
- CFPB: The CFPB is a federal agency that protects individual consumers against unfair, deceptive or abusive practices while penalizing companies that violate the rules and break the law.
- FTC: The FTC also protects consumers against unfair and deceptive practices while protecting the public from unfair marketplace conditions.
- Food and Drug Administration (FDA): The FDA oversees various industries, including food production and pharmaceuticals, to protect consumers against harmful products.
- Individual states: Stotz points out that, at the state level, each state maintains its own consumer protection agency or division entrusted with enforcing state-specific consumer protection laws. "State attorney generals and local consumer protection offices also contribute to the enforcement of these statutes," she said.
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FAQ
What is the intent of consumer protection laws?
Consumer protection laws were instituted with the fundamental objective of safeguarding the rights and interests of consumers in commercial interactions.
What are some things that consumer protection laws cover?
Consumer protection laws vary in scope but can cover credit and credit billing issues, consumer privacy issues, warranties and service contracts, unfair trade practices and more.
Who enforces federal consumer protection laws?
Federal agencies like the CFPB and FTC oversee federal consumer protection laws, whereas individual states have their own agencies to enforce state laws.
Bottom line
Consumer protection laws come in many different forms, each overseeing various aspects of consumer safety. Consumers can rely on these laws to protect them if they find themselves in the crosshairs of an abusive company or if they’re worried about privacy rights violations.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Federal Trade Commission, “ About the FTC .” Accessed Sept. 11, 2023.
- Consumer Financial Protection Bureau, " The Bureau ." Accessed Sept. 11, 2023.
- USA.gov, " State consumer protection offices ." Accessed Sept. 11, 2023.
- Federal Trade Commission, " Businessperson's Guide to Federal Warranty Law ." Accessed Sept. 11, 2023.
- Federal Trade Commission, " Fair Debt Collection Practices Act ." Accessed Sept. 12, 2023.
- Federal Trade Commission, " Protecting Consumer Privacy and Security ." Accessed Sept. 12, 2023.
- Georgetown Law, " Consumer Protection ." Accessed Sept. 12, 2023.
- Consumer Financial Protection Bureau, " What protections do I have against credit discrimination? " Accessed Sept. 12, 2023.
- Federal Trade Commission, " Fair Credit Reporting Act ." Accessed Sept. 12, 2023.
- Food and Drug Administration, " What We Do ." Accessed Sept. 12, 2023.
- Congress.gov, " H.R.4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act ." Accessed Sept. 12, 2023.
- Consumer Financial Protection Bureau, " What laws limit what debt collectors can say or do? " Accessed Sept. 12, 2023.
- Georgetown Law, " Securities Law ." Accessed Sept. 12, 2023.
- Federal Trade Commission, " Gramm-Leach-Bliley Act ." Accessed Sept. 12, 2023.
- Federal Communications Commission, " FCC Actions on Robocalls, Telemarketing ." Accessed Sept. 12, 2023.
- U.S. Department of Justice, " The Fair Housing Act ." Accessed Sept. 12, 2023.
- Federal Trade Commission, " Truth in Lending Act ." Accessed Sept. 12, 2023.
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